Audit Committee Report
The audit committee operates pursuant to a charter which is reviewed annually by the audit committee. Additionally, a brief description of the primary responsibilities of
the audit committee is included in this Proxy Statement under the discussion of “Corporate Governance—Audit Committee.” Under the audit committee charter, management is responsible for the preparation, presentation and integrity of the Company’s
financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered
public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States.
In the performance of its oversight function, the audit committee reviewed and discussed with management and KPMG LLP, as the Company’s independent registered public
accounting firm, the Company’s audited financial
statements for the fiscal year ended December 31, 2020. The audit committee also discussed with the Company’s independent registered public accounting firm the matters
required to be discussed by applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the audit committee received and reviewed the written disclosures and the letters from the Company’s independent
registered public accounting firm required by applicable requirements of the PCAOB, regarding such independent registered public accounting firm’s communications with the audit committee concerning independence, and discussed with the Company’s
independent registered public accounting firm their independence from the Company.
Based upon the review and discussions described in the preceding paragraph, the audit committee recommended to the Board that the Company’s audited financial statements be
included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC.
Submitted by the Audit Committee of the Company’s Board of Directors:
Dr. James Ryans (Former Chair)
Dr. Wanda Austin
Craig Kreeger
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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20
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Executive Officers
The table below identifies and sets forth certain biographical and other information regarding our executive officers as of July 13, 2021. Other than as to Michael
Moses, as more fully described under “Certain Transactions with Related Persons — Compensation of Chief Astronaut Instructor,” there are no family relationships among any of our executive officers or directors.
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Executive Officer
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Age
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Position
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Michael Colglazier
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54
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Chief Executive Officer, President and Director
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Douglas Ahrens
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54
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Executive Vice President, Chief Financial Officer and Treasurer
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Michael Moses
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53
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President, Space Missions and Safety, Galactic Enterprises
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Michelle Kley
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49
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Executive Vice President, General Counsel and Secretary
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Swaminathan B. Iyer
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46
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President, Aerospace Systems, Galactic Co.
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See page 12 of this Proxy Statement for Michael Colglazier’s biography.
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Douglas Ahrens
Executive Vice President,
Chief Financial Officer
and Treasurer
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Doug Ahrens has served as our Executive Vice President, Chief Financial Officer and Treasurer since March 2021. He has over 20 years of operational and strategic finance
experience from multinational companies and most recently served as the Chief Financial Officer of Mellanox Technologies, Ltd. (Nasdaq: MLNX) from 2019 to 2020, until its acquisition by NVIDIA Corporation. Prior to this, from September 2015
to December 2018, Mr. Ahrens served as Chief Financial Officer of GlobalLogic Inc., a private software engineering firm. From October 2013 to September 2015, Mr. Ahrens served as Chief Financial Officer of Applied Micro Circuits Corporation
(now MACOM Technology Solutions), while it was then-publicly traded fabless semiconductor manufacturer. Prior to October 2013, Mr. Ahrens held various finance roles at Maxim Integrated Products, Inc. and Intel. Mr. Ahrens holds a Bachelor of
Science in Mechanical Engineering from the University of California, San Diego and a Master of Business Administration from Harvard Business School.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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21
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Executive Officers
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|
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Michael Moses
President,
Space Missions and Safety,
Galactic Enterprises, LLC
|
|
Mr. Moses has served as the President, Space Missions and Safety of Galactic Enterprises, a wholly owned subsidiary of ours focused on the operation of our spaceflight systems, since June
2016 and is responsible for overseeing program development and spaceflight operations, including vehicle processing, flight planning, astronaut training and flight crew operations. Mr. Moses previously served as Galactic Enterprises’
Vice-President of Operations from October 2011 to June 2016. Prior to joining the VG Companies, Mr. Moses served at NASA’s Kennedy Space Center in Florida as the Launch Integration Manager from August 2008 to October 2011, where he led all
space shuttle processing activities from landing through launch, including serving as the chair of NASA’s Mission Management Team, where he provided ultimate shuttle launch decision authority. Mr. Moses served as Flight Director at NASA’s
Johnson Space Center from April 2005 to August 2008 where he led teams of flight controllers in the planning, training and execution of space shuttle missions. Mr. Moses graduated from Purdue University with a bachelor’s degree in Physics and a
master’s degree in Aeronautical and Astronautical Engineering, and earned a master’s degree in Space Sciences from the Florida Institute of Technology. Mr. Moses is a two-time recipient of the NASA Outstanding Leadership Medal.
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Michelle Kley
Executive Vice President,
General Counsel
and Secretary
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Ms. Kley has served as our Executive Vice President, General Counsel and Secretary since December 2019. Ms. Kley is responsible for overseeing all legal affairs, including corporate
governance, securities law and NYSE compliance, M&A activity and strategic transactions. She also acts as Secretary and advises the Board of Directors. Prior to joining the Company, from 2016 to 2019, Ms. Kley was the Senior Vice President,
Chief Legal and Compliance Officer and Secretary of Maxar Technologies Inc. (“Maxar”), and from 2012 to 2016, she served as Associate General Counsel and Vice President of Legal of Space Systems/Loral, LLC, a subsidiary of Maxar. Prior to
joining Maxar, from 2011 to 2012, Ms. Kley was a corporate associate at Morrison & Foerster LLP. From 2010 to 2011, Ms. Kley served as legal counsel for Beazley Group. From 2003 to 2009, Ms. Kley was a corporate associate at Wilson Sonsini
Goodrich & Rosati P.C. She is a member of the International Institute of Space Law and serves on the board of directors of its US affiliate, the US Center for Space Law. Ms. Kley graduated from University of California Berkeley Law School
(Boalt Hall) with a J.D. degree and from Sonoma State University with a Bachelor of Arts degree in psychology.
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Swaminathan B. Iyer
President,
Aerospace Systems,
Galactic Co.
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Mr. Iyer has served as President, Aerospace Systems of Galactic Co., a wholly owned subsidiary of ours, since March 2021. Mr. Iyer most recently served as President of GKN Advanced Defense
Systems, which provides advanced components and technology to leading military aircrafts and helicopters and, prior to this, served as Chief Executive Officer of Israel Aerospace Industries North America, which provides systems and intelligence
to the aerospace, land, sea, and cyber domains. Mr. Iyer was also the President of Ultra Electronics, 3eTI, which specializes in application-engineered solutions for the defense, security and critical detection and, prior to that, was Vice
President, Defense & Space at Honeywell Aerospace, where he led multiple, multi-billion dollar international and domestic defense programs. As Branch Chief for the Deputy Under Secretary of the Air Force, International Affairs, South Asia,
Australia & Oceania, he was responsible for formulating and integrating policy with respect to political-military relationships, security assistance, technology and information disclosure issues, military exchanges, and attaché affairs. Mr.
Iyer was a Lt. Colonel in the USAF and logged over 3,500 hours (105 combat hours) of flight experience. Mr. Iyer holds an M.Sc. in aerospace engineering from the University of Michigan.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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22
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Corporate Governance
Our Board of Directors has adopted Corporate Governance Guidelines. A copy of these Corporate Governance Guidelines can be found in the “Governance —
Governance Documents” section of the “Investors Information” page of our website located at www.virgingalactic.com, or by writing to our Corporate Secretary at our offices at 166 North Roadrunner Parkway, Suite 1C, Las Cruces, New Mexico 88011.
Among the topics addressed in our Corporate Governance Guidelines are:
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Director independence and qualifications
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Stock ownership
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Executive sessions of independent directors
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Board access to senior management
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Board leadership structure
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Board access to independent advisors
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Selection of new directors
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Board self-evaluations
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Director orientation and continuing education
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Board meetings
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Limits on board service
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Meeting attendance by directors and non-directors
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Change of principal occupation
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Meeting materials
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Term limits
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Board committees, responsibilities and independence
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Director responsibilities
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Succession planning
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Director compensation
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Board Leadership Structure
If the Chairperson of the Board is a member of management or does not otherwise qualify as independent, our Corporate Governance Guidelines provide for the appointment by
the independent directors of a lead independent director (the “Lead Director”). The Lead Director’s responsibilities include, but are not limited to: presiding over all meetings of the Board at which the Chairperson of the Board is not present,
including any executive sessions of the independent directors; approving Board meeting schedules and agendas; and acting as the liaison between the independent directors and the Chief Executive Officer and Chairperson of the Board. Our Corporate
Governance Guidelines provide that, at such times as the Chairperson of the Board qualifies as independent, the Chairperson of the Board will serve as Lead Director.
The Board believes that our current leadership structure of Chief Executive Officer and Chair of the Board being held by two separate individuals is in the best interests
of the Company and its stockholders and strikes the appropriate balance between the Chief Executive Officer and President’s responsibility for the strategic direction, day-to-day leadership and performance of our Company and the Chair of the Board’s
responsibility to guide overall strategic direction of our Company and provide oversight of our corporate governance and guidance to our Chief Executive Officer and
President and to set the agenda for and preside over Board meetings. We recognize that different leadership structures may be appropriate for companies in different
situations and believe that no one structure is suitable for all companies. Accordingly, the Board will continue to periodically review our leadership structure and make such changes in the future as it deems appropriate and in the best interests of
the Company and its stockholders.
Composition of the Board of Directors
Our business and affairs are managed under the direction of our Board of Directors. Our Board is currently composed of nine directors. Subject to the terms of the
Stockholders’ Agreement, as further described and defined in “— Certain Transactions with Related Persons — Stockholders’ Agreement,” and our Certificate of Incorporation and Bylaws, the number of directors is fixed by our Board of Directors. Virgin
Investments Limited (“VIL”), SCH Sponsor Corp. (the “Sponsor”) and Mr. Palihapitiya (together, the “Voting Parties”) are party to the Stockholders’ Agreement pursuant to which, among other things, (i) VIL and Mr. Palihapitiya have rights to designate
directors for election to the Board of Directors (and the Voting Parties will vote in favor of such designees at any annual or special meeting of stockholders in which directors are elected), (ii) VIL has agreed not to take action
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
23
|
Corporate Governance
to remove the members of the Board of Directors designated by Mr. Palihapitiya pursuant thereto, (iii) Mr. Palihapitiya has agreed not to take action to remove the
members of the Board of Directors designated by VIL pursuant thereto and (iv) VIL has, under certain circumstances, the right to approve certain matters as set forth therein.
Under the Stockholders’ Agreement, VIL has the right to designate three directors (the “VG designees”) for as long as VIL and Aabar Space, Inc. (“Aabar”) beneficially
own 57,395,219 or more shares of our common stock, which represents 50% of the number of shares beneficially owned by Vieco USA, Inc., a Delaware corporation (“Vieco US”) immediately following the Closing and related transactions, provided that, when
such beneficial ownership falls below (x) 57,395,219 shares, VIL will have the right to designate only two directors, (y) 28,697,610 shares, VIL will have the right to designate only one director and (z) 11,479,044 shares, VIL will not have the right
to designate any directors. For purposes of determining the number of shares beneficially owned by VIL and the extent of VIL’s nomination and consent rights under the Stockholders’ Agreement, the shares distributed to Aabar are deemed to be held by
VIL until such time as Aabar transfers or sells such shares, subject to certain exceptions, as contemplated by the Stockholders’ Agreement. Each of the Sponsor and Mr. Palihapitiya have agreed to vote, or cause to vote, all of their outstanding
shares of our common stock at any annual or special meeting of stockholders in which directors are elected, so as to cause the election of the VG designees.
