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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the
Registrant ☐
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as
permitted by Rule 14a 6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
| ☐ |
Soliciting Material Pursuant to
§240.14a-12 |
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GLU MOBILE INC.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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box): |
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transaction applies: |
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Aggregate number of securities to which
transaction applies: |
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of
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Total fee paid: |
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materials. |
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box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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GLU MOBILE INC.
875 Howard Street, Suite 100
San Francisco, California 94103
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
NOTICE IS HEREBY GIVEN that an Annual
Meeting of Stockholders of Glu Mobile Inc., a Delaware corporation
(“Glu,” “we,” “our” and similar terms), will be held on Thursday,
June 18, 2020, at 10:00 a.m. Pacific Time, at 875 Howard Street,
Suite 100, San Francisco, California (the “Annual Meeting”).
We intend to hold our annual
meeting in person. However, we are sensitive to the public health and
travel concerns our stockholders may have and recommendations that
public health officials may issue in light of the evolving
coronavirus (COVID-19) situation. As a result, we may impose
additional procedures or limitations on meeting attendees (beyond
those described herein) or may decide to hold the stockholder
meeting in a different location or solely by means of remote
communication (i.e., a virtual-only stockholder meeting). We plan
to announce any such updates through a press release and on our
proxy website http://www.proxyvote.com, and we encourage you to
check this website prior to the meeting if you plan to attend. It
is important that you retain a copy of the control number found on
the proxy card, voting instruction form or Notice of Internet
Availability of Proxy Materials, as such number will be required in
order for stockholders to gain access to any meeting held solely by
means of remote communication. At the Annual Meeting, our
stockholders will be asked to consider and vote upon:
1. The election of four Class I directors to
Glu’s Board of Directors (the “Board”), each to serve until Glu’s
annual meeting of stockholders to be held in 2023 and until his or
her successor is elected and qualified, or until his or her death,
resignation or removal.
2. Approval of the amendment and restatement
of our 2007 Equity Incentive Plan to increase the aggregate number
of shares of common stock authorized for issuance under the plan by
7,000,000 shares and make certain other changes as described in
more detail in the proxy statement.
3. An advisory vote to approve the
compensation paid to Glu’s named executive officers.
4. The ratification of the appointment of
PricewaterhouseCoopers LLP as Glu’s independent registered public
accounting firm for the year ending December 31, 2020.
5. The transaction of such other business as
may properly come before the Annual Meeting or before any
adjournment(s) or postponement(s) thereof.
Proposals 1 through 4 are more fully
described in the attached proxy statement. We have not received
notice of other matters that may be properly brought before the
Annual Meeting.
Only stockholders who owned our common stock
at the close of business on April 20, 2020 may vote at the Annual
Meeting, or at any adjournment or postponement of the
meeting.
This year, we are again using the Internet
as our primary means of furnishing proxy materials to stockholders.
Consequently, most stockholders will not receive paper copies of
our proxy materials. We will instead send these stockholders a
Notice of Internet Availability of Proxy Materials with
instructions for accessing the proxy materials and voting via the
Internet. The Notice also provides information on how stockholders
can obtain paper copies of our proxy materials if they so
choose.
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Your vote is important. Whether or not you
plan to attend the Annual Meeting, please cast your vote, as
instructed in the Notice of Internet Availability of Proxy
Materials, over the Internet or by telephone, as promptly as
possible. You may also request a paper proxy card to submit your
vote by mail, if you prefer. We encourage you to vote via the
Internet. We
believe it is convenient for our stockholders, while significantly
lowering the cost of our Annual Meeting and conserving natural
resources.
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By Order of the
Board, |
 |
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Scott J. Leichtner
Vice President, General Counsel and
Corporate Secretary
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San Francisco, California
April 28, 2020
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IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY
OF PROXY MATERIALS:
Glu’s combined Proxy Statement for the 2020
Annual Meeting of Stockholders and the Annual Report to
Stockholders for the year ended December 31, 2019 are available
online at www.proxyvote.com. You will need your control number
found on your Notice of Internet Availability to access these
materials.
|
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GLU MOBILE INC.
PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF
STOCKHOLDERS
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The information contained in the Compensation
Committee Report and the Audit Committee Report of this proxy
statement shall not be deemed to be “soliciting material,” to be
“filed” with the Securities and Exchange Commission (“SEC”), or to
be subject to Regulation 14A or Regulation 14C (other than as
provided in Item 407 of Regulation S-K) or to the liabilities of
Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and shall not be deemed to be incorporated by
reference in future filings with the SEC except to the extent that
we specifically incorporate it by reference into a document filed
under the Securities Act of 1933, as amended, or the Exchange
Act.
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GLU MOBILE INC.
875 Howard Street, Suite 100
San Francisco, California 94103
PROXY STATEMENT FOR THE
2020 ANNUAL MEETING OF
STOCKHOLDERS
INFORMATION ABOUT THE
MEETING, MEETING MATERIALS, VOTING AND PROXIES
Date, Time and Place of Meeting
The Board of Directors (the “Board”) of Glu
Mobile Inc., a Delaware corporation (“Glu,” “we,” “our” and similar
terms), is asking for your proxy for use at the 2020 Annual Meeting
of Stockholders (the “Annual Meeting”) and at any adjournments or
postponements of the meeting. We are holding the meeting on
Thursday, June 18, 2020, at 10:00 a.m. Pacific Time, at our
principal executive offices at 875 Howard Street, Suite 100, San
Francisco, California. We intend to hold our annual meeting in
person. However, we are sensitive to the public health and
travel concerns our stockholders may have and recommendations that
public health officials may issue in light of the evolving
coronavirus (COVID-19) situation. As a result, we may impose
additional procedures or limitations on meeting attendees (beyond
those described herein) or may decide to hold the stockholder
meeting in a different location or solely by means of remote
communication (i.e., a virtual-only stockholder meeting). We plan
to announce any such updates through a press release and on our
proxy website (http://www.proxyvote.com). It is important that you retain a copy of the
control number found on the proxy card, voting instruction form or
Notice of Internet Availability of Proxy Materials, as such number
will be required in order for stockholders to gain access to any
meeting held solely by means of remote communication.
We encourage you to check
this website prior to the meeting if you plan to attend.
We first released this proxy
statement to our stockholders on or about April 28,
2020.
Internet Availability of Proxy
Materials
We are pleased to again furnish proxy
materials to our stockholders on the Internet, rather than mailing
printed copies to each stockholder. If you received a Notice of
Internet Availability of Proxy Materials (“Notice of Internet
Availability”) by mail, you will not receive a printed copy of the
proxy materials unless you request one. Instead, the Notice of
Internet Availability provides instructions for accessing and
reviewing the proxy materials and casting your vote on the
Internet. If you received a Notice of Internet Availability by mail
and would like to receive a printed copy of our proxy materials,
please follow the instructions included in the Notice of Internet
Availability. We encourage stockholders to take advantage of the
electronic availability of the proxy materials to help reduce the
expense and environmental impact of the Annual Meeting. We
anticipate that the Notice of Internet Availability will be mailed
to stockholders on or about April 28, 2020.
Record Date; Outstanding Shares;
Quorum
Only holders of record of our common stock
at the close of business on April 20, 2020 (the “Record Date”) will
be entitled to notice of and to vote at the Annual Meeting. As of
the close of business on the Record Date, there were 151,592,087
shares of our common stock outstanding and entitled to vote, held
of record by approximately 48 stockholders and held beneficially by
thousands of additional stockholders.
Pursuant to our Amended and Restated Bylaws
(our “Bylaws”), a majority of the outstanding shares of common
stock, present in person or by proxy, will constitute a quorum at
the Annual Meeting. We must have a quorum to transact business.
Each stockholder is entitled to one vote for each share of common
stock held as of the Record Date. For ten days before the Annual
Meeting, a complete list of stockholders entitled to vote at the
Annual Meeting will be available upon request by any stockholder
for any purpose germane to the meeting. Requests should be sent to:
Glu Mobile Inc., 875 Howard Street, Suite 100, San Francisco,
California 94103, Attn: Corporate Secretary. If the meeting is held
by means of remote communication, then the stockholder list will
also be available during such virtual meeting.
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Voting Via the Internet, by Telephone or By
Mail
Holders of shares of our common stock whose
shares are registered in their own name with our transfer agent,
American Stock Transfer and Trust Company, are record holders. As
an alternative to voting in person at the Annual Meeting, record
holders may vote via the Internet, by telephone or, for those
stockholders who receive a paper proxy card in the mail, by mailing
a completed proxy card.
For those record holders who receive a paper
proxy card, instructions for voting via the Internet, telephone or
by mail are set forth on the proxy card. Stockholders who elect to
vote by mail should sign and mail the proxy card in the addressed,
postage paid envelope that was enclosed with the proxy materials,
and their shares will be voted at the Annual Meeting in the manner
they direct. All properly executed, returned and unrevoked proxies
will be voted in accordance with the instructions indicated on the
proxy card.
For those stockholders who receive a Notice
of Internet Availability, the notice provides information on how to
access the proxy and contains instructions on how to vote via the
Internet or by telephone. If you received a Notice of Internet
Availability, you can request a printed copy of your proxy
materials by following the instructions contained in the notice.
Stockholders who have elected to receive the 2020 Proxy Statement
and Annual Report to Stockholders for the year ending December 31,
2019 electronically will receive an email on or about April 28,
2020 with information on how to access stockholder information and
instructions for voting.
In light of the evolving COVID-19 situation,
we strongly recommend that you vote your shares in advance of the
meeting as instructed above, even if you plan to attend the
meeting.
Signed but unmarked proxies will be voted
FOR each director nominee listed on the proxy card, FOR the
approval of the amendment and restatement of our 2007 Equity
Incentive Plan, FOR the compensation of our Named Executive
Officers (defined in “Compensation Discussion and Analysis” below),
and FOR the ratification of our independent registered public
accounting firm for the year ending December 31, 2020.
The Board does not know of,
and does not intend to bring, any business before the Annual
Meeting other than that referred to in this proxy statement and
specified in the Notice of Annual Meeting. As to any other business
that may properly come before the Annual Meeting, including any
motion made for adjournment of the Annual Meeting (including for
purposes of soliciting additional votes), signing and returning the
proxy card will confer discretionary authority on the proxies (Nick
Earl and Eric R. Ludwig, who have been designated by the Board) to
vote all shares covered by the proxy card in their
discretion.
Revoking a Proxy
Any stockholder who has given a proxy may
revoke it at any time before it is exercised at the Annual Meeting
by (1) filing a written notice of revocation with, or delivering a
duly executed proxy bearing a later date to, our Corporate
Secretary at 875 Howard Street, Suite 100, San Francisco,
California 94103 or (2) attending the Annual Meeting and voting in
person (although attending the Annual Meeting will not, by itself,
revoke a proxy).
Votes Required
Director elections (Proposal No. 1) will be
determined by a plurality of shares of common stock present in
person or represented by proxy at the Annual Meeting and entitled
to vote on such proposal. Approval of each of the proposals to
approve the amendment and restatement of our 2007 Equity Incentive
Plan (Proposal No. 2), the advisory vote on the compensation of our
Named Executive Officers (Proposal No. 3) and the ratification of
the selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the year ending December 31,
2020 (Proposal No. 4) requires the affirmative vote of a majority
of the shares of common stock present in person or represented by
proxy at the Annual Meeting and voted for or against the
matter.
Effect of Abstentions
If a signed proxy is returned and the
stockholder has specifically abstained from voting on any matter,
the shares represented by such proxy will be considered present at
the Annual Meeting for purposes of determining a quorum, but will
not be considered to have been voted for or against such matter. As
such, an abstention will have no effect on any of the
proposals.
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Effect of “Broker Non-Votes”
Brokers, banks or other agents holding
shares in street name have discretionary authority to vote shares
held for a beneficial owner on “routine” matters, such as the
ratification of our independent registered public accounting firm,
without instructions from the beneficial owner of those shares.
However, absent instructions from the beneficial owner of such
shares, brokers, banks or other agents holding shares in street
name do not have discretionary authority to vote shares held for a
beneficial owner on certain “non-routine” matters, such as
Proposals No. 1 through No. 3.
If a signed proxy is returned by a broker,
bank or other agent holding shares in street name that indicates
that the broker does not have discretionary authority as to certain
shares to vote on a proposal (“broker non-votes”), such shares will
be considered present at the Annual Meeting for purposes of
determining a quorum on all proposals, but will not be entitled to
vote on and thus will have no effect on the outcome of any
proposal.
Solicitation of Proxies and
Expenses
We will bear the cost of soliciting proxies
from our stockholders. Our directors, officers and employees,
without additional compensation, may solicit proxies by mail,
telephone, letter, facsimile, electronically or in person.
Following the original mailing of the proxies and other soliciting
materials, we will request that brokers, custodians, nominees and
other record holders forward copies of the proxy and other
soliciting materials to persons for whom they hold shares of common
stock and request authority for the exercise of proxies. In such
cases, we will reimburse such record holders for their reasonable
expenses incurred for forwarding such materials.
Voting Results
The preliminary voting results will be
announced at the Annual Meeting. The final voting results will be
tallied by our Inspector of Elections and published in a Current
Report on Form 8-K to be filed with the SEC within four business
days of the Annual Meeting.
Delivery of Voting Materials to Stockholders
Sharing an Address
To reduce the expense of delivering
duplicate materials to stockholders sharing the same address, we
have adopted a procedure approved by the SEC called “householding.”
Under this procedure, certain stockholders of record who have the
same address and last name will receive only one copy of the proxy
materials sent to stockholders until such time as one or more of
these stockholders notifies us that they wish to continue receiving
individual copies. This procedure will reduce duplicate mailings
and save printing costs and postage fees, as well as natural
resources.
Stockholders who currently receive multiple
copies of the proxy statement at their address and would like to
request “householding” of their communications should contact their
broker.
How to Obtain a Separate Set of Voting
Materials
Stockholders who received a householded
mailing this year, and would like to have additional copies of the
proxy materials mailed to them, may submit their request to
Investor Relations, Glu Mobile Inc., 875 Howard Street, Suite 100,
San Francisco, California 94103 or by email to IR@glu.com.
Stockholders may also contact us at the address or email above if
they received multiple copies of the Annual Meeting materials and
would prefer to receive a single copy in the future. Stockholders
who would like to opt out of householding for future mailings may
send a written request to Investor Relations at the above physical
address or email address.
Annual Report on Form 10-K
A copy of our Annual Report on Form 10-K for
the year ended December 31, 2019, including the financial
statements, list of exhibits and any exhibit specifically
requested, is available without charge upon written request to:
Corporate Secretary, Glu Mobile Inc., 875 Howard Street, Suite 100,
San Francisco, California 94103.
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PROPOSAL NO. 1 –
ELECTION OF CLASS I DIRECTORS
Our Board currently consists of ten
directors. Our Restated Certificate of Incorporation and Bylaws
provide for a classified Board, divided into three classes. At each
annual meeting of stockholders, successors to the class of
directors whose term expires at that annual meeting will be elected
for a term to expire at the third succeeding annual meeting. The
individuals so elected will serve until their successors are
elected and qualified.
This year, the terms of our four Class I
directors, Darla Anderson, Ben Feder, Hany M. Nada and Benjamin T.
Smith, IV, will expire at the Annual Meeting.
The Board has nominated Darla Anderson, Ben
Feder, Hany M. Nada and Benjamin T. Smith, IV to serve as Class I
directors, each for a three-year term that is expected to expire at
our annual meeting in 2023 or until his or her earlier resignation
or removal (the “Board’s Nominees”). Our Nominating and Governance
Committee reviewed the qualifications of the Board’s Nominees and
unanimously recommended to the Board that they be submitted to
stockholders for election. You can find the principal occupation
and other information about the Board’s Nominees, as well as other
Board members, below.
Three of our continuing directors are Class
II directors, whose terms will expire at our 2021 annual meeting,
and three of our continuing directors are Class III directors,
whose terms will expire at our 2022 annual meeting.
The election of our Class I directors will
be determined by the four nominees receiving the greatest number of
votes from shares eligible to vote on the matter. Unless a
stockholder signing a proxy withholds authority to vote for one or
more of the Board’s Nominees in the manner described on the proxy
card, each proxy received will be voted for the election of each of
the Board’s Nominees. If any nominee is unable or declines to serve
as a director at the time of the Annual Meeting, the proxies will
be voted for the nominee or nominees who shall be designated by the
present Board to fill the vacancy. We are not aware that any of the
Board’s Nominees will be unable or will decline to serve as a
director.
There are no family relationships between
any of our directors, nominees or executive officers.
On April 29, 2015, Glu agreed to issue in a
private placement offering to a wholly-owned subsidiary of Tencent
Holdings Limited (“Tencent”) an aggregate of 21,000,000 shares of
Glu’s common stock at a purchase price of $6.00 per share, for
aggregate proceeds of $126 million (the “Offering”). In connection
with the Offering, Glu and Tencent became parties to a voting and
standstill agreement (the “Voting Agreement”), pursuant to which
Glu agreed to cause a representative of Tencent to be elected and
appointed as a new member of the Board as a Class I director, and
to subsequently nominate for future director elections a designee
of Tencent on the Board. Ben Feder has served as the Tencent
representative on the Board since January 26, 2017.
Tencent will continue to have a right to
appoint one member to the Board so long as (1) Tencent and its
controlled affiliates, continue to hold a net long ownership
position of at least 5% of Glu’s outstanding shares and (2) Tencent
or Tencent’s designee to the Board does not materially breach any
material obligation to Glu under the Voting Agreement and a
separate confidentiality agreement between the parties related to
confidentiality and use limitations for information Mr. Feder (or a
subsequent Tencent designee to the Board) obtains by virtue of
serving on the Board, which breach is not cured within 30 days
following Tencent’s receipt of written notice of such breach.
Tencent, through its controlled affiliates, held 13.85% of Glu’s
outstanding shares as of April 20, 2020. Other than the appointment
of Mr. Feder by Tencent, there are no arrangements or
understandings between any director, nominee or executive officer
and any other person pursuant to which he or she has been or will
be selected as a director and/or executive officer.
The Board recommends that stockholders vote “FOR”
the election of
Darla Anderson, Ben Feder, Hany M. Nada and
Benjamin T. Smith, IV as Class I Directors.
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Information Regarding Our Nominees and
Directors
Nominees for Class I Directors (whose terms
expire at the Annual Meeting)
Darla Anderson (Age 60)
Movie
Producer
Ms. Anderson has served as one of our
directors since March 2019. In January 2019, Ms. Anderson signed a
multi-year development and production deal with Netflix to develop
and produce new animated and live-action projects. From 1993 until
March 2018, Ms. Anderson held various positions at Pixar Animation
Studios, a computer animation film studio, most recently as a
Producer. While at Pixar, Ms. Anderson contributed to a number of
Pixar’s hit movies, including A Bug’s Life, Monsters, Inc., Cars and Toy Story 3, and she produced Coco for which she earned an Academy Award for Best
Animated Feature. Prior to joining Pixar, she served as the
Executive Producer of the commercial division of Angel Studios, a
video game developer. Since February 2020, Ms. Anderson has served
as a director of dMY Technology Group, Inc., a blank check company
whose business purpose is to effect a business combination with one
or more businesses. Since July 2008, Ms. Anderson has served on
the Producers Council
Board of the Producers Guild of America. Ms. Anderson holds a B.A. in art from San
Diego State University.
Ms. Anderson’s proven track record in
successfully producing high-caliber entertainment projects, her
expertise in developing engaging and unique experiences to delight
audiences and her ability to provide guidance to our creative
leaders led the Board to conclude that she should serve as a
director.
Ben Feder (Age 56)
President, International Partnerships
(North America) of Tencent Holdings Limited
Mr. Feder has served as one of our directors
since January 2017 and was appointed to our Board by Tencent, which
is a leading Internet and gaming company in China. Since October
2016, Mr. Feder has served as President, International Partnerships
(North America) of Tencent. In addition, Mr. Feder serves on the
boards of several private gaming companies as a representative of
Tencent. From 2001 to October 2016, Mr. Feder served in various
positions at ZelnickMedia Corporation., a media investment and
management firm, including as co-founder, partner and vice
chairman. From April 2007 to April 2010, Mr. Feder served as a
member of the board of directors of Take Two Interactive Software
Inc., or Take Two, a leading developer and publisher of video
games, and from April 2007 to December 2010 he also served as Chief
Executive Officer of Take Two. Prior to co-founding ZelnickMedia in
2001, Mr. Feder was Chief Executive Officer of MessageClick, Inc.,
a leading provider of voice messaging technology for
next-generation telephone networks, and held a senior position with
News Corporation. Mr. Feder received a B.A. in history from
Columbia University and an M.B.A. from the Harvard Business
School.
Mr. Feder’s deep knowledge of the gaming
industry, including his leadership experience at both Tencent and
Take Two, led the Board to conclude that he should serve as a
director.
Hany M. Nada (Age 51)
Co-Founder and Managing
Partner, ACME Capital
Mr. Nada has served as one of our directors
since April 2005. Mr. Nada co-founded ACME Capital, a venture
capital firm, in January 2019 and serves as the firm’s Managing
Partner. Prior to co-founding ACME Capital, Mr. Nada co-founded GGV
Capital (formerly Granite Global Ventures) in 2000 and served as a
Managing Director until October 2016 and as a Venture Partner from
November 2016 until October 2018. Prior to co-founding GGV Capital,
Mr. Nada served as Managing Director and Senior Research Analyst at
Piper Jaffray & Co., specializing in Internet software and
e-infrastructure. Mr. Nada serves on the boards of directors of
several privately held companies, including Arcbyt, DraftKings,
Inc., Phoenix Labs, and WildTangent, Inc, and was previously on the
board of directors of Vocera Communications, Inc., a publicly
traded company. In addition, Mr. Nada is an observer on the board
of directors of Houzz, Inc., IonQ Inc. and Uhnder, Inc. Mr. Nada
holds a B.S. in economics and a B.A. in political science from the
University of Minnesota.
Mr. Nada’s experience in the venture capital
industry, which includes a focus on software, wireless
applications, and multimedia, his expertise and insights into high
technology companies that he gained during his tenure as Managing
Director and Senior Research Analyst at Piper Jaffray & Co.,
his experience as a director of high technology companies and his
relationship with entities owning a significant percentage of our
common stock led the Board to conclude that he should serve as a
director.
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Benjamin T. Smith, IV (Age 52)
Senior Partner, A.T. Kearney
Mr. Smith has served as one of our directors
since November 2010, interim co-Lead Independent Director from July
2014 to December 2014 and Lead Independent Director since April
2016. Mr. Smith has been a Senior Partner at the strategic
consulting firm, A.T. Kearney, since October 2016 and prior to that
served as the Chief Executive Officer of Wanderful Media, a new
media shopping company, from April 2012 to June 2016. Prior to
joining Wanderful Media, Mr. Smith served as an independent
director of and advisor to technology companies, including in his
role as a Venture Partner at Accelerator Venture Capital, where he
has served since December 2011. Previously, Mr. Smith served as the
Chairman and Chief Executive Officer of WYBS, Inc. d/b/a
MerchantCircle, a leading social network of small business owners,
from when he co-founded the company in August 2004 until the
company was sold to Reply.com in May 2011. Mr. Smith served as the
Senior Vice President of Corporate Development and a strategic
advisor to Borland Software Corporation, a vendor of Open
Application Lifecycle Management solutions, from March 2005 to
October 2007 and the Chief Executive Officer of, and an advisor to,
CodeGear, a division of Borland, from November 2006 to October
2007. Mr. Smith previously co-founded Spoke Software, Inc., a
provider of social networking software that connects business
professionals, in 2002, and served as its Chief Executive Officer
from 2002 to 2004. Mr. Smith also served the Bush Administration as
the Senior Advisor for Strategy and Planning to the Secretary of
Transportation from 2001 to 2002. Prior to then, Mr. Smith was a
Vice President and Partner at A.T. Kearney, and Vice President,
Venture Development at Electronic Data Systems Corporation (EDS)
after A.T. Kearney was purchased by EDS. In addition, Mr. Smith
serves as an advisor or investor in several other private companies
and provides advisory services to a number of high-technology
companies. He also advised and led the board of directors of
Tapulous Inc., a mobile social gaming company, from its founding in
2009 until its sale to The Walt Disney Company in July 2010. Mr.
Smith holds a B.S. in mechanical engineering from the University of
California at Davis and an M.B.A. from Carnegie Mellon University’s
Tepper School of Business.
Mr. Smith’s extensive operating and
investment experience in the social networking and gaming
industries, which includes having co-founded two social networking
companies, and his experience as a director of and strategic
consultant to high-technology companies led the Board to conclude
that he should serve as a director.
Continuing Class II Directors (whose terms expire
at the 2021 Annual Meeting of Stockholders)
Eric R. Ball (Age 56)
General Partner, Impact
Venture Capital
Dr. Ball has served as one of our directors
since October 2013. Dr. Ball serves as General Partner of Impact
Venture Capital, a technology investment firm, a position he has
held since August 2016. Before joining Impact Venture Capital, Dr.
Ball was Chief Financial Officer of C3, Inc. (doing business as C3
IoT), a full-stack development platform for the “Internet of
Things,” from August 2015 to May 2016. Prior to then, Dr. Ball
served as Senior Vice President and Treasurer of Oracle
Corporation, a global computer technology company, from May 2005 to
September 2015. Before joining Oracle, Dr. Ball worked in a variety
of headquarters and operating finance roles at Flextronics, Inc.,
Cisco Systems, Inc., Avery Dennison, and AT&T Inc. Dr. Ball
serves as an advisor to Kyriba Corporation and SineWave Ventures,
and since March 2017 as a board member to Answers Corporation. Dr.
Ball holds an B.A. in economics from the University of Michigan, an
M.A in economics/finance and an M.B.A. from the University of
Rochester and a Ph.D. in management from the Drucker-Ito School of
Management.
Dr. Ball’s more than 20 years of experience
in finance and operations with technology companies, particularly
those larger than Glu, led the Board to conclude that he should
serve as a director. In addition, our Board’s determination in
light of his experience as a finance executive and director
overseeing or assessing the performance of companies and public
accountants, that Dr. Ball is an “audit committee financial expert”
lends further support to his financial acumen and qualifications
for serving on our Board.
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Table of Contents
Nick Earl (Age 54)
President and Chief Executive Officer,
Glu Mobile Inc.
Mr. Earl has served as our President and
Chief Executive Officer since November 2016 and prior to that was
our President of Global Studios from November 2015 to November
2016. Before joining us, from November 2014 to September 2015, Mr.
Earl served as President of Worldwide Studios at Kabam. From
September 2001 to October 2014, Mr. Earl served in several
management positions at Electronic Arts, including most recently as
Senior Vice President & General Manager of EA Mobile. From 1999
to 2001, Mr. Earl served as VP Product Development at Eidos. From
April 1993 to March 1999, Mr. Earl served as an executive producer
/ GM at The 3DO Company. Mr. Earl holds a B.A. in economics from
the University of California at Berkeley.
Mr. Earl’s experience as our President and
Chief Executive Officer, which gives him unique insights into our
challenges, opportunities and operations, and his
strong background of senior
management in the mobile gaming sector led the Board to conclude that he should serve as
a director.
Ann Mather (Age 60)
Independent Director of and Advisor to
Technology and Media Companies
Ms. Mather has served as one of our
directors since September 2005. She has also served as a member of
the board of directors of: Alphabet Inc. since November 2005 and
serves as chair of its audit committee; Netflix, Inc. since July
2010 and serves as chair of its audit committee; MGM Holdings Inc.
since December 2010 and serves as lead independent director;
Shutterfly, Inc. since May 2013 and serves on its audit committee;
Arista Networks, Inc. since July 2013 and serves as chair of its
audit committee and Airbnb, Inc. since August 2018. Ms. Mather has
also been an independent trustee to the Dodge & Cox Funds board
of trustees since May 2011. From 1999 to 2004, Ms. Mather was
Executive Vice President and Chief Financial Officer of Pixar, Inc.
Prior to her service at Pixar, Ms. Mather was Executive Vice
President and Chief Financial Officer of Village Roadshow Pictures,
the film production division of Village Roadshow Limited. Ms.
Mather holds an M.A. in geography from Cambridge University in
England.
Ms. Mather’s experience as the chief
financial officer of two companies, including a publicly traded
company, her international experience gained through several
executive positions in Europe and her experience as a director of
high technology companies led the Board to conclude that she should
serve as a director.
Continuing Class III Directors (whose terms
expire at the 2022 Annual Meeting of
Stockholders)
Niccolo M. de Masi (Age 39)
Chief Executive Officer
and Director, dMY Technology Group, Inc.
Chairman, Glu Mobile Inc.
Mr. de Masi has served as our Chairman since
November 2019, as our Executive Chairman from November 2016 to
November 2019, as President and Chief Executive Officer from
January 2010 to November 2016, as one of our directors since
January 2010, as interim Chairman of our board of directors from
July 2014 to December 2014 and as the Chairman of our board of
directors since December 2014. Since January 2020, Mr. de Masi has
served as the Chief Executive Officer and a director of dMY
Technology Group. Since February 2019, Mr. de Masi has served as
the Chief Innovation Officer of Resideo Technologies, Inc., a
provider of residential comfort and security solutions, and
previously Mr. de Masi also served as the President of the Products
and Solutions segment of Resideo Technologies from February 2019 to
January 2020. Prior to joining Resideo Technologies, Mr. de Masi
served as the President of Essential, a mobile phone hardware
company, from November 2016 to October 2018. Prior to joining Glu
in January 2010, Mr. de Masi was the Chief Executive Officer and
President of Hands-On Mobile, a mobile technology company and
developer and publisher of mobile entertainment, from October 2009
to December 2009, and previously served as the President of
Hands-On Mobile from March 2008 to October 2009. Prior to joining
Hands-On Mobile, Mr. de Masi was the Chief Executive Officer of
Monstermob Group PLC, a mobile entertainment company, from June
2006 to February 2007. Mr. de Masi joined Monstermob in 2004 and,
prior to becoming its Chief Executive Officer, held positions as
its Managing Director and as its Chief Operating Officer, where he
was responsible for formulating and implementing Monstermob’s
growth and product strategy. Prior to joining Monstermob, Mr. de
Masi worked in a variety of corporate finance and operational roles
within the technology, media and telecommunications (TMT) sector,
beginning his career with JP Morgan on both the TMT debt capital
markets and mergers and acquisitions teams in London. He has also
worked as a physicist with Siemens Solar and within the Strategic
Planning and Development divisions of Technicolor. Mr. de Masi
previously served as a director of Resideo Technologies from
October 2018 to January 2020 and Xura, Inc. from November 2015
until its sale in August 2016. Mr. de Masi holds an M.A. degree in
physics and an MSci. degree in electronic engineering—both from
Cambridge University.
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Mr. de Masi’s successful tenure as our
President and Chief Executive Officer and current position as
Chairman, which gives him unique insights into our challenges,
opportunities and operations, and his strong background of senior management and
executive experience in the mobile gaming and content
sectors led the Board
to conclude that he should serve as a director.
Greg Brandeau (Age 58)
Managing Partner, Paradox
Strategies
Mr. Brandeau has served as one of our
directors since August 2015. Since May 2014, Mr. Brandeau has
served as Managing Partner of Paradox Strategies (fka Slices of
Genius), a consulting organization founded by Mr. Brandeau. He
served as President and Chief Operating Officer of Maker Media,
Inc., a global platform for connecting makers with each other, with
products and services, and with partner organizations, from
September 2013 to April 2014. Prior to Maker Media, Mr. Brandeau
served as Chief Technology Officer of The Walt Disney Studios, a
motion picture studio, from November 2009 to April 2012. Prior to
that, he served as Senior Vice President of Technology for Pixar
Animation Studios, a computer animation studio, from February 2004
to November 2009. Mr. Brandeau is an Advisory Board Member for
Infrascale, Inc. and the California Institute for
Telecommunications and Information Technology, and a member of the
Visiting Committee for the Humanities at the Massachusetts
Institute of Technology. In addition to his prior technology
management roles at Maker Media, The Walt Disney Studios and Pixar,
he has served in various technology management roles for Walt
Disney Animation Studios, Perlegen Sciences Inc., NeXT Computer,
Inc. and Mountain Network Solutions, Inc. He is the co-author
of Collective
Genius: The Art and Practice of Leading
Innovation. Mr.
Brandeau holds B.S and M.S degrees in electronic engineering from
the Massachusetts Institute of Technology, and an M.B.A. from Duke
University.
Mr. Brandeau’s strong background in
technology management, particularly through his experiences in
senior technology management roles at dynamic and innovative
companies like Disney, Pixar, and NeXT Computer, led the Board to
conclude that he should serve as a director.
Gabrielle Toledano (Age 53)
Chief Operating Officer,
Keystone Strategy
Ms. Toledano has served as one of our
directors since December 2017. Since January 2020, Ms. Toledano has
served as Chief Operating Officer at Keystone Strategy LLC, a
strategy and economics consulting firm. Prior to that, Ms. Toledano
served as an Executive in Residence for Comcast Ventures, a
corporate venture capital firm, from January 2019 to December 2019.
From May 2017 to October 2018, Ms. Toledano served as the Chief
People Officer of Tesla Inc., a manufacturer of electric vehicles
and energy storage products. From December 2016 to May 2017, Ms.
Toledano served as an Advisor to, and from February 2006 to
December 2016 as the Chief Talent Officer and Executive Vice
President at, Electronic Arts Inc., an interactive entertainment
software company. From February 2017 to March 2017, she served as a
consultant to Slack Technologies, Inc., a software company. Prior
to joining Electronic Arts, from 2002 to 2006 Ms. Toledano served
as Chief Human Resources Officer at Siebel Systems, Inc., a
supplier of customer software solutions and services. From 1991 to
2002, Ms. Toledano served in various human resources positions at
Microsoft Corporation and Oracle Corporation. Ms. Toledano has
served as a director of Namely, Inc. since February 2019 and Visier
Inc. since May 2014, and previously served as a director of
TalentSky from January 2015 to January 2019, Jhana from November
2016 to July 2017, Jive Software from November 2015 to June 2017,
Big City Mountaineers from May 2011 to September 2014, and the
Society of Human Resource Management from February 2009 to July
2011. In addition, Ms. Toledano has advised several technology
companies in the Human Capital Management space, including
Collective Health, a healthcare platform company, Espresa, an
employee programs automation platform provider, and Betterworks, an
enterprise collaboration platform provider. Ms. Toledano holds a
B.A. in modern thought and literature and an M.A. in education from
Stanford University.
Ms. Toledano’s strong background in gaming
and technology management, including her extensive experience as an
executive in the Human Resources field of various public companies,
and her broad experience as a director of technology companies led
the Board to conclude that she should serve as a
director.
8
Table of Contents
CORPORATE
GOVERNANCE
Our Board has adopted Corporate Governance
Principles that are designed to assist the Board in observing
practices and procedures that serve the best interests of Glu and
our stockholders. The Nominating and Governance Committee oversees
these Corporate Governance Principles and periodically makes
recommendations to the Board regarding any changes. These Corporate
Governance Principles address, among other things, our policy on
succession planning and senior leadership development, retirement,
Board performance evaluations and committee structure, as well as
Board diversity.
|
|
Age |
Tenure |
|
|
|
|
Director |
(Years) |
(Years) |
Independence |
Gender |
Attendance |
|
Darla Anderson |
60 |
1 |
Yes |
F |
>75% |
|
Eric R. Ball |
56 |
6 |
Yes |
M |
>75% |
|
Greg Brandeau |
58 |
4 |
Yes |
M |
>75% |
|
Niccolo M. de
Masi |
39 |
10 |
No |
M |
>75% |
|
Nick Earl |
54 |
3 |
No |
M |
>75% |
|
Ben Feder |
56 |
3 |
No |
M |
>75% |
|
Ann Mather |
60 |
15 |
Yes |
F |
>75% |
|
Hany M. Nada |
51 |
15 |
Yes |
M |
>75% |
|
Benjamin T. Smith,
IV |
52 |
9 |
Yes |
M |
>75% |
|
Gabrielle
Toledano |
53 |
2 |
Yes |
F |
>75% |
We maintain a corporate governance page on
our company website that includes key information about corporate
governance matters, including copies of our Corporate Governance
Principles, our Code of Business Conduct and Ethics for all
employees, including our senior executive and financial officers,
and the charter for each Board committee. The link to this
corporate governance page can be found at
http://www.glu.com/investors (by clicking on the “corporate
governance” link).
Board
and Committee Self-Evaluation
The Board conducts a self-evaluation of the
performance, composition, leadership structure, and governance of
the Board and its Committees at least annually. The evaluation
format and process is supervised by the Chair of the Nominating and
Governance Committee. The evaluation is typically conducted as a
written self-assessment, followed by an opportunity to provide
feedback on Board performance and diversity, and to raise any
concerns that an individual director may have in interviews with
the Chair of our Nominating and Governance Committee and an
independent third party advisor. Based upon the assessment results,
the Board agrees on improvement goals and tracks its progress
against those goals over time. The Board has engaged and paid fees
to a third-party advisor to assist in performing the Board
evaluation and may do so again in the future. Generally, our legal
advisors assist with the Board evaluation on an annual basis. The
Nominating and Governance Committee strives to embed honest
feedback into the Board’s culture and set a tone of open and
transparent dialogue throughout the assessment process.
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Evaluations of candidates generally involve
a review of background materials, internal discussions and
interviews with selected identified candidates as appropriate. In
conducting its review and evaluation, the Nominating and Governance
Committee may solicit the views of management, other members of the
Board and other individuals it believes may have insight into a
candidate’s qualifications and the needs of the Board and its
committees. Candidates for the Board are generally selected based
on desired skills and experience in the context of the existing
composition of the Board and needs of the Board and its committees
at that time, including the requirements of applicable rules and
regulations of the SEC and The Nasdaq Stock Market. The Nominating
and Governance Committee will consider these needs and further
evaluate each candidate’s qualifications based on their
independence, integrity, collegiality, diversity, skills,
financial, technical, operational and other expertise and
experience, breadth of experience, practical wisdom, judgment,
knowledge about our business or industry, personal and professional
ethics, availability and commitment to representing and enhancing
the long-term interests of our stockholders. The Nominating and
Governance Committee may also identify and consider other factors
that reflect our environment as it evolves or that it believes will
otherwise contribute to the Board’s overall effectiveness and our
success. In accordance with our Corporate Governance Principles and
our Nominating and Governance Committee Charter, the Nominating and
Governance Committee also considers nominees from diverse
backgrounds who combine a broad spectrum of experience and
expertise. The Nominating and Governance Committee does not assign
specific weights to particular criteria, and no particular
criterion is necessarily applicable to all candidates. The
Nominating and Governance Committee will choose candidates to
recommend for nomination based on the specific needs of the Board
and Glu at that time. Although the Nominating and Governance
Committee uses these and other criteria as appropriate to evaluate
candidates, the Nominating and Governance Committee has no stated
minimum criteria for candidates. All candidates, including those
nominated by stockholders, are evaluated in the manner described
above. Final approval of nominees to be presented for election is
determined by the full Board.
Board Diversity Policy
The Board believes that maintaining a
diverse membership with varying backgrounds, skills, expertise and
other differentiating personal characteristics promotes
inclusiveness, enhances the Board’s deliberations and enables the
Board to better represent all of Glu’s constituents, including its
diverse customer base and workforce. Accordingly, the Board is
committed to seeking out highly qualified candidates with diverse
backgrounds, skills and experiences as part of each Board search we
undertake. To further this goal and to focus on this commitment,
the Board and the Nominating and Governance Committee have amended
the Corporate Governance Principles and the Nominating and
Governance Committee charter accordingly. These considerations and
goals have been important factors in the Board’s refreshment
efforts, which have included the addition of Ms. Toledano to our
Board in December 2017 and Ms. Anderson in March 2019.
Board Responsibilities
and Leadership Structure
Our Board oversees management’s performance
on behalf of our stockholders. The Board’s primary responsibilities
are to (1) select, oversee and determine compensation for our
President and Chief Executive Officer who, with senior management,
manages our day-to-day operations, (2) monitor management’s
performance to assess whether we are operating in an effective,
efficient and ethical manner to create value for our stockholders
and (3) periodically review our long-term plans, business
initiatives, capital projects and budget matters.
The Board and its committees meet throughout
the year on a set schedule, and also hold special meetings and act
by written consent from time to time as appropriate. The Board held
six meetings during 2019 and acted once by unanimous written
consent. The independent directors meet without management present
at regularly scheduled executive sessions, and in 2019 the
independent directors held executive sessions at a total of four
Board meetings. The Board has delegated certain responsibilities
and authority to the committees described below. Committees report
regularly to the full Board on their activities and
actions.
The Board designated Mr. de Masi as its
interim Chairman in July 2014, as its Chairman in December 2014, as
its Executive Chairman in November 2016 and as its Chairman in
November 2019. The Board believes that it should maintain
flexibility to select its Chairman and board leadership structure
from time to time. The Board believes that it is currently in the
best interest of Glu and its stockholders for Mr. de Masi to serve
as Chairman in light of his knowledge of our company and our
industry, his previous role as Chief Executive Officer, his
experience executing successful strategic acquisitions and
investments, and his ability to support Mr. Earl in his role as
Glu’s Chief Executive Officer.
The Board has also established a Lead
Independent Director position, which the Board believes provides an
appropriate balance in our leadership. In April 2016, the
Nominating and Governance Committee recommended to the Board the
appointment of Mr. Smith as the Lead Independent Director, which
appointment was subsequently approved by the Board.
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Table of Contents
The Lead Independent Director role helps to
ensure a strong, independent and active Board. The Lead Independent
Director must be “independent” under the rules of the Nasdaq Stock
Market (“Nasdaq”) and is appointed by the Board. Our Lead
Independent Director has a robust role in our board process,
including responsibility for:
| ● |
presiding at
all meetings of the Board at which the Chairman is not present,
including executive sessions of the independent directors;
|
| ● |
serving as the
liaison between the Chairman and the independent directors;
|
| ● |
having the
authority to call special meetings of the Board;
|
| ● |
encouraging
direct dialogue between all directors (particularly those with
dissenting views) and management;
|
| ● |
being available
for communications with our stockholders; and
|
| ● |
performing such
other functions and responsibilities as requested by the Board from
time to time. |
The proper discharge of the Board’s
fiduciary duties to Glu and its stockholders requires it to retain
the flexibility to determine the person or persons best suited for
the roles of Chairman and Chief Executive Officer. Accordingly, the
Board has determined that its selections of Mr. de Masi as Chairman
and Mr. Earl as Chief Executive Officer are consistent with its
fiduciary duties to retain individuals that are best suited for
these positions. The Lead Independent Director role provides a
necessary layer of independent oversight of Board matters and
ensures effective communication between management and the
independent directors, which increases the independent directors’
understanding of management decisions and our operations. As such,
the Board of Directors believes that its leadership structure is
appropriate.
Insider Trading, Hedging,
Pledging and Short-Selling Policies
Our Insider Trading Policy prohibits our
directors, officers, employees and contractors from purchasing or
selling Glu securities while in possession of material, non-public
information. In order to ensure that trading is conducted only at
times when our directors, officers and certain employees with
regular access to confidential information about Glu or our
business are not aware of material nonpublic information about us,
our Insider Trading Policy requires that each such person pre-clear
any proposed trades of our stock with our General
Counsel.
In addition, our Insider Trading Policy
prohibits all directors, officers and employees from short-selling
Glu stock, or engaging in hedging or monetization transactions,
such as where they may acquire, sell, or trade in any interest or
position relating to the future price of Glu securities, such as a
put option or a call option, zero cost collars and forward sale
contracts or any other type of derivative security, and they may
not contribute Glu securities to exchange funds that could be
interpreted as having the effect of hedging. These policies were
established in part because there is often a conflict of interest
involved when an employee bets against our performance. Our
officers and directors are also prohibited from pledging any Glu
securities as collateral in a margin account or for a loan unless
such pledge (or any modification of an existing pledge) is approved
by Glu’s Insider Trading Compliance Officer and the Nominating and
Governance Committee.
Role of the Board in Risk
Oversight
One of our Board’s key functions is
providing oversight of our risk management process. The Board 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 the Board’s standing committees that each
address risks inherent in their respective areas of oversight. In
particular, our Audit Committee has the responsibility to consider
and discuss our major financial risk exposures and the steps our
management has taken to monitor and control these exposures, our
Compensation Committee assesses and monitors whether any of our
compensation policies and programs have the potential to encourage
excessive risk-taking, our Nominating and Governance Committee
monitors our major legal compliance risk exposures and our program
for promoting and monitoring compliance with applicable legal and
regulatory requirements, and our Board is responsible for
monitoring and assessing strategic risk exposure and other risks
not covered by our committees.
The full Board (or the appropriate committee
in the case of risks that are under the purview of a particular
committee) receives reports on the risks we face from our Board
committee chairpersons, Chairman, Chief Executive Officer or other
members of management to enable us to understand our risk
identification, risk management and risk mitigation strategies
regarding strategic and operational risks, including but not
limited to cybersecurity risk. For additional information regarding
our cybersecurity efforts, please see “Corporate Social
Responsibility—Cybersecurity Risk
Oversight” below.
When a committee receives the report, the chairman of that
committee reports on the discussion to the full Board at the next
Board meeting. However, the committee chairs are responsible for
reporting findings regarding material risk exposures to the Board
as quickly as possible. We believe that our Board’s leadership
structure supports effective risk management because it allows our
Lead Independent Director and the other independent directors on
our committees to exercise oversight over management.
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Table of Contents
Director Independence
Our Board currently includes seven
independent directors, three of whom are standing for election at
the Annual Meeting. To be considered independent under the rules of
The Nasdaq Stock Market, referred to as the Nasdaq listing rules, a
director may not be employed by Glu or engage in certain types of
business dealings with us. In addition, as required by the Nasdaq
listing rules, the Board has made a determination as to each
independent director currently serving on the Board or who served
on the Board during 2019 that no relationship exists which, in the
opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director. In making these determinations, the Board reviewed and
discussed information provided by the directors and by our
management with regard to each director’s business and personal
activities as they relate to Glu and our management. In assessing
director independence under the Nasdaq listing rules, the
Nominating and Governance Committee and the full Board reviewed
relevant transactions, relationships and arrangements that may
affect the independence of our Board members, including
that:
|
● |
Mr. Feder was during 2019,
and currently is, an officer of Tencent, and wholly-owned
subsidiaries of Tencent owned in the aggregate 13.85% of our
outstanding capital stock as of April 20, 2020; and |
|
|
|
|
● |
Ms. Mather was during 2019,
and currently is, a director of Alphabet Inc., the parent company
of Google Inc., with which we conduct business in the ordinary
course and revenues from which represented 33.5% of our total
revenues in 2019. |
After reviewing these transactions and other
relevant standards, the Board determined that each of Ms. Anderson,
Dr. Ball, Mr. Brandeau, Ms. Mather, Mr. Nada, Mr. Smith and Ms.
Toledano is an independent director.
Attendance at Board, Committee and Annual Stockholders
Meetings
The Board expects that each director will
prepare for, attend and participate in all Board and applicable
committee meetings and that each Board member will see that other
commitments do not materially interfere with his or her service on
the Board. Our Corporate Governance Principles provide that
non-employee directors may not serve on the boards of more than
five public companies, and our Chief Executive Officer may not
serve on the boards of more than two public companies, in each case
including Glu.
No director attended fewer than 75% of the
aggregate number of meetings of the Board and the committees on
which he or she served in 2019. None of our directors, except for
Nick Earl, attended the 2019 Annual Meeting of Stockholders. Under
our Corporate Governance Principles, all directors are encouraged
to attend the annual meetings of our stockholders.
Board Committees and Charters
The Board currently has a standing Audit
Committee, Compensation Committee, Nominating and Governance
Committee and Strategy Committee. The members of each committee are
appointed by the Board based on recommendations of the Nominating
and Governance Committee. Each member of the Audit Committee, the
Compensation Committee and the Nominating and Governance Committee
is an independent director as determined by the Board in accordance
with the Nasdaq listing rules. On the Strategy Committee, each of
Messrs. de Masi, Earl and Feder are considered non-independent
under the Nasdaq listing. Each of the Audit Committee, Compensation
Committee and Nominating and Governance Committee annually reviews
its charter and makes recommendations to our Board for revision to
reflect changes in laws and regulations and evolving best
practices. Copies of each charter can be found on our website at
http://www.glu.com/investors (by clicking on the “corporate
governance” link). Current committee members are as
follows:
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Table of Contents
|
Audit |
Compensation |
Nominating and |
Strategy |
| Director |
Committee |
Committee |
Governance
Committee |
Committee |
| Darla
Anderson |
— |
— |
— |
Member |
| Eric R.
Ball |
Chair |
— |
— |
— |
| Greg
Brandeau |
— |
Member |
Chair |
— |
| Niccolo M. de
Masi |
— |
— |
— |
Chair |
| Nick
Earl |
— |
— |
— |
Member |
| Ben
Feder |
— |
— |
— |
Member |
| Ann
Mather |
— |
— |
Member |
— |
| Hany M.
Nada |
Member |
Member |
— |
Member |
| Benjamin T.
Smith, IV |
Member |
Member |
Member |
Member |
| Gabrielle
Toledano |
— |
Chair |
— |
— |
13
Table of Contents
Strategy
Committee
The Strategy Committee currently consists of
six of our directors, Mr. de Masi, who became the committee chair
in January 2020, Ms. Anderson and Messrs. Earl, Feder, Nada and
Smith; Mr. Smith had been the committee chair prior to Mr. de Masi.
Our Strategy Committee assists the Board and senior management in
refining our strategic vision and growth initiatives.
Compensation Committee Interlocks and Insider
Participation
During 2019, Messrs. Brandeau, Nada and
Smith and Ms. Toledano each served on the Compensation Committee.
None of these individuals is or has been an officer or employee of
Glu or any of our subsidiaries. There are no other relationships
between committee members and Glu or any other company that are
required by SEC regulations to be disclosed under this
caption.
Risk Analysis of Performance-Based Compensation
Plans
The Compensation Committee believes that our
executive compensation programs do not encourage excessive and
unnecessary risk-taking. The design of our compensation programs is
intended to encourage our executive officers to remain focused on
both our short-and long-term financial goals in several key
respects. Focusing on a strong pay-for-performance culture for our
executive compensation program, the Compensation Committee decided
in December 2019 to continue (1) replacing cash bonuses for each of
our executive officers other than our General Counsel with
performance-based restricted stock units (“PSUs”) for 2020 and (2)
having a significant portion of each executive officer’s annual
equity award be comprised of PSUs in addition to standard time
vesting restricted stock units (“RSUs”). The committee believed
that this focus will better align the interests of our executive
officers with our stockholders and is consistent with our strategic
goals of realizing significant bookings and Adjusted EBITDA growth
in 2020 and beyond. All PSUs granted to our executive officers in
2019 (other than the PSUs granted in lieu of annual cash bonuses)
vest over three years and the time-vesting RSUs vest over four
years, encouraging executive officers to focus on sustained stock
price appreciation over the long term. Additionally, our Board
adopted a clawback policy in 2017 which authorizes our Board to
recoup past incentive compensation paid to executive officers in
certain situations and our Board is able to include clawback
provisions in award agreements for our executive officers. Finally,
our system of internal controls over financial reporting, standards
of business conduct and compliance programs, among other things,
reduce the likelihood of manipulation of our financial performance
to enhance payments under our executive bonus plan.
14
Table of Contents
Corporate
Social Responsibility
Cybersecurity Risk Oversight and Data
Privacy
Our Board is committed to mitigating data
privacy and cybersecurity risks and recognizes this issue’s
importance as part of our risk management framework. Our
cybersecurity program is overseen by the Board, the Audit Committee
and Mr. Brandeau, given his extensive information technology
expertise. In order to defend against and respond to the threat of
security breaches and cyberattacks, we have developed a
comprehensive program that is designed to protect and preserve the
confidentiality, integrity and continued availability of all
information and systems owned by or in the care of Glu. This
program also includes a cyber incident response plan that provides
controls and procedures for timely and accurate reporting of any
material cybersecurity incident. Our Vice President,
Global Customer and Technical
Operations periodically reviews our cybersecurity program
with Mr. Brandeau and presents quarterly reports on the program to
the Audit Committee, which is tasked with oversight of such risk
issues. These updates include a report on the top cybersecurity
risks and counter measures implemented by Glu as well as reporting
on any other current cybersecurity projects. Mr. Brandeau and Mr.
Ball regularly brief the full Board on these matters, and our Vice
President, Global Customer and Technical Operations reviews our
cybersecurity program with the full Board at least
annually.
In addition to active Board oversight, we
have posted on our website a privacy notice explaining how certain
personal information is collected, used and disclosed by Glu and
its subsidiaries. We also perform worldwide annual live employee
trainings on our data protection and security practices. We
certified under the EU-U.S. and the Swiss-U.S. Privacy Shield
Frameworks with the U.S. Department of Commerce and have data
processing agreements in place with our business partners who
process personal data for us. Further, we monitor existing and
upcoming privacy laws, rules and regulations and we undertook
significant efforts to comply with the European Union’s General
Data Protection Regulation, which became effective in May 2018
and the California Consumer Privacy Act of 2018, which became
effective in January 2020.
Sustainability
We are increasingly focused on
sustainability initiatives to reduce our energy consumption, carbon
footprint, waste and materials consumption. We strive to engage
both our employees and suppliers in our sustainability efforts. Our
San Francisco headquarters is located in an Energy Star™-rated
building and offers employees public transportation, bike parking
and an electric car charging station to reduce Source 3 emissions.
When considering locations for facilities, we prioritize proximity
to public transportation, and we have established pre-tax and
subsidy public transportation programs to encourage employees to
use public transportation when commuting to and from the office, in
an effort to improve air quality, reduce traffic congestion, and
conserve energy. We will continue to evaluate how to reduce Glu’s
carbon footprint and our employees’ carbon footprint over time. We
are also focused on reducing our use of disposable materials in our
offices and have recycling programs in place at our North American
facilities.
Diversity, Inclusion and Workforce
Human capital management, including our
diversity and inclusion initiative, is a key driver of our success.
We believe that a diverse, inclusive culture yields a more creative
and innovative workplace that advances our business objectives. For
this reason, we encourage, support, and celebrate the diverse
voices of our employees, believing that all forms of diversity
provide value at Glu. To attract the best talent, we promote a
culture in which everyone feels accepted and valued as their
authentic selves, starting at the top with our Board Diversity
Policy. For example, we actively partner with organizations to
drive inclusiveness of women in the gaming industry. When
recruiting and hiring candidates, we consider all aspects of each
candidate’s qualifications and skills, with the goal of ensuring
our organization has diversity of experience and perspectives, as
well as diversity with respect to race, gender, ethnicity, and
areas of expertise. We seek to retain our employees through
competitive compensation and benefits package and our unique
values-driven culture. We invest in our talent by providing our
employees with training, mentoring, and career development
opportunities. We believe that these initiatives enable us to hire
and retain talented, high-performing employees.