Additionally, pursuant to the Stockholders’ Agreement, Mr. Palihapitiya also has the right to designate two directors (the “CP designees”), one of which must qualify
as an “independent director” under stock exchange regulations applicable to us, for as long as Mr. Palihapitiya and the Sponsor collectively beneficially own at least 21,375,000 shares of our common stock, which represents 90% of the number of shares
beneficially owned by them as of immediately following the Closing, but excluding the 10,000,000 shares purchased by Mr. Palihapitiya from Vieco US, provided that when such beneficial ownership falls below (x) 21,375,000 shares, Mr. Palihapitiya will
have the right to designate only one director, who will not be required to qualify as an “independent director” and (y) 11,875,000 shares, Mr. Palihapitiya will not have the right to designate any directors. VIL has agreed to vote, or cause to vote,
all of its outstanding shares of our common stock at any annual or special meeting of stockholders in which
directors are elected, so as to cause the election of the CP designees. The initial chairperson of the Board of Directors is Mr. Palihapitiya until such time as VIL
identifies a permanent chairperson who qualifies as an independent director and is reasonably acceptable to Mr. Palihapitiya.
Under the terms of the Stockholders’ Agreement, two directors (the “Other designees”), each of whom must qualify as an “independent director” under stock exchange
regulations applicable to us and one of whom must qualify as an “audit committee financial expert” as defined under the rules of the SEC, were appointed in accordance with the Stockholders’ Agreement and, thereafter, will be as determined by the
Board of Directors. In addition, under the terms of the Stockholders’ Agreement, the individual serving as our Chief Executive Officer (the “CEO designee”), was appointed in accordance with the Stockholders’ Agreement to our Board of Directors and
will, going forward, be determined by what individual holds the title of Chief Executive Officer of the Company.
VIL currently has the right to designate three directors and Mr. Palihapitiya one director. Messrs. Kreeger, Lovell and Mattson serve as the VIL designees, Mr. Bain
serves as the CP designee and Dr. Austin serves as the Other designee. Dr. Ryans, a former director and an Other designee, stepped down from the Board in February 2021 and, in connection with this departure, the Board identified and recommended Mr.
West as a director nominee. In June 2021, the Board increased the size of the Board to nine directors and identified and recommended Ms. Jonas as a director nominee. Mr. Colglazier became the CEO designee in connection with his appointment as the
Company’s Chief Executive Officer in July 2020, superseding Mr. Whitesides as Chief Executive Officer and the initial CEO designee.
Pursuant to the terms of the Stockholders’ Agreement, the VG designees, the CP designees and the Other designees are only able to be removed with or without cause at
the request of the party entitled to designate such director. In all other cases and at any other time, directors are only able to be removed by the affirmative vote of at least a majority of the voting power of our common stock. Pursuant to the
terms of the Stockholders’ Agreement, the CEO designee will be removed at such time when the individual ceases to serve as Chief Executive Officer of the Company.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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24
|
Corporate Governance
In addition, under the amended and restated trademark license agreement (the “Amended TMLA”), to the extent the Virgin Group does not otherwise have a right to place
a director on our Board of Directors, such as VIL’s right to designate the VG designees under the Stockholders’ Agreement, we have agreed to provide Virgin Enterprises Limited (“VEL”) with the right to appoint one director to our Board of Directors
(provided the designee is qualified to serve on the Board under all applicable corporate governance policies and regulatory and NYSE requirements).
Boeing Board Observer Right
In connection with a subscription agreement dated October 7, 2019 between us and an entity affiliated with The Boeing Company (the “Boeing Agreement”), Boeing had a
right to have a representative attend all meetings of our Board of Directors and to receive all materials provided to our Board, subject to exceptions for us to preserve attorney-client privilege, avoid disclosure of trade secrets or prevent material
competitive harm. This right was to expire on October 7, 2023, subject to automatic two-year renewals unless we provide prior written notice, or such other time as when Boeing owns less than all of the shares of common stock purchased by it pursuant
to the Boeing Agreement. Based on its share ownership, Boeing no longer has a Board observer right.
Director Independence
Under our Corporate Governance Guidelines and the NYSE rules, a director is not independent unless the Board affirmatively determines that he or she does not have a
direct or indirect material relationship with us or any of our subsidiaries and that the NYSE’s per se bars to determining a director independent have not been triggered.
Our Board has undertaken a review of its composition, the composition of its committees and the independence of our directors and considered whether any director has
a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his or her
background, employment and affiliations, including family relationships, our Board of Directors has determined that none of Dr. Austin, Mr. Bain, Ms. Jonas, Mr. Kreeger, Mr. Mattson or Mr. West, representing six of our nine directors, has a
relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors qualifies as “independent” as that term is defined under the rules of the NYSE. In making
these determinations, our Board of Directors considered the relationships that each non-employee director has with us and all other facts and circumstances the Board deemed relevant in determining their independence, including the director’s
beneficial ownership of our common stock and the relationships of our non-employee directors with certain of our significant stockholders.
Board Committees
We have four standing committees of our Board of Directors. Each of our four standing committees of our Board of Directors has the composition and the
responsibilities described below. In addition, from time to time, special committees may be established under the direction of our Board when necessary to address specific issues. Each of the audit committee, compensation committee, nominating and
corporate governance committee and safety committee operates under a written charter.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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25
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Corporate Governance
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Director
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Audit Committee
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Compensation Committee
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Nominating & Corporate Governance Committee
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Safety
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Michael Colglazier
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Chamath Palihapitiya
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Wanda Austin
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M
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C
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M
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Adam Bain
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M
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C
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Tina Jonas
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M
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Craig Kreeger
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M
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C
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Evan Lovell
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M
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George Mattson
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C
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M
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M
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W. Gilbert West
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M
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C Chairperson M Member
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Audit
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Our audit committee is responsible for, among other things:
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Committee
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•
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appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
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•
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discussing with our independent registered public accounting firm their independence from management;
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•
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reviewing with our independent registered public accounting firm the scope and results of their audits; approving all audit and permissible non-audit services to be performed by our
independent registered public accounting firm;
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•
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overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file
with the SEC;
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•
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reviewing and monitoring our accounting principles, accounting policies and financial and accounting controls and compliance with legal and regulatory requirements; and
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•
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establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
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Our audit committee consists of Dr. Austin, Ms. Jonas and Messrs. Kreeger and Mattson, with Mr. Mattson serving as chair. We have affirmatively determined
that each member of the audit committee qualifies as independent under NYSE rules applicable to board members generally and under the NYSE rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), specific
to audit committee members. All members of our audit committee meet the requirements for financial literacy under the applicable NYSE rules. In addition, the Board has determined that each of Dr. Austin, Ms. Jonas and Mr. Mattson qualifies as
an “audit committee financial expert,” as such term is defined in Item 407(d) (5) of Regulation S-K.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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26
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Corporate Governance
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Compensation Committee
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Our compensation committee is responsible for, among other things:
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•
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reviewing and approving corporate goals and objectives with respect to the compensation of our Chief Executive Officer, evaluating our
Chief Executive Officer’s performance in light of these goals and objectives and setting the Chief Executive Officer’s compensation;
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•
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reviewing and setting or making recommendations to our Board of Directors regarding the compensation of our other executive officers and, from time
to time, other members of our leadership team;
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•
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reviewing and making recommendations to our Board of Directors regarding director compensation;
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•
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implementing and administering our incentive compensation and equity-based plans and arrangements;
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•
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retaining or obtaining advice from any compensation consultants; and
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•
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participating in succession planning for our Chief Executive Officer and others serving in key management positions.
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Our compensation committee consists of Dr. Austin and Messrs. Bain and Mattson, with Dr. Austin serving as chair. We have affirmatively determined that each
member of the compensation committee qualifies as independent under NYSE rules, including the additional independence standards for members of a compensation committee, and that each qualifies as a “non-employee director” as defined in Rule
16b-3 of the Exchange Act.
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The compensation committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time as further
described in its charter. The compensation committee may also delegate to one or more executive officers the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity
plans.
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Compensation Consultants
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The compensation committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. In accordance
with this authority, the compensation committee engaged the services of Mercer (US) Inc. (“Mercer”) as its independent outside compensation consultant for the months in 2020 calendar year of January through August. Meridian Compensation
Partners, LLC (“Meridian”) was retained by the compensation committee as an independent consultant for the months of September through December of 2020 to assist the committee in its evaluation of the compensation provided to our executive
officers.
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Other than advising the compensation committee, neither Mercer nor Meridian nor any of their respective affiliates maintain any other direct or indirect
business relationships with us or any of our subsidiaries. The compensation committee has considered the independence of both Mercer and Meridian, consistent with the requirements of the NYSE, and has determined that Mercer and Meridian are
independent. Further, pursuant to SEC rules, the compensation committee conducted a conflicts of interest assessment and determined there is no conflict of interest resulting from retaining Mercer or Meridian in the year 2020.
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Additionally, during 2020, neither Mercer nor Meridian provided any services to us other than regarding executive and director compensation and broad-based
plans that do not discriminate in scope, terms, or operation, in favor of our executive officers or directors, and that are available generally to all salaried employees.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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27
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Corporate Governance
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Nominating and Corporate Governance Committee
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Our nominating and corporate governance committee is responsible for, among other things:
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assisting our Board of Directors in identifying individuals qualified to become members of our Board of Directors, consistent with criteria set forth in our governance guidelines;
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recommending director nominees for election to our Board of Directors;
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•
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reviewing the appropriate composition of our Board of Directors and its committees;
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•
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providing oversight with respect to the Company’s environmental, social and governance strategy, initiatives and policies; and
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developing and recommending to our Board of Directors a set of corporate governance guidelines and principles.
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Our nominating and corporate governance committee consists of Messrs. Bain and Mattson, with Mr. Bain serving as chair. We have affirmatively determined that each member of the nominating and corporate
governance committee qualifies as independent under NYSE rules.
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Safety Committee
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Our safety committee is responsible for, among other things:
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reviewing our safety performance, including processes to ensure compliance with internal policies and goals and applicable laws and regulations;
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providing input on the management of current and emerging safety issues;
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assisting our Board of Directors with oversight of our risk management and security processes;
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reviewing safety audit findings and resulting action plans; and
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periodically visiting our facilities and reviewing any safety issues.
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Our safety committee consists of Dr. Austin and Messrs. Kreeger, Lovell, and West, with Mr. Kreeger serving as chair.
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Board and Board Committee Meetings and Attendance
We expect all directors to attend all meetings of the Board and the committees of the Board of which they are members. During the year ended December 31, 2020, the
Board met fifteen times, the audit committee met eight times, the compensation committee met eight times, the nominating and corporate governance committee met six times and the safety committee met five times. Each of our incumbent directors
attended at least 75% of the total meetings of the Board and committees thereof held during 2020 during the time that such director served on the Board or such committee in 2020.
Executive Sessions
Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition, at least once a year, the
independent directors meet in a private session that excludes management and any non-independent directors. The independent Chair of the Board presides at each of these meetings and, in his absence, the non-management and independent directors in
attendance, as applicable, determine which member will preside at such session.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Corporate Governance
Director Attendance at Annual Meeting of Stockholders
We do not have a formal policy regarding the attendance of our Board members at our annual meetings of stockholders, but we expect all directors to make every effort to
attend any meeting of stockholders. All of our then-serving Board members attended our 2020 annual meeting of stockholders.
Director Nominations Process
The nominating and corporate governance committee is responsible for recommending candidates to serve on the Board and its committees. In considering whether to
recommend any particular candidate to serve on the Board or its committees or for inclusion in the Board’s slate of recommended director nominees for election at the annual meeting of stockholders, the nominating and corporate governance committee
considers the criteria set forth in our Corporate Governance Guidelines. Specifically, the nominating and corporate governance committee considers candidates who have a high level of personal and professional integrity, strong ethics and values and
the ability to make mature business judgments. In addition to any factors they deem relevant, the nominating and corporate governance committee may consider: the candidate’s experience in corporate management, such as serving as an officer or former
officer of a publicly held company; the candidate’s experience as a board member of another publicly held company; the candidate’s professional and academic experience relevant to the Company’s industry; the strength of the candidate’s leadership
skills; the candidate’s experience in finance and accounting and/or executive compensation practices; whether the candidate has the time required for preparation, participation and attendance at Board meetings and committee meetings, if applicable;
and the candidate’s geographic background, gender, age and ethnicity.