15
Table of Contents
Compliance and Ethics
Our culture of integrity and compliance
starts with our Code of Business Conduct and Ethics (the “Code of
Conduct”) and our compliance program, which includes risk
assessment, development of policies and procedures, worldwide live
annual trainings of our employees in our compliance program, and
investigations and remediation of potential compliance matters. The
Code of Conduct applies to all of our employees, including our
executive officers, and our Board. Our Nominating and Governance
Committee annually reviews our compliance policies, including our
Code. Complaints or concerns regarding possible violations of the
Code of Conduct or our policies may be made by phone, letter, email
or web reporting using a third party confidential hotline. Reports
may be made anonymously.
Community Involvement and Impact
We are committed to community involvement at
a local and global level, as well as mobilizing our workforce to
give back. We support community initiatives and actively encourage
our employees to participate in volunteer days by providing
full-time, non-contract employees with one day of paid leave
annually to pursue group volunteer activities with registered 501c3
or 501c4 organizations. As part of that initiative, in 2019 we
sponsored “Glu Gives” to clean up local beaches. We also made
direct donations to charitable causes focused on the global
well-being of people and our planet. In 2019, Glu made donations to
SpecialEffect (a gaming initiative for individuals with physical
disabilities), Extra Life (benefitting local Children’s Miracle
Network Hospitals), and the Golden Gate Audubon Society. In
addition, we have partnered with various organizations on in-game
events and campaigns to drive awareness of charitable causes and
have partnered with advertising networks to support initiatives
focusing on environmental and social issues. For example, we
recently joined the #PlayApartTogether campaign, actively
encouraging players to follow guidance of the World Health
Organization and local health authorities to help slow the spread
of COVID-19.
DIRECTOR
COMPENSATION
Overview
The Compensation Committee and the
Nominating and Governance Committee with the help of its
compensation consultant Radford, an Aon company (“Radford”),
evaluate the appropriate level and form of compensation for
non-employee directors on an annual basis relative to industry
peers and recommend changes to the Board when appropriate. Our
non-employee director compensation program is set forth below and
was most recently amended in April 2019:
Cash Compensation
|
● |
Non-employee directors
receive an annual cash retainer of $40,000; |
|
|
|
|
● |
The Lead Independent Director
receives an additional annual cash retainer of $25,000; |
|
|
|
|
● |
The chair of the Audit
Committee receives additional annual cash compensation of
$20,000; |
|
|
|
|
● |
The chair of the Compensation
Committee receives additional annual cash compensation of
$15,000; |
|
|
|
|
● |
The chair of the Nominating
and Governance Committee receives additional annual cash
compensation of $10,000; |
|
|
|
|
● |
The chair of the Strategy
Committee receives additional cash compensation of $20,000;
and |
|
|
|
|
● |
Each non-employee director
receives additional annual cash compensation of $10,000 for service
on the Audit Committee, $7,500 for service on the Compensation
Committee and $5,000 for service on each of the Nominating and
Governance Committee or Strategy Committee, other than as
chair. |
All cash compensation to directors is paid
in arrears in quarterly installments. We also reimburse our
directors for reasonable expenses in connection with attendance at
Board and committee meetings.
16
Table of Contents
Equity Compensation
Annual Equity Grants
In April 2019, our Board amended our
non-employee director compensation program to provide that each
year immediately following our annual meeting of stockholders, each
non-employee director will receive the lesser in value of (1) stock
options and RSUs having an aggregate grant date fair value of
$235,000, with the number of stock options and RSUs allocated to
provide an equal value of each equity instrument, or (2) the
aggregate grant date fair value of (a) an RSU covering 25,000
shares of our common stock and (b) a stock option to purchase
50,000 shares of our common stock. Both the stock option and RSU
awards will vest on the earlier to occur of (a) the first
anniversary of the grant date and (b) the date of our next annual
meeting of stockholders that follows the grant date.
New Director Equity Grants
In April 2019, our Board amended our
non-employee director compensation program to provide that each new
non-employee director will receive the lesser in value of (1) stock
options and RSUs having an aggregate grant date fair value of
$352,500, with the number of stock options and RSUs allocated to
provide an equal value of each equity instrument, or (2) the
aggregate grant date fair value of (a) an RSU covering 37,500
shares of our common stock and (b) a stock option
to purchase 75,000 shares of
our common stock. The RSU will vest as to 33⅓% of the total number
of shares subject to the RSUs on the first anniversary of the grant
date and thereafter vest in equal quarterly installments over the
next two years
following the first vesting date on the same day of each third
month. The stock option will vest as to 33⅓% of the
underlying shares on the
first anniversary of the grant date and thereafter vest pro rata
monthly over the next 24 months.
Other Equity Matters
Our 2007 Equity Incentive Plan, under which
we grant equity awards to our non-employee directors, provides that
such awards are subject to a compensation limit. Specifically, in
any calendar year, no non-employee director may be granted any
awards or awards denominated in shares that exceed in the aggregate
$600,000 in value plus an additional aggregate $600,000 in value
for one-time awards to a newly appointed or elected outside
director. This limit does not apply to any award made pursuant to
deferred compensation arrangements in lieu of all or a portion of
cash retainers.
In addition, our 2007 Equity Incentive Plan
provides that each of the equity awards held by our non-employee
directors will accelerate in full immediately prior to a change in
control of Glu.
Since Mr. Earl is an executive officer, and
since the Voting Agreement provides that Tencent’s designee to
Glu’s Board shall not receive any compensation for his or her Board
service, we do not provide, and have not provided, Messrs. Earl or
Feder any compensation for service on our Board or on the Strategy
Committee. In November 2019, Mr. de Masi’s role changed from
Executive Chairman to Chairman of the Board. As an executive
officer, Mr. de Masi did not receive any compensation for his
services on the Board and on the Strategy Committee and only
started being compensated for his services on the Board and
Strategy Committee in November 2019.
Director
Summary Compensation Table
The following table sets
forth certain information with respect to compensation awarded to,
earned by or paid to each person who served as a non-employee
director during 2019.
|
Fees Earned or |
Stock Awards(1)(2)(3) |
Option
Awards(1)(2)(3) |
|
|
|
| Name |
Paid in Cash ($) |
($) |
($) |
Total ($) |
| Darla Anderson(4) |
|
33,111 |
|
|
272,957 |
(4) |
|
|
90,539 |
|
|
396,607 |
|
| Eric R.
Ball |
|
60,000 |
|
|
90,557 |
|
|
|
90,539 |
|
|
241,096 |
|
| Greg Brandeau |
|
57,500 |
|
|
90,557 |
|
|
|
90,539 |
|
|
238,596 |
|
| Niccolo M. de
Masi(5) |
|
7,337 |
|
|
— |
|
|
|
— |
|
|
7,337 |
|
| Ben
Feder(6) |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
| Ann
Mather |
|
45,000 |
|
|
90,557 |
|
|
|
90,539 |
|
|
226,096 |
|
| Hany M. Nada |
|
62,500 |
|
|
90,557 |
|
|
|
90,539 |
|
|
243,596 |
|
| Benjamin T.
Smith, IV(7) |
|
109,870 |
|
|
90,557 |
|
|
|
90,539 |
|
|
290,966 |
|
| Gabrielle Toledano(7) |
|
52,630 |
|
|
90,557 |
|
|
|
90,539 |
|
|
233,726 |
|
____________________
|
(1) |
Amounts
shown in this column do not reflect dollar amounts actually
received by the non-employee director. Instead, these amounts
reflect the grant date fair value calculated in accordance with
FASB ASC Topic 718 of each RSU award or stock option award, as
applicable. See Note 12 — Stock Option and Other Benefit Plans — in
the notes to consolidated financial statements contained in our
Annual Report on Form 10-K for the year ended December 31, 2019 for
a description of the ASC Topic 718 methodology and
assumptions.
|
|
|
|
| (2) |
On June 6,
2019, following our 2019 Annual Meeting of Stockholders, each of
Ms. Anderson, Dr. Ball, Mr. Brandeau, Ms. Mather, Mr. Nada, Mr.
Smith and Ms. Toledano received an option to purchase 28,780 shares
of our common stock at an exercise price of $7.05 per share and an
RSU award for 12,845 shares.
|
17
Table of Contents
| (3) |
The
aggregate number of outstanding stock options and unvested RSU
awards held by each of our non-employee directors as of December
31, 2019 was as follows:
|
|
|
|
| Name |
Stock Options |
RSU Awards |
| Darla Anderson |
|
28,780 |
|
|
32,845 |
|
| Eric R.
Ball |
|
278,780 |
|
|
12,845 |
|
| Greg Brandeau |
|
238,780 |
|
|
12,845 |
|
| Niccolo M. de
Masi |
|
— |
|
|
— |
|
| Ben
Feder |
|
— |
|
|
— |
|
| Ann
Mather |
|
153,780 |
|
|
12,845 |
|
| Hany M. Nada |
|
278,780 |
|
|
12,845 |
|
| Benjamin T.
Smith, IV |
|
278,780 |
|
|
12,845 |
|
| Gabrielle Toledano |
|
138,780 |
|
|
12,845 |
|
| (4) |
Ms.
Anderson joined our Board on March 4, 2019. Upon joining the Board,
Ms. Anderson received 20,000 RSUs which vest as to
33⅓% of the total number of
shares subject to the RSUs on the first anniversary of the grant
date and thereafter
vest in equal quarterly installments over the next two years
following the first vesting date on the same day of each third
month.
|
|
|
| (5) |
Mr. de
Masi started being compensated for his services on the Board and
Strategy Committee in November 2019 when his role changed from
Executive Chairman to Chairman of the Board. The compensation
reflected in the table does not include the compensation of
$324,519 that Mr. de Masi received as the Executive Chairman of Glu
in 2019.
|
|
|
| (6) |
Mr. Feder
does not receive compensation for service on our Board or on our
Strategy Committee pursuant to the terms of the Voting Agreement we
entered into with Tencent.
|
|
|
|
| (7) |
Ms.
Toledano became Chair of the Compensation Committee on April 25,
2019. The former Chair of this committee, Mr. Smith, remains on the
committee as a regular member.
|
Stock Ownership Guidelines
In April 2018, our Board adopted stock
ownership guidelines for our non-employee directors in order to
better align the long-term interests of our non-employee directors
with our stockholders and to further promote a long-term
perspective in overseeing our company; our Board amended these
guidelines in January 2020. Under these stock ownership guidelines,
as amended, each of our non-employee directors is required to hold
at least five times his or her annual cash retainer, which is equal
to $200,000, of our common stock. In determining the value of a
non-employee director’s stock ownership, shares of our common stock
as well as vested, in-the money, unexercised stock options are
counted. Each non-employee director is required to comply with
these stock ownership guidelines by April 1, 2023 or, if later,
within five years from his or her election to our Board. Compliance
with these stock ownership guidelines is measured on the last day
of our fiscal year based on a non-employee director’s year end
holdings and our 30-day average stock price. If a non-employee
director fails to comply with these stock ownership guidelines
within the time frame specified above, such non-employee director
will be expected to achieve compliance by retaining 100% of the
shares acquired from his or her next RSU vest. As of December 31,
2019, each of our non-employee directors was in compliance with
these guidelines, other than Ms. Anderson who joined our Board in
March 2019 and has until March 2024 to achieve compliance and Mr.
Feder who was appointed to the Board by a greater than 10%
stockholder and does not receive any compensation for his services
on the Board or on the Strategy Committee from us.
18
Table of Contents
STOCKHOLDER MATTERS
Stockholder
Communications with Directors
Stockholders may communicate with the Board
by sending an email to bod@glu.com, or by sending written
correspondence to: Board, c/o Corporate Secretary, Glu Mobile Inc.,
875 Howard Street, Suite 100, San Francisco, California 94103.
Communications are distributed to the Board, or to any individual
directors as appropriate, depending on the facts and circumstances
outlined in the communication. The Board has instructed the
Corporate Secretary to review all correspondence and to determine,
in his discretion, whether matters submitted are appropriate for
Board consideration. In particular, the Board has directed that
communications such as product or commercial inquiries or
complaints, resume and other job inquiries, surveys and general
business solicitations or advertisements should not be forwarded to
the Board. In addition, material that is unduly hostile,
threatening, illegal, patently offensive or similarly inappropriate
or unsuitable will be excluded, with the provision that any
communication that is filtered out must be made available to any
non-management director upon request. The Corporate Secretary may
forward certain communications to another person or department for
review and possible response.
Stockholder Recommendations of Director
Candidates
The Nominating and Governance Committee will
consider nominees recommended by stockholders for election as
directors. If a stockholder would like to recommend a director
candidate for our 2021 Annual Meeting of Stockholders, the
stockholder must deliver notice in writing to the Corporate
Secretary, Glu Mobile Inc., 875 Howard Street, Suite 100, San
Francisco, California 94103. Such notice must set forth the
information required under our Bylaws to be included in the notice.
A copy of our Bylaws, which we most recently amended on March 7,
2014, may be obtained from the SEC’s website.
Stockholder Proposals for the 2021 Annual Meeting of
Stockholders
Under SEC Rule 14a-8, any stockholder who
intends to present a proposal for inclusion in our 2021 proxy
statement and form of proxy must submit the proposal, in writing,
so that the Corporate Secretary receives it at our principal
executive offices by December 29, 2020. Any stockholder who wishes
to bring a proposal or nominate a person for election to the Board
at the 2021 Annual Meeting of Stockholders must provide written
notice of the proposal or nomination to our Corporate Secretary, at
our principal executive offices, between February 18, 2021 and
March 20, 2021. In addition, our stockholders must comply with the
other procedural requirements in our Bylaws, including that such
stockholders must have continuously beneficially owned at least 1%
of our outstanding common stock for a period of one year prior to
the date of the submission of the proposal or nomination and
continue to be a stockholder of record at the time of the annual
meeting, entitled to vote at such meeting and otherwise comply with
the requirements in our Bylaws. Any notice delivered by a
stockholder in connection with a nomination or proposal must
include, among other things, (a) a written consent to the public
disclosure of information provided by such persons pursuant to our
Bylaws; (b) a description of (i) any agreement with respect to the
nomination or proposal between or among such stockholder and
associated person(s) and any of their respective affiliates or
associates, and (ii) as to each person whom such stockholder or
associated person proposes to nominate for election or re-election
as a director, a description of any agreement of such person with
any other person or entity (other than Glu) with respect to any
compensation, reimbursement or indemnification in connection with
service or action as a director known to such stockholder or
associated person; and (c) a representation that the stockholder
has continuously beneficially owned at least 1% of our outstanding
common stock for the one-year period before giving such notice, is
entitled to vote at such meeting and intends to appear at the
meeting to propose such business or nomination.
19
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain
information regarding ownership of our common stock as of April 20,
2020 by:
| ● |
Each Named Executive Officer (defined in
“Compensation Discussion and Analysis” below); |
|
|
| ● |
Each of our directors; |
|
|
| ● |
All current executive officers and directors as a
group; and |
|
|
| ● |
All persons known to us to beneficially own 5% or
more of our common stock. |
We calculated the “Percent of Class” based
on 151,592,087 shares of common stock outstanding on April 20,
2020. In accordance with SEC regulations, we also included shares
subject to equity awards that are currently vested or will become
vested by June 19, 2020 (i.e., within 60 days of April 20, 2020).
We deem those shares outstanding and beneficially owned by the
person holding the award for computing that person’s percentage
ownership, but they are not treated as outstanding for computing
any other person’s percentage ownership. Unless otherwise
indicated, each person has sole voting and investment power with
respect to the shares each person beneficially owns, and the
address of each person is: c/o Glu Mobile Inc., 875 Howard Street,
Suite 100, San Francisco, California 94103.
|
Amount and Nature of |
|
|
|
| Name of
Beneficial Owner |
Beneficial Ownership |
Percent of Class |
| 5%
Stockholders |
|
|
|
|
|
|
| Red River Investment
Limited(1) |
|
21,000,000 |
|
|
13.85% |
|
| BlackRock
Inc.(2) |
|
17,910,794 |
|
|
11.82% |
|
| Vanguard Group Inc.(3) |
|
11,486,348 |
|
|
7.58% |
|
| Named Executive
Officers and Directors |
|
|
|
|
|
|
| Nick Earl(4) |
|
4,361,623 |
|
|
2.88% |
|
| Eric R.
Ludwig(5) |
|
2,300,508 |
|
|
1.52% |
|
| Chris Akhavan(6) |
|
881,188 |
|
|
* |
|
| Becky Ann
Hughes(7) |
|
282,656 |
|
|
* |
|
| Scott Leichtner(8) |
|
1,032,916 |
|
|
* |
|
| Darla
Anderson(9) |
|
49,957 |
|
|
* |
|
| Eric R. Ball(10) |
|
401,625 |
|
|
* |
|
| Greg
Brandeau(11) |
|
276,625 |
|
|
* |
|
| Niccolo M. de Masi |
|
817,333 |
|
|
* |
|
| Ben
Feder(12) |
|
— |
|
|
— |
|
| Ann Mather(13) |
|
220,291 |
|
|
* |
|
| Hany M.
Nada(14) |
|
456,825 |
|
|
* |
|
| Benjamin T. Smith, IV(15) |
|
276,625 |
|
|
* |
|
| Gabrielle
Toledano(16) |
|
166,624 |
|
|
* |
|
| All directors and executive officers as a group
(14 persons)(17) |
|
11,328,223 |
|
|
7.47% |
|
____________________
| * |
Represents beneficial ownership of less than 1%
of the outstanding shares of our common stock. |
|
|
|
| (1) |
The
information is based solely upon a Schedule 13D/A filed with the
SEC on June 4, 2019 by Tencent Holdings Limited (“Tencent”), Red
River Investment Limited, a wholly-owned subsidiary of Tencent
(“Red River”), and THL E Limited, a wholly-owned subsidiary of
Tencent (“THL”). Tencent and Red River have shared voting and
dispositive power over 21,000,000 shares. THL does not beneficially
own any outstanding shares of Glu. The principal address of Tencent
is 29/F Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong
Kong. The principal address of each of Red River and THL is P.O.
Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands. The individual officers and directors of
each of Tencent, Red River and THL are listed on Appendix A to the
Schedule 13D/A. |
| |
| (2) |
The
information is based solely upon a Schedule 13G/A filed with the
SEC on February 4, 2020 by BlackRock, Inc. on its own behalf and on
behalf of certain of its subsidiaries specified on Exhibit A to the
Schedule 13G/A. BlackRock Inc. has sole voting power over
17,622,583 shares and sole dispositive power over 17,910,794
shares. The address for BlackRock Inc. is 55 East 52nd Street, New
York, New York 10055. |
20
Table of Contents
| (3) |
The
information is based solely upon a Schedule 13G/A filed with the
SEC on February 12, 2020 by Vanguard Group Inc. (“Vanguard”) on its
own behalf and on behalf of its wholly-owned subsidiaries Vanguard
Fiduciary Trust Company (“VFTC”) and Vanguard Investments
Australia, Ltd. (“VIA”). Vanguard has sole voting power over
240,589 shares, shared voting power over 7,600 shares, sole
dispositive power over 11,250,718 shares and shared dispositive
power over 235,630 shares. VFTC is the beneficial owner of 228,030
shares and VIA is the beneficial owner of 20,159 shares. The
address for Vanguard is 100 Vanguard Boulevard, Malvern,
Pennsylvania 19355.
|
|
|
| (4) |
Includes
2,907,144 shares subject to options that are exercisable and
926,583 shares subject to PSOs that are exercisable within 60 days
of April 20, 2020.
|
|
|
| (5) |
Includes
(a) 187,693 shares held by The Ludwig McKillop Trust, of which Mr.
Ludwig and his spouse, Mary Elizabeth McKillop, are the
co-trustees, (b) 8,880 shares held by Mr. Ludwig’s minor children,
(c) 1,106,533 shares subject to options that are exercisable, and
(d) 940,402 shares subject to PSOs that are exercisable within 60
days of April 20, 2020.
|
|
|
| (6) |
Represents
252,342 shares subject to options that are exercisable and 628,846
shares subject to PSOs that are exercisable within 60 days of April
20, 2020.
|
|
|
| (7) |
Includes
102,776 shares subject to options that are exercisable, 129,932
shares subject to PSOs that are exercisable and 12,500 shares that
will settle pursuant to RSU awards within 60 days of April 20,
2020.
|
|
|
| (8) |
Includes
619,784 shares subject to options that are exercisable and 201,592
shares subject to PSOs that are exercisable within 60 days of April
20, 2020.
|
|
|
| (9) |
Includes
28,780 shares subject to options that are exercisable and 14,511
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (10) |
Includes
228,780 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (11) |
Includes
238,780 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (12) |
Mr. Feder
was appointed to the Board by a greater than 10% stockholder and we
do not provide him with any compensation for his services on the
Board or on the Strategy Committee.
|
|
|
| (13) |
Includes
128,780 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (14) |
Includes
228,780 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (15) |
Includes
228,780 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
| (16) |
Includes
128,779 shares subject to options that are exercisable and 12,845
shares that will settle pursuant to RSU awards within 60 days of
April 20, 2020.
|
|
|
|
| (17) |
Includes
6,200,038 shares subject to options that are exercisable, 2,827,355
shares subject to PSOs that are exercisable and 104,081 shares that
will settle pursuant to RSU awards within 60 days of April 20,
2020.
|
21
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis
(“CD&A”) describes the philosophy, objectives and structure of
our fiscal year 2019 executive compensation program. This CD&A
is intended to be read in conjunction with the tables following
this section which provide further historical compensation
information for the executives identified below. We refer to these
individuals collectively as our “Named Executive
Officers.”
|
Name |
|
Position |
|
Nick Earl |
|
President and Chief Executive
Officer |
|
Eric R.
Ludwig |
|
Executive Vice President,
Chief Operating
Officer and Chief Financial Officer |
|
Chris
Akhavan |
|
Senior Vice President,
Business & Corporate
Development |
|
Becky Ann
Hughes |
|
Senior Vice President,
Revenue |
|
Scott J.
Leichtner |
|
Vice President, General
Counsel and Corporate
Secretary |
We also refer to Messrs. Earl, Ludwig and
Akhavan and Ms. Hughes as our “Eligible Officers” to indicate that
they were eligible to receive certain performance-based equity
awards in lieu of performance-based cash incentive
awards.
Executive Summary
Our executive compensation program is
designed to align the interests of the Named Executive Officers and
our other executives with our stockholders and to emphasize our
pay-for-performance culture by rewarding our executives for strong
company performance and financial results. Our executive
compensation program is designed to focus and reward executives on
performance which the Compensation Committee believes will drive
the creation of sustainable long-term value for our stockholders,
and our business results directly impact the compensation received
by our executives.
2019 Business Highlights
Our corporate performance during 2019 was
strong. Highlights of our performance include:
| ● |
Revenues. Our 2019
revenues were a company record of $411.4 million, a 12% increase
from the $366.6 million in revenues we generated in 2018.
|
| ● |
Bookings. Our 2019 bookings were
also a company record of $423.3 million, a 10% increase from the
$384.6 million in bookings we generated in 2018. This was our third
straight year of double-digit year-over-year bookings growth.
|
| ● |
Growth Games. Revenues
from our three growth games, Design Home, Covet Fashion
and our Tap Sports Baseball franchise were $322.3 million
in 2019, a 22% increase from the $263.8 million in revenues that we
generated from these titles in 2018. Bookings from our three growth
games were $333.4 million in 2019, a 16% increase from the $286.3
million that we generated from these titles in 2018.
|
| ● |
GAAP
Profitability. We generated GAAP net income of $8.9
million, a major milestone for our company. |
2019 Compensation Highlights
Because of our strong pay for performance
culture, and our focus on incentivizing and achieving results which
will drive sustainable long-term value creation for our
stockholders, we set very high performance goals for our executive
compensation program. Therefore, despite the fact that 2019 was a
record year for us in terms of revenues, bookings, and
profitability, we did not achieve the performance goals established
by the Compensation Committee, resulting in no payouts under any of
our 2019 performance-based programs for executives.
22
Table of Contents
We took the following actions related to
2019 executive compensation:
| ● |
Selective Increases to Base
Salaries: We did not increase base salaries for any
of our named executive officers during 2019, other than for Becky
Ann Hughes effective upon her promotion from Vice President,
General Manager Glu Play to Senior Vice President, Revenue in
December 2019.
|
| ● |
No
Annual Incentive Payouts: We did not achieve the Adjusted
EBITDA and bookings targets established by the Compensation
Committee and, as a result, our Named Executive Officers did not
receive annual incentive payouts for 2019 performance.
|
| ● |
Long-term Incentive Program:
|
| -- |
No
vesting of the first tranche of 2018 performance
awards: We did not meet the Adjusted EBITDA threshold
or the bookings goals that the Compensation Committee established
in October 2018 for 2019 performance and therefore the first
tranche of the performance awards issued in 2018 did not vest.
|
| -- |
Vesting
at 77.7% of the second tranche of 2017 performance awards:
We met the Adjusted EBITDA threshold and generated bookings between
target and maximum with respect to the targets that the
Compensation Committee established in October 2017 for 2019
performance and therefore the second tranche of the performance
awards issued in 2017 vested at 77.7%. |
Components of Pay
|
|
|
Performance |
|
|
|
Performance
Measured/Rewarded |
|
Element |
|
Period |
|
Objective |
|
for 2019 |
|
Base Salary |
|
Annual |
|
Recognizes an individual’s
role and responsibilities and serves as an important retention
vehicle |
|
●Reviewed annually and set based on
market competitiveness, individual performance and internal equity
considerations
|
|
Annual Incentive
Opportunity |
|
Annual |
|
Motivates executives to
achieve our annual financial plan and strategic goals. For our
Eligible Officers, annual incentive opportunities are delivered in
performance-based equity to further align annual performance
achievements with the creation of sustainable long-term
value for stockholders. Mr. Leichtner’s annual incentive
opportunity is in cash. |
|
●Bookings
●Adjusted EBITDA
|
|
Time-based RSUs |
|
Long-Term |
|
Supports the achievement of
strong share price growth. |
|
●Vesting 25% on the first Glu
quarterly vesting date following the first anniversary of grant,
and 6.25% quarterly thereafter
|
|
PSUs |
|
Long-Term |
|
Aligns the interests of
management and stockholders and serves an important retention
vehicle |
|
●Adjusted EBITDA achievement and
bookings thresholds over a three-year period
|
23
Table of Contents
Target Pay Mix
To help retain and motivate our Named
Executive Officers, our Compensation Committee aims to offer
compensation competitive to our peers and industry through a mix of
cash (base salaries and an annual performance-based bonus for Mr.
Leichtner) and long-term incentives (annual performance-based
equity awards for our Eligible Officers and long-term
performance-based and time-based equity awards for all of our Named
Executive Officers).
The Compensation Committee does not have any
formal policies for allocating total compensation among the various
components; instead, the committee uses its judgment, in
consultation with Radford, to establish an appropriate balance of
short-term and long-term compensation for each Named Executive
Officer. The balance may change from year to year based on
corporate strategy and objectives, among other considerations, but
the majority of each executive’s potential total compensation is
based solely on the achievement of aggressive performance
goals.
Governance of Our Pay Program
The Compensation Committee regularly reviews
best practices in executive compensation and uses the following
guidelines to design our compensation programs:
|
What We
Do |
✓Pay-for-performance philosophy and
culture
✓Consider the views of our
stockholders when designing our program
✓Periodically engage with
stockholders
✓Majority of potential compensation
is performance-based and not guaranteed
✓Responsible use of shares under our
long-term incentive program
✓Compensation Committee comprised
solely of independent directors
✓Engage an independent compensation
consultant
✓Review compensation philosophy and
strategy annually
✓Clawbacks
✓Annual say-on-pay vote
✓Stock ownership guidelines for CEO
and non-employee board members
|
What
We
Don’t Do |
✕No hedging of Glu
stock
✕No pledging of Glu stock without
approval
✕No change in control excise tax
gross-ups
✕No backdating or repricing of stock
option awards
✕No perquisites
✕No special health or welfare
benefits
✕No pension or nonqualified deferred
compensation
|
2019 Say on Pay Results and Consideration of
Stockholder Support
At our 2019 Annual Meeting of Stockholders,
we conducted a stockholder advisory vote, or say-on-pay vote, on
the compensation of the Named Executive Officers. At that meeting,
our stockholders approved the compensation of our Named Executive
Officers, as disclosed in our 2019 annual proxy statement, with
approximately 95.92% of the votes cast in favor of the
proposal.