We consider diversity a meaningful factor in identifying qualified director nominees, but do not have a formal diversity policy. The Board evaluates each individual
in the context of the Board as a whole, with the objective of assembling a group that has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. In determining whether to recommend a
director for re-election,
the nominating and corporate governance committee may also consider potential conflicts of interest with the candidates other personal and profession pursuits.
In identifying prospective director candidates, the nominating and corporate governance committee may seek referrals from other members of the Board, management,
stockholders and other sources, including third party recommendations. The nominating and corporate governance committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the
Company. The nominating and corporate governance committee uses the same criteria for evaluating candidates regardless of the source of the referral or recommendation. When considering director candidates, the nominating and corporate governance
committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness. In connection with its annual recommendation
of a slate of nominees, the nominating and corporate governance committee also may assess the contributions of those directors recommended for re-election in the context of the Board evaluation process and other perceived needs of the Board.
As described under “—Composition of the Board of Directors” above, the Stockholders’ Agreement provides for the parties thereof to designate persons to our Board
based on their voting power of our common stock and subject to additional requirements. Pursuant to the Stockholders’ Agreement and their current voting power, VIL currently has the right to designate three VG Designees to serve on the Board and Mr.
Palihapitiya currently has the right to designate one CP designee. Additionally, the Stockholders’ Agreement also provides for the appointment of two Other designees on the Board who, thereafter, will be as determined by the Board. In addition, the
Stockholders’ Agreement provides there be a CEO designee serving on the Board, who will be the person then serving as Chief Executive Officer of the Company.
VIL designated Messrs. Kreeger, Lovell and Mattson for election to our Board of Directors, Mr. Palihapitiya designated Mr. Bain and Dr. Austin was designated as an
Other designee. Dr. Ryans, a former director and an Other designee, stepped down from the Board in February 2021 and, in connection with
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this departure, the Board, with the assistance of the search firm Spencer Stuart, identified and recommended Mr. West as a director nominee. In June 2021, the Board
increased the size of the Board to nine directors and, with the assistance of the search firm Spencer Stuart, identified and recommended Ms. Jonas as a director nominee. The Board also determined it in the best interests of the Company and its
stockholders to recommend that Mr. Palihapitiya continue to serve on the Board and approved his nomination to be reelected at this Annual Meeting. Mr. Colglazier became the CEO designee in connection with his appointment as the Company’s Chief
Executive Officer in July 2020, superseding Mr. Whitesides as Chief Executive Officer and the initial CEO designee. Each of the director nominees to be elected at the Annual Meeting was evaluated in accordance with our standard review process for
director candidates in connection with their initial appointment in conjunction with the contractual obligations under the Stockholders’ Agreement and their nomination for election or re-election, as applicable, at the Annual Meeting.
When considering whether the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its
oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed in each of the Board member’s biographical information set forth above. We believe that our directors provide an
appropriate mix of experience and skills relevant to the size and nature of our business. This process resulted in the Board’s nomination of the incumbent directors named in this Proxy Statement and proposed for election by you at the Annual Meeting.
The nominating and corporate governance committee will consider director candidates recommended by stockholders, and such candidates will be considered and evaluated
under the same criteria described above. Any recommendation submitted to the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information
that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected and must otherwise comply
with the requirements
under our bylaws for stockholders to recommend director nominees. Stockholders wishing to propose a candidate for consideration may do so by submitting the above
information to the attention of the Corporate Secretary, Virgin Galactic Holdings, Inc., 166 North Roadrunner Parkway, Suite 1C, Las Cruces, New Mexico 88011. All recommendations for director nominations received by the Corporate Secretary that
satisfy our by-law requirements relating to such director nominations will be presented to the nominating and corporate governance committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent and information
requirements set forth in our bylaws. These timing requirements are also described under the caption “Stockholder Proposals and Director Nominations.”
Board Role in Risk Oversight
The Board of Directors has overall responsibility for risk oversight, including, as part of regular Board and committee meetings, general oversight of executives’
management of risks relevant to the Company. A fundamental part of risk oversight is not only understanding the material risks a company faces and the steps management is taking to manage those risks, but also understanding what level of risk is
appropriate for the Company. The involvement of the Board of Directors in reviewing our business strategy is an integral aspect of the Board’s assessment of management’s tolerance for risk and its determination of what constitutes an appropriate
level of risk for the Company. While the full Board has overall responsibility for risk oversight and is currently overseeing the Company’s business continuity risks, such as risks relating to the COVID-19
pandemic, it is supported in this function by its audit committee, compensation committee and nominating and corporate governance committee. Each of the committees regularly reports to the Board.
The audit committee assists the Board in fulfilling its risk oversight responsibilities by periodically reviewing our accounting, reporting and financial practices,
including the integrity of our financial statements, the surveillance of administrative and financial controls, our compliance with legal and regulatory requirements, our enterprise risk management program and our cyber and data security risk
management. Through its regular meetings with
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Corporate Governance
management, including the finance, legal, internal audit, tax, compliance and information technology functions, the audit committee reviews and discusses significant
areas of our business and summarizes for the Board areas of risk and the appropriate mitigating factors. The safety committee assists the Board in matters related to safety arising as a result of the Company’s business and operations and the
processes used to mitigate key safety risks. Through its regular meetings with management and other advisers, its review of the Company’s policies and safety audits and results and on-site visits to the Company’s facilities and other oversight
responsibilities, the safety committee oversees key safety risks. The compensation committee assists the Board by overseeing and evaluating risks related to the Company’s compensation structure and compensation programs, including the formulation,
administration and regulatory compliance with respect to compensation matters, and coordinating, along with the Board’s Chair, succession planning discussions. The nominating and corporate governance committee assists the Board by overseeing and
evaluating programs and risks associated with Board organization, membership and structure and corporate governance. In addition, our Board and its committees receive periodic detailed operating performance reviews from members of management.
Committee Charters and Corporate Governance Guidelines
Our Corporate Governance Guidelines, charters of the audit committee, compensation committee, nominating and corporate governance committee and safety committee and
other corporate governance information are available under the Governance section of the Investor Information page of our website at www.virgingalactic.com, or by writing to our Corporate Secretary at our offices at 166 North Roadrunner
Parkway, Suite 1C, Las Cruces, New Mexico 88011.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all of our directors, officers and employees, including our principal
executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. A copy of our Code of Business Conduct and Ethics is available
under the under the Governance section of the Investor Information page of our website at www.virgingalactic.com, or by writing to our Corporate Secretary at
our offices at 166 North Roadrunner Parkway, Suite 1C, Las Cruces, New Mexico 88011. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website rather than by filing a
Current Report on Form 8-K.
Anti-Hedging Policy
Our Board of Directors has adopted an Insider Trading Compliance Policy, which applies to all of our directors, officers and employees. The policy prohibits our
directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts; short sales; and transactions in publicly traded options, such as puts, calls and other derivatives
involving our equity securities.
Communications with the Board
Any stockholder or any other interested party who desires to communicate with our Board of Directors, our non-management directors or any specified individual
director, may do so by directing such correspondence to the attention of the Corporate Secretary at our offices at 166 North Roadrunner Parkway, Suite 1C, Las Cruces, New Mexico 88011. The Corporate Secretary will forward the communication to the
appropriate director or directors as appropriate.
Commitment to ESG
At Virgin Galactic, we recognize that taking responsibility for environmental, social and governance (“ESG”) considerations is essential to delivering long-term
excellence and value creation for our employees, customers, stockholders, communities and other stakeholders. Sustainability has been a core value since our inception, and we are continuing to develop and refine our ESG strategy, including through an
ESG Executive Committee, to establish our strategy, initiatives and policies that align with industry best practices standards such as Sustainability Accounting Standards Board (“SASB”) relevant to our business.
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Corporate Governance
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Social Responsibility
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Data Security
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Within Virgin Galactic, we strive to cultivate a high-performing and diverse workforce and to foster a culture of collaboration and learning and, externally, are intentional about our
collaborations with organizations that foster and promote diversity in science, technology, engineering and math (“STEM”) fields. For example, we work with the Society of Hispanic Professional Engineers, Society of Women Engineers, the National
Society of Black Engineers, Historically Black Colleges and Universities, and The Mom Project. We have also awarded scholarships, hosted space chats with over 11,000 students in over 10 countries around the world, contributed over 6,000
volunteering hours and held over 250 events.
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Our information technology department oversees data security, critical systems penetration, training, auditing and testing. Our policies and practices follow recognized cybersecurity
standards to help determine and address security risks to our business. Our employees are regularly informed about data security and privacy issues and are trained accordingly.
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Environment, Health and Safety
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Human Capital
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We aim to reduce our carbon footprint and develop solutions that alleviate the global strain on natural resources. We have several environmental initiatives and targets, such as eliminating single-use
plastic and building vehicles that can be used for multiple commercial flights. We are also keenly focused on human safety. Our Safety Management System (SMS) is informed by Federal Aviation Administration guidance and is in line with national
and international policies and other flight standards. We have a proactive safety risk management process to identify potential safety hazards, minimize risks and ensure proper corrective actions where appropriate. Our process and protocols are
audited regularly to ensure compliance to the latest standards, to monitor and document issues, and develop corrective action plans with the operations teams.
In response to the COVID-19 pandemic, we formed a COVID-19 task force with leadership from across the Company to provide resources and tools to assist and support our workforce with overall wellness,
mental wellness and cope with stress, anxiety, isolation and loss. We continue to monitor protocols and guidelines, communicate expectations and make accommodations to protect the safety of our employees while increasing production with strict
safety protocols in place.
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Our employees, our teammates, are the cornerstone of our success. As of June 28, 2021, we had 773 employees across the globe. Prior to joining our Company, a number of our employees had prior
experience working for a wide variety of reputed commercial aviation, aerospace, high-technology, and world-recognized organizations.
Our integrated human capital management strategy includes the acquisition, development, and retention of our teammates, as well as the design of market-based compensation and benefits programs to enable
and achieve our strategic mission.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Corporate Governance
Total Workforce Demographics:
We regularly assess the impact of our efforts in diversifying our workforce. In the assessment of our December 31, 2019 to December 31, 2020 (year-over-year) impact,
we did not have any change in our female versus male representation within our global workforce. The representation of Asian and
Black or African American increased in representation within our workforce during this timeframe of Asian representation in 2019 of 6.7% versus 7.5% in 2020 and Black
or African American in 2019 had a representation of 3.7% versus 5.2% in 2020.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Corporate Governance
Compensation and Benefits:
Virgin Galactic offers competitive compensation, benefits and services that meet the needs of its employees, including short time and long-term incentive programs,
defined contribution plan, healthcare benefits, and wellness and employee assistance programs. Management monitors market compensation and benefits to attract, retain and promote teammates. In addition, Virgin Galactic’s incentive programs are
aligned with the Company’s mission and intended to reward and incentivize high performing teams and an engaged workforce.
For the year ended 2020, the compensation and benefits expense payable to and earned by personnel totaled $103.8 million.
In partnership with our human resources, medical, safety, security, legal, and communications functions, our Company executives and Chief Executive Officer provided
and shared comprehensive resources and tools, and internal communications to assist and support our teammates with overall wellness during the pandemic, This included mental wellness support in coping with stress, anxiety, isolation, and loss, as
well as our many employees balancing childcare obligations in the midst of the pandemic. Based on the location of our primary facilities and its associated communities, these areas were impacted with higher case rates of the pandemic within the U.S.
and the United Kingdom.
Supporting our Employees through the COVID-19 Pandemic:
In response to COVID-19 and related state and local government orders to stay at home, Virgin Galactic immediately responded in March 2020 with the creation of a
COVID-19 Task Force as part of our internal and external pandemic emergency response plan.
Beginning in April 2020, Virgin Galactic offered for all employees required to work onsite the benefit of routine testing and, in the third quarter of 2020, commenced
offering an in-house testing benefit offering for employees required to work onsite.
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Executive Compensation
Compensation Discussion And Analysis
Executive Summary
This Compensation Discussion and Analysis (“CD&A”) provides an overview of our executive
compensation philosophy, the overall objectives of our executive compensation program, how each element of our executive compensation program is designed to satisfy those objectives, and the policies underlying our 2020 executive compensation
program and the compensation awarded to our named executive officers for 2020. The following discussion and analysis of compensation arrangements of our named executive officers should be read together with the compensation tables and related
disclosures.
Our named executive officers for fiscal year 2020 were:
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•
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Michael Colglazier, our Chief Executive Officer and President,
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•
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George Whitesides, our former Chief Executive Officer and Chief Space Officer (during 2020),
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•
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Jonathan Campagna, our Chief Financial Officer (during 2020),
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•
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Michael Moses, who serves as our President, Space Missions and Safety, of Galactic Enterprises
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•
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Michelle Kley, our Executive Vice President, General Counsel and Secretary, and
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•
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Enrico Palermo, our former President, Galactic Co. and Chief Operating Officer.
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In July 2020, Michael Colglazier was appointed as our Chief Executive Officer and George Whitesides
was appointed as Chief Space Officer. Effective February 25, 2021, Mr. Whitesides departed from his position as our Chief Space Officer. In addition, in December 2020 Mr. Palermo resigned as our President, Galactic Co. and Chief Operating Officer.
In March 2021, Mr. Campagna ceased serving as our Chief Financial Officer and Douglas Ahrens was
appointed as our Chief Financial Officer.
Operational and Performance Highlights
In 2020, the Company’s leadership established a long-term vision and outlined the Company’s
strategies to achieve these objectives. That vision included a target of 400 spaceflights per year per spaceport with multiple spaceports located around the world.
We believe the exploration of space and the cultivation and monetization of space-related
capabilities offer immense potential to create economic value and future growth. Further, we believe we are at the center of these industry trends and well-positioned to capitalize on them by bringing human spaceflight to a broad global population
that dreams of traveling to space. In the third quarter of 2020, management raised approximately $460 million to strengthen the Company’s financial position to enable the Company to focus on such strategic long-term objectives. In addition, our
executive leadership team was expanded in 2020, with top talent that will support realization of our vision and long-term performance objectives.
Regarding the Company’s 2020 commercial and space missions’ operations, the market for commercial
human spaceflight for private individuals is new and untapped. As of December 31, 2020, only 581 humans have ever traveled above the Earth’s atmosphere into space to become officially recognized as astronauts, cosmonauts or taikonauts. We believe
this market opportunity is supported by approximately 600 reservations and over $80 million of deposits we had booked as of December 31, 2020, and during the COVID-19 pandemic, our commercial team maintained our approximately 600 future astronauts.
Additionally, in February 2020, we launched our One Small Step campaign, which allowed interested individuals to place a $1,000 refundable registration deposit towards the cost of a future ticket once we reopen ticket sales. On December 31, 2020,
we closed the One Small Step campaign to new entrants, having received approximately 1,000 One Small Step deposits through that date.
On our overall performance, we continue to progress through our test program schedule and our fleet
expansion efforts during 2020, despite challenges and delays caused by the COVID-19 pandemic and actions taken in response to the COVID-19 pandemic.
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Executive Compensation
Compensation Highlights
2020 was a transitional year for the Company, as it was our first full year as a public company
following the Closing. In early 2020, at the beginning of the pandemic in the United States, the Company’s Board determined to reduce Board compensation and management proposed Mr. Whitesides and the executive officers reduce base salaries for a
period of time in the first half of 2020. Mr. Whitesides and the executive officers also reduced their 2019 cash bonus incentives to ensure the Company was taking every effort to preserve cash and maintain job stability across the Company’s
workforce in the midst of the pandemic.
Throughout the challenges of the pandemic in 2020 and the transitional efforts required in the first
half of 2020 as a newly public company, the Company established 2020 performance objectives for the Company’s first cash incentive program, and also established an initial equity incentive framework for nonexecutive new hires within the 2019
Incentive Plan.
In 2020, our executive compensation program consists of fixed and variable pay, including cash and
non-cash components. The key elements of our 2020 executive compensation program are as follows:
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Compensation Element
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Key Features and Objectives
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Base Salary
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• Reflects individual skills, experience, and overall responsibilities
of the executive’s position
• Attracts and retains talent by providing a stable and reliable
source of income
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Cash-Based Incentive Compensation
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• Rewards the achievement of corporate
objectives and overall contributions towards achieving those objectives
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Equity Based Compensation
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• Incentivizes our executives to create long-term stockholder value
• Aligns our executive’s strategic objectives with those of our
stockholders’ interests over the long-term
• Promotes retention and executive stock ownership
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Compensation Program Objectives
The main objectives of the Company’s executive compensation program are to:
• Motivate, attract and retain highly qualified executives who are
committed to the Company’s mission, performance and culture, by paying them competitively.
• Create a fair, reasonable and balanced compensation program that
rewards executives’ performance and contributions to the Company’s short- and long-term business results, while closely aligning the interests of the executives with those of stockholders.
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• Emphasize pay for performance, with a program that aligns financial and operational achievements.
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We believe that the Company’s executive compensation program design features
accomplish the following:
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• Provide base salaries consistent with each executive’s
responsibilities so that they are not motivated to take excessive risks to achieve a reasonable level of financial security.
• Ensure that a significant portion of each executive’s compensation
is tied to the future share performance of the Company, thus aligning their interests with those of our stockholders.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Executive Compensation
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•
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Utilize equity compensation and vesting periods for equity awards that encourage executives to remain employed and focus on sustained share price appreciation.
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•
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Utilize a mix between cash and equity compensation designed to encourage strategies and actions that are in the long-term best interests of the Company.
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Role of the Board, Management and Compensation Consultant
The compensation committee has ultimate responsibility for compensation-related decisions and, in
2020, the compensation committee retained an independent consultant, Mercer, from January through August. Meridian was retained by the compensation committee as an independent consultant for the months of September through December of 2020 to
assist the committee in its evaluation of the compensation provided to our executive officers. In addition, the compensation committee’s independent consultant generally attends compensation committee meetings and provides information, research and
analysis pertaining to executive compensation and governance as requested by the compensation committee.
Other than advising the compensation committee, as described above, neither Mercer nor Meridian
provided any services to the Company in 2020.
In March 2020, the compensation committee approved a 2020 peer group for the newly created public
Company. The peer group was utilized in the assessment of the non-employee director compensation and in the development of the overall compensation for Mr. Colglazier as Chief Executive Officer and for Mr. Whitesides as Chief Safety Officer. This
peer group consisted of the following companies:
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• HEICO Corporation
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• II-VI Incorporated
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• Kratos Defense & Security Solutions, Inc.
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• Mercury Systems, Inc.
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• National Instruments Corp.
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• Proofpoint, Inc.
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• PROS Holdings, Inc .
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• PTC Therapeutics, Inc.
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• Rogers Corporation
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• Aerojet Rocketdyne Holdings, Inc.
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• AeroVironment, Inc.
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• AppFolio, Inc.
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• Axon Enterprise, Inc.
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• Cloudera, Inc.
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• Cognex Corporation
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• Coherent, Inc.
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• Cubic Corporation
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• Emergent Biosolutions, Inc.
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• FireEye, Inc.
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• FLIR Systems, Inc.
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Stockholder Say-on-Pay Vote
Approximately 99% of votes cast were voted in favor of our 2020 say-on-pay proposal, which we
believe affirms our stockholders’ support of our approach to our executive compensation program. In addition, at our 2020 annual meeting our stockholders had their first opportunity to cast an advisory vote on the frequency of our say-on-pay
proposals, and the majority of our stockholders approved holding such votes on an annual basis. Our next say-on-pay vote will occur at our 2021 annual meeting of stockholders. The Company intends to consider the outcome of the say-on-pay votes when
making compensation decisions regarding our named executive officers.
Elements of Our Executive Compensation Program
The Company’s primary components of compensation for its executive officers have been base salary,
incentive cash bonuses and grants of long-term equity-based incentive compensation. In 2020, the Company did not have a pre-established policy or target for the allocation between cash and non-cash incentive compensation or between short-term and
long-term compensation, although the Company did attempt to keep total cash compensation within the Company’s fiscal year budget while reinforcing its pay-for-performance philosophy.
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Executive Compensation
Base Salaries
The base salaries of our named executive officers are an important part of their total compensation
package, and are intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Based on 2020’s operational challenges within the pandemic, management did not propose any
adjustments within the year to named executive officers’ base salaries.
The following table sets forth the base salaries for each of our named executive officers that were
approved for 2020:
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Named Executive Officer
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Approved 2020
Base Salary
($)
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Michael Colglazier(1)
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1,000,000
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George Whitesides
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450,000
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Jonathan Campagna
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350,000
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Michael Moses
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350,000
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Michelle Kley
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350,000
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Enrico Palermo(1)
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425,000
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(1)
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Messrs. Colglazier and Palermo received pro-rated base salaries for 2020 to reflect a partial year of service.
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On April 30, 2020, as a precautionary measure during this phase of COVID-19 national mobilization
and recovery, our executive officers, including our named executive officers, voluntarily agreed to a temporary reduction in their annual base salaries.
The annual base salaries earned for the period from May 11, 2020 through June 30, 2020 for Mr.
Whitesides was reduced by 20%, and for Messrs. Campagna, Moses and Palermo, Ms. Kley, and our other executive officers’ were reduced by 10%.
Cash-Based Incentive Compensation
Colglazier Signing Bonus
In connection with joining our company, Mr. Colglazier received a one-time cash bonus equal to
$1,000,000, one-half of which was paid upon joining the Company, and one-half of which will be paid following the first anniversary of his employment commencement date, subject to his continued employment. The one-time cash bonus was to encourage
Mr. Colglazier to join the Company and provide leadership experience and expertise in the Company’s strategy, specifically in commercial, brand and operations.
2020 Annual Cash Bonuses
Each of our named executive officers participated in 2020 Executive Annual Cash Incentive Program
(the “Program”), which was our annual cash bonus program.
The maximum bonus that may be paid under the Program to any executive was 120% of his or her target
bonus opportunity for 2020. However, pursuant to his employment agreement, Mr. Colglazier’s maximum bonus opportunity was 150% of his target bonus opportunity. For 2020, Mr. Colglazier was eligible to receive a bonus equal to 100% of his base
salary earned in 2020 on a prorated basis, which was intended to encourage Mr. Colglazier to join the Company and to address his forgone annual cash incentive award target bonus opportunity with his prior employer.
The 2020 target bonus opportunities for the named executive officers are as follows:
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Named Executive Officer
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Target Bonus Opportunity
(% of Base Salary)
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Michael Colglazier
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100%
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George Whitesides
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50%
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Jonathan Campagna
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50%
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Michael Moses
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50%
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Michelle Kley
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50%
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Enrico Palermo
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50%
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VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
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Executive Compensation
Bonuses under the Program may be earned based on the achievement of corporate performance objectives
and individual performance. The Company’s corporate performance objectives included achievement of five preestablished goals with equal weighting of 20% for each goal. The pre-established goals were set in the first quarter of 2020, and related to
overall safety performance, commercialization, vehicle test flight readiness, and overall financial and internal program performance at the Company and/or subsidiary (Galactic Enterprises or Galactic Co.) levels.