24
Table of Contents
Our Compensation Committee noted the support
of our stockholders in the 2019 say-on-pay vote and considered this
result in their decision-making regarding our executive
compensation. Given that the 2019 say-on-pay vote reflected strong
support for our compensation practices, and that we did not receive
any stockholder feedback requiring compensation changes during
2019, we have maintained our existing focus on performance-based
compensation. We value the opinions of our stockholders and will
continue to consider the outcome of future say-on-pay votes, as one
element in the process, when making compensation decisions for our
executive officers.
Compensation Philosophy and
Objectives
The Compensation Committee has established a
compensation program for executive officers designed to
| ● |
Attract
individuals with the skills necessary for us to achieve our
performance objectives;
|
| ● |
Motivate and
reward those individuals fairly over time; and
|
| ● |
Retain those
individuals who continue to perform at or above the levels that we
expect. |
Our compensation program for executive
officers is also designed to reinforce a sense of ownership,
urgency, innovation and overall entrepreneurial spirit and to link
rewards to measurable corporate and, where appropriate, individual
performance.
We provide competitive pay opportunities. We
reward the achievement of specific financial and strategic goals
which we believe will drive the creation of sustainable long-term
value for our stockholders. We use performance-based equity and
multi-year goals to ensure that performance is sustained over a
longer time horizon.
Process for Setting Executive
Compensation
Role of the Compensation Committee
The Compensation Committee acts on behalf of
the Board to oversee the compensation policies and practices
applicable to all our employees, including the administration of
our equity plans. Our Compensation Committee annually assesses the
performance of our Chief Executive Officer, other executives and
members of our senior leadership, and, based in part on the
recommendations from our Chief Executive Officer (other than with
respect to his own compensation), approves the compensation of
these executives.
The Compensation Committee works within the
framework of a pay-for-performance philosophy to determine each
component of an executive officer’s compensation package based on
numerous factors, including:
| ● |
the
individual’s particular background and circumstances, including
training and prior relevant work experience;
|
| ● |
the
individual’s role with us and the compensation paid to similar
persons in the companies represented in the compensation data that
the Compensation Committee reviews;
|
| ● |
the demand for
personnel with the individual’s specific expertise and experience
at the time of hire or review;
|
| ● |
performance
goals and other expectations for the position, where
appropriate;
|
| ● |
comparison to
other executives within our company having similar levels of
expertise and experience; and
|
| ● |
compensation
data of peer companies for similar positions. |
The Compensation Committee performs a
strategic review of our executive officers’ compensation levels to
determine whether they provide adequate incentives and motivation
and whether they are appropriately aligned with the competitive
talent market. Historically, in making compensation decisions, the
Compensation Committee has given significant weight to, among other
things, our financial performance relative to our operating plan
approved by the Board.
25
Table of Contents
Role of the Compensation
Consultant
The Compensation Committee’s charter
provides that the committee has the authority to retain experts and
advisors of its choice to assist the committee in performing its
functions. In 2019, the Compensation Committee relied upon the
advice and expertise of Radford. The Compensation Committee
selected Radford based on its expertise in executive compensation,
particularly with respect to compensation practices of technology
companies in the San Francisco Bay Area. Radford provided the
following services to the committee in 2019:
| ● |
reviewed and
provided recommendations regarding the composition of our peer
group, and provided compensation data relating to executives at the
selected peer group companies;
|
| ● |
conducted a
comprehensive review of the total compensation arrangements for our
Named Executive Officers and other members of senior leadership and
provided advice on our compensation of these individuals;
|
| ● |
conducted a
comprehensive review of compensation paid to the members of our
Board and its committees, and provided advice on our director
compensation program;
|
| ● |
provided
research and recommendations relating to the short- and long-term
incentive plans applicable to our Named Executive Officers, other
executive officers and members of our senior leadership;
|
| ● |
assisted the
Compensation Committee in a comprehensive review of our equity
strategy, our request for stockholder approval of an increase to
the aggregate number of shares of common stock authorized for
issuances under our 2007 Equity Incentive Plan and related
stockholder outreach;
|
| ● |
updated the
Compensation Committee on emerging trends/best practices in the
area of executive and Board compensation;
|
| ● |
participated in
Compensation Committee meetings, as requested, and provided ad hoc
advice and support;
|
| ● |
assisted with
our disclosure in this Compensation Discussion and Analysis;
and
|
| ● |
assisted with
Proposal No. 2 below, which is the proposal to amend our 2007
Equity Incentive Plan, to, among other things, increase the
aggregate number of shares of common stock authorized for issuances
under the plan by 7,000,000 shares. |
In selecting Radford, the Compensation
Committee reviewed Radford’s independence as required under SEC and
Nasdaq rules. Based on this assessment, the Compensation Committee
does not believe the retention of, and the work performed by,
Radford creates any conflict of interest.
Role of Executive Officers in Compensation
Decisions
To aid the Compensation Committee in its
responsibilities, Messrs. Earl and Ludwig provide the Compensation
Committee with recommendations relating to the performance and
achievements for each of the Named Executive Officers. The
committee typically evaluates, discusses and modifies or approves
these recommendations. The Compensation Committee does not consult
with any other executive officer with regard to its decisions. No
executive officer is involved in the deliberations or decisions
regarding his or her own pay.
Use of Competitive Market Data
When considering executive compensation
decisions, the Compensation Committee believes it is important to
be informed as to current compensation practices of comparable
publicly held companies, especially to understand the demand and
competitiveness for attracting and retaining an individual with
each Named Executive Officer’s specific expertise and
experience.
Radford has historically provided the
Compensation Committee competitive market data using the most
recently approved peer group as well as with information from
select cuts of the Radford Global Technology Survey. Data from the
Radford survey was filtered to reflect companies having similar
industry and financial profiles as the companies included in our
peer group. The committee uses the data as a reference point when
making pay determinations, but does not benchmark pay to a specific
level or percentile of the market.
26
Table of Contents
Our executive compensation is typically
established annually during the fourth quarter of each fiscal year.
Compensation decisions on annual and long-term equity incentives
for our executives, including the magnitude of equity awards and
the levels of cash compensation for the upcoming fiscal year, have
historically been finalized at an October meeting of the
Compensation Committee. As described in more detail below,
compensation data from a peer group established and approved in
September 2018 was relied upon by the Compensation Committee to
finalize cash compensation for the 2019 fiscal year, while the peer
group identified in July 2019 and the related competitive
assessment was relied upon by the Compensation Committee to
finalize the executive equity awards granted in December
2019.
In addition to reviewing the market data
contained in the Radford’s reports, the Compensation Committee also
considered a number of additional factors in making executive
compensation decisions, including our overall performance, each
executive officer’s individual performance, the scope of
responsibility of each executive officer, and the then-current
compensation and equity holdings of each executive
officer.
Determination of 2018 Peer Group
In September 2018, the Compensation
Committee, with input from Radford, reviewed the peer group that
was used in 2017 and approved changes to better reflect our
then-current market capitalization and revenues. The peer group
selection criteria for purposes of determining our 2018 peer group,
which was used in guiding compensation decisions made in October
2018 for fiscal 2019, targeted companies with the following
characteristics:
|
● |
in the gaming
as well as internet and application software and services
sectors;
|
|
|
|
|
● |
headquartered
in the San Francisco Bay Area, as well as other high technology
centers;
|
|
|
|
|
● |
annual revenue between
approximately $155 million and $800 million (Glu’s revenue for the
prior four quarters at the time the peer group was determined was
approximately $333 million); and |
|
|
|
|
● |
market capitalization of
between approximately $300 million and $3.6 billion (Glu’s market
capitalization at the time the peer group was determined was
approximately $894 million). |
Based on the criteria above, the
Compensation Committee approved the below peer companies in
September 2018, which were used in guiding compensation decisions
made in October 2018. Compared to the 2017 peer group, BazaarVoice
and Silver Spring Networks were excluded due to acquisition and
Telenav because it no longer fit the revenue or market
capitalization criteria. Zynga fell outside of the target revenue
range, but the committee believed it was appropriate to include
Zynga in the group of peer companies due to it being the most
similar company to Glu in terms of it being a developer and
publisher of mobile games located in San Francisco and thus a
primary competitor for executive talent. Companies listed in bold
were also included in the 2017 peer group.
|
●A10 Networks
●Blucora
●Carbonite
●Care.com
|
|
●Lending Tree
●LivePerson
●MobileIron
●Monotype Imaging
|
|
●PROS Holdings
●QAD
●QuinStreet
●Quotient Technology
|
|
●Rapid7
●Shutterstock
●TrueCar
●XO Group
●Zynga
|
Determination of 2019 Peer Group
In July 2019, the Compensation Committee,
with input from Radford, reviewed the peer group that was used
during the first half of 2019 and approved changes to better
reflect our then-current market capitalization and revenues. The
peer group selection criteria for purposes of determining our 2019
peer group, which was used in guiding compensation decisions made
in December 2019 for fiscal 2020, targeted companies with the
following characteristics:
|
● |
in the gaming as well as
internet and application software and services sectors; |
|
|
|
|
● |
headquartered in the San
Francisco Bay Area, as well as other high technology
centers; |
27
Table of Contents
|
● |
annual revenue between approximately $200 million
and $1.2 billion (Glu’s revenue for the prior four quarters at the
time the peer group was determined was approximately $381 million);
and |
|
|
|
|
● |
market capitalization of between approximately
$400 million and $4 billion (Glu’s trailing six-month average
market capitalization at the time the peer group was determined was
approximately $1.3 billion). |
Based on the criteria above, the
Compensation Committee approved the below peer companies in July
2019, which were used in guiding compensation decisions made in
December 2019. Compared to the 2018 peer group, XO Group was
excluded due to the company having been acquired and Box, Chegg and
Eventbrite were added because they fit the peer group selection
criteria. As in 2018, Zynga fell outside of the target revenue
range, but the committee believed it was appropriate to include
Zynga in the group of peer companies for the same reasons noted
above. In addition, the committee elected to retain in the peer
group Care.com, Lending Tree and MobileIron even though they did
not meet one of the criteria (Care.com and MobileIron were slightly
below the revenue range and Lending Tree was slightly above the
market capitalization range) in order to maintain year-over-year
consistency. Companies listed in bold were included in the 2018
peer group.
|
●A10 Networks
●Blucora
●Box
●Carbonite
●Care.com
|
|
●Chegg
●Eventbrite
●Lending Tree
●LivePerson
●MobileIron
|
|
●Monotype Imaging
Holdings
●PROS Holdings
●QAD
●QuinStreet
|
|
●Quotient Technology
●Rapid7
●Shutterstock
●TrueCar
●Zynga
|
2019 Elements of Compensation
Base Salary
Base salaries provide fixed compensation to
executive officers for performing their ongoing responsibilities.
The Compensation Committee generally fixes executive officer base
salaries at levels it believes will enable us to hire and retain
individuals in a competitive environment and to reward individual
performance and a level of contribution that is in-line with and in
furtherance of our overall business goals.
The Compensation Committee reviews executive
salaries annually, typically in the fourth quarter, and adjusts
them as appropriate. Such adjustments are based on factors that may
include promotions, the assumption of increased responsibilities or
to address competitive pressure or retention issues, should they
arise.
The table below sets forth the annual base
salaries for each of the Named Executive Officers as of December
31, 2018 and 2019.
|
|
2018 Salary |
|
|
|
|
|
Component |
|
($) |
|
2019 Salary
($) |
|
% Increase |
|
Nick Earl |
|
475,000 |
|
475,000 |
|
|
0 |
% |
| Eric R. Ludwig |
|
375,000 |
|
375,000 |
|
|
0 |
% |
|
Chris Akhavan |
|
400,000 |
|
400,000 |
|
|
0 |
% |
| Becky Ann Hughes |
|
300,000 |
|
360,000 |
(1) |
|
20 |
% |
|
Scott J.
Leichtner |
|
345,000 |
|
345,000 |
|
|
0 |
% |
____________________
|
(1) |
On December 17, 2019, Ms.
Hughes was promoted from Vice President and General Manager of Glu
Play to Senior Vice President, Revenue. The increase in her salary
reflects the additional responsibilities that she assumed and is
effective on that date. |
28
Table of Contents
Annual Incentives Opportunity for 2019: PSOs for
Messrs. Earl, Ludwig and Akhavan, Cash for Mr. Leichtner and a Mix
of PSUs and Cash for Ms. Hughes
Consistent with the prior year, the
Compensation Committee determined that for 2019 it would not
provide Messrs. Earl, Ludwig and Akhavan with a cash-based annual
bonus plan, but instead would provide them with the opportunity to
earn an equivalent value of PSOs (the “2019 Annual PSOs”) to the
extent that Glu achieved certain bookings and Adjusted EBITDA
(defined as non-GAAP operating income excluding depreciation and
royalty impairments) targets during 2019 (the “2019 Targets”). In
addition, the committee elected to award Ms. Hughes PSUs that were
also based on the 2019 Targets in lieu of 50% of her bonus
opportunity; Ms. Hughes participated in a cash bonus plan with
respect to the remaining 50% of her bonus opportunity as discussed
below. At the time the Compensation Committee made its
determination, Ms. Hughes was Vice President and General Manager of
our Glu Play game development studio and not yet an executive
officer. Due to constraints on the number of shares available for
issuance under our 2007 Equity Incentive Plan, the committee
decided that Ms. Hughes, together with our other creative leaders
and certain other members of Glu’s leadership team, would receive
50% of their bonus in PSUs rather than PSOs and the remainder in
cash.
The 2019 Annual PSOs and Ms. Hughes’ PSUs
were issued in October 2018 and, to the extent earned based on
fiscal 2019 performance, would have vested in February 2020, which
aligned with the payment date for cash bonuses to our other
employees.
For 2019, the Compensation Committee
selected bookings and Adjusted EBITDA as the performance metrics
for the annual incentive program because it believed that these
measures would best reflect whether we had achieved financial
performance that would lead to company success. The committee
believed that significantly increasing bookings from the prior year
would be the best way to increase stockholder value, but that we
needed to achieve that growth while generating meaningful positive
Adjusted EBITDA for the year.
Consistent with prior years, the committee
decided to use bookings rather than revenue because GAAP accounting
rules require that we recognize our in-app purchase revenue over
four to eight months, depending on the game, and defer such amounts
into future periods, and the committee believed that bookings would
be a better indicator of our success during 2019. The committee
decided to use Adjusted EBITDA, rather than GAAP profit/(loss),
because GAAP accounting rules require that we take into account
non-cash expenses, such as stock-based compensation, and certain
other expenses that are not reflective of Glu’s core business and
operating results during 2019.
The committee determined the maximum number
of 2019 Annual PSOs or PSUs, as applicable, that each Eligible
Officer could potentially earn by calculating the maximum cash
bonus that each of the Eligible Officers could have otherwise
received in 2019 (50% of the maximum with respect to Ms. Hughes),
based on the historical maximum bonus percentages and annual base
salaries for each of the Eligible Officers, and then converting
such maximum bonus value into a maximum number of 2019 Annual PSOs
or PSUs, as applicable, using a conversion ratio that took into
account Glu’s stock price on the date the Compensation Committee
approved the 2019 Annual PSOs and PSUs and, in the case of the 2019
Annual PSOs, the Black-Scholes value of the 2019 Annual PSOs. See
the table below for more information regarding these
grants.
|
|
|
|
|
Base Salary
for |
|
|
|
Target
Bonus |
Maximum
Bonus |
|
|
|
|
|
|
Determining #
of |
|
|
|
Value
Converted |
Value
Converted |
Actual
Earned |
|
Named
Executive |
|
Target
Bonus |
Maximum
Bonus |
2019
Annual |
2019
Target |
2019
Maximum |
into 2019
Annual |
into 2019
Annual |
2019
Annual |
|
Officer |
|
Percentage |
Percentage |
PSOs/PSUs |
Bonus
Value |
Bonus
Value |
PSOs/PSUs(1) |
PSOs/PSUs(1) |
PSOs/PSUs(1) |
|
Nick Earl |
|
100% |
200% |
$475,000 |
$475,000 |
$950,000 |
|
150,709 |
301,418 |
0 |
|
Eric
Ludwig |
|
100% |
200% |
$375,000 |
$375,000 |
$750,000 |
|
118,981 |
237,962 |
0 |
|
Chris
Akhavan |
|
100% |
200% |
$400,000 |
$400,000 |
$800,000 |
|
126,913 |
253,826 |
0 |
|
Becky Ann
Hughes |
|
75% |
150% |
$300,000 |
$225,000 |
$450,000 |
(2) |
16,705 |
33,410 |
0 |
|
|
|
|
(1) |
Messrs. Earl, Ludwig and
Akhavan received their annual incentive opportunity in form of PSOs
awards and Ms. Hughes in form of PSU awards. |
|
|
|
|
(2) |
50% of Ms. Hughes’ 2019
Maximum Bonus Value was converted into PSUs. |
29
Table of Contents
Given constraints in the number of shares
available for issuance under Glu’s 2007 Equity Incentive Plan, the
Compensation Committee decided that Mr. Leichtner, together with
Glu’s other corporate vice presidents, would not receive a 2019
Annual PSO or a PSU but would instead be eligible for a cash-based
bonus for 2019 performance, which bonus would be determined based
on the achievement of the same 2019 Targets. In addition, as
discussed above, Ms. Hughes participated in a similar cash bonus
plan with respect to the remaining 50% of her bonus
opportunity.
|
|
|
2019
Target |
2019
Maximum |
2019 Target
Cash |
2019 Maximum
Cash |
2019 Actual Earned
Cash |
|
Named Executive
Officer |
|
Bonus
Percentage |
Bonus
Percentage |
Bonus |
Bonus |
Bonus |
|
Becky Ann
Hughes |
|
75% |
150% |
$225,000 |
$225,000 |
(1) |
$0 |
|
Scott
Leichtner |
|
50% |
100% |
$172,500 |
$345,000 |
|
$0 |
| |
|
| (1) |
Ms. Hughes’ maximum bonus opportunity was
$450,000, of which $225,000 was in cash and 50% was converted into
PSUs.
|
The Compensation Committee, at its October
25, 2018 meeting, established the following bookings-based 2019
Targets, provided that we generated at least a minimum Adjusted
EBITDA threshold of $60 million:
|
Performance
Metric |
Threshold
(MMs) |
Target
(MMs) |
Maximum
(MMs) |
|
Bookings |
$426 |
$444 |
$462 |
Each of these bookings targets represented a
significant increase over our 2018 bookings results of $384.6
million and the Adjusted EBITDA threshold of $60 million reflected
a significant increase from our 2018 Adjusted EBITDA of $42
million. In 2019, we did not meet the Adjusted EBITDA threshold or
the bookings threshold, as we generated $42 million of Adjusted
EBITDA and $423 million of bookings. As a result, no 2019 Named
Executive Officer received any annual incentive-based compensation
for 2019 performance. As a result, all 2019 Annual PSOs and Ms.
Hughes’ PSUs were forfeited and neither Mr. Leichtner nor Ms.
Hughes received a cash bonus.
Annual Incentives Opportunity for 2020: PSUs for
the Eligible Officers and Cash for Mr. Leichtner
Consistent with the prior years, the
Compensation Committee determined that for 2020 it would not
provide the Eligible Officers with a cash-based bonus plan, but
instead would provide them with the opportunity to earn an
equivalent value of performance-based equity, in this case PSUs
(the “2020 Annual PSUs”), to the extent that Glu achieves certain
bookings and Adjusted EBITDA (again defined as non-GAAP operating
income excluding depreciation/amortization and royalty impairments)
targets during 2020 (the “2020 Targets”). The committee selected
PSUs instead of PSOs to better align with market practice and to
conserve shares in our equity plan. Additionally, the committee
determined that it was the performance goals of the program, rather
than the vehicle used to deliver the award, which served as the
primary factor when considering whether or not the awards created a
strong incentive to achieve objectives aligned with driving
sustainable long-term value.
The Compensation Committee determined the
maximum number of 2020 Annual PSUs that the Eligible Officers can
potentially earn by calculating the maximum cash bonus that each of
these Eligible Officers could have otherwise received in 2020,
based on the historical maximum bonus percentages and annual base
salaries for each Eligible Officer and then converting such maximum
bonus value into a maximum number of 2020 Annual PSUs using a
conversion ratio that took into account both Glu’s 90 day average
stock price from September 14, 2019 to December 13, 2019, as
illustrated in the table below.
30
Table of Contents
|
|
|
|
|
|
|
Base
Salary |
|
|
|
Target |
Maximum |
|
|
|
|
|
|
|
for |
|
|
|
Bonus
Value |
Bonus
Value |
|
|
|
2020 |
2020 |
Determining |
|
|
|
Converted |
Converted |
|
Named |
2020
Threshold |
Target |
Maximum |
# |
|
2020 |
into 2020 |
into 2020 |
|
Executive |
Bonus |
Bonus |
Bonus |
of 2020 |
2020
Target |
Maximum |
Annual |
Annual |
|
Officer |
Percentage |
Percentage |
Percentage |
Annual
PSUs |
Bonus
Value |
Bonus
Value |
PSUs |
PSUs |
|
Nick Earl |
30% |
100% |
|
200% |
|
$475,000 |
$475,000 |
$950,000 |
|
85,500 |
171,000 |
|
Eric
Ludwig |
30% |
100% |
|
200% |
|
$375,000 |
$375,000 |
$750,000 |
|
67,500 |
135,000 |
|
Chris
Akhavan |
24.3% |
81% |
(1) |
162% |
(1) |
$400,000 |
$324,000 |
$648,000 |
(1) |
58,500 |
117,000 |
|
Becky Ann
Hughes |
27% |
90% |
(1) |
180% |
(1) |
$360,000 |
$324,000 |
$648,000 |
|
58,500 |
117,000 |
____________________
|
(1) |
In December 2019, we restructured our Revenue
team, with Mr. Akahvan moving from Chief Revenue Officer to Senior
Vice President, Business & Corporate Development and Ms.
Hughes assuming oversight of the Revenue team as Senior Vice
President, Revenue. In connection with Ms. Hughes’ promotion, the
Compensation Committee increased Ms. Hughes’ target and maximum bonus percentages from
75% and 150% to 90% and 180%, respectively. The committee, however,
did not increase her bonus percentages to the 100% and 200% levels
that Mr. Akhavan had received as Chief Revenue Officer due to the
fact that Ms. Hughes was new in the role and because she did not
assume all of Mr. Akhavan’s previous duties since our Advertising
team remained under Mr. Akhavan’s supervision. The committee
determined to reduce Mr. Akhavan’s target and maximum bonus
percentages from 100% and 200% to 81% and 162%, respectively, which
had the impact of reducing his maximum bonus value by $152,000 from
$800,000 to $648,000. The committee reallocated this amount by
increasing the value of Mr. Akhavan’s annual refresh grants by
$152,000, as discussed below. The committee determined to reduce
Mr. Akhavan’s maximum bonus value to match that of Ms. Hughes given
his new role and the reduction of his organization, with the
opportunity to recoup the decrease via a larger long-term incentive
grant if he excelled in this new position.
|
Given constraints in the number of shares
available for issuance under Glu’s 2007 Equity Incentive Plan, the
Compensation Committee again decided that Mr. Leichtner, together
with Glu’s other corporate vice presidents, would not receive 2020
Annual PSUs but would instead be eligible for a cash-based bonus
for 2020 performance, which bonus would be determined based on the
achievement of the same 2020 Targets.
|
|
2020 Threshold
Bonus |
2020
Target |
2020
Maximum |
2020 Target
Cash |
2020 Maximum
Cash |
|
Named Executive
Officer |
Percentage |
Bonus
Percentage |
Bonus
Percentage |
Bonus |
Bonus |
|
Scott
Leichtner |
15 |
% |
50 |
% |
100 |
% |
$172,500 |
$345,000 |
The Eligible Officers will only earn the
maximum amount of 2020 Annual PSUs, and Mr. Leichtner will only
earn the maximum cash bonus, if Glu both (1) achieves a minimum
Adjusted EBITDA threshold for 2020 (the “Adjusted EBITDA
Threshold”) and (2) generates bookings for 2020 that equal or
exceed a specified maximum level of performance (the “Maximum
Bookings Goal”). If Glu does not achieve the Maximum Bookings Goal,
the Eligible Officers can earn (1) 15% of the maximum amount of
2020 Annual PSUs or, for Mr. Leichtner, 15% of the maximum bonus,
if Glu achieves the Adjusted EBITDA Threshold in 2020 and generates
2020 bookings that are approximately 12% below the Maximum Bookings
Goal (the “Minimum Bookings Goal”) and (2) 50% of the maximum
amount of 2020 Annual PSUs or, for Mr. Leichtner, 50% of the
maximum bonus, if Glu achieves the Adjusted EBITDA Threshold in
2020 and generates 2020 bookings that are approximately 4% below
the Maximum Bookings Goal (the “Target Bookings Goal”). If Glu does
not achieve the Adjusted EBITDA Threshold or the Minimum Bookings
Goal, no 2020 Annual PSUs or, for Mr. Leichtner, no cash bonus will
be earned. To the extent that Glu achieves the Adjusted EBITDA
Threshold in 2020 and generates bookings between the Minimum
Bookings Goal and the Maximum Bookings Goal, the number of 2020
Annual PSUs earned or, for Mr. Leichtner, the amount of the cash
bonus, will be calculated on a linear basis. Each of the Maximum Bookings Goal and the
Target Bookings Goal represents a significant increase over our
2019 actual bookings.
31
Table of Contents
The table below illustrates the number of
2020 Annual PSUs that each of the Eligible Officers could
potentially earn based on Glu’s Adjusted EBITDA and bookings for
2020:
|
|
|
2020 Annual PSUs Earned if
Glu |
|
2020 Annual PSUs Earned
if |
|
2020Annual PSUs Earned
if |
|
2020 Annual PSUs Earned if Glu |
|
|
|
Achieves Adjusted
EBITDA |
|
Glu Achieves
Adjusted |
|
Glu Achieves
Adjusted |
|
Fails to Achieve Adjusted |
|
|
|
Threshold and
Maximum |
|
EBITDA Threshold and
Target |
|
EBITDA Threshold
and |
|
EBITDA Threshold or |
|
Named Executive
Officer |
|
Bookings
Goal |
|
Bookings
Goal |
|
Minimum Bookings
Goal |
|
Minimum
Bookings Goal |
|
Nick Earl |
|
171,000 |
|
85,500 |
|
25,650 |
|
0 |
|
Eric Ludwig |
|
135,000 |
|
67,500 |
|
20,250 |
|
0 |
|
Chris Akhavan |
|
117,000 |
|
58,500 |
|
17,550 |
|
0 |
|
Becky Ann Hughes |
|
117,000 |
|
58,500 |
|
17,550 |
|
0 |
The 2020 Annual PSUs were granted on
December 17, 2019. Glu will determine its 2020 Adjusted EBITDA and
2020 bookings in early 2021, and to the extent that the Eligible
Officers earn any 2020 Annual PSUs, or Mr. Leichtner earns any cash
bonus, based on Glu’s 2020 bookings and 2020 Adjusted EBITDA, such
2020 Annual PSUs will fully vest, and for Mr. Leichtner, such cash
bonus will be paid, in February 2021 (consistent with the timing of
when Glu historically paid cash bonuses to executive
officers).
Long-Term Incentives
Philosophy Regarding Equity
Grants
We use equity awards to reward long-term
performance, with strong corporate performance and extended
executive officer tenure producing potentially significant value
for each executive officer.