In early 2021, the compensation committee assessed the Company’s 2020 achievement of the corporate
performance objectives and the Program payouts recommended by the Chief Executive Officer. It was determined that the Company achieved goals relating to safety performance and internal program performance, but not the other performance goals; as
such, 40% of each executive’s 2020 target bonus was earned. The compensation committee also acknowledged individual performance in 2020 and determined to award additional discretionary bonuses to Mr. Moses and Ms. Kley, as recommended by the Chief
Executive Officer in recognition of their individual contributions during the year. Mr. Colglazier received a bonus equal to 100% of his base salary earned in 2020 pursuant to the terms of his employment agreement. The following table sets forth
the total annual bonus paid to each named executive officer:
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Named Executive Officer
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2020 Annual Bonus
($)
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Michael Colglazier
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452,055
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George Whitesides
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0
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Jonathan Campagna
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70,000
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Michael Moses
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165,000
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Michelle Kley
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135,000
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Enrico Palermo
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78,000
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Mr. Whitesides departed from the Company on February 25, 2021; as such, he was not eligible to
receive the 2020 annual bonus under the terms of the Program and Mr. Whitesides’ employment agreement. The Chief Executive Officer recommended to the compensation committee that Mr. Palermo and Mr. Campagna remain eligible to earn a 2020 bonus even
though each were not employed with the Company at the time the compensation committee assessed the Company’s 2020 performance achievement of the corporate performance objectives, and recommended Program payouts from the Chief Executive Officer.
Milestone-Based Cash Incentive Plan
The VG Companies currently maintain a cash incentive plan adopted in 2017 in which certain of the
named executive officers participate. These named executive officers are eligible to receive bonuses under the cash incentive plan upon the VG Companies’ achievement of three specified performance objectives (each such objective a “qualifying
milestone”). Payment of bonuses pursuant to the cash incentive plan, if any, is contingent upon the applicable named executive officer’s continued employment through the applicable payment date.
The first qualifying milestone was not achieved under the cash incentive plan. In connection with
the Virgin Galactic Business Combination, the second qualifying milestone was achieved in 2019. In addition, the third qualifying milestone was amended such that the amount payable upon achievement of the third qualifying milestone will be
conditioned upon the achievement of a cash flow goal prior to, or as of, the end of calendar year 2027, subject to the executive’s continued employment.
The following table shows the remaining bonus opportunity that may become payable upon achieving the
amended third qualifying milestone. In connection with their 2021 separations, Messrs. Whitesides and Campagna are no longer eligible to receive this bonus.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
42
|
Executive Compensation
|
Named Executive Officer
|
Amended Third
Qualifying Milestone
Opportunity ($)
|
|
George Whitesides
|
2,000,000
|
|
Jonathan Campagna
|
78,125
|
|
Michael Moses
|
1,000,000
|
Mr. Whitesides also was eligible to receive a milestone bonus of a lump sum cash payment equal to
$500,000, payable within 30 days following a commercial launch at any time during his employment, and continues to be eligible to receive this bonus following his separation from the Company.
Equity Compensation
We maintain the 2019 Incentive Plan, under which we may grant cash and equity incentive awards to
directors, employees and consultants of our Company and our affiliates, to enable us to attract and retain services, skills and experience of these individuals, which we believe are essential to our long-term success.
Anniversary Awards
In 2019, we approved equity award grants to our named executive officers in connection with the
Virgin Galactic Business Combination, in the form of stock options and RSUs. RSU awards were granted to the named executive officers in connection with the Closing. Fifty percent of the stock options were granted to each named executive officer in
connection with the Closing; and the remaining 50% originally was intended to be granted as stock options on the first anniversary of the Closing. In 2020, our compensation committee determined to grant this remaining 50% portion in the form of
stock options and RSUs, half of the aggregate number of shares was granted as stock options, and the other half of which was granted as RSUs (the “Anniversary Awards”).
The following table sets forth the Anniversary Awards that were granted in 2020 (but does not
include any other awards granted in 2020).
|
Named Executive Officer
|
Anniversary
Awards (Restricted
Stock Units)
Granted in 2020
|
Anniversary
Awards
(Stock Options)
Granted in 2020
|
|
George Whitesides(1)
|
320,840
|
320,840
|
|
Jonathan Campagna(2)
|
152,781
|
152,781
|
|
Michael Moses(2)
|
229,171
|
229,172
|
|
Enrico Palermo(2)
|
229,171
|
229,172
|
|
|
(1)
|
Mr. Whitesides’ Anniversary Awards were granted in July 2020 in connection with his transition to Chief Space Officer (rather than in October 2020).
|
|
|
(2)
|
Anniversary Awards were granted to Messrs. Campagna, Moses and Palermo in October 2020.
|
The Anniversary Awards granted to Messrs. Campagna, Moses and Palermo vest (and become exercisable,
as applicable) as to 25% of the shares subject to each award on the first anniversary of the grant date and as to the remaining 75% in substantially equal monthly installments until the fourth anniversary of the grant date, subject to continued
service through the applicable vesting date. The portion of the Anniversary Award granted to Mr. Whitesides that consists of stock options vests in equal monthly installments until the second anniversary of the grant date, and the portion of his
Anniversary Award that consists of RSUs vests in equal quarterly installments until the second anniversary of the grant date, in each case subject to continued service. Messrs. Campagna and Palermo forfeited the unvested portions of their
Anniversary Awards when they separated from the Company.
Colglazier Awards
In connection with joining the Company, we granted Mr. Colglazier certain equity awards that were
meant to replace equity he was scheduled to forfeit from his prior employer, align Mr. Colglazier’s interests immediately with our stockholders’ interests, and retain Mr. Colglazier over the long-term vesting period of the equity awards. More
specifically, we granted Mr. Colglazier on the effective date of his employment with the Company in July 2020 a stock option to purchase 500,000 shares, a RSU award covering 70,000 shares (the “Signing RSU Award”) and a second RSU award covering
500,000 shares (the “Additional RSU Award”).
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
43
|
Executive Compensation
Mr. Colglazier’s stock option is scheduled to vest and become exercisable
in substantially equal monthly installments over the 60 months following his employment commencement date. Half of the Signing RSU Award was vested as of Mr. Colglazier’s employment start date and half is scheduled to vest on the one year
anniversary of such date. The Additional RSU Award is scheduled to vest as to 25% of the RSUs subject to the award on the one year anniversary of his employment commencement date and as to the remaining
75% in substantially equal quarterly installments over the following 12 quarters. The vesting of
each of Mr. Colglazier’s awards are subject to his continued service.
The table below provides additional detail on the equity components of Mr. Colglazier’s new hire
package. Vesting covers up to five-years in total, thereby ensuring long-term retention and alignment:
|
Equity Award Component
|
Number of
Shares
|
Vesting Provisions
|
Rationale
|
|
Stock Option
|
500,000
|
5 years in total:
substantially equal monthly installments over the 60 months through the fifth anniversary of the employment commencement date
|
Options provide alignment with stockholders as no value is delivered without share price appreciation; ensure retention over 5-year vesting period
|
|
“Signing RSU Award”
|
70,000
|
1 year in total:
50% on employment commencement date and 50% on the first anniversary of the employment commencement date
|
Encourage Mr. Colglazier to join
Virgin Galactic by replacing equity Mr. Colglazier was scheduled to forfeit from prior employer; Provide alignment with stockholders and ensure retention
|
|
“Additional RSU Award”
|
500,000
|
4 years in total:
25% on the first anniversary of the employment commencement date; 75% in substantially equal quarterly installments thereafter until the fourth anniversary of the vesting commencement date
|
2020 reflected a transitional year for the Company, and Mr. Colglazier’s equity awards were a key
part in securing Mr. Colglazier’s leadership of Virgin Galactic as its Chief Executive Officer. Going forward, the value of Mr. Colglazier’s annual equity grants are expected to be less than the value of the 2020 awards and will be determined by
the compensation committee based on various factors, such as individual and Company performance, market competitive pay levels among peers, support of the Committee’s pay for performance philosophy and long-term alignment with stockholders.
Palermo Awards
As discussed earlier, in connection with his appointment as Chief Operating Officer, in January 2020
management proposed and the compensation committee granted to Mr. Palermo a stock option to purchase an aggregate of 145,828 shares and an RSU award covering 55,000 shares. These awards were scheduled to vest as to 25% of the shares subject to the
award on the first anniversary of the his appointment and as to the remaining 75% in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. Mr. Palermo forfeited the
unvested portions of these awards when he resigned in December 2020.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
44
|
Executive Compensation
Other Elements of Compensation
Retirement Plans
In 2020, the named executive officers participated in a 401 (k) retirement savings plan. The
Internal Revenue Code of 1986, as amended (the “Code”), allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. In 2020, contributions made by
participants in the 401(k) plan were matched up to a specified percentage of the employee contributions on behalf of the named executive officers. These matching contributions are fully vested as of the date on which the contribution is made.
Employee Benefits and Perquisites
Health/Welfare Plans In 2020, the named executive officers had the opportunity to
participate in health and welfare plans provided by the Company to other executive officers and employees.
Perquisites In 2020, Mr. Palermo received a $3,692 car allowance and an executive annual
physical with an additional benefit of $3,976.
Mr. Colglazier received $15,000 in connection with the negotiation of his employment agreement and,
subject to availability, he will be entitled to join a spaceflight in connection with the performance of his duties (on a tax grossed-up basis to him) and may invite three guests to join a spaceflight.
Mr. Whitesides received $11,201 for legal fees incurred in connection with the negotiation of the
amended employment agreement. In addition, each of Mr. Whitesides and his wife is entitled to a company paid spaceflight.
We believe the health and welfare plans and the perquisites described above are necessary and
appropriate to provide a competitive compensation package to the named executive officers.
Severance and Change in Control-Based Compensation
We have entered into employment agreements with each of our named executive officers that provides
for severance upon a termination of employment without cause or for good reason. We believe that job security and terminations of
employment, both within and outside of the change of control context, are causes of significant
concern and uncertainty for our executive officers and that providing protections to our executive officers in these contexts is therefore appropriate in order to alleviate these concerns and allow the executives to remain focused on their duties
and responsibilities to our Company in all situations. These are described and quantified below under “Potential Payments Upon Termination or Change in Control.”
In connection with his departure in February 2021, Mr. Whitesides is entitled to receive a cash
amount equal to 1.0 multiplied by the sum of his annual base salary as of the date of his departure and target bonus amount, payable over twelve months, and will continue to participate in our group health plan at the level at which he participated
immediately prior to his departure for twelve months following the date of his qualifying termination. In addition, all equity awards held by Mr. Whitesides which were outstanding and unvested as of the date of his qualifying termination and which
were subject solely to time-based vesting became fully vested and exercisable (to the extent applicable) on the date of his termination. Mr. Whitesides will continue to be eligible to earn a Milestone Bonus (as defined in his employment agreement)
associated with a commercial launch and will continue to have the opportunity for a spaceflight expedition, both of which are described further below under “George Whitesides Amended and Restated Employment Agreement”.
In connection with Mr. Campagna’s departure in March 2021, Mr. Campagna is entitled to receive a
cash amount equal to 0.5 multiplied by the sum of his annual base salary as of the date of his departure and target bonus amount, payable over six months, and will continue to participate in our group health plan at the level at which he
participated immediately prior to his departure for six months following the date of his qualifying termination. All equity awards held by Mr. Campagna which were outstanding and unvested as of the date of his qualifying termination (after taking
into account the accelerated vesting described in the previous sentence) were forfeited without consideration.
The severance entitlements under Mr. Whitesides’ and Mr. Campagna’s employment agreements are
described and quantified further below under “Potential Payments Upon Termination or Change in Control.”
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
45
|
Executive Compensation
Tax and Accounting Considerations
As a general matter, our Board of Directors and the compensation committee review and consider the
various tax and accounting implications of compensation programs we utilize.
Code Section 409A
Section 409A of the Code, or Section 409A, requires that “nonqualified deferred compensation” be
deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees
and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and
benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.
Code Section 280G
Section 280G of the Code, or Section 280G, disallows a tax deduction with respect to excess
parachute payments to certain executives of companies which undergo a change of control. In addition, Section 4999 of the Code imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are
compensation linked to or triggered by a change of control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock
options, restricted stock and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G based on the executive’s prior compensation. In approving the compensation
arrangements for our named executive officers, our Board of Directors or compensation committee considers all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G. However, the Board of
Directors or compensation committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G and the imposition of excise taxes under Section 4999 when it believes that such
arrangements are appropriate to attract and retain executive talent.
Accounting for Stock-Based Compensation
We follow the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or
ASC Topic 718, for our stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the
compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of stock options and RSUs under our equity incentive award plan are accounted
for under ASC Topic 718. Our Board of Directors or compensation committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award
plan and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Certain Governance Matters
As a newly public company, the compensation committee expects to evaluate certain additional
compensation policies and practices in the areas such as clawback and recoupment provision, Board and executive stock ownership, and retention guidelines in 2021 and 2022.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
46
|
Summary Compensation Table
The following table sets forth information concerning the compensation of the named executive officers
for the years ended December 31, 2020, 2019 and 2018.
|
Name and Principal Positions
|
Year
|
Salary
($)(1)
|
Bonus
($)(2)
|
|
Stock Awards
($)(3)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive Plan
Compensation
($)(4)
|
|
All Other
Compensation
($)(5)
|
Total
($)
|
Michael Colglazier
Chief Executive Officer(7)
|
2020
|
442,308
|
952,055
|
(6)
|
13,098,600
|
7,540,000
|
—
|
|
22,637
|
21,603,545
|
George Whitesides
Former Chief Executive Officer, Chief
Space Officer (during 2020)(7)
|
2020
|
454,500
|
—
|
|
9,581,221
|
4,613,679
|
—
|
|
29,729
|
14,679,129
|
|
2019
|
346,346
|
1,536,863
|
|
1,384,605
|
4,988,505
|
48,383
|
|
19,051
|
8,323,753
|
|
2018
|
350,673
|
93,850
|
|
—
|
—
|
—
|
|
18,685
|
463,208
|
Jonathan Campagna
Chief Financial Officer
|
2020
|
358,481
|
—
|
|
3,975,810
|
1,891,429
|
70,000
|
|
18,403
|
6,314,123
|
|
2019
|
245,019
|
468,115
|
|
659,337
|
2,375,476
|
25,026
|
|
18,992
|
3,791,965
|
Michael Moses
President, Space Missions and
Safety, Galactic Enterprises
|
2020
|
358,615
|
95,000
|
|
5,963,711
|
2,837,149
|
70,000
|
|
18,504
|
9,342,979
|
|
2019
|
308,899
|
1,039,237
|
|
989,009
|
3,563,216
|
35,145
|
|
65,566
|
6,001,072
|
|
2018
|
300,986
|
68,850
|
|
—
|
—
|
—
|
|
18,696
|
388,532
|
Michelle Kley(8)
Executive Vice President, General
Counsel and Secretary
|
2020
|
358,481
|
65,000
|
|
—
|
—
|
70,000
|
|
17,892
|
511,373
|
Enrico Palermo(9)
Former Chief Operating Officer
|
2020
|
501,050
|
—
|
|
6,717,211
|
4,213,766
|
78,000
|
(10)
|
24,968
|
11,534,995
|
|
2019
|
312,625
|
774,237
|
|
989,009
|
3,563,213
|
35,549
|
|
20,391
|
5,695,024
|
|
2018
|
297,684
|
68,850
|
|
—
|
—
|
—
|
|
16,702
|
383,236
|
|
|
(1)
|
Salaries for each named executive officer other than Mr. Colglazier, who joined in July 2020, reflect voluntary reductions to the base salaries paid May
through June 2020.
|
|
|
(2)
|
Amounts represent the annual bonus payable to each named executive officer (other than Messrs. Colglazier and Whitesides) for 2020 based on individual
performance as determined by the compensation committee in its discretion.
|
|
|
(3)
|
The amounts shown in this column represent the grant date fair value RSUs and stock options awarded to the named executive officers in the applicable year,
computed in accordance with the requirements of FASB ASC Topic 718, but excluding any impact of forfeitures as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all option and RSU
awards made to executives in Note 14 to our financial statements included in the 2020 10-K. In addition, with respect to 2020, the amounts include the incremental fair value associated with the modification of December 2019 RSUs granted to
Messrs. Whitesides, Campagna, Moses and Palermo (to remove a stock price goal as a vesting condition).
|
|
|
(4)
|
Amounts represent the portion of the annual bonuses payable to each named executive officer (other than Messrs. Colglazier and Whitesides) for 2020 based on
achievement of designated Company performance metrics.
|
|
|
(5)
|
For 2020, amounts in this column include the amounts set forth in the table below:
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
47
|
Summary Compensation Table
|
Named Executive Officer
|
401(k) Plan
Contribution
($)(a)
|
AD&D
Premium
($)
|
Group Term
Life Premium
($)
|
Car
Allowance
($)
|
Legal Fee
Reimbursement
($)
|
Annual
Physical
($)
|
|
Michael Colglazier
|
6,923
|
126
|
588
|
—
|
15,000
|
—
|
|
George Whitesides
|
17,100
|
252
|
1,176
|
—
|
11,201
|
—
|
|
Jonathan Campagna
|
17,100
|
147
|
1,156
|
—
|
—
|
—
|
|
Michael Moses
|
17,100
|
248
|
1,156
|
—
|
—
|
—
|
|
Michelle Kley
|
16,478
|
258
|
1,156
|
—
|
—
|
—
|
|
Enrico Palermo
|
15,881
|
252
|
1,176
|
3,692
|
—
|
3,976
|
|
|
(a)
|
Amounts include safe harbor and employer matching contributions made in 2020.
|
|
|
(6)
|
Amounts represent (i) one-half of Mr. Colglazier’s signing bonus ($500,000), which was paid to him in July 2020, and (ii) the pro-rated 2020 annual bonus
award payable to Mr. Colglazier pursuant to the terms of his employment agreement, which is equal to the product of 100% multiplied by the base salary earned by Mr. Colglazier from July 20, 2020 through December 31, 2020.
|
|
|
(7)
|
In July 2020, Mr. Colglazier become our Chief Executive Officer and Mr. Whitesides transitioned to become our Chief Space Officer until his resignation in
February 2021. Mr. Whitesides was not eligible to receive a 2020 annual bonus award.
|
|
|
(8)
|
Ms. Kley was not a named executive officer during 2019.
|
|
|
(9)
|
Mr. Palermo departed from our company on December 4, 2020. Mr. Palermo’s 2020 salary includes his unused accrued vacation, paid out at the time of
termination in December 2020.
|
|
|
(10)
|
Amount represents the 2020 annual bonus award payable to Mr. Palermo, based on his time employed by us during 2020.
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
48
|
Grants of Plan-Based Awards in Fiscal 2020
|
|
|
|
Estimated Future Payout Under
Non-Equity Incentive Plan Awards
|
All Other
Stock
Awards
Number of
Shares of
Stock
(#)
|
All Other
Stock
Awards
Number of
Securities
Underlying
Options
($)
|
Exercise or
Base Price
of Option
Awards
($)/Sh)
|
Grant Date
Fair Value
of Stock and
Option
Awards
($)(3)
|
|
|
Name
|
Grant Date
|
|
Threshold
($)
|
Target
($)(1)
|
Maximum
($)(2)
|
|
Michael Colglazier
|
July 20, 2020
|
|
—
|
—
|
—
|
500,000
|
—
|
—
|
11,490,000
|
|
|
|
July 20, 2020
|
|
—
|
—
|
—
|
70,000
|
—
|
—
|
1,608,600
|
|
|
|
July 20, 2020
|
|
—
|
—
|
—
|
—
|
500,000
|
22.98
|
7,540,000
|
|
|
George Whitesides
|
March 10, 2020
|
|
—
|
—
|
—
|
—
|
—
|
—
|
2,208,318
|
(4)
|
|
|
July 20, 2020
|
|
—
|
—
|
—
|
320,840
|
—
|
—
|
7,372,903
|
|
|
|
July 20, 2020
|
|
—
|
—
|
—
|
—
|
320,840
|
22.98
|
4,613,679
|
|
|
|
First Qtr. 2020
|
|
225,000
|
225,000
|
270,000
|
—
|
—
|
—
|
—
|
|
|
Jonathan Campagna
|
March 10, 2020
|
|
—
|
—
|
—
|
|
—
|
—
|
1,051,582
|
(4)
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
152,781
|
—
|
—
|
2,924,228
|
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
—
|
152,781
|
19.14
|
1,891,429
|
|
|
|
First Qtr. 2020
|
|
175,000
|
175,000
|
210,000
|
—
|
—
|
—
|
—
|
|
|
Michael Moses
|
March 10, 2020
|
|
—
|
—
|
—
|
|
—
|
—
|
1,577,378
|
(4)
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
229,171
|
—
|
—
|
4,386,333
|
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
—
|
229,172
|
19.14
|
2,837,149
|
|
|
|
First Qtr. 2020
|
|
175,000
|
175,000
|
210,000
|
—
|
—
|
—
|
—
|
|
|
Michelle Kley
|
First Qtr. 2020
|
|
175,000
|
175,000
|
210,000
|
—
|
—
|
—
|
—
|
|
|
Enrico Palermo
|
January 13, 2020
|
|
—
|
—
|
—
|
—
|
145,828
|
13.70
|
1,376,616
|
|
|
|
January 13, 2020
|
|
—
|
—
|
—
|
55,000
|
—
|
—
|
753,500
|
|
|
|
March 10, 2020
|
|
—
|
—
|
—
|
—
|
—
|
—
|
1,577,378
|
(4)
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
—
|
229,172
|
19.14
|
2,837,149
|
|
|
|
October 25, 2020
|
|
—
|
—
|
—
|
229,171
|
—
|
—
|
4,386,333
|
|
|
|
First Qtr. 2020
|
|
212,500
|
212,500
|
255,000
|
—
|
—
|
—
|
—
|
|
|
|
(1)
|
The amounts in this column represent the value of the portion of the annual bonus that each named executive officer was eligible to earn in 2020 based on
achievement of designated Company performance objectives. For further discussion of the 2020 annual bonuses see “Compensation Discussion and Analysis—Cash-Based Incentive Compensation — 2020 Executive Cash Bonuses.”
|
|
|
(2)
|
The amounts in this column represent the value of the maximum target bonus opportunity that each named executive officer was eligible to earn in 2020 based
on the achievements of designated Company performance objectives and individual performance. For further discussion of the 2020 annual bonuses see “Compensation Discussion and Analysis - Cash-Based Incentive Compensation - 2020 Executive Cash
Bonuses.”
|
|
|
(3)
|
The amounts in the table reflect the full grant date fair value of time-vesting option and RSU awards computed in accordance with the requirements of ASC
Topic 718, but excluding any impact of forfeitures as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all option and RSU awards made to executives in Note 14 in our consolidated
financial statements included in the 2020 10-K.
|
|
|
(4)
|
The amounts reflect the incremental fair value associated with the modification of December 2019 RSU’s granted to Messrs. Whitesides, Campagna, Moses and
Palermo (to remove a stock price goal as a vesting condition).
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
49
|
Grants of Plan-Based Awards in Fiscal 2020
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
The following is a description of the employment agreements we have entered into with our named
executive officers.
General Description of Employment Agreements
Each agreement will continue until terminated in accordance with its terms, and provides for an
annual base salary, target annual bonus and eligibility to participate in customary health, welfare and fringe benefit plans, provided by the Company to its executive officers. In connection with Mr. Whitesides’ resignation from the Company in
February 2021, his employment agreement terminated as of February 25, 2021. In connection with Mr. Campagna’s departure from the Company in March 2021, his employment agreement terminated.