In December 2019, to emphasize our
pay-for-performance culture, more conservatively manage our equity
burn utilization rate, and better align with market practice, the
Compensation Committee revised our equity grant program for our
Named Executive Officers as follows:
|
(1) |
50% PSUs
with multi-year performance vesting goals tied to our Adjusted
EBITDA and bookings for our Eligible Officers; and 25% PSUs with
multi-year performance vesting goals tied to our Adjusted EBITDA
and bookings for Mr. Leichtner; and
|
|
|
|
|
|
(2) |
50%
time-based RSUs with a four-year vesting for our Eligible Officers;
and 75% time-based RSUs with a four-year vesting for Mr.
Leichtner.
|
The Compensation Committee selected Adjusted
EBITDA and bookings as the appropriate metrics given the importance
of these factors on driving sustainable long-term stockholder value
creation. The
committee believes that Glu’s executive compensation program aligns
the interests of our executive officers with Glu’s stockholders and
is consistent with Glu’s strategic goals of realizing significant
bookings and Adjusted EBITDA growth in 2020 and beyond.
The size of executive equity awards is
generally set at a level that the Compensation Committee deems
appropriate to create a meaningful opportunity for significant
compensation if we achieve the applicable performance goals and our
stock price appreciates. The amounts are also based upon market
data presented by the applicable Compensation Committee Consultant,
the individual’s position with us and the individual’s potential
for future responsibility and promotion. The relative weight given
to each of these factors varies from individual to individual at
the committee’s discretion.
2019 Long-Term Equity Grants
In December 2019, the Compensation Committee
determined the value of each Named Executive Officer’s annual
long-term equity awards by considering market data provided by
Radford (including the compensation of similarly situated
executives at Glu’s peer companies), past performance and future
potential performance of each executive, as well as each Named
Executive Officer’s current equity holdings.
32
Table of Contents
The Compensation Committee determined to
award 66.67% of the value of each of Messrs. Earl’s, Ludwig’s and
Akhavan’s annual equity award in PSUs and 33.3% of the value of Mr.
Leichtner’s annual equity award in PSUs; these Executive Officers
received the balance of their annual refresh equity awards in the
form of time vesting RSUs. The table below sets forth for each
Named Executive Officer the value of his or her annual refresh
equity awards and the number of PSU and time vesting RSUs
received:
|
|
|
|
|
|
|
|
Maximum PSUs (#) |
|
|
|
|
|
|
|
|
if Maximum |
|
|
|
|
|
|
|
|
Bookings Goal is |
|
Executive |
Equity Value ($) |
RSUs (#) |
met |
|
Nick Earl |
|
4,100,000 |
|
|
369,099 |
|
|
553,649 |
|
|
Eric Ludwig |
|
2,300,000 |
|
|
207,056 |
|
|
310,584 |
|
|
Chris Akhavan |
|
902,000 |
|
|
81,202 |
|
|
121,803 |
|
|
Becky Ann Hughes |
|
925,000 |
|
|
83,272 |
|
|
124,908 |
|
|
Scott Leichtner |
|
550,000 |
|
|
74,270 |
|
|
37,136 |
|
Each PSU is earned based upon achievement of
rigorous multi-year (2020, 2021 and 2022) bookings and Adjusted
EBITDA performance targets that are aligned with the long-term
strategy approved by the Board, with one-third of the maximum
shares subject to the PSUs earnable in each of those years.
Executives are able to earn between 20% and 100% of the maximum
PSUs specified in the table above depending upon
performance.
Each Named Executive Officer will earn the
maximum amount of PSUs for a given year if Glu
|
- |
Achieves
the Adjusted EBITDA threshold for the respective year;
and
|
|
|
|
|
|
- |
Generates
bookings for such year that equal or exceed the Maximum Bookings
Goal for such year.
|
The Adjusted EBITDA and the Maximum Bookings
Goals increase in each year of the three-year performance period.
Each of the Maximum Bookings Goal and Target Bookings Goal for 2020
represents a significant increase over our 2019 bookings, with the
thresholds and goals for 2021 and 2022 increasing approximately 20%
from the prior year’s thresholds.
|
|
Adjusted |
Payout as % of Maximum for
Bookings Performance |
|
|
EBITA |
|
|
threshold |
Below |
|
|
|
|
|
|
|
|
|
|
Performance
Metric |
achieved? |
Threshold |
Threshold |
Target |
Maximum |
|
Bookings |
Yes |
0% |
|
20% |
|
|
66.67% |
|
|
100% |
|
|
Bookings |
No |
0% |
|
0% |
|
|
0% |
|
|
0% |
|
To the extent that Glu achieves the Adjusted
EBITDA threshold for a given year and generates bookings between
two of the goals, the number of PSUs earned by the Named Executive
Officer for such year will be calculated on a linear
basis.
If Glu does not achieve an Adjusted EBITDA
threshold or bookings goals in any year, and less than the full
amount of shares are earned for such year, the Eligible Officer
cannot recapture those shares through overachievement of the
maximum Adjusted EBITDA thresholds and bookings goals in subsequent
years.
33
Table of Contents
The table below illustrates the number of
PSUs that each Named Executive Officers could potentially earn
based on Glu’s Adjusted EBITDA and bookings for 2020, 2021 and
2022:
|
|
|
|
|
|
|
|
|
|
Target PSUs Eligible to be |
| Named |
|
|
|
|
|
|
Maximum |
Earned for Performance During: |
| Executive |
Threshold |
Target PSUs |
Total PSUs |
|
|
|
|
|
|
|
|
|
| Officer |
PSUs
Earnable |
Earnable |
Earnable |
FY20 |
FY21 |
FY22 |
| Nick Earl |
|
110,730 |
|
|
369,099 |
|
|
553,649 |
|
|
123,033 |
|
|
123,033 |
|
|
123,033 |
|
| Eric Ludwig |
|
62,117 |
|
|
207,056 |
|
|
310,584 |
|
|
69,018 |
|
|
69,019 |
|
|
69,019 |
|
| Chris
Akhavan |
|
24,361 |
|
|
81,202 |
|
|
121,803 |
|
|
27,067 |
|
|
27,067 |
|
|
27,068 |
|
| Becky Ann Hughes |
|
24,982 |
|
|
83,272 |
|
|
124,908 |
|
|
27,757 |
|
|
27,757 |
|
|
27,758 |
|
| Scott
Leichtner |
|
7,427 |
|
|
24,757 |
|
|
37,136 |
|
|
8,252 |
|
|
8,252 |
|
|
8,253 |
|
Each of the PSUs and time vesting RSUs were
granted on December 17, 2019. Glu will determine its EBITDA and
bookings for each of 2020, 2021 and 2022 early in 2021, 2022 and
2023, respectively, and to the extent that the Named Executive
Officers earn any PSUs based on Glu’s bookings and EBITDA for such
years, the shares earned will fully vest in February 2021, 2022 and
2023, respectively. The time vesting RSUs vest over four years,
with 25% of the total number of shares subject to the RSUs vesting
on December 17, 2020, with 4.166% of the underlying shares vesting
on February 15, 2021, an additional 6.25% of the underlying shares
vesting in each of the following 11 quarters on the same day of
each third month, and with the final 2.0833% of the underlying
shares vesting on February 15, 2024; provided, however, that if any
portion of the RSU vests on a date that is a non-trading day on The
Nasdaq Stock Market, then the RSU will vest on the next trading
day.
The committee believed that the annual
refresh awards to the Named Executive Officers were merited based
on the past successes of these executives and that these awards
will help to ensure that these executives are properly incented to
remain with us and focus on achieving our long-term strategic goals
and creating stockholder value. The committee determined that the
size and mix of their equity awards appropriately balanced both
retention and motivational objectives of executive pay.
Achievement of Prior Long-Term Equity
Grants
In October 2017 and 2018, we made awards of
PSOs and PSUs to our executives which are earned based on the
achievement of Adjusted EBITDA and bookings performance targets
over three years, including 2019. The table below specifies the
performance targets for the 2017 and 2018 PSOs and PSUs and the
degree to which we achieved these performance targets based on 2019
performance:
|
|
% of Tranche |
Performance
Metrics |
|
|
Earned for |
Adjusted |
|
|
|
|
|
2019 |
EBITDA |
Threshold |
Target |
Maximum |
|
Award |
Performance |
Threshold |
Bookings |
Bookings |
Bookings |
|
2017 PSOs and
PSUs |
|
77.7% |
|
$40M |
$390M |
$415M |
$440M |
|
2018 PSOs and
PSUs |
|
0% |
|
$60M |
$426M |
$444M |
$462M |
34
Table of Contents
In 2020, the third tranche of the 2017 and
the second tranche of the 2018 long-term incentive equity grants
require achievement of significant bookings and Adjusted EBITDA
growth to be earned.
Additional Compensation Plans and
Policies
Severance and Change of Control
Payments
Messrs. Earl, Ludwig, Akhavan and Leichtner
each have an agreement with us that provides for payments and
benefits if the individual is terminated under certain
circumstances within 12 months following a change of control of Glu
(a “double trigger” termination). In addition, Mr. Earl’s
employment agreement provides for payments and benefits if he is
terminated under certain circumstances in the absence of our change
of control. For a description of these agreements and
quantification of these severance and change of control benefits,
please see the discussion under “Payments Upon Termination or Change in
Control” below.
Other than as set forth in these agreements, no executive officer
is entitled upon termination to either equity vesting acceleration
or cash severance payments.
The Compensation Committee decided to
provide these arrangements to mitigate some of the risk that exists
for executives working in a small public company, an environment
where there is a meaningful likelihood that we may be acquired.
These arrangements are also intended to mitigate a potential
disincentive for executives to consider and execute on an
acquisition where the acquirer may not require the services of
these executives following the acquisition.
Other Benefits
Executive officers are eligible to
participate in all of our employee benefit plans, such as medical,
dental, vision, group life, disability, and accidental death and
dismemberment insurance and our employee stock purchase plan and
401(k) plan, in each case on the same basis as other employees.
There were no special benefits or perquisites provided to any Named
Executive Officer in 2019.
Clawback Policy (Recovery of Incentive
Compensation Policy)
Since 2017, we have maintained an executive
compensation recovery policy that permits us to seek recovery of
some or all of incentive compensation paid or awarded to executive
officers, our Vice President of Accounting and our corporate
controller in the event of the restatement by Glu of any financial
results required to be reported under the U.S. federal securities
laws after January 1, 2018 because one or more executive officers,
our Vice President of Accounting and/or our corporate controller
engaged in fraud or intentional misconduct. In such cases, the
Compensation Committee may review all incentive-based cash
compensation and equity compensation paid, granted or for which our
executive officers, our Vice President of Accounting and our
corporate controller are eligible on or after January 1, 2018
(“Incentive
Compensation”) on
the basis of having met or exceeded performance goals during the
period covered by the restatement and will, to the extent
practicable and in the best interests of stockholders, instruct Glu
to seek to recover or cancel such Incentive Compensation from our
executive officers, our Vice President of Accounting and our
corporate controller to the extent that performance goals would not
have been met under such restated financial result. In addition, as
a public company subject to the provisions of Section 304 of the
Sarbanes-Oxley Act of 2002, if we are required as a result of
misconduct to restate our financial results due to our material
noncompliance with any financial reporting requirements under the
federal securities laws, our Chief Executive Officer and Chief
Financial Officer may be legally required to reimburse us for any
bonus or other incentive-based or equity-based compensation they
receive.
Chief Executive Officer Stock Ownership
Guidelines
In January 2020, our Board adopted stock
ownership guidelines for our Chief Executive Officer in order to
better align the long-term interests of our Chief Executive Officer
with our stockholders. Under these stock ownership guidelines, our
Chief Executive Officer is required to hold at least five times his
annual cash salary in our common stock. In determining the value of
his stock ownership, shares and vested, in-the money unexercised
stock options are counted. Mr. Earl is required to comply with
these stock ownership guidelines by January 30, 2025. Compliance
with these stock ownership guidelines is measured once per year
based on Mr. Earl’s year-end holdings and our 30-day average stock
price. As of January 30, 2020, Mr. Earl was in compliance with
these guidelines.
35
Table of Contents
Equity Granting Policy
Equity awards are typically either granted
at regularly scheduled Stock Option Administration Committee
meetings or via unanimous written consent, with the effective date
of such grant being the second Tuesday of each month. The primary
exceptions are for new hire or promotion equity grants that require
Compensation Committee approval, which grants are generally
approved on the second Tuesday of each month following the date the
individual is hired or promoted, or for new hire awards made to
individuals in connection with an acquisition. The Stock Option
Administration Committee does not have discretion to set other
grant dates for awards made pursuant to its delegated authority.
Our annual equity awards for our executive officers are generally
made at the Compensation Committee meeting held during our fourth
quarter, at which the Compensation Committee reviews executive
compensation for the upcoming year.
Other than as described in the section of
this proxy statement titled “Director Compensation,” we do not have
any program, plan or obligation that requires us to grant new
equity compensation on specified dates.
The exercise price of a newly granted option
is the closing price of our common stock on the date the option is
granted.
Tax and Accounting Treatment of
Compensation
In designing our compensation programs, the
Compensation Committee considers the financial accounting and tax
consequences to us, as well as the tax consequences to our
employees. We account for equity compensation paid to our employees
under the rules of FASB ASC Topic 718, which requires us to
estimate and record an expense for each equity compensation award
over the service period of the award and in case of performance
awards, if the performance is likely to be achieved. Accounting
rules also require us to record cash compensation as an expense at
the time the obligation is accrued. Management considers the FASB
ASC Topic 718 cost of outstanding equity awards as part of our
equity grant recommendations to the Compensation
Committee.
Section 162(m) of the Tax Code generally
disallows public companies a tax deduction for federal income tax
purposes of remuneration in excess of $1 million paid to certain
executive officers. The 2017 Tax Cuts and Jobs Act (the “Tax Act”)
enacted on December 22, 2017 repealed an exemption from the $1
million disallowance for certain performance-based compensation.
Due to the repeal of the performance-based compensation exemption,
remuneration in excess of $1 million is exempt from this deduction
limit if it qualifies as “performance-based compensation” within
the meaning of Section 162(m) only with respect to remuneration
paid or payable pursuant to a binding written agreement in effect
on or before November 2, 2017 for taxable years beginning on or
before January 1, 2017. Thus, options to purchase shares of our
common stock, stock appreciation rights that may be exercised for
shares of our common stock, restricted stock units granted before
April 1, 2015 and other performance-based equity awards granted in
2017 or earlier and outstanding on November 2, 2017 pursuant to a
binding written agreement may be exempt from the deduction limit if
the conditions of Section 162(m) prior to the Tax Act are
satisfied. While our Compensation Committee may consider the
deductibility of awards as one factor in determining executive
compensation, our Compensation Committee also looks at other
factors in making its decisions and retains the flexibility to
award compensation that it determines to be consistent with the
goals of our executive compensation program, even if the awards are
not deductible by us for tax purposes.
Sections 280G and 4999 of the Code provide
that executive officers and directors who hold significant equity
interests and certain other service providers may be subject to an
excise tax if they receive payments or benefits in connection with
a change in control that exceeds certain prescribed limits and that
the payor company, or a successor, may forfeit a deduction on the
amounts subject to this additional tax. Section 409A of the Code
also imposes additional significant taxes on the individual in the
event that an executive officer, director or other service provider
receives “deferred compensation” that does not meet the
requirements of Section 409A of the Code. We did not provide any
executive officer, including any Named Executive Officer, with a
“gross-up” or other reimbursement payment for any tax liability
that he or she might owe as a result of the application of Sections
280G, 4999, or 409A of the Code during 2019, and we have not agreed
and are not otherwise obligated to provide any Named Executive
Officers with such a “gross-up” or other reimbursement.
We also consider the tax impact to employees
in designing our compensation programs, including our equity
compensation programs. For example, employees generally control the
timing of taxation with respect to stock options but do not control
the timing with respect to RSUs and PSUs in which income is
recognized upon vesting and settlement. To assist employees
(including our executives) in satisfying their tax obligations for
RSUs and PSUs, we withhold shares from the vesting RSUs and PSUs to
cover applicable taxes. We structure cash bonus compensation so
that it is taxable to our employees at the time it is paid to
them.
36
Table of Contents
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and
discussed the Compensation Disclosure and Analysis set forth above
with Glu’s management. Based on its review and these discussions,
the Compensation Committee recommended to our Board that the
Compensation Discussion and Analysis be included in this proxy
statement which is incorporated by reference into our Annual Report
on Form 10-K filed with the SEC on February 28, 2020.
|
Gabrielle Toledano
(Chair) |
|
Greg Brandeau |
|
Hany M. Nada |
|
Benjamin T. Smith, IV |
37
Table of Contents
EXECUTIVE
COMPENSATION
Please see the section titled “Executive
Officers” at the end of Item 1 of our Annual Report on Form 10-K
for the year ended December 31, 2019, which accompanies these proxy
materials, regarding the identity of our executive officers and
their respective business experience.
Summary Compensation Table
The following table shows compensation
earned during 2019 by our Named Executive Officers. For information
about employment contracts, termination of employment and
change-of-control arrangements between us and the Named Executive
Officers, see “Potential Payments upon Termination or Change in
Control” below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive |
|
|
|
|
|
|
| Name and |
Fiscal |
|
|
|
|
|
|
|
Stock
Awards |
Option |
Plan Compensation |
All Other |
|
|
|
|
Principal
Position |
Year |
Salary ($) |
Bonus ($) |
($)(1) |
Awards
($)(2) |
($)(3) |
Compensation |
Total ($) |
|
Nick Earl |
|
2019 |
|
|
475,000 |
|
|
|
— |
|
|
6,671,863 |
(4) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
7,146,863 |
|
|
President and
Chief |
|
2018 |
|
|
455,769 |
(5) |
|
|
— |
|
|
1,694,705 |
(6) |
|
|
7,162,611 |
(7) |
|
|
— |
|
|
— |
|
|
9,313,086 |
|
|
Executive
Officer |
|
2017 |
|
|
450,000 |
|
|
|
— |
|
|
— |
|
|
|
1,454,246 |
(8) |
|
|
702,000 |
|
|
— |
|
|
2,606,246 |
|
|
Eric R.
Ludwig |
|
2019 |
|
|
375,000 |
|
|
|
— |
|
|
3,981,104 |
(4) |
|
|
— |
|
|
|
— |
|
|
|
|
|
4,356,104 |
|
|
Executive
Vice |
|
2018 |
|
|
375,000 |
|
|
|
— |
|
|
— |
|
|
|
3,040,889 |
(7) |
|
|
— |
|
|
— |
|
|
3,415,890 |
|
|
President,
Chief |
|
2017 |
|
|
375,000 |
|
|
|
— |
|
|
— |
|
|
|
2,117,652 |
(8) |
|
|
585,000 |
|
|
— |
|
|
3,077,652 |
|
|
Operating Officer
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Akhavan |
|
2019 |
|
|
400,000 |
|
|
|
— |
|
|
1,952,031 |
(4) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
2,352,031 |
|
|
Senior Vice
President, |
|
2018 |
|
|
400,000 |
|
|
|
— |
|
|
— |
|
|
|
1,705,320 |
(7) |
|
|
— |
|
|
— |
|
|
2,105,320 |
|
|
Business &
Corporate |
|
2017 |
|
|
307,692 |
(9) |
|
|
— |
|
|
— |
|
|
|
1,702,157 |
(8) |
|
|
436,800 |
|
|
— |
|
|
2,446,649 |
|
|
Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Becky Ann
Hughes(10) |
|
2019 |
|
|
300,923 |
(11) |
|
|
— |
|
|
1,983,598 |
(4) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
2,284,521 |
|
|
Senior Vice
President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J.
Leichtner |
|
2019 |
|
|
345,000 |
|
|
|
— |
|
|
679,577 |
(4) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
1,024,577 |
|
|
Vice President,
General |
|
2018 |
|
|
325,769 |
(12) |
|
|
— |
|
|
385,200 |
(6) |
|
|
172,985 |
(7) |
|
|
— |
|
|
— |
|
|
883,954 |
|
|
Counsel and
Corporate |
|
2017 |
|
|
308,462 |
(12) |
|
|
— |
|
|
204,733 |
(13) |
|
|
552,256 |
(8) |
|
|
237,900 |
|
|
— |
|
|
1,303,351 |
|
|
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
|
(1) |
Amounts shown in this column
do not reflect dollar amounts actually received by the officer.
Instead, these amounts reflect the aggregate full grant date fair
value calculated in accordance with FASB ASC Topic 718. See Note 12
— Stock Option and Other Benefit Plans — in the notes to
consolidated financial statements contained in our Form 10-K for
the year ended December 31, 2019 for a description of the ASC Topic
718 methodology and assumptions. The number of shares subject to
PSUs and RSUs granted in 2019 to our Named Executive Officers is
shown in the “Grants of Plan-Based Awards in 2019” table
below. |
|
|
|
|
(2) |
Amounts shown in this column
are calculated in accordance with FASB ASC Topic 718. See Note 12 —
Stock Option and Other Benefit Plans — in the notes to consolidated
financial statements contained in our Form 10-K for the year ended
December 31, 2019 for a description of the ASC Topic 718
methodology and assumptions. |
| |
|
|
(3) |
The amounts received by the
Named Executive Officers in 2017 represent total performance-based
cash bonuses that were earned during 2017 and paid in 2018 pursuant
to our 2017 Executive Bonus Plan. In October 2017, our Compensation
Committee decided to grant PSOs with respect to 2018 performance
goals to the Named Executive Officers in lieu of a cash bonus for
2018, and the Compensation Committee in October 2018 again granted
PSOs with respect to 2019 performance goals to Messrs. Earl, Ludwig
and Akhavan in lieu of a cash bonus for 2019. Ms. Hughes received
PSUs in lieu of 50% of her cash bonus, while Mr. Leichtner
participated in a cash bonus plan for 2019 pursuant to which
payments would be made based on the achievement of the same
Adjusted EBITDA and bookings targets that were utilized for the
PSOs and PSUs issued to the Eligible Officers; Ms. Hughes
participated in a similar cash bonus plan with respect to the
remaining 50% of her bonus opportunity. Because we did not achieve
the Adjusted EBITDA and bookings goals established by the
Compensation Committee for 2019 performance, neither Mr. Leichtner
nor Ms. Hughes received a cash bonus for 2019. See the
“Compensation Discussion and Analysis” section of this proxy
statement for further information regarding the 2019 grants of PSOs
and PSUs in lieu of a 2019 cash bonus as well as the cash bonus
plan in which Mr. Leichtner and Ms. Hughes
participated. |
38
Table of Contents
|
(4) |
Represents RSU and PSU
awards. The table reflects the full fair market value of the PSU
award taking into account the probable outcome of the performance
conditions as of December 31, 2019. This value equals the grant
date fair values of the maximum shares issuable under the PSU
award: $4,420,359 for Mr. Earl, $2,718,062 for Mr. Ludwig,
$1,456,698 for Mr. Akhavan, $1,475,639 for Ms. Hughes and $226,530
for Mr. Leichtner. See the “Compensation Discussion and Analysis”
section of this proxy statement for further information regarding
the performance conditions of the PSUs. |
|
|
|
|
(5) |
In October 2018, in
connection with the Compensation Committee’s annual review of
executive compensation, the committee increased Mr. Earl’s annual
base salary to $475,000, effective as of October 1,
2018. |
| |
|
|
(6) |
Represents PSU awards. The
table reflects the full fair market value of the PSU award taking
into account the probable outcome of the performance conditions as
of December 31, 2018. This value equals the grant date fair values
of the maximum shares issuable under the PSU award. |
| |
|
|
(7) |
Represents time-based stock
option and PSO awards. The grant date fair value of the time-based
stock option awards were as follows: $968,560 for Mr. Earl’s
January 2018 grant, $1,070,718 for Mr. Earl’s October 2018 grant,
$569,658 for Mr. Ludwig, $208,775 for Mr. Akhavan, and $172,985 for
Mr. Leichtner. The table reflects the full fair market value of the
PSO awards taking into account the probable outcome of the
performance conditions as of December 31, 2018. The grant date fair
value of the maximum shares issuable under the PSO awards are as
follows: $999,689 for Mr. Earl’s January 2018 grant, $4,123,644 for
Mr. Earl’s October 2018 grant, $2,471,232 for Mr. Ludwig and
$1,496,545 for Mr. Akhavan. |
| |
|
|
(8) |
Represents time-based stock
option and PSO awards. The grant date fair value of the time-based
stock option awards were as follows: $688,245 for Mr. Earl,
$466,471 for Mr. Ludwig, $356,649 for Mr. Akhavan, and $314,687 for
Mr. Leichtner. The table reflects the full fair market value of the
PSO awards taking into account the probable outcome of the
performance conditions as of December 31, 2017. The grant date fair
value of the maximum shares issuable under the PSO awards were as
follows: $1,332,175 for Mr. Earl, $2,533,674 for Mr. Ludwig,
$2,081,631 for Mr. Akhavan and $413,163 for Mr.
Leichtner. |
| |
|
|
(9) |
In October 2017, in
connection with the Compensation Committee’s annual review of
executive compensation, the committee increased Mr. Akhavan’s
annual base salary to $400,000, effective as of October 1,
2017. |
| |
|
|
(10) |
On December 17, 2019, Ms.
Hughes was promoted from Vice President and General Manager of our
Glu Play game development studio to Senior Vice President,
Revenue. |
| |
|
|
(11) |
In December 2019, in
connection with the Compensation Committee’s annual review of
executive compensation, the committee increased Ms. Hughes’ annual
base salary to $360,000, effective as of December 17,
2019. |
| |
|
|
(12) |
In October 2017 and 2018, in
connection with the Compensation Committee’s annual review of
executive compensation, the committee increased Mr. Leichtner’s
annual base salary to $320,000, effective as of October 1, 2017,
and to $345,000, effective October 1, 2018. |
| |
|
|
(13) |
The table reflects the full
fair market value of the PSU award taking into account the probable
outcome of the performance conditions as of December 31, 2017. The
grant date fair value of the maximum shares issuable under the PSU
award was $285,674. |
39
Table of Contents
Grants of Plan-Based Awards in
2019
The following table provides information for
the Named Executive Officers about equity awards granted during
2019. All RSUs and PSUs were awarded under our 2007 Equity
Incentive Plan.
|
|
|
|
|
Estimated
Future |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
Non- |
Estimated
Future |
Stock Award; Number |
Grant Date
Fair |
|
|
|
|
|
Equity
Plan |
Payouts Under Equity
Plan |
of Shares of Stocks
or |
Value of
Stock |
|
|
|
|
|
Incentive Awards
($) |
Incentive Awards
(#) |
Units |
Awards |
|
Name |
Grant Date |
Target |
Maximum |
Threshold |
Target |
Maximum |
(#) |
($)(1) |
|
Nick Earl |
|
12/17/19 |
(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
369,099 |
|
|
2,251,504 |
|
|
|
|
12/17/19 |
(3) |
|
|
— |
|
|
— |
|
|
25,650 |
|
|
85,500 |
|
|
171,000 |
|
|
— |
|
|
1,043,100 |
|
|
|
|
12/17/19 |
(4) |
|
|
— |
|
|
— |
|
|
110,730 |
|
|
369,099 |
|
|
553,649 |
|
|
— |
|
|
3,377,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric R.