Pursuant to the employment agreements, each of Messrs. Whitesides, Campagna, Moses and Palermo were
entitled, in connection with the Virgin Galactic Business Combination, to receive stock options to purchase shares of the Company’s common stock and an RSU award covering shares of the Company’s common stock. The RSUs were granted in connection
with the Closing, and were effective as of the date of the filing of the Form S-8 for the 2019 Plan. Half of the stock options were granted to the executives at the Closing and half were expected to be granted on the first anniversary of the
Closing; however, as described above, the second half was granted in the form of both stock options and RSU awards.
Awards granted in connection with the Closing will vest as to 25% of the shares subject to the award
on the one year anniversary of the Closing and as to the remaining 75% in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. Awards granted on the first
anniversary of the Closing will vest along the same schedule, except the vesting dates will be keyed off of the grant date (rather than the Closing). However, as described above, Mr. Whiteside’s stock option was scheduled to vest in equal monthly
installments over a two-year period following the July 2020 grant date, and his RSU award was scheduled to vest in equal quarterly installments over the same period, in each case subject to continued service.
The employment agreements also contain customary confidentiality and non-solicitation provisions,
and also includes a “best pay” provision under Section 280G of the
Code, pursuant to which any “parachute payments” that become payable to the executive will either be
paid in full or reduced, so that such payments are not subject to the excise tax under Section 4999 of the Code, whichever results in the better after-tax treatment to the executive.
Michael Colglazier Employment Agreement
In July 2020 we entered into an employment agreement with Mr. Colglazier. Mr. Colglazier’s service
pursuant to the employment agreement will continue for a period of five years, unless earlier terminated in accordance with its terms. Pursuant to his employment agreement, Mr. Colglazier serves as the Chief Executive Officer and President of the
Company and reports directly to the Company’s Board of Directors. During the employment period, the Company is obligated to cause Mr. Colglazier to be nominated to stand for election to the Board of Directors, unless an event constituting “cause”
has occurred and not been cured or Mr. Colglazier has issued a termination notice.
Under the employment agreement, Mr. Colglazier is entitled to receive an initial annual base salary
of $1,000,000, subject to annual review by the Board of Directors or a subcommittee thereof and to increase in its discretion, and is eligible to receive an annual performance bonus targeted at 100% of his then-current annual base salary, ranging
from a minimum threshold of 50% to a maximum of 150% based on whether performance objectives are achieved (respectively). The actual amount of any annual bonus will be determined by reference to the attainment of applicable Company and/or
individual performance objectives, as determined by the Board of Directors or a subcommittee thereof.
Mr. Colglazier also received a one-time cash bonus equal to $1,000,000, one-half paid following his
employment start date and one-half to be paid following the first anniversary of his employment start date, subject to his continued employment. In addition, Mr. Colglazier (i) was entitled to receive reimbursement of (or Company-paid) legal fees
of $15,000 in connection with the negotiation of his employment agreement and (ii) subject to availability, will be entitled to join a spaceflight in connection with the performance of his duties (on a tax grossed-up basis to him) and may invite
three guests to join a spaceflight.
In connection with joining our company, we granted to Mr. Colglazier a stock option to purchase
500,000 shares, the Signing RSU Award and the Additional RSU Award.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
50
|
Grants of Plan-Based Awards in Fiscal 2020
Mr. Colglazier’s stock option is scheduled to vest and become exercisable in substantially equal
monthly installments over the 60 months following his employment commencement date. Half of the Signing RSU Award was vested as of Mr. Colglazier’s employment start date and half is scheduled to vest on the one year anniversary of such date. The
Additional RSU Award is scheduled to vest as to 25% of the RSUs subject to the award on the one year anniversary of his employment commencement date and as to the remaining 75% in substantially equal quarterly installments over the following 12
quarters. The vesting of each of Mr. Colglazier’s awards are subject to his continued service.
George Whitesides Amended and Restated Employment Agreement
Prior to his departure in February 2021, we were party to an employment agreement with Mr.
Whitesides that we entered into when he transitioned from the role of our Chief Executive Officer to become our Chief Space Officer on July 20, 2020.
Under the amended employment agreement, Mr. Whitesides was entitled to receive an initial annual
base salary of $450,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and was eligible to receive an annual performance bonus targeted at 50% of Mr. Whitesides’ then-current annual base salary.
However, due to his departure in February 2021, Mr. Whitesides was not eligible to receive an annual bonus for the year ended December 31, 2020. Mr. Whitesides also is eligible to earn a one-time cash bonus equal to $500,000, payable within 30 days
following a commercial launch, subject to his employment through the payment date. In addition, Mr. Whitesides is entitled to join a spaceflight in connection with the performance of his duties, and his wife is entitled to join a spaceflight.
Jonathan Campagna Employment Agreement
Prior to his departure in March 2021, we were party to an employment agreement with Mr. Campagna,
dated as of October 25, 2019. Pursuant to his employment agreement, Mr. Campagna served as the Chief Financial Officer of the Company and reported directly to our Chief Executive Officer. Under the employment agreement, Mr. Campagna was entitled to
receive an initial annual base salary of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and was eligible to receive an annual performance bonus targeted at 50% of Mr. Campagna’s
then-current annual base salary. The actual
amount of any such bonus would be determined by reference to the attainment of applicable Company
and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof.
Michael Moses Employment Agreement
On October 25, 2019, we entered into an employment agreement with Mr. Moses. Pursuant to his
employment agreement, Mr. Moses serves as the President, Space Missions and Safety, of Galactic Enterprises and reports directly to our Chief Executive Officer. Under the employment agreement in 2020, Mr. Moses is entitled to receive an initial
annual base salary of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and is eligible to receive an annual performance bonus targeted at 50% of Mr. Moses then- current annual base
salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof.
Enrico Palermo Employment Agreement
Prior to his departure in December 2020, we were party to an employment agreement with Mr. Palermo,
which was amended January 13, 2020. Pursuant to his amended employment agreement, Mr. Palermo served as the Chief Operating Officer of Virgin Galactic Holdings, Inc. and President of Galactic Co., and reported directly to our Chief Executive
Officer. Under his amended employment agreement, Mr. Palermo was entitled to receive an initial annual base salary of $425,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and was eligible to
receive an annual performance bonus targeted at 50% of Mr. Palermo’s then-current annual base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable Company and/ or individual performance
objectives, as determined by the Company’s Board of Directors or a subcommittee thereof. Mr. Palermo also was entitled to an annual vehicle allowance of $3,600. In addition, Mr. Palermo was entitled to receive a $60,000 bonus in connection with
certain events related to entering into his amended employment agreement.
Pursuant to his amended employment agreement Mr. Palermo received, in
connection with his appointment as Chief Operating Officer, an additional award of stock options to purchase an aggregate of 291,656 shares of the Company’s
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
51
|
Grants of Plan-Based Awards in Fiscal 2020
common stock (the “Palermo Options”) and an RSU award covering 55,000 shares of the Company’s common
stock (the “Palermo RSUs” and, together with the Palermo Option, the “Palermo Equity Awards”). The Palermo RSUs and half of the Palermo Options were granted on January 13, 2020; the other half of the Palermo Options were to be granted on January
13, 2021, subject to Mr. Palermo’s continued employment through the applicable grant date. The Palermo Equity Awards granted on January 13, 2020 vest as to 25% of the shares subject to the award on the one year anniversary of the grant date and as
to the remaining 75% of the shares in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. Palermo Equity Awards eligible to be granted on January 13, 2021 included
a similar four-year vesting schedule from and after the grant date.
Michelle Kley Employment Agreement
On December 2, 2019, we entered into an employment agreement with Ms. Kley. Pursuant to her
employment agreement, Ms. Kley serves as the Executive Vice President, General Counsel and Secretary and reports directly to our Chief Executive Officer. Under the employment agreement, Ms. Kley is entitled to receive an initial annual base salary
of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and is eligible to receive an annual performance bonus targeted at 50% of Ms. Kley’s then-current annual base salary. The actual amount
of any such bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof. In addition, pursuant to her employment
agreement, Ms. Kley received an award of stock options to purchase 300,000 shares of the Company’s common stock that vest with respect to 25% of the shares subject to the award on the one year anniversary of her employment start date and as to the
remaining 75% of the shares in substantially equal monthly installments over the following 36 months, subject to continued service as of the applicable vesting date.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
52
|
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of common stock underlying outstanding equity
incentive plan awards for each named executive officer as of December 31, 2020.
|
Name
|
Option Awards
|
|
Stock Awards
|
Numbers of
Securities Underlying
Unexercised Options
($) Exercisable
|
Number of
Securities Underlying
Unexercised Options
($) Unexercisable
|
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Number of
Shares or Units
of Stock That
Have Not Vested
($)
|
|
Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(1)
|
|
Michael Colglazier
|
41,666
|
458,334
|
(2)
|
22.98
|
7/20/30
|
|
|
|
|
|
|
—
|
—
|
|
—
|
—
|
|
35,000
|
(3)
|
830,550
|
|
|
|
|
|
|
|
|
500,000
|
(4)
|
11,865,000
|
|
George Whitesides
|
187,157
|
454,524
|
(5)
|
11.79
|
10/25/29
|
|
|
|
|
|
|
|
|
|
|
|
|
138,014
|
(6)
|
3,275,072
|
|
|
66,841
|
253,999
|
(7)
|
22.98
|
7/20/30
|
|
|
|
|
|
|
|
|
|
|
|
|
280,735
|
(8)
|
6,661,842
|
|
Jonathan Campagna
|
89,122
|
216,440
|
(5)
|
11.79
|
10/25/29
|
|
|
|
|
|
|
|
|
|
|
|
|
65,721
|
(6)
|
1,559,559
|
|
|
—
|
152,781
|
(9)
|
19.14
|
10/25/30
|
|
|
|
|
|
|
|
|
|
|
|
|
152,781
|
(10)
|
3,625,493
|
|
Michael Moses
|
133,683
|
324,660
|
(5)
|
11.79
|
10/25/29
|
|
|
|
|
|
|
|
|
|
|
|
|
98,582
|
(6)
|
2,339,351
|
|
|
—
|
229,172
|
(9)
|
19.14
|
10/25/30
|
|
|
|
|
|
|
|
|
|
|
|
|
229,171
|
(10)
|
5,438,228
|
|
Michelle Kley
|
75,000
|
225,000
|
(11)
|
7.46
|
12/02/29
|
|
—
|
|
—
|
|
Enrico Palermo
|
124,134
|
—
|
|
11.79
|
10/25/29
|
|
—
|
|
—
|
|
|
(1)
|
The market value of shares of our common stock that have not vested is calculated based on the closing trading price of our common stock ($23.73) as
reported on the NYSE on December 31, 2020.
|
|
|
(2)
|
This stock option vests and becomes exercisable in substantially equal monthly installments over the 60-month period following Mr. Colglazier’s employment
commencement date, July 20, 2020, subject to continued service through the applicable vesting date.
|
|
|
(3)
|
This RSU award vests in full on July 20, 2021, subject to continued service through the applicable vesting date.
|
|
|
(4)
|
This RSU award vests as to 25% of the RSUs on July 20, 2021 and in substantially equal quarterly installments over the following 12 quarters, subject to
continued service through the applicable vesting date.
|
|
|
(5)
|
This stock option has vested as to 25% of the shares underlying the option on October 25, 2020, and the remaining 75% of the underlying shares will vest in
substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date.
|
|
|
(6)
|
This RSU award vested as to 25% of the RSUs on October 25, 2020, and as to the remaining 75% of the underlying shares in substantially equal monthly
installments over the following 36 months, subject to continued service through the applicable vesting date.
|
|
|
(7)
|
This stock option vests and becomes exercisable in 24 substantially equal installments on each of the 24 monthly anniversaries, following the grant date,
subject to continued service through the applicable vesting date.
|
|
|
(8)
|
This RSU award vests in substantially equal quarterly installments over the two-year period following the grant date, subject to continued service through
the applicable vesting date.
|
|
|
(9)
|
This stock option will vest and become exercisable with respect to 25% of the shares underlying the option on October 25, 2021, and as to the remaining 75%
of the underlying shares will vest in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date.
|
|
|
(10)
|
This RSU award vested as to 25% of the RSUs on October 25, 2021, and as to the remaining 75% of the underlying shares in substantially equal monthly
installments over the following 36 months, subject to continued service through the applicable vesting date.
|
|
|
(11)
|
This stock option will vest and become exercisable with respect to 25% of the shares underlying the option on the first anniversary of the grant date,
December 31, 2019 and as to the remaining 75% of the underlying shares, in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date.