Ludwig |
|
12/17/19 |
(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
207,056 |
|
|
1,263,042 |
|
|
|
12/17/19 |
(3) |
|
|
— |
|
|
— |
|
|
20,250 |
|
|
67,500 |
|
|
135,000 |
|
|
— |
|
|
823,500 |
|
|
|
12/17/19 |
(4) |
|
|
— |
|
|
— |
|
|
62,117 |
|
|
207,056 |
|
|
310,584 |
|
|
— |
|
|
1,894,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Akhavan |
|
12/17/19 |
(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
81,202 |
|
|
495,332 |
|
|
|
|
12/17/19 |
(3) |
|
|
— |
|
|
— |
|
|
17,550 |
|
|
58,500 |
|
|
117,000 |
|
|
— |
|
|
713,700 |
|
|
|
|
12/17/19 |
(4) |
|
|
— |
|
|
— |
|
|
24,361 |
|
|
81,202 |
|
|
121,803 |
|
|
— |
|
|
742,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Becky Ann |
|
12/17/19 |
(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
83,272 |
|
|
507,959 |
|
|
Hughes |
|
12/17/19 |
(3) |
|
|
— |
|
|
— |
|
|
17,550 |
|
|
58,500 |
|
|
117,000 |
|
|
— |
|
|
713,700 |
|
|
|
12/17/19 |
(4) |
|
|
— |
|
|
— |
|
|
24,982 |
|
|
83,272 |
|
|
124,908 |
|
|
— |
|
|
761,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J.
Leichtner |
|
12/17/19 |
(2) |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
74,270 |
|
|
453,047 |
|
|
|
|
12/17/19 |
(3) |
|
|
172,500 |
|
|
345,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
12/17/19 |
(4) |
|
|
— |
|
|
— |
|
|
7,427 |
|
|
24,757 |
|
|
37,136 |
|
|
— |
|
|
226,530 |
|
| |
|
|
(1) |
Amounts shown in this column
do not reflect dollar amounts actually received by the officer.
Instead, these amounts reflect the aggregate full grant date fair
value calculated in accordance with FASB ASC Topic 718. See Note 12
— Stock Option and Other Benefit Plans — in the notes to
consolidated financial statements contained in our Form 10-K for
the year ended December 31, 2019 for a description of the ASC Topic
718 methodology and assumptions. The performance awards reflected
in this column reflect the full fair market value of the award
taking into account the probable outcome of the performance
conditions. |
|
|
|
|
(2) |
On December 17, 2019, our
Compensation Committee determined to award each of Messrs. Earl,
Ludwig, Akhavan and Leichtner and Ms. Hughes time-based RSUs in the
amounts listed above as part of their annual refresh awards. The
time-based RSUs vest as to 25% of the total number of shares
subject to the RSUs on December 17, 2020, with 4.166% of the
underlying shares vesting on February 15, 2021, an additional 6.25%
of the underlying shares vesting in each of the following 11
quarters on the same day of each third month (e.g., the first such
quarterly vesting date will be May 15, 2021, the next quarterly
vesting date will be August 15, 2021, etc.), with the final 2.0833%
of the underlying shares vesting on February 15, 2024; provided,
however, that if any portion of the RSU vests on a date that is a
non-trading day on The Nasdaq Stock Market, then the RSU will vest
on the next trading day. |
| |
|
|
(3) |
On December 17, 2019, our
Compensation Committee determined to award each of Messrs. Earl,
Ludwig and Akhavan and Ms. Hughes PSUs in lieu of a cash bonus plan
for 2020. The shares indicated represent the threshold, target and
maximum number of shares to be issued depending on the achievement
of minimum Adjusted EBITDA thresholds and bookings goals during
2020. Mr. Leichtner participates in a cash bonus plan for 2020 as
further described in the “Compensation Discussion and Analysis”
section above. |
| |
|
|
(4) |
On December 17, 2019, our
Compensation Committee determined to award each of Messrs. Earl,
Ludwig, Akhavan and Leichtner and Ms. Hughes PSUs in the amounts
listed above as part of their annual refresh awards. The shares
indicated represent the threshold, target and maximum number of
shares to be issued depending on the achievement of minimum
Adjusted EBITDA thresholds and bookings goals during 2020, 2021 and
2022 as further described below in footnote 15 to the “Outstanding
Equity Awards at the End of 2019” Table. |
40
Table of Contents
Outstanding Equity Awards at the End of
2019
The following table provides information
with respect to outstanding stock options, RSUs, PSOs and PSUs held
by our Named Executive Officers as of December 31, 2019.
|
|
|
Option
Awards |
Stock
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based
Vesting |
Performance-Based |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
Vesting
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
Number of securities |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
Equity |
|
|
|
underlying
unexercised
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
Incentive
Plan |
|
|
|
options
(#)(1)(2) |
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
Awards: |
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares, |
Market or |
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
Market |
Units or |
Payout
Value |
|
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
Number of |
Value of |
Other |
of
Unearned |
|
|
|
|
|
|
|
|
|
Underlying |
|
|
|
|
|
|
Shares or |
Shares or |
Rights |
Shares,
Units |
|
|
|
|
|
|
|
|
|
Unexercised |
|
|
|
|
|
|
Units of |
Units of |
That |
or Other |
|
|
|
|
|
|
|
|
|
Unearned |
Option |
|
|
|
Stock That |
Stock That |
Have Not |
Rights
that |
|
|
|
|
|
|
|
|
|
Options |
Exercise |
Option Expiration |
Have Not |
Have Not |
Vested(#) |
Have not |
|
Name |
Grant Date |
Exercisable |
Unexercisable |
(#)(1)(2) |
Price($)(3) |
Date |
Vested(#)(2)(4) |
Vested(#)
(5) |
(4) |
Vested($) |
|
Nick Earl |
12/09/15 |
(6) |
|
300,000 |
|
|
— |
|
|
— |
|
|
2.92 |
|
|
12/09/25 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/16 |
|
|
672,916 |
|
|
177,084 |
|
|
— |
|
|
2.13 |
|
|
10/11/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
11/14/16 |
(7) |
|
501,041 |
|
|
148,959 |
|
|
— |
|
|
2.10 |
|
|
11/14/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
01/03/17 |
(7) |
|
655,208 |
|
|
194,792 |
|
|
— |
|
|
2.00 |
|
|
01/02/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(8)(9) |
|
650,000 |
|
|
— |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
01/02/18 |
(8) |
|
271,340 |
|
|
294,937 |
|
|
— |
|
|
3.63 |
|
|
01/02/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
01/02/18 |
(8)(11) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
311,241 |
|
|
$ |
1,883,008 |
|
|
|
01/02/18 |
(8)(10) |
|
155,620 |
|
|
— |
|
|
311,241 |
|
|
3.63 |
|
|
01/02/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
|
|
104,708 |
|
|
254,292 |
|
|
— |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(12) |
|
— |
|
|
— |
|
|
301,418 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(13) |
|
— |
|
|
— |
|
|
809,000 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(15) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
369,099 |
|
|
$ |
2,233,049 |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(16) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
553,649 |
|
|
$ |
3,349,576 |
|
|
|
12/17/19 |
(17) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
171,000 |
|
|
$ |
1,034,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric R.
Ludwig |
10/14/14 |
|
|
205,000 |
|
|
— |
|
|
— |
|
|
4.10 |
|
|
10/14/20 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/13/15 |
|
|
265,000 |
|
|
— |
|
|
— |
|
|
4.09 |
|
|
10/13/25 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/16 |
|
|
672,916 |
|
|
177,084 |
|
|
— |
|
|
2.13 |
|
|
10/11/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
|
|
151,745 |
|
|
128,401 |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(9) |
|
566,976 |
|
|
— |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(10) |
|
210,109 |
|
|
— |
|
|
420,219 |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
|
|
55,708 |
|
|
135,292 |
|
|
— |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(12) |
|
— |
|
|
— |
|
|
237,962 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(13) |
|
— |
|
|
— |
|
|
431,000 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(15) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
207,056 |
|
|
$ |
1,252,689 |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(16) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
310,584 |
|
|
$ |
1,879,033 |
|
|
|
12/17/19 |
(17) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
135,000 |
|
|
$ |
816,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Akhavan |
10/14/14 |
|
|
100,000 |
|
|
— |
|
|
— |
|
|
4.10 |
|
|
10/14/20 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/13/15 |
|
|
90,000 |
|
|
— |
|
|
— |
|
|
4.09 |
|
|
10/13/25 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/16 |
|
|
356,250 |
|
|
93,750 |
|
|
— |
|
|
2.13 |
|
|
10/11/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
|
|
116,019 |
|
|
98,172 |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(9) |
|
503,979 |
|
|
— |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(10) |
|
160,643 |
|
|
— |
|
|
321,286 |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
|
|
20.416 |
|
|
49,584 |
|
|
— |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(12) |
|
— |
|
|
— |
|
|
253,826 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(13) |
|
— |
|
|
— |
|
|
158,000 |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(15) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
81,202 |
|
|
$ |
491,272 |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(16) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
121,803 |
|
|
$ |
736,908 |
|
|
|
12/17/19 |
(17) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
117,000 |
|
|
$ |
707,850 |
|
41
Table of Contents
|
Becky |
04/13/16 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12,500 |
|
|
$ |
75,625 |
|
|
— |
|
|
|
— |
|
|
Ann |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hughes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/11/16 |
|
|
2,083 |
|
|
20,834 |
|
|
— |
|
|
2.13 |
|
|
10/11/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/16 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,000 |
|
|
$ |
151,250 |
|
|
— |
|
|
|
— |
|
|
|
10/11/17 |
(9) |
|
129,932 |
|
|
— |
|
|
— |
|
|
3,59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/17 |
|
|
71,656 |
|
|
60,634 |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/17 |
(11) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
37,140 |
|
|
$ |
224,697 |
|
|
|
10/25/18 |
(12) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
33,410 |
|
|
$ |
202,131 |
|
|
|
10/25/18 |
(14) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
208,000 |
|
|
$ |
1,258,400 |
|
|
|
12/17/19 |
(15) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
83,272 |
|
|
$ |
503,796 |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(16) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
124,908 |
|
|
$ |
755,693 |
|
|
|
12/17/19 |
(17) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
117,000 |
|
|
$ |
707,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott J. |
10/14/14 |
|
|
60,000 |
|
|
— |
|
|
— |
|
|
4.10 |
|
|
10/14/20 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
Leichtner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/13/15 |
|
|
90,000 |
|
|
— |
|
|
— |
|
|
4.09 |
|
|
10/13/25 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/11/16 |
|
|
277,083 |
|
|
72,917 |
|
|
— |
|
|
2.13 |
|
|
10/11/26 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
|
|
102,369 |
|
|
86,621 |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(9) |
|
201,592 |
|
|
— |
|
|
— |
|
|
3.59 |
|
|
10/10/27 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/10/17 |
(11) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
53,050 |
|
|
$ |
320,953 |
|
|
|
10/25/18 |
|
|
16,916 |
|
|
41,084 |
|
|
— |
|
|
6.42 |
|
|
10/25/28 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
10/25/18 |
(14) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
60,000 |
|
|
$ |
363,000 |
|
|
|
12/17/19 |
(15) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
74,270 |
|
|
$ |
449,334 |
|
|
— |
|
|
|
— |
|
|
|
12/17/19 |
(16) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
37,136 |
|
|
$ |
224,673 |
|
____________________
|
(1) |
Unless
otherwise indicated, each award in these columns is a stock option
that was granted under our 2007 Equity Incentive Plan. Except as
otherwise described in these footnotes, each stock option vests
with respect to 25% of the underlying shares on the first
anniversary of the grant date and as to
1/48th of the shares of common
stock underlying it monthly thereafter.
|
|
(2) |
We have
entered into the severance agreements described under “Potential
Payments upon Termination or Change in Control” below, which
provide for acceleration of vesting of each equity award made or to
be made to our Named Executive Officers other than Ms. Hughes if
certain events occur following a change of control of Glu.
|
|
(3) |
Represents the fair market value of a share of
our common stock, which is equal to the closing price of our common
stock on The Nasdaq Global Select Market on the grant date.
|
|
(4) |
Each
award in this column is a time-vesting RSU or a PSU award that was
granted under our 2007 Equity Incentive Plan. Except as otherwise
noted, each RSU vests as to 25% of the total number of shares on
the applicable quarterly vesting date that is at least one year
from the grant date (the “RSU First Vesting Date”), with the
remaining 75% of the shares vesting in equal quarterly installments
over the next three years following the RSU First Vesting Date on
the same day of each third month (e.g., if the RSU First Vesting
Date is February 15, the first quarterly vesting date will be May
15, the next quarterly vesting date will be August 15, etc.);
provided, however, that if any portion of the RSU vests on a date
that is a non-trading day on The Nasdaq Global Select Market, then
the award will vest on the next trading day.
|
|
(5) |
Represents the product of the maximum number of
shares subject to the RSU or PSU, as applicable, that have not
vested multiplied by the closing price of our common stock on The
Nasdaq Global Select Market on December 31, 2019, the last trading
day of 2019, which was $6.05
|
|
(6) |
On
December 7, 2015, our Compensation Committee approved an award to
Mr. Earl of an option to purchase 300,000 shares of our common
stock and 500,000 RSUs under our 2008 Equity Inducement Plan in
connection with our hiring of Mr. Earl.
|
|
(7) |
On
November 14, 2016, our Compensation Committee approved an award to
Mr. Earl of an option to purchase 1,500,000 shares of our common
stock. However, due to a limitation that was previously contained
in our 2007 Equity Incentive Plan regarding the number of shares
that may be awarded to any employee during a calendar year (the
“Plan Grant Limitation”), we were only able to award Mr. Earl an
option to purchase 650,000 shares of our common stock at such time.
Due to the Plan Grant Limitation, our Compensation Committee on
November 14, 2016 approved a bifurcation of this grant, and Mr.
Earl was awarded the 850,000 shares balance of his option on
January 3, 2017, the first trading day of 2017, with identical
vesting to the option granted on November 14, 2017 (i.e., 25% of
the underlying shares vested on November 14, 2017 and
1/48th of the underlying shares
vest monthly thereafter). |
42
Table of Contents
|
(8) |
On
October 10, 2017, our Compensation Committee approved a PSO award
under our 2007 Equity Incentive Plan to Mr. Earl to purchase up to
a maximum of 650,000 shares of our common stock. However, due to
the Plan Grant Limitation, we were not able to grant Mr. Earl
further equity awards in 2017. On January 2, 2018, our Compensation
Committee awarded Mr. Earl a PSO award to purchase up to 466,861
shares, a PSU award covering up to 466,861 shares, and an option to
purchase 566,277 shares.
|
|
(9) |
On
October 10, 2017, our Compensation Committee determined to award
each of these Named Executive Officers PSOs in lieu of a cash bonus
plan for 2018. The number of shares subject to the PSOs that would
become vested and exercisable, if any, depended on the achievement
of minimum Adjusted EBITDA thresholds and bookings goals during
2018. Since we met the required Adjusted EBITDA goal and generated
more than the maximum level of bookings during 2018, the maximum
number of PSOs that these Executive Officers could earn, as
indicated in the table, vested and became exercisable in February
2019.
|
|
(10) |
Represents PSOs containing Adjusted EBITDA
thresholds and bookings goals for each of 2018, 2019 and 2020, with
one-third of the maximum shares subject to the PSOs earnable in
each of those years. Since we met the required Adjusted EBITDA goal
and generated more than the maximum level of bookings for 2018, the
maximum number of PSOs that Messrs. Earl, Ludwig, and Akhavan could
earn for 2018 (which is one-third of the shares indicated in the
table) vested and became exercisable in February 2019. For 2019 and
2020, Glu will determine its Adjusted EBITDA and bookings for each
of these years in early 2020 and 2021, respectively, and to the
extent that these Named Executive Officers earn any PSOs based on
Glu’s bookings and Adjusted EBITDA for such years, the shares
earned will fully vest in February 2020 and 2021, respectively.
|
|
(11) |
Represents PSUs containing Adjusted EBITDA
thresholds and bookings goals for each of 2018, 2019 and 2020, with
one-third of the maximum shares subject to the PSUs earnable in
each of those years. Since we met the required Adjusted EBITDA goal
and generated more than the maximum level of bookings for 2018, the
maximum number of PSUs that these Named Executive Officers could
earn for 2018 (which is one-third of the shares indicated in the
table) vested and became exercisable in February 2019. We met the
Adjusted EBITDA threshold and generated bookings between target and
maximum with respect to the targets that the Compensation Committee
established in October 2017 for 2019 performance and therefore the
second tranche of the performance awards issued in 2017 vested at
77.7%. For 2020, Glu will determine its Adjusted EBITDA and
bookings in early 2021 and to the extent that these Named Executive
Officers earn any PSUs based on Glu’s bookings and Adjusted EBITDA
for 2020 performance, the shares earned will fully vest in February
2021.
|
|
(12) |
On
October 25, 2018, our Compensation Committee determined to award
each of these Named Executive Officers PSOs, or PSUs in the case of
Ms. Hughes, under our 2007 Equity Incentive Plan in lieu of a cash
bonus plan for 2019; Ms. Hughes received PSUs in lieu of 50% of her
cash bonus and participated in a cash bonus plan with respect to
the remaining 50% of her bonus opportunity. The shares indicated
represent the maximum number of shares to be issued depending on
the achievement of minimum Adjusted EBITDA thresholds and bookings
goals during 2019. Because we did not achieve the Adjusted EBITDA
and bookings goals established by the Compensation Committee for
2019 performance, none of these PSOs or PSUs vested.
|
|
(13) |
Represents PSOs containing Adjusted EBITDA
thresholds and bookings goals for each of 2019, 2020 and 2021, with
one-third of the maximum shares subject to the PSOs earnable in
each of those years. We did not meet the Adjusted EBITDA threshold
or the bookings goals that the Compensation Committee established
in October 2018 for 2019 performance and therefore the first
tranche of the performance awards issued in 2018 did not vest. Glu
will determine its Adjusted EBITDA and bookings for each of 2020
and 2021 early in 2021 and 2022, respectively, and to the extent
that these Named Executive Officers earn any PSOs based on Glu’s
bookings and Adjusted EBITDA for such years, the shares earned will
fully vest in February 2020, 2021 and 2022, respectively.
|
|
(14) |
Represents PSUs containing Adjusted EBITDA
thresholds and bookings goals for each of 2019, 2020 and 2021, with
one-third of the maximum shares subject to the PSUs earnable in
each of those years. We did not meet the Adjusted EBITDA threshold
or the bookings goals that the Compensation Committee established
in October 2018 for 2019 performance and therefore the first
tranche of the performance awards issued in 2018 did not vest. Glu
will determine |
43
Table of Contents
|
|
its
Adjusted EBITDA and bookings for each of 2020 and 2021 early in
2021 and 2022, respectively, and to the extent that these Named
Executive Officers earn any PSUs based on Glu’s bookings and
Adjusted EBITDA for such years, the shares earned will fully vest
in February 2020, 2021 and 2022, respectively.
|
|
(15) |
Represents time-based RSUs that vest as to 25% of
the total number of shares subject to the RSUs on December 17,
2020, with 4.166% of the underlying shares vesting on February 15,
2021, an additional 6.25% of the underlying shares vesting in each
of the following 11 quarters on the same day of each third month
(e.g., the first such quarterly vesting date will be May 15, 2021,
the next quarterly vesting date will be August 15, 2021, etc.),
with the final 2.0833% of the underlying shares vesting on February
15, 2024; provided, however, that if any portion of the RSU vests
on a date that is a non-trading day on The Nasdaq Stock Market,
then the RSU will vest on the next trading day.
|
|
(16) |
Represents PSUs containing Adjusted EBITDA
thresholds and bookings goals for each of 2020, 2021 and 2022, with
one-third of the maximum shares subject to the PSUs earnable in
each of those years. Glu will determine its Adjusted EBITDA and
bookings for each of 2020, 2021 and 2022 early in 2021, 2022 and
2023, respectively, and to the extent that these Named Executive
Officers earn any PSUs based on Glu’s bookings and Adjusted EBITDA
for such years, the shares earned will fully vest in February 2021,
2022 and 2023, respectively.
|
|
(17) |
On
December 17, 2019, our Compensation Committee determined to award
these Named Executive Officers PSUs in lieu of a cash bonus plan
for 2020. The PSUs indicated represent the maximum number of shares
to be issued depending on the achievement of minimum Adjusted
EBITDA thresholds and bookings goals during 2020. Glu will
determine its 2020 Adjusted EBITDA and bookings in early 2021, and
to the extent that these Named Executive Officers earn any PSUs
based on Glu’s 2020 bookings and Adjusted EBITDA, such PSOs will
fully vest in February 2021. |
Option
Exercises and Stock Vested in 2019
The following table shows information about
stock option exercises and RSU award settlements for each of the
Named Executive Officers during 2019, including the value realized
upon exercise or settlement. Other than RSUs, we have not granted
any stock awards (as opposed to other forms of equity compensation)
to any of our employees that settled during 2019.
|
|
Number of Shares |
|
Value Realized on |
|
Number of Shares |
|
Value Realized on |
|
|
Acquired on Exercise |
|
Exercise of Options(2) |
|
Acquired On |
|
Settlement of
RSUs(4) |
|
Name |
of
Options(1) |
|
($) |
|
Settlement of
RSUs(3) |
|
($) |
|
Nick Earl |
|
— |
|
|
|
— |
|
|
|
280,620 |
|
|
|
2,370,871 |
|
|
Eric R. Ludwig |
|
138,000 |
|
|
|
604,440 |
|
|
|
83,750 |
|
|
|
594,835 |
|
|
Chris Akhavan |
|
— |
|
|
|
— |
|
|
|
27,500 |
|
|
|
195,319 |
|
|
Becky Ann Hughes |
|
77,083 |
|
|
|
251,298 |
|
|
|
71,070 |
|
|
|
554,997 |
|
|
Scott J.
Leichtner |
|
54,357 |
|
|
|
89,780 |
|
|
|
54,025 |
|
|
|
448,102 |
|
____________________
|
(1) |
Amounts
reported in this column include 99,819 shares relinquished by Mr.
Ludwig and cancelled by Glu in exchange for Glu’s agreement to pay
federal and state tax withholding obligations of Mr. Ludwig
resulting from the cashless exercise of the options.
|
|
(2) |
The
value realized on exercise of option awards is calculated as the
difference between the price at which the exercised shares were
sold (excluding brokerage commissions) and the exercise price of
the options.
|
|
(3) |
Amounts
reported in this column include shares relinquished by the Named
Executive Officer and cancelled by Glu in exchange for Glu’s
agreement to pay federal and state tax withholding obligations of
the Named Executive Officer resulting from the vesting of RSUs,
including withholding of 141,369 shares from Mr. Earl, 45,610
shares from Mr. Ludwig, 14,060 shares from Mr. Akhavan and 27,243
shares from Mr. Leichtner.
|
|
(4) |
The
value realized on settlement of RSUs is calculated by multiplying
the number of RSUs settled by the closing price of Glu’s common
stock on the settlement date. |
44
Table of Contents
Pension Benefits and
Nonqualified Deferred Compensation
We do not provide any defined benefit plan
pension benefits or a nonqualified deferred compensation plan to
our Named Executive Officers.
Potential Payments
upon Termination or Change in Control
Mr. Earl
On November 10, 2016, we entered into both
an employment agreement and a Change of Control Severance Agreement
with Nick Earl, our President and Chief Executive
Officer.
The employment agreement provides that
should Mr. Earl terminate his employment based on an “involuntary
termination” or be terminated, other than for “cause” or
disability, at any time, other than within twelve months after a
“change in control transaction,” and Mr. Earl delivers to us a
signed agreement and general release, then Mr. Earl will be
entitled to the following severance benefits:
| ● |
12 months of
his then-current annual base salary, payable in lump-sum; and
|
| ● |
up to 12 months
of continuation coverage for him (and any eligible dependents)
pursuant to COBRA. |
The Change of Control Severance Agreement
provides that if Mr. Earl terminates his employment based on an
“involuntary termination” or if he is terminated, other than for
“cause” or disability, within 12 months after a “change in control
transaction,” and Mr. Earl delivers to us a signed agreement and
general release, he would receive the same benefits set forth above
pursuant to his employment agreement, except that he will also
receive:
| ● |
a lump-sum
payment of his annual bonus for such calendar year, based on the
target potential amount; and
|
| ● |
full vesting
for all of his outstanding and unvested equity awards that were
granted after November 10, 2016 (with vesting of performance-based
equity to be based upon target-level achievement). |
Outstanding and unvested equity awards that
were granted prior to November 10, 2016 remain subject to the
severance agreement we entered into with Mr. Earl on February 8,
2016. Such severance agreement provides that if Mr. Earl terminates
his employment based on an “involuntary termination” or is
terminated, other than for “cause” or disability, within 12 months
after a “change in control transaction,” he would receive an
additional 36 months of vesting with respect to each of his then
outstanding and not fully vested equity awards.
Mr. Ludwig
On October 10, 2008, we entered into a
severance agreement with Eric R. Ludwig, our Executive Vice
President, Chief Operating Officer and Chief Financial Officer,
which was amended on July 7, 2011. Under this agreement, as
amended, if Mr. Ludwig terminates his employment based on an
“involuntary termination” or if he is terminated, other than for
“cause” or disability, within 12 months after a “change in control
transaction,” he would receive 12 months of his then-current annual
base salary, payable in lump-sum. Mr. Ludwig would also receive a
lump-sum payment of his annual bonus for such calendar year, based
on the target potential amount. Additionally, Mr. Ludwig’s then
outstanding and unvested equity awards would become fully vested
(with vesting of performance-based equity to be based upon
target-level achievement). Finally, Mr. Ludwig would receive
reimbursement for up to 12 months of COBRA premiums.
Mr. Akhavan and Mr. Leichtner
On July 7, 2011, we entered into a change of
control severance agreement with Scott Leichtner, our Vice
President, General Counsel and Corporate Secretary, and on June 3,
2013, we entered into a change of control severance agreement with
Chris Akhavan. Each of these agreements provides that if the
executive terminates his employment based on an “involuntary
termination” or is terminated, other than for “cause” or
disability, within 12 months after a “change in control
transaction,” he would receive six months of his then-current
annual base salary, payable in lump-sum. Each officer would also
receive 50% of his annual bonus for such calendar year, based on
the target potential amount. Additionally, each officer would
receive an additional 36 months of vesting with respect to each of
his then outstanding and not fully vested equity awards (with
vesting of performance-based equity to be based upon target-level
achievement). Finally, each officer would receive reimbursement for
up to six months of COBRA premiums.
45
Table of Contents
The following definitions are used in the
severance agreements and retention arrangements described for the
Named Executive Officers:
“Cause” is defined to mean (1) the
executive’s committing an act of gross negligence, gross misconduct
or dishonesty, or other willful act, including misappropriation,
embezzlement or fraud, that materially adversely affects us or any
of our customers, suppliers or partners, (2) his personal
dishonesty, willful misconduct in the performance of services for
us, or breach of fiduciary duty involving personal profit, (3) his
being convicted of, or pleading no contest to, any felony or
misdemeanor involving fraud, breach of trust or misappropriation or
any other act that our Board reasonably believes in good faith has
materially adversely affected, or upon disclosure will materially
adversely affect, us, including our public reputation, (4) any
material breach of any agreement with us by him that remains
uncured for 30 days after written notice by us to him, unless that
breach is incapable of cure, or any other material unauthorized use
or disclosure of our confidential information or trade secrets
involving personal benefit or (5) his failure to follow the lawful
directions of our Board or, if he is not the Chief Executive
Officer, the lawful directions of the Chief Executive Officer, in
the scope of his employment unless he reasonably believes in good
faith that these directions are not lawful and notifies our Board
or Chief Executive Officer, as the case may be, of the reasons for
his belief.
A “change in control transaction” is defined
to mean the closing of (1) a merger or consolidation in one
transaction or a series of related transactions, in which our
securities held by our stockholders before the merger or
consolidation represent less than 50% of the outstanding voting
equity securities of the surviving corporation after the
transaction or series of related transactions, (2) a sale or other
transfer of all or substantially all of our assets as a going
concern, in one transaction or a series of related transactions,
followed by the distribution to our stockholders of any proceeds
remaining after payment of creditors or (3) a transfer of more than
50% of our outstanding voting equity securities by our stockholders
to one or more related persons or entities other than Glu in one
transaction or a series of related transactions.
“Involuntary Termination” is defined to mean
the executive’s resignation of employment from Glu expressly based
on the occurrence of any of the following conditions, without the
executive’s informed written consent, provided, however, that with
respect to each of the following conditions, the executive must (1)
within 90 days following its occurrence, deliver to us a written
notice explaining the specific basis for the executive’s belief
that he is entitled to terminate his employment due to an
Involuntary Termination and (2) give us an opportunity to cure any
of the following within 30 days following delivery of such notice
and explanation: (1) a material reduction in his duties, position
or responsibilities, or his removal from these duties, position and
responsibilities, unless he is provided with a position of
substantially equal or greater organizational level, duties,
authority and compensation; provided, however, that a change of
title, in and of itself, or a reduction of duties, position or
responsibilities solely by virtue of our being acquired and made
part of a larger entity will not constitute an “Involuntary
Termination,” (2) a greater than 15% reduction in his then current
annual base compensation that is not applicable to our other
executive officers or (3) without his express written consent, a
relocation to a facility or a location more than 30 miles from his
then current location of employment. Involuntary Termination does
not include a termination of employment for death or permanent
disability.
The table below estimates as of December 31,
2019 the potential payments to Messrs. Earl, Ludwig, Akhavan and
Leichtner should such officer terminate their employment based on
an “involuntary termination” or be terminated other than for
“cause” or disability either (1) within 12 months following a
“change in control transaction” or (2) or in the absence of a
“change in control transaction.” We have not entered into a change
of control agreement with Ms. Hughes.
46
Table of Contents
| Name |
|
Benefits |
|
Termination Other Than for
Cause or Disability or by Named
Executive Officer Based on an
Involuntary Termination Within 12
Months Following
Change in Control Transaction($) |
|
Termination
Other Than for
Cause or Disability or by Named
Executive Officer Based on an
Involuntary Termination
Absent a
Change in Control
Transaction($) |
| Nick Earl |
|
Severance |
|
475,000 |
|
|
475,000 |
|
|
Equity
Acceleration(1) |
|
6,979,185 |
(3) |
|
|
|
|
COBRA
Premium(2) |
|
21,046 |
|
|
21,046 |
|
|
Total
Value |
|
7,475,231 |
|
|
496,046 |
|
|
| Eric R. Ludwig |
|
Severance |
|
375,000 |
|
|
|
|
|
Equity Acceleration(1) |
|
4,612,948 |
(4) |
|
|
|
|
COBRA Premium(2) |
|
34,120 |
|
|
|
|
|
Total Value |
|
5,022,068 |
|
|
|
| |
| Chris
Akhavan |
|
Severance |
|
200,000 |
|
|
|
|
|
Equity
Acceleration(1) |
|
2,472,382 |
(5) |
|
|
|
|
COBRA
Premium(2) |
|
5,409 |
|
|
|
|
|
Total
Value |
|
2,677,791 |
|
|
|
|
|
| Scott J. Leichtner |
|
Severance |
|
172,500 |
|
|
|
|
|
Equity Acceleration(1) |
|
1,500,512 |
(5) |
|
|
|
|
COBRA Premium(2) |
|
11,817 |
|
|
|
|
|
Total Value |
|
1,684,829 |
|
|
|
____________________
| (1) |
These
amounts are calculated by aggregating the sums determined by
multiplying, for each award the number of shares accelerated by (a)
the positive difference, if any, between the closing price per
share of our common stock on The Nasdaq Global Select Market on
December 31, 2019, the last trading day of 2019, which was $6.05,
and the option exercise price per share for stock options, and (b)
$6.05 per share in the case of RSUs and PSUs.
|
|
|
|
| (2) |
COBRA
payout amounts are estimated based on the cost of the monthly
premium and represent coverage for medical, dental and vision
insurance for the executive and his eligible dependents, if
any.
|
|
|
| (3) |
Reflects
(i) full acceleration of all unvested shares subject to outstanding
equity awards held by Mr. Earl on December 31, 2019 and granted
after November 10, 2016 and (ii) an additional 36 months of vesting
of all outstanding equity awards held by Mr. Earl on December 31,
2019 and granted prior to November 10, 2016. PSOs and PSUs will
accelerate free of all restrictions (other than those set forth in
our insider trading policies then in effect or imposed by
applicable law) based on the target amount.
|
|
|
| (4) |
Reflects
full acceleration of all unvested shares subject to outstanding
equity awards held by Mr. Ludwig on December 31, 2019. PSOs will
accelerate free of all restrictions (other than those set forth in
our insider trading policies then in effect or imposed by
applicable law) based on the target amount.
|
|
|
| (5) |
Reflects
an additional 36 months of vesting of all outstanding time-based
equity awards and outstanding performance- based equity awards (at
the target level of performance achievement) held by the executive
officer on December 31, 2019. PSOs and PSUs will accelerate free of
all restrictions (other than those set forth in our insider trading
policies then in effect or imposed by applicable law) based on the
target amount.
|
Chief
Executive Officer Pay Ratio Disclosure
Our ratio of the annual total compensation
of our CEO to the median of the annual total compensation of all
our employees (excluding our CEO) for 2019 is 80 to 1. We believe
this ratio, which was calculated in a manner consistent with Item
402(u) of Regulation S-K, to be a reasonable estimate, based upon
the assumptions and adjustments described below. As disclosed in
the 2019 Summary Compensation Table above, the annual total
compensation for 2019 for our CEO was $7,146,863. The median of the
annual total compensation for 2019 for all our employees was
$89,738. In identifying the median employee under Item 402(u),
reporting companies are permitted to use reasonable estimates,
assumptions and methodologies based on their own facts and
circumstances. As a result, the disclosure regarding the
compensation of our median employee may not be directly comparable
to similar disclosure by other reporting companies.
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Table of Contents
Calculation Methodology
In 2019, there was no change in our employee
population or employee compensation arrangements that we believe
would significantly impact the pay ratio. Accordingly, for purposes
of calculating the pay ratio set forth above, we are permitted to
use the same median employee that we identified for purposes of our
2018 pay ratio. The median employee that we identified for purposes
of our 2018 pay ratio has since terminated employment with us. As a
result, we have identified a substitute median employee with
substantially similar compensation to that of our original median
employee.
For a description of our methodology for
identifying the median employee, see “Chief Executive Officer Pay
Ratio Disclosure” on page 48 of our definitive proxy statement
filed with the Securities and Exchange Commission on April 26,
2019.
We calculated the 2019 annual total
compensation for the median employee using the same methodology we
used to calculate the 2019 amount reported for our Named Executive
Officers in the “Total” column of the Summary Compensation
Table.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Review, Approval or Ratification of Transactions
with Related Persons
Our Nominating and Governance Committee has
adopted a written related-person transactions policy. The
Nominating and Governance Committee reviews transactions that may
be “related-person transactions,” which are transactions between us
and related persons in which the aggregate amount involved exceeds
or may be expected to exceed $120,000 and in which a related person
has or will have a direct or indirect material interest. For
purposes of the policy, a related person is a director, executive
officer, nominee for director, or a greater than 5% beneficial
owner of our common stock and their immediate family members, in
each case as of January 1, 2019, the beginning of our last fiscal
year.
This policy provides that, barring special
facts or circumstances, a related person does not have a direct or
indirect material interest in the following categories of
transactions:
| ● |
employment-related compensation to executive
officers that is approved by the Compensation
Committee; |
|
|
| ● |
compensation to non-employee directors that is
reported in our proxy statement; |
|
|
| ● |
any transaction with another company to which the
related party’s only relationship is as a director, beneficial
owner of less than 10% of that company’s shares, or employee (other
than an executive officer), if the aggregate amount involved does
not exceed the greater of $500,000 or 2% of that company’s total
annual revenues; |
|
|
| ● |
any transaction where the related party’s
interest arises solely from the ownership of our common stock and
all holders of our common stock receive the same benefit on a pro
rata basis (e.g., a dividend); and |
|
|
| ● |
ordinary course business travel and expenses,
advances and reimbursements. |
In determining whether to approve or ratify
a related-person transaction, the Nominating and Governance
Committee will take into account, among other factors it deems
appropriate, whether the transaction is on terms no less favorable
than terms generally available to an unaffiliated third party under
the same or similar circumstances, the extent of the related
party’s interest in the transaction, the benefits to us of the
transaction, the potential impact on a director’s independence and
whether the transaction would impair the judgment of a director or
executive officer to act in our best interests and those of our
stockholders.
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Table of Contents
Tencent Transaction
On April 29, 2015, Glu agreed to issue in a
private placement offering to Red River Investments Limited (“Red
River”), a wholly-owned subsidiary of Tencent, an aggregate of
21,000,000 shares of Glu’s common stock at a purchase price of
$6.00 per share, for aggregate proceeds of $126 million (the
“Offering”). The shares of Glu’s common stock were issued in two
separate closings on each of April 29, 2015 and June 3, 2015. In
connection with the Offering, Red River became a greater than 5%
owner of Glu, and Glu and Tencent became parties to a voting and
standstill agreement, pursuant to which Glu agreed to cause a
representative of Tencent to be elected and appointed as a new
member of the Board as a Class I director, and to subsequently
nominate for future director elections a representative of Tencent
to the Board. Mr. Feder, the current representative of Tencent on
the Board was elected on January 26, 2017 pursuant to the voting
and standstill agreement. Tencent, through Red River and another of
its controlled affiliates, held 13.85% of Glu’s outstanding shares
as of April 20, 2020.
Indemnification Agreements
We have entered into indemnity agreements
with each of our directors and executive officers that may be
broader than the specific indemnification provisions contained in
the Delaware General Corporation Law. These indemnity agreements
may require us, among other things, to indemnify our directors and
executive officers against liabilities that may arise by reason of
their status or service. These indemnity agreements may also
require us to advance all expenses incurred by the directors and
executive officers in investigating or defending any such action,
suit or proceeding. We believe that these agreements are necessary
to attract and retain qualified individuals to serve as directors
and executive officers. We have obtained insurance policies under
which, subject to the limitations of the policies, coverage is
provided to our directors and officers against loss arising from
claims made by reason of breach of fiduciary duty or other wrongful
acts as a director or officer, including claims relating to public
securities matters, and to us with respect to payments that may be
made by us to these officers and directors pursuant to our
indemnification obligations or otherwise as a matter of
law.
Other than the indemnification agreements
and the compensation arrangements that are described in this proxy
statement under the headings “Compensation Discussion and
Analysis,” “Executive Compensation” and “Director Compensation,”
since January 1, 2019, we have not been a party to any transaction
or series of similar transactions in which the amount involved
exceeded or will exceed $120,000 and in which any director, nominee
for director, executive officer, holder of more than 5% of our
common stock or certain persons or entities affiliated with them
had or will have a material interest.
See also “Corporate Governance — Director
Independence” for information the Board considered in determining
the independence of our non-employee directors.
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Table of Contents
PROPOSAL NO. 2 –
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF
OUR 2007 EQUITY INCENTIVE PLAN
On April 23, 2020, the Board, upon
recommendation of the Compensation Committee, adopted the Sixth
Amended and Restated 2007 Equity Incentive Plan (the “Restated
Plan”), subject to stockholder approval. The Restated Plan is an
amendment and restatement of the Glu Mobile Inc. Fifth Amended and
Restated 2007 Equity Incentive Plan (the “2007 Plan”), which was
last amended in June 2019. If our stockholders do not approve this
Proposal, then the 2007 Plan will continue without the amendments
in accordance with its terms.
The principal terms of the Restated Plan are
summarized below. This summary is not a complete description of the
Restated Plan, and it is qualified in its entirety by reference to
the complete text of the Restated Plan document. The Restated Plan,
marked to show changes from the 2007 Plan, is attached as
Appendix A
to this proxy
statement.
Amendments to the 2007 Plan
The following are the primary amendments to
the 2007 Plan contained in the Restated Plan:
| ● |
an increase to the available share reserve by
7,000,000 shares of our common stock (for a cumulative aggregate
share authorization of 58,573,191 shares); and |
|
|
| ● |
certain clarifying and technical
changes. |
Rationale For and Reasons Why the Board
Recommends a Vote FOR the Restated Plan
Equity Compensation Is a Critical Element of Our
Compensation Policy.
We believe that long-term incentive
compensation programs align the interests of management, employees
and stockholders to create long-term stockholder value. We strongly
believe that the approval of the Restated Plan is essential to our
continued success, because we otherwise may not have sufficient
shares available under our 2007 Plan to attract and retain new
employees or to motivate and retain our existing employees. This is
particularly critical since our employees are our most valuable
asset. In addition, in December 2019 our Compensation Committee
determined to continue its practice of replacing cash bonuses with
performance-based equity awards for our Eligible Officers. We
expect that the Compensation Committee will similarly utilize
performance-based equity awards in lieu of cash bonuses for at
least some our senior leadership team for 2021, which will impact
our utilization of shares from the Restated Plan during the next 12
months.
Accordingly, approving the Restated Plan is
in the best interest of our stockholders because equity awards help
us to:
| ● |
attract, motivate and retain talented
employees; |
|
|
| ● |
align employee and stockholder
interests; |
|
|
| ● |
link employee compensation with company
performance; and |
|
|
| ● |
maintain a culture based on employee stock
ownership. |
After carefully forecasting our anticipated
growth, hiring plans and retention needs and considering our
historical grant and forfeiture rates and the expectation that the
Compensation Committee will utilize performance-based equity awards
in lieu of cash bonuses for our Eligible Officers for 2021, we
anticipate the 7,000,000 shares that we seek to add to the Restated
Plan — combined with shares currently reserved under, or that we
may add to, our 2018 Inducement Plan (which we may use for certain
newly hired employees and to grant equity awards in connection with
acquisitions) will be sufficient to attract and retain key
employees through at least June 2021, at which point we expect to
again ask for stockholder approval for an increase to the number of
shares available under the Restated Plan. However, a change in
business conditions or our strategy could alter this
projection.
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Table of Contents
The Restated Plan Conforms to Best Practices in
Equity Incentive Plans.
The Restated Plan conforms to best practices
in equity incentive plans in that it:
| ■ |
a limitation providing that no equity awards will
vest, in whole or in part, prior to one year from the date of grant
(subject to a 5% carve-out as described below); |
|
|
| ■ |
a limitation of $600,000 on the grant date fair
value of equity awards that may be granted to any non-employee
director in any calendar year, plus an additional $600,000 in grant
date fair value for one-time awards to a newly appointed or elected
non-employee director; |
|
|
| ■ |
a provision providing that any equity awards
issued to our executive officers will be subject to any clawback or
recoupment policies in effect or as may be amended or adopted from
time to time; |
|
|
| ■ |
a restriction that the following shares will not
be available for future grant under the Restated Plan: (1) shares
used in connection with the exercise of a stock option or stock
appreciation right to pay the exercise price or purchase price of
such award or satisfy applicable tax withholding obligations and
(2) the gross number of shares subject to stock appreciation rights
or stock options that are exercised; |
|
|
| ■ |
a restriction that only shares used to satisfy
applicable minimum tax withholding obligations on any award other
than a stock option or a stock appreciation right will be available
for future grant under the Restated Plan; |
|
|
| ■ |
a prohibition against repricing or certain other
exchanges of stock options and stock appreciation rights without
stockholder approval; |
|
|
| ■ |
a limitation on the transferability of awards,
since generally awards may not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are
granted, except by will or the laws of descent and distribution;
and |
|
|
| ■ |
a provision prohibiting the grant of discounted
options or stock appreciation rights. |
| ■ |
single-trigger vesting acceleration rights, other
than on a limited basis for non-employee directors; |
|
|
| ■ |
tax gross-ups; and |
|
|
| ■ |
an evergreen provision to automatically increase
the number of shares available under it. |
Our Use of Equity Supports a Strong
Pay-for-Performance Culture and Has Been Managed to Stay within
Industry Norms.
We have carefully managed our annual equity
award dilution over the past three years by, among other things,
limiting equity awards to high-performing employees, determining
the appropriate size of awards based on our review of market data
and reviewing market practices for equity burn rates in our
industry.
|
Options |
RSUs |
PSUs |
PSOs |
PSUs |
PSOs |
Burn |
| Period |
Granted |
Granted |
Granted |
Granted |
Earned |
Earned |
Rate(1) |
| Fiscal 2017 |
|
5,346 |
|
|
2,360 |
|
|
661 |
|
|
4,246 |
|
|
0 |
|
|
0 |
|
|
6.55% |
|
| Fiscal
2018 |
|
6,092 |
|
|
278 |
|
|
2,909 |
|
|
2,737 |
|
|
0 |
|
|
0 |
|
|
4.60% |
|
| Fiscal 2019 |
|
815 |
|
|
2,936 |
|
|
2,780 |
|
|
0 |
|
|
700 |
|
|
3,512 |
|
|
6.64% |
|
| 3-Yr.
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.93% |
|
____________________
|
|
|
| (1) |
“Burn
Rate” means the sum of the number of shares subject to time-vesting
equity awards granted and the number of performance-vesting shares
earned in the fiscal year (using a 1.5x multiplier for each RSU or
PSU award), divided by basic weighted average common shares
outstanding during the fiscal year. All share-based amounts in this
table are displayed in thousands.
|
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Table of Contents
Beginning in October 2017, we modified our
executive compensation program to incorporate a heavy weighting on
performance-based equity. As a result, our equity program is
strongly aligned with stockholders’ interests given that our
executive leadership’s annual and long term incentives (including
the annual bonus opportunity) mainly consists of performance based
equity awards in the form of PSOs or PSUs whose vesting is based on
the achievement of challenging performance targets in addition to
the time-vesting period applicable to each award. In particular, a
significant number of the PSOs granted during 2017 and 2018 and the
PSUs granted in 2019 reflect a change in our compensation strategy
to replace, for key members of our senior leadership team, the
annual cash bonus plan with PSOs for 2018 and 2019 and with PSUs
for 2020 that vest based on our achievement of pre-established
annual bookings and Adjusted EBITDA goals. In addition, the annual
equity awarded to our senior leadership team in each of October
2017, October 2018 and December 2019 consisted of a mix of
multi-year PSUs, PSOs and time vesting stock options, with no time
vesting RSUs granted with respect to the 2017 and 2018 grants and a
mix of multi-year PSUs with time vesting RSUs with respect to the
2019 grants. The Compensation Committee, our Board of Directors and
management team supported these changes in our compensation
strategy to reinforce our business objectives and to drive a focus
on sustained stockholder value creation.
We will continue to review our compensation
plans and strategies as our business evolves and will continue to
use equity and performance-based incentives to drive accountability
by our leadership team and to reward for sustained strong
performance. We believe that increasing the number of shares
available for grant under the Restated Plan will enable us to
continue to provide competitive equity compensation to our
employees and directors while continuing to comply with best
practices for equity incentive plan grant practices.
We Broadly Distribute Equity
Awards.
Our equity awards are widely spread among
our employees. For example, during 2019, our Named Executive
Officers received an aggregate of restricted stock units
(time-based and performance-based) for 2,502,979 shares, or
approximately 38.3% of aggregate equity awards we granted to all
employees in 2019. In 2019, a majority of our North American
employees who started with us during the year received an RSU
and/or stock option award in the month following their start date,
and approximately 270 of our global employees (representing 37.8%
of all existing global employees as of December 31, 2019) received
a refresh stock option award.
Conclusion
If our stockholders do not approve the
Restated Plan, our plans to operate our business would be
materially adversely affected because we otherwise may not have
sufficient shares available under our 2007 Plan to attract and
retain new employees or to motivate and retain our existing
employees. Additionally, if the shares available for grant under
the 2007 Plan are not increased, we may need to use our 2018
Inducement Plan — which is a non-stockholder approved plan — to
grant awards to newly hired employees and find other ways to retain
our current employees, as they are not eligible to receive awards
under the 2018 Inducement Plan due to rules put in place by Nasdaq
with respect to non-stockholder approved plans. This could require
us to offer material cash-based incentives to compete for talent as
well as to revert back to annual cash incentive bonus plans for our
Eligible Officers rather than utilizing PSUs, which could have a
significant impact upon our quarterly results of operations and
balance sheet. Moreover, this would not be competitive with most
other technology companies in the San Francisco Bay Area with which
we compete for talent or our peer companies. We believe that a
cash-based incentive program for all of our executive leadership
would not have significant long-term retention value and would not
serve to align our employees’ interests as closely with those of
our stockholders in the absence of equity incentives.
Our future success depends heavily on our
ability to attract and retain high caliber employees. The ability
to grant equity awards is a necessary and powerful recruiting and
retention tool for us to hire and motivate the quality personnel we
need to compete.
For these reasons, we request that our
stockholders approve the Restated Plan. If the Restated Plan is not
approved, we do not expect to be able to offer competitive equity
packages to retain our current employees and hire new
employees.
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Table of Contents
General
The Restated Plan provides for the grant of
incentive stock options, nonstatutory stock options, restricted
stock awards, stock appreciation rights, RSUs and stock bonuses and
performance shares (collectively, the “stock awards”). The Restated
Plan also provides the ability to grant performance shares that may
qualify the compensation attributable to those awards as
performance-based compensation for purposes of the Code, as
explained in greater detail below.
Incentive stock options granted under the
Restated Plan are intended to qualify as “incentive stock options”
within the meaning of Section 422 of the Code; nonstatutory stock
options granted are not intended to qualify as incentive stock
options under the Code. See “Federal Income Tax Information” for a
discussion of the tax treatment of the various stock
awards.
Purpose
Our Board adopted the Restated Plan to
provide a means to retain the services of our employees, directors,
consultants, independent contractors and advisors, and those of any
parent or subsidiary of ours, to attract and retain the new talent
to our company that we will require to execute our strategy and
grow our business, and to provide a means by which these eligible
individuals may be given an opportunity to benefit from increases
in the value of our common stock through the grant of equity
awards, thereby aligning the long-term compensation and interests
of those individuals with our stockholders.
Administration
The Restated Plan is administered by our
Compensation Committee, all of the members of which are
non-employee directors under applicable federal securities laws and
outside directors as defined under applicable federal tax laws. Our
Compensation Committee has the authority to construe and interpret
the Restated Plan, grant and determine the terms of each award,
including the exercise price, the number of shares subject to the
award, the exercisability of the award and the form of
consideration payable upon exercise of the award, and make all
other determinations necessary or advisable for the administration
of the Restated Plan.
Eligibility
The Restated Plan provides for the grant of
incentive stock options only to our employees and employees of any
parent or subsidiary of ours. All awards other than incentive stock
options may be granted to our employees, directors, consultants,
independent contractors and advisors, and those of any parent or
subsidiary of ours. As of March 31, 2020, we had a total of 740
employees and eight non-employee directors who would be eligible to
receive awards from the Restated Plan. Our executive officers and
directors have an interest in this Proposal insofar as they are
eligible to receive awards under the Restated Plan.
Shares Subject to the Restated
Plan
If stockholders approve the Restated Plan,
then the shares reserved under the Restated Plan will increase by
7,000,000 shares of our common stock, and the cumulative aggregate
share authorization under the Restated Plan will increase to
58,573,191 shares, which includes 2,461,644 shares that have been
added to the plan pursuant to the “pour over” provision of our 2001
Second Amended and Restated Stock Option Plan (the “2001 Plan,”
which plan expired when we adopted the 2007 Plan); this pour over
provision allowed us to add to the 2007 Plan any shares that were
subject to a stock option granted under our 2001 Plan that were
cancelled, expired or terminated. The following table summarizes
information regarding awards outstanding and shares of our Common
Stock remaining available for grant as of December 31,
2019:
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Table of Contents
| Stock Options Outstanding* |
|
19,264,617 |
| Weighted Average Exercise Price of Stock Options
Outstanding |
|
$3.56 |
| Weighted Average Remaining Term of Stock Options
Outstanding |
|
7.22 years |
| Full Value Awards Outstanding (RSUs and
PSUs)* |
|
8,086,039 |
| Shares Available for Grant under the 2007
Plan |
|
2,686,329 |
| Shares Available for Grant under the 2018
Inducement Plan |
|
156,108 |
____________________
*Excludes all PSOs and PSUs paid in lieu of
earned annual incentive cash compensation.
The closing price of Glu’s common stock on
The Nasdaq Global Select Market on April 20, 2020 was $7.91 per
share.
In addition, the following shares will again
be available for grant and issuance under our Restated
Plan:
|
● |
shares surrendered pursuant to an exchange
program; |
|
|
|
|
● |
shares subject to an option or stock appreciation
right granted under our Restated Plan that cease to be subject to
the option or stock appreciation right for any reason other than
exercise of the option or stock appreciation right; |
|
|
|
|
● |
shares used to satisfy the tax withholding
obligations for RSU awards; provided, however, that only shares
used to satisfy the minimum tax withholding obligations for RSU
awards will again be available for future grant and issuance under
the Restated Plan; |
|
|
|
|
● |
shares subject to an award granted under our
Restated Plan that are subsequently forfeited or repurchased by us
at the original issue price; and |
|
|
|
|
● |
shares subject to an award granted under our
Restated Plan that otherwise terminates without shares being
issued. |
Full-Value Awards
A Full Value Award is an award — other than
an option or stock appreciation right — that is settled in shares
of common stock. The Restated Plan provides that any shares that
are subject to awards of options or stock appreciation rights will
be counted against the share reserve limit as one share for every
one share granted. Additionally, the Restated Plan provides that
any shares that are subject to Full Value Awards will be counted
against the share reserve limit as 1.32 shares for every one share
granted. Paying dividend equivalents in cash in connection with any
outstanding award will not be counted against the shares available
for issuance under the Restated Plan.
If an award previously granted under the
Restated Plan terminates, expires or lapses for any reason, any
shares subject to the award may be used again for new grants under
the Restated Plan. The Restated Plan also reflects the share
counting principle described above when determining the number of
shares that may be re-granted after an award expires. If an award
terminates, expires or lapses for any reason, any share that again
becomes available for future grant shall be added back to the
Restated Plan (1) as one share if the share was subject to an
option or a stock appreciation right, and (2) as 1.32 shares if
such share was subject to a Full Value Award.
Vesting/Acceleration Restrictions
The Restated Plan mandates that awards shall
not provide for any vesting prior to at least twelve (12) months
from grant. Notwithstanding the foregoing, the Compensation
Committee may permit (i) acceleration of vesting of awards in the
event of a participant’s death, disability or a significant
corporate transaction and (ii) vesting of awards on any basis prior
to twelve (12) months from grant or any acceleration of vesting of
awards representing up to an aggregate of five percent (5%) of the
shares reserved and available for grant under the Restated Plan as
of the date of its approval by our stockholders. For purposes of
awards to non-employee directors, a vesting period will be deemed
to be one year if it runs from the date of one annual meeting of
our stockholders to the next annual meeting of our stockholders.
Glu may also suspend the vesting of equity grants held by employees
upon a reduction in their hours-worked.
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Table of Contents
Terms of Options
The Restated Plan provides for the grant of
nonstatutory stock options, incentive stock options or a
combination of each. Incentive stock options may only be granted to
our employees and employees of any parent or subsidiary of ours.
Subject to adjustment as provided in the Restated Plan, in no event
shall more than 16,666,666 shares of our common stock be available
for issuance pursuant to the exercise of incentive stock options
granted under the Restated Plan.
Each stock option granted under the Restated
Plan must be evidenced by a written agreement between us and the
optionee specifying the number of shares subject to the stock
option and the other terms and conditions of the stock option,
consistent with the requirements of the Restated Plan. The exercise
price of each stock option may not be less than the fair market
value of a share of our common stock on the date of grant (except
in connection with the assumption or substitution for another stock
option in a manner qualifying under Sections 409A and 424(a) of the
Code). In addition, any incentive stock option granted to a person
who at the time of grant owns stock possessing more than 10% of the
total combined voting power of all classes of our stock or any
subsidiary corporation of Glu (a “Ten Percent Stockholder”) must
have an exercise price equal to at least 110% of the fair market
value of a share of our common stock on the date of
grant.
The Restated Plan provides that the stock
option exercise price may be paid in cash or by check or, where
expressly approved by our Compensation Committee (and to the extent
not otherwise set forth in the applicable award agreement) and
permitted under applicable law, by means of:
|
● |
cancellation of indebtedness; |
|
|
|
|
● |
surrender of shares of our common stock owned by
the optionee having a fair market value not less than the aggregate
exercise price of the shares being exercised; |
|
|
|
|
● |
waiver of compensation due or accrued to the
optionee for services rendered or to be rendered to Glu or a parent
or subsidiary of Glu; |
|
|
|
|
● |
a broker-assisted cashless exercise; |
|
|
|
|
● |
by any combination of the above methods;
or |
|
|
|
|
● |
any other method of payment permitted by
applicable law. |
Our Compensation Committee may provide for
options to be exercised only as they vest or to be immediately
exercisable with any shares issued on exercise being subject to our
right of repurchase that lapses as the shares vest. Options may
vest based on time or achievement of performance conditions, as is
the case with PSOs. In general, our time-based vesting employee
stock options vest over a four-year period, with 25% of the
underlying shares vesting on the first anniversary of the grant
date and the remaining shares vesting in equal monthly installments
thereafter for the following three years. However, stock options
granted to our employees located in India generally vest over a
four-year period, with 25% of the underlying shares vesting on the
first anniversary of the grant date and the remaining shares
vesting in equal annual installments thereafter for the following
three years.
The Restated Plan allows us to grant stock
options with a term of up to ten years. Subject to the term of the
stock option, a stock option generally will remain exercisable for
three months following the optionee’s termination of service,
except that if service terminates as a result of an optionee’s
death or disability, the stock option generally will remain
exercisable for 12 months, and, if an employee optionee’s service
is terminated for cause, the stock option will expire on the date
of termination. The Compensation Committee, in its discretion, may
provide different post-termination exercise periods, but in any
event the stock option must be exercised no later than the original
expiration of its term.
Unless otherwise determined by our
Compensation Committee, stock options are not assignable or
transferable by the optionee other than by will or by the laws of
descent and distribution.
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Table of Contents
Terms of Stock Appreciation Rights, or
“SARs”
SARs provide for a payment, or payments, in
cash or shares of our common stock, to the participant based upon
the increase in the fair market value of our common stock on the
date of exercise from the stated exercise price. SARs may vest
based on time or achievement of performance conditions. Each SAR
awarded under the Restated Plan must be evidenced by a written
agreement between us and the participant specifying the terms and
conditions of the SAR, consistent with the requirements of the
Restated Plan.
Our Compensation Committee will determine
the terms of each SAR, including the number of shares subject to
the SAR, the exercise price and the time or times during which the
SAR may be settled, the consideration to be distributed on
settlement of the SAR and the effect of the participant’s
termination on his or her SAR. The exercise price of SAR may be
less than the fair market value of the underlying shares of common
stock.
A SAR may be awarded upon satisfaction of
performance factors that are set out in advance in the
participant’s individual award agreement. If the participant earns
the SAR upon the satisfaction of performance factors, then the
Compensation Committee will determine the performance factors to be
used, as well as the nature, length and starting date of the
performance period.
The Restated Plan will still allow us to
grant SARs with a term of up to ten years. Except as may be set
forth in the participant’s individual award agreement, vesting
ceases upon the participant’s termination of service unless
determined otherwise by the Compensation Committee.
Terms of RSUs
RSUs represent the right to receive shares
of our common stock at a specified date in the future, subject to
forfeiture of that right because of termination of the
participant’s services to us or the failure to achieve certain
performance conditions. If an RSU has not been forfeited, then on
the date specified in the RSU agreement, we will deliver to the
holder of the RSU whole shares of our common stock, which may be
subject to additional restrictions, cash or a combination of our
common stock and cash.
Our Compensation Committee will determine
the terms of each RSU, including the number of shares subject to
the RSU award, the time or times during which the RSU may be
settled, the consideration to be distributed on settlement of the
RSU and the effect of the participant’s termination on his or her
RSU.
An RSU may be granted upon satisfaction of
performance factors that are set out in advance in the
participant’s individual award agreement, as is the case with PSUs.
If the RSU is being earned upon the satisfaction of performance
factors, then the Compensation Committee will determine the
performance factors to be used, the nature, length and starting
date of the performance period and the number of shares that will
be subject to the RSU.
Except as may be set forth in the
participant’s individual award agreement, vesting ceases upon the
participant’s termination of service unless determined otherwise by
the Compensation Committee.
Terms of Stock Bonus Awards
Stock bonuses are awards of shares of our
common stock, which may be restricted stock or RSUs that are
granted as additional compensation for service and/or performance.
Payment from the participant is not required for stock bonuses, and
stock bonuses are generally not subject to vesting.
Our Compensation Committee will determine
the number of shares to be awarded to a participant under a stock
bonus award and any restrictions thereon. These restrictions may be
based upon completion of a specified number of years of service
with Glu or upon satisfaction of performance goals as specified in
the participant’s individual award agreement. Prior to the grant of
any stock bonus award, our Compensation Committee will determine
the performance factors to be used, the nature, length and starting
date of the performance period and the number of shares that will
be awarded to the participant.
Except as may be set forth in the
participant’s individual award agreement, vesting ceases upon the
participant’s termination of service unless determined otherwise by
the Compensation Committee.
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Terms of Performance Shares
Performance shares are awards denominated in
shares of our common stock that may be settled in cash or by
issuance of those shares only if performance goals established by
our Compensation Committee have been achieved. Each performance
share will have an initial value equal to the fair market value of
a share of our common stock on the date of grant. After the
applicable performance period has ended or the applicable metric
satisfied, the holder of performance shares will generally be
entitled to receive a payout of the number of performance shares
earned by the participant, to be determined as a function of the
extent to which the corresponding performance factors or other
vesting provisions have been achieved.
Before granting any performance share award,
our Compensation Committee will determine the terms of each
performance share award, including the number of shares subject to
the award, the performance factors and performance period that will
determine the time and extent to which each award of performance
shares will be settled, the consideration to be distributed on
settlement of the award and the effect of the participant’s
termination on his or her performance share award. Before
settlement, the Compensation Committee determines the extent to
which the performance shares have been earned.
Terms of Performance Options
Performance stock options are stock options
that vest and or become exercisable upon achievement of performance
goals established by our Compensation Committee. The exercise price
of each performance stock option may not be less than the fair
market value of a share of our common stock on the date of its
grant. After the applicable performance period has ended or the
applicable metric satisfied, the holder of a performance stock
option may vest in that option or that option may then convert to a
time-based vesting stock option.
Before granting any performance stock
options, our Compensation Committee will determine the terms of
each performance stock option award, including the number of shares
subject to the option, the exercise price, the performance factors
and performance period that will determine the time and extent to
which the performance stock option is earned. The Compensation
Committee determines the extent to which the performance stock
options have been earned.
Awards to Non-Employee Directors
Non-employee members of our Board of
Directors are eligible to receive any type of award offered under
the Restated Plan except incentive stock options, which can only be
granted to employees. Non-employee directors may not be granted any
award or awards denominated in shares that exceed in the aggregate
$600,000 in value (based on the financial accounting value of such
awards) in any fiscal year, plus an additional $600,000 in value
for one-time awards to a newly appointed or elected non-employee
director. If stock options or SARs are granted to our non-employee
directors, their exercise price may not be less than the fair
market value of our common stock when the option or SAR is granted.
In the event of a corporate transaction, all awards held by our
non-employee directors will accelerate fully and become vested and
exercisable or settled, as the case may be. Our non-employee
director compensation program is described under “Director
Compensation” above.
Changes to Capital Structure
If there is any change to the outstanding
shares of our common stock without our receipt of consideration
(whether through stock dividend, recapitalization, stock split,
reverse stock split, subdivision, combination, reclassification or
similar change in our capital structure), appropriate adjustments
will be made to: (a) the maximum number of securities issuable
under the Restated Plan, (b) the exercise prices of and number of
shares subject to outstanding options and stock appreciation
rights, (c) the number of shares subject to RSUs and other
outstanding awards, (d) the maximum number of shares that may be
issued as incentive stock options, (e) the maximum number of shares
that may be awarded to an individual or new employee in a calendar
year and (f) the number of shares that are granted as awards to our
non-employee directors.
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Corporate Transactions; Changes in
Control
In the event of certain significant
corporate transactions, any or all outstanding awards under the
Restated Plan may be assumed or replaced by the successor
corporation. In the alternative, the successor corporation may
substitute equivalent awards or provide substantially similar
consideration to award holders as was provided to stockholders
after taking into account the existing provisions of the awards.
The successor corporation may also issue, in place of outstanding
Glu shares held by the award holder, substantially similar shares
or other property subject to repurchase restrictions no less
favorable to the holder. In the event such successor corporation
refuses to assume, convert, replace or substitute awards, then such
awards will expire on such transaction at such time and on such
conditions as the Board will determine. However, our Board or
Compensation Committee may accelerate the vesting of such awards in
connection with certain significant corporate
transactions.
In the event of certain significant
corporate transactions, the vesting of all awards granted to
non-employee members of our Board of Directors will accelerate and
such awards will become exercisable (as applicable) in full prior
to the consummation of such corporate transaction at such times and
on such conditions as the Compensation Committee
determines.
A significant corporate transaction means
the occurrence of any of the following events: (a) any person
becomes the beneficial owner of Glu securities representing 50% or
more of the total voting power represented by our then-outstanding
voting securities; (b) our consummation of the sale or disposition
of all or substantially all of our assets; (c) the consummation of
a merger or consolidation of Glu with any other corporation, other
than a merger or consolidation which would result in our voting
securities outstanding immediately prior to such merger or
consolidation continuing to represent 50% of the total voting power
represented by the voting securities of Glu or such surviving
entity or its parent outstanding immediately after such merger or
consolidation.
Restrictions on Repricing
Unless our stockholders first approve such
action, the Restated Plan provides that we may not (1) reprice
(i.e., reduce the exercise price of) stock options or stock
appreciation rights, (2) implement an option exchange or award
transfer program, or (3) reduce the exercise price of stock options
or stock appreciation rights without the consent of the holder of
such options or rights.
Provisions for Foreign
Participants
Our Compensation Committee may modify awards
granted to participants who are foreign nationals or employed
outside the United States or establish subplans or procedures under
the Restated Plan to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect
to tax, securities, currency, employee benefit or other
matters.
Duration, Termination and
Amendment
Our Compensation Committee may terminate or
amend the Restated Plan at any time; provided, however, that the
committee will not, without the approval of our stockholders, amend
the Restated Plan in any manner that requires stockholder approval.
Unless sooner terminated, the Restated Plan will expire on June 4,
2025.
Federal Income Tax Information
The following summary is intended only as a
general guide to the current U.S. federal income tax consequences
of participation in the Restated Plan and does not attempt to
describe all possible federal or other tax consequences of such
participation or tax consequences based on particular
circumstances. Furthermore, the tax consequences are complex and
subject to change, and a taxpayer’s particular situation may be
such that some variation of the described rules is
applicable.
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Incentive Stock Options
A participant recognizes no taxable ordinary
income as a result of the grant or exercise of an incentive stock
option qualifying under Section 422 of the Code. However, the
exercise of an incentive stock option may increase the
participant’s alternative minimum tax liability, if any.
If a participant holds stock acquired
through exercise of an incentive stock option for more than two
years from the date on which the stock option was granted and more
than one year after the date the stock option was exercised for
those shares, any gain or loss on a disposition of those shares (a
“qualifying disposition”) will be a long-term capital gain or loss.
Upon such a qualifying disposition, we will not be entitled to any
income tax deduction.
Generally, if the participant disposes of
the stock before the expiration of either of those holding periods
(a “disqualifying disposition”), then at the time of such
disqualifying disposition, the participant will realize taxable
ordinary income equal to the lesser of (i) the excess of the
stock’s fair market value on the date of exercise over the exercise
price, or (ii) the participant’s actual gain, if any, on the
purchase and sale. The participant’s additional gain or any loss
upon the disqualifying disposition will be a capital gain or loss,
which will be long-term or short-term depending on whether the
stock was held for more than one year. To the extent the
participant recognizes ordinary income by reason of a disqualifying
disposition, generally we will be entitled to a corresponding
income tax deduction in the tax year in which the disqualifying
disposition occurs.
Nonstatutory Stock Options
Stock options not designated or qualifying
as incentive stock options are nonstatutory stock options having no
special tax status. A participant generally recognizes no taxable
ordinary income as the result of the grant of such a stock option.
Upon exercise of a nonstatutory stock option, the participant
normally recognizes ordinary income in the amount of the difference
between the stock option exercise price and the fair market value
of the shares on the date of purchase. Generally, we will be
entitled to an income tax deduction in the tax year in which such
ordinary income is recognized by the participant.
Upon the disposition of stock acquired by
the exercise of a nonstatutory stock option, any gain or loss,
based on the difference between the sale price and the fair market
value on the exercise date, will be taxed as capital gain or
loss.
Stock Appreciation Rights
A participant recognizes no taxable ordinary
income upon the receipt of a SAR. Upon the exercise of a SAR, the
participant will recognize ordinary income in an amount equal to
the excess of the fair market value of the underlying shares of
common stock on the exercise date over the exercise price. If the
participant is an employee, such ordinary income generally is
subject to withholding of income and employment taxes. We generally
should be entitled to a deduction equal to the amount of ordinary
income recognized by the participant in connection with the
exercise of the stock appreciation right, except to the extent such
deduction is limited by applicable provisions of the
Code.
Restricted Stock Units
A participant recognizes no taxable income
upon receipt of an RSU. In general, the participant will recognize
ordinary income in the year in which the shares subject to that
award vest and are actually issued to the participant in an amount
equal to the fair market value of the shares on the date of
issuance. Generally, we will be entitled to an income tax deduction
equal to the amount of ordinary income recognized by the
participant at the time the shares are issued. In general, the
deduction will be allowed for the taxable year in which such
ordinary income is recognized by the participant.
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Stock Bonuses
A participant acquiring restricted stock
generally will recognize ordinary income equal to the difference
between the fair market value of the shares on the “determination
date” (as defined below) and the participant’s purchase price, if
any. If the participant is an employee, such ordinary income
generally is subject to withholding of income and employment taxes.
The “determination date” is the date on which the participant
acquires the shares unless they are subject to a substantial risk
of forfeiture and are not transferable, in which case the
determination date is the earlier of (a) the date on which the
shares become transferable or (b) the date on which the shares are
no longer subject to a substantial risk of forfeiture. If the
determination date is after the date on which the participant
acquires the shares, the participant may elect, pursuant to Section
83(b) of the Code, to have the date of acquisition be the
determination date by filing an election with the Internal Revenue
Service no later than 30 days after the date the shares are
acquired. Upon the sale of shares acquired pursuant to a restricted
stock award, any gain or loss, based on the difference between the
sale price and the fair market value on the determination date,
will be taxed as a capital gain or loss. Such gain or loss will be
long-term or short-term depending on whether the stock was held for
more than one year. Generally, we will be entitled to a
corresponding income tax deduction in the year in which ordinary
income is recognized by the participant.
Performance Shares
A participant generally will recognize no
income upon the grant of a performance share award. Upon the
settlement of a performance share award, participants normally will
recognize ordinary income in the year of receipt in an amount equal
to the cash received, if any, and the fair market value of any
unrestricted shares received. If the participant is an employee,
such ordinary income generally is subject to withholding of income
and employment taxes. If the participant receives shares of
restricted stock, the participant generally will be taxed in the
same manner as described above in “Stock Bonuses.” Upon the sale of
any shares received, any gain or loss, based on the difference
between the sale price and the fair market value on the
“determination date,” will be taxed as a capital gain or loss. We
generally should be entitled to a deduction equal to the amount of
ordinary income recognized by the participant on the determination
date.
New Plan Benefits
The Restated Plan does not provide for set
benefits or amounts of awards and we have not approved any awards
that are conditioned on shareholder approval of the Restated Plan.
However, as discussed in further detail in the section entitled
“Director Compensation”, each non-employee director who will remain
a non-employee director (excluding Mr. Feder, as discussed above)
after the annual stockholders meeting is entitled to receive the
lesser in value of (1) stock options and RSUs having an aggregate
grant date fair value of $235,000, with the number of stock options
and RSUs allocated to provide an equal value of each equity
instrument, or (2) the aggregate grant date fair value of (a) an
RSU covering 25,000 shares of our common stock and (b) a stock
option to purchase 50,000 shares of our common stock. Such awards
will be granted under the Restated Plan. All other future awards to
our directors, executive officers, employees and consultants under
the Restated Plan are discretionary and cannot be determined at
this time.
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History of Grants Under the Plan
Pursuant to SEC rules, the following table
sets forth the number of shares subject to stock options or
restricted stock unit awards granted under the Restated Plan from
March 21, 2007 (when the Rested Plan became effective following
initial approval by our stockholders) through December 31,
2019.
| Name and Position |
|
Number of Underlying
Awards(1) |
|
Nick Earl |
|
|
|
|
|
President and Chief
Executive Officer |
|
|
7,063,165 |
|
| Eric R. Ludwig, |
|
|
|
|
| Executive Vice President, Chief Operating Officer
and Chief Financial Officer |
|
|
6,623,052 |
|
|
Chris
Akhavan |
|
|
|
|
|
Senior Vice President,
Business & Corporate Development |
|
|
3,146,930 |
|
| Becky Ann Hughes |
|
|
|
|
| Senior Vice President, Revenue |
|
|
1,204,522 |
|
|
Scott J.
Leichtner |
|
|
|
|
|
VP, General Counsel and
Secretary |
|
|
1,739,563 |
|
| All current executive officers (5
persons) |
|
|
19,777,232 |
|
|
All current non-employee
directors (9 persons) |
|
|
6,527,166 |
|
| All employees (excluding current executive
officers) |
|
|
29,666,262 |
|
____________________
|
|
|
| (1) |
These
share numbers do not include shares underlying options that were
granted but were subsequently canceled or expired
unexercised.
|
EQUITY
COMPENSATION PLAN INFORMATION
Equity Compensation Plan Table
The following table sets forth certain
information, as of December 31, 2019, concerning securities
authorized for issuance under all of our equity compensation plans:
our 2001 Plan, which terminated when we adopted the 2007 Plan, 2007
Employee Stock Purchase Plan (the “ESPP”) and 2008 Inducement Plan,
which terminated on March 13, 2018 and was replaced by the 2018
Inducement Plan, effective April 2, 2018. The ESPP contained an
“evergreen” provision, pursuant to which on January 1st of each
year we automatically added 1% of our shares of common stock
outstanding on the preceding December 31st to the shares reserved
for issuance under the ESPP; this evergreen provision expired after
the increase on January 1, 2015. In addition, pursuant to a “pour
over” provision in our 2007 Plan, options that were cancelled,
expired or terminated under the 2001 Plan were added to the number
of shares reserved for issuance under our 2007 Plan.
|
Number of
Securities to be Issued Upon
Exercise of Outstanding Options,
Warrants and Rights |
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights(1) |
Number of Securities Remaining
Available for Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column (a) |
| Plan
Category |
(a) |
(b) |
(c) |
|
Equity compensation plans
approved by security holders |
|
28,916,074 |
|
|
|
$ |
4.00 |
|
|
5,473,466 |
(2) |
|
| Equity compensation
plans not approved by security holders |
|
3,321,904 |
(3) |
|
|
$ |
2.77 |
|
|
156,108 |
(4) |
|
|
Total |
|
32,237,978 |
|
|
|
|
|
|
|
5,629,574 |
|
|
____________________
|
|
|
| (1) |
The
weighted average exercise price does not take into account the
shares subject to outstanding RSUs and PSUs, which have no exercise
price.
|
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|
(2) |
Represents 2,686,329 shares available for
issuance under our the 2007 Plan, which plan permits the grant of
incentive and non-qualified stock options (including PSOs), stock
appreciation rights, restricted stock, stock awards and RSUs; and
2,787,137 shares available for issuance under the ESPP.
|
|
|
|
|
(3) |
Represents outstanding options under the 2008
Inducement Plan and 2018 Inducement Plan.
|
|
|
|
|
(4) |
Represents shares available for issuance under
the 2018 Inducement Plan, under which we may only grant
non-qualified stock options and RSUs.
|
Equity Compensation Plans Not Approved by
Securityholders
In March 2008, in connection with our
acquisition of Superscape Group plc, our Board of Directors adopted
the 2008 Inducement Plan to augment the shares available under our
then existing 2007 Plan. We have not sought stockholder approval
for the 2008 Inducement Plan. As such, awards under the 2008
Inducement Plan were granted in accordance with Nasdaq Listing Rule
5635(c)(4) and only to persons not previously an employee or
director, or following a bona fide period of non-employment, as an
inducement material to such individuals entering into employment
with us. The 2008 Inducement Plan, which had a ten-year term and
expired on March 13, 2018, did not require the approval of our
stockholders. We initially reserved 600,000 shares of our common
stock for issuance under the 2008 Inducement Plan. On December 28,
2009, the Compensation Committee of our Board of Directors
increased the number of shares reserved for issuance under the 2008
Inducement Plan by 819,245 shares. We used all of the 1,250,000
shares then available for a stock option grant to Niccolo de Masi
in connection with his appointment as our new President and Chief
Executive Officer.
Furthermore, in connection with the
acquisitions of Griptonite, Inc. and Blammo Games Inc., the
Compensation Committee increased the number of shares reserved for
issuance under our 2008 Inducement Plan by 1,050,000 shares to
grant stock options to certain of the new non-executive officer
employees of Griptonite and Blammo. In November 2012, the
Compensation Committee further increased the number of shares
available for issuance by an additional 300,000 shares, all of
which we used to award a stock option grant to our newly hired
President of Studios. In May 2013, the Compensation Committee
amended the 2008 Inducement Plan to increase the number of shares
available for grant by 200,000 shares in order to issue shares to
new hires, including Chris Akhavan, our current Senior Vice
President, Business & Corporate Development who was at that
time hired as our President of Publishing. In December 2015, the
Compensation Committee approved an increase in the number of
authorized shares of common stock available for grant by 1,000,000
shares in connection with grants made to Nick Earl upon his hiring
as President of Global Studios.
Finally, in November 2016, the Compensation
Committee approved an increase in the number of authorized shares
of common stock available for grant by 6,000,000 to grant stock
options and RSUs to employees of Crowdstar Inc. (“Crowdstar”) in
connection with our acquisition of Crowdstar. Accordingly, as of
December 31, 2019, we had reserved a total of 9,969,245 shares of
our common stock for grant and issuance under the 2008 Inducement
Plan since its inception, of which, 3,080,991 shares were subject
to outstanding stock options and RSUs and no shares remained
available for issuance. On March 13, 2018, the 2008 Inducement Plan
expired and was replaced by the 2018 Inducement Plan effective
April 2, 2018. As of December 31, 2019, we had reserved a total of
400,000 shares under the 2018 Inducement Plan, of which 240,913
shares were subject to outstanding stock options and 156,108 shares
remained available for issuance.
The 2018 Inducement Plan, which replaced the
2008 Inducement Plan, permits us to grant non-qualified stock
options and RSUs. We may grant non-qualified stock options under
the 2018 Inducement Plan at prices less than 100% of the fair value
of the shares on the date of grant, at the discretion of our Board
of Directors. The fair value of our common stock is determined by
the last sale price of our stock on The Nasdaq Global Market on the
date of determination. If any option granted under the 2018
Inducement Plan expires or terminates for any reason without being
exercised in full, the unexercised shares will be available for
grant under the 2018 Inducement Plan. All outstanding awards are
subject to adjustment for any future stock dividends, splits,
combinations, or other changes in capitalization as described in
the 2008 and 2018 Inducement Plans. If we were acquired and the
acquiring corporation did not assume or replace the awards granted
under the 2008 or 2018 Inducement Plans, or if we were to liquidate
or dissolve, all outstanding awards will expire on such terms as
our Board of Directors determines.
The Board recommends that stockholders vote “FOR”
the proposal to amend and restate our 2007 Equity
Incentive Plan.
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PROPOSAL NO. 3 –
ADVISORY VOTE ON EXECUTIVE
COMPENSATION
In accordance with Section 14A of the
Exchange Act, we are including in this proxy statement the
opportunity for our stockholders to vote to approve, on a
non-binding, advisory basis, the compensation of our Named
Executive Officers as disclosed in this proxy statement. This
non-binding advisory vote is commonly referred to as a “say on pay”
vote. At our 2017 Annual Meeting of Stockholders, our stockholders
approved advisory voting on our executive compensation on an annual
basis. Accordingly, we are requesting that stockholders vote, in an
advisory capacity, on our Named Executive Officer compensation as
disclosed in the “Compensation Discussion and Analysis” and
“Executive Compensation” sections of this proxy statement at the
Annual Meeting.
We strongly encourage stockholders to review
the information contained in the “Compensation Discussion and
Analysis” and “Executive Compensation” sections of this proxy
statement, which discuss how our executive compensation policies
and procedures implement our compensation philosophy and contain
tabular information and narrative discussion about the compensation
of our Named Executive Officers. The Compensation Committee and the
Board believe that these policies and procedures are effective in
implementing our compensation philosophy and in achieving its
goals.
While the results of this advisory vote are
not binding, the Compensation Committee will consider the outcome
of the vote in deciding whether to take any action as a result of
the vote and when making future compensation decisions for our
Named Executive Officers.
The Board recommends that stockholders vote “FOR”
the
following advisory resolution:
RESOLVED, that the stockholders approve, on
an advisory basis, the compensation of our named executive officers
as described in the “Compensation Discussion and Analysis” and
“Executive Compensation” sections and the accompanying tabular and
narrative disclosures in this proxy statement pursuant to the
compensation disclosure rules of the SEC.
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PROPOSAL NO. 4
–
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM,
PRICEWATERHOUSECOOPERS LLP, FOR THE FISCAL YEAR
ENDING DECEMBER 31,
2020
Our Audit Committee has selected, and is
submitting for ratification by the stockholders its selection of,
PricewaterhouseCoopers LLP (“PwC”) to serve as our independent
registered public accounting firm for the year ending December 31,
2020. Although stockholder approval of this proposal is not
required by law, the Audit Committee has determined that it is
desirable to request that stockholders ratify this selection.
Notwithstanding the selection, the Audit Committee, in its
discretion, may appoint a different independent registered public
accounting firm at any time, if the Audit Committee feels that such
a change would be in the best interests of us and our stockholders.
If our stockholders do not approve this Proposal No. 4, the Audit
Committee will reconsider the selection of PwC as our independent
registered public accounting firm for 2020.
The following table sets forth the aggregate
fees and related expenses for which we were billed by PwC for
professional services provided by them during 2019 and 2018. The
Audit Committee considered the provision of the services
corresponding to these fees, and the Audit Committee believes that
the provision of these services is compatible with PwC maintaining
its independence. The Audit Committee’s pre-approval policies and
procedures require prior approval by the Audit Committee of each
engagement of PwC to perform services. All of the professional
services listed below were approved in accordance with these
policies.
|
|
2019 |
2018 |
|
Audit fees |
|
$ |
1,589,750 |
$ |
1,562,976 |
| Audit-related fees |
|
|
— |
|
— |
|
Tax fees |
|
|
92,400 |
|
74,700 |
| All other |
|
|
2,700 |
|
2,700 |