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
53
|
2020 Option Exercises and Stock Vested
The following table shows the number of shares of common stock acquired by each named executive officer during 2020 upon the exercise of stock options and the vesting of RSUs during 2020.
|
|
Option Awards
|
|
Option Awards
|
|
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized on
Exercised
($)(1)
|
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized
on Vesting
($)(1)
|
|
Michael Colglazier
|
—
|
—
|
|
35,000
|
$
|
804,300
|
|
George Whitesides
|
—
|
—
|
|
56,830
|
$
|
1,147,278
|
|
Jonathan Campagna
|
—
|
—
|
|
27,062
|
$
|
546,324
|
|
Michael Moses
|
—
|
—
|
|
40,593
|
$
|
819,485
|
|
Michelle Kley
|
—
|
—
|
|
—
|
$
|
—
|
|
Enrico Palermo
|
—
|
—
|
|
37,693
|
$
|
744,520
|
(1) Represents the amounts realized based on the fair market value of our stock on the
exercise or vesting date.
Potential Payments Upon Termination
or Change in Control
In accordance with SEC rules, the following table summarizes the payments that would be
made to certain of our named executive officers upon the occurrence of certain qualifying terminations of employment, assuming such named executive officer’s termination of employment with the Company
occurred on December 31, 2020 and, where relevant, that a change of control of the Company occurred on December 31, 2020. Amounts shown in the table below do not include (1) accrued but unpaid salary
and (2) other benefits earned or accrued by the named executive officers during his employment that are available to all salaried employees, such as
accrued vacation).
We have
entered into certain agreements with each of our named executive officers that provide our named executive officers with severance protections. The employment agreements provide that the named executive officers will be eligible for severance
benefits in certain circumstances following a termination of employment without cause or with good reason, whether or not in connection with a change in control. In connection with Mr. Whitesides’ resignation from the Company in February 2021, his employment agreement
terminated as of February 25, 2021. In connection with Mr.
Campagna’s departure from the Company in March 2021, his employment agreement terminated.
Under his employment agreement, if Mr. Colglazier
experiences a “qualifying termination” of employment, then, in addition to any accrued amounts, he will be entitled to receive the following severance payments and benefits:
|
•
|
A cash severance amount equal to the sum of (i) his annual base salary then in effect and (ii) his target annual bonus, multiplied by (A) 1.0 if the termination date occurs after the
second anniversary of the employment start date or (B) 2.0 if the termination date occurs on or before the second anniversary of the employment start date. The multiplier also will equal 2.0 if
the termination date occurs during the 24-month period following a “change in control” (as defined in the 2019 Plan) of the Company.
|
|
•
|
Pro-rated annual bonus for the year of termination.
|
|
•
|
Company-subsidized healthcare coverage for 12 - 18 months after the termination date.
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
54
|
Potential Payments Upon Termination or Change in Control
|
•
|
Accelerated vesting of any then-outstanding Company equity awards that vest based solely on the passage of time. The accelerated
vesting will cover the number of shares or RSUs that would have vested during the 12-month period following the termination date (or, if the termination occurs on or before the second
anniversary of the employment start date, the 24-month period). However, if the termination occurs during the 24-month period following a change in control, then such equity awards will vest in
full.
|
|
•
|
Continued opportunity to receive the spaceflight described above (but not if his employment terminates due to his death or disability).
|
A “qualifying termination” includes a termination of Mr. Colglazier’s employment (i) by the Company without “cause”, (ii) by Mr. Colglazier for “good reason” (as defined in the employment
agreement), (iii) due to Mr. Colglazier’s death or disability or (iv) by reason of the Company’s non-renewal of the employment agreement at the end of its
term.
Under the employment agreements for Messrs. Campagna and Moses, and Ms. Kley, if the executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason” (each, as defined in the employment
agreement, and referred to herein as a qualifying termination) then the executive will be entitled to receive the following severance payments and benefits:
|
•
|
an amount equal to 0.5 times the sum of (a) the executive’s annual base salary then in effect and (b) his target annual bonus amount; and
|
|
•
|
continued healthcare coverage for 6 months after the termination date.
|
However, if either such termination of employment occurs on or within 24 months following a “change in control” (as defined in the 2019 Plan), then the executive instead will be entitled to receive
the following severance payments and benefits:
|
•
|
an amount equal to 1.0 times the sum of (a) the executive’s annual base salary then in effect and (b) his target annual bonus amount;
|
|
•
|
continued healthcare coverage for 12 months after the termination date; and
|
|
•
|
full accelerated vesting of all outstanding and unvested time-based vesting equity awards.
|
Mr. Campagna’s employment was terminated without “cause” in March 2021. As a result, he is entitled to receive a cash amount equal to 0.5 multiplied by the sum of his annual base salary and
target bonus amount, payable over six months. In addition, Mr. Campagna will continue to participate in our group health plan at the level at which he participated immediately prior to his departure for
six months following the date of his qualifying termination. All equity awards held by Mr. Campagna which
were outstanding and unvested as of the date of his termination (after taking into account the accelerated vesting described in the previous sentence) were forfeited without consideration. In connection with Mr.
Campagna’s termination, in addition to the severance payments described in this paragraph, our board decided to pay him the full amount of his actual bonus for 2020. The quantified amount payable
to Mr. Campagna in connection with his termination is shown in the table below.
Under Mr. Whitesides’ employment agreement
as in effect on December 31, 2020, if he experiences a “qualifying termination” of employment, then, in addition to any accrued amounts, he will be entitled to receive the following severance payments
and benefits:
|
•
|
A cash severance amount equal to 1.0 times the sum of (i) his annual base salary then in effect and (ii) his target annual bonus. The multiplier will equal 1.5 if the termination date occurs during the 24-month period following a “change in control” (as defined in the 2019 Plan) of the Company.
|
|
•
|
Company subsidized healthcare coverage for 12 - 18 months after the termination date.
|
|
•
|
Accelerated vesting of any then outstanding Company equity awards that vest based solely on the passage of time.
|
|
•
|
Continued opportunity to receive the commercial flight bonus and the spaceflight described above.
|
A “qualifying termination” includes a termination of Mr. Whitesides’ employment (i) by the Company without “cause” (as defined in the amended employment agreement), (ii) by Mr. Whitesides for “good reason” (as defined in the amended
employment agreement) or (iii) by Mr. Whitesides for any reason after November 1, 2020.
In connection with Mr. Whitesides’ departure
in February 25, 2021, he is entitled to receive a cash amount equal to 1.0 multiplied by the sum of his base salary and target bonus
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
55
|
Potential Payments Upon Termination or Change in Control
opportunity, payable over twelve months, and will continue to participate in our group
health plan at the level at which he participated immediately prior to his departure for twelve months following the date of his qualifying termination. In addition, all equity awards held by Mr. Whitesides which were outstanding and unvested as of the date of his qualifying termination and which were subject solely to time-based became fully vested and exercisable (to the extent applicable) on
the date of his qualifying termination. Mr. Whitesides will continue to be eligible to earn a milestone bonus (as defined in his employment agreement) and will continue to have the opportunity for a
spaceflight expedition. The quantified amount payable to Mr. Whitesides in connection with his termination is shown in the table below.
The severance payments and benefits described above are subject to the executive’s execution and non-revocation of a general release of claims in favor of the Company and continued compliance with customary confidentiality and non-solicitation requirements, then, in addition to any
accrued amounts. Mr. Palermo departed from our Company in December 2020 and did not receive any severance payments or benefits; however, he remains
eligible to receive a pro-rata bonus under our 2020 annual bonus program. The amounts below that are related to Mr. Whitesides and Mr. Campagna will
actually be received by Messrs. Whitesides and Campagna in connection with their departures from the Company in February and March 2021, respectively.
|
|
Qualifying
Termination
|
Change in Control
with Qualifying
Termination
|
|
Name
|
Benefit
|
($)
|
($)
|
|
Michael Colglazier
|
Cash Payment
|
4,452,054
|
4,452,054
|
|
|
Vesting of Equity Awards
|
6,674,686
|
20,235,550
|
|
|
Value of Benefits
|
45,134
|
45,134
|
|
|
Total(1)
|
11,171,874
|
24,732,738
|
|
George Whitesides(2)
|
Cash Payment
|
675,000
|
1,012,500
|
|
|
Vesting of Equity Awards
|
19,536,454
|
19,536,454
|
|
|
Value of Benefits
|
30,090
|
45,134
|
|
|
Total(3)
|
20,241,544
|
20,594,088
|
|
Jonathan Campagna(4)
|
Cash Payment
|
[262,500]
|
525,000
|
|
|
Vesting of Equity Awards
|
—
|
9,450,698
|
|
|
Value of Benefits
|
14,998
|
29,996
|
|
|
Total
|
277,498
|
10,005,694
|
|
Michael Moses
|
Cash Payment
|
262,500
|
525,000
|
|
|
Vesting of Equity Awards
|
—
|
14,176,053
|
|
|
Value of Benefits
|
15,045
|
30,090
|
|
|
Total
|
277,545
|
14,731,143
|
|
Michelle Kley
|
Cash Payment
|
262,500
|
525,000
|
|
|
Vesting of Equity Awards
|
—
|
1,476,000
|
|
|
Value of Benefits
|
4,956
|
9,911
|
|
|
Total
|
267,456
|
2,010,911
|
|
(1)
|
Mr. Colgazier’s total does not include the value of the commercial flight bonus and the spaceflight.
|
|
(2)
|
Mr. Whitesides departed from his position as Chief Space Officer
effective February 25, 2021. He is entitled to receive the payments and benefits listed next to his name under the “Qualifying Termination” column.
|
|
(3)
|
Mr. Whitesides’ total does not include the milestone payment or the value of the spaceflight.
|
|
(4)
|
Mr. Campagna departed from his position as Chief Financial Officer in
March 2021. He is entitled to receive the payments and benefits listed next to his name under the “Qualifying Termination” column. In addition, he received a payment of $70,000 with respect to his 2020 annual bonus.
|
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
56
|
CEO Pay Ratio
Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing
the following information regarding the relationship of the annual total compensation of our median compensated employee to the annual total compensation of Michael Colglazier, our Chief Executive Officer.
We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner that is intended to be consistent with the requirements of Item
402(u) of Regulation S-K.
For 2020, our last completed fiscal year:
|
•
|
the annual total compensation of the employee who represents our median compensated employee (other than our Chief Executive Officer) was
$225,665; and
|
|
•
|
the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table included above, was $21,705,600.
|
Based on this information, for 2020, our Chief Executive Officer’s ratio of annual
total compensation to the median of the annual total compensation of all of our employees (other than the Chief Executive Officer) was 96 to 1.
We determined that, as of December 31, 2020, our employee population excluding our Chief Executive Officer consisted of 824 full-time employees. To identify
the median employee from our employee population, we reviewed the annual total compensation of each of our employees in the same manner as calculated for the annual total compensation of our Chief Executive Officer.
With respect to the annual total compensation of the median employee, we identified and
calculated the elements of such employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $225,665. With
respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our 2020 Summary Compensation
Table included in this Proxy Statement.
Compensation Risk Assessment
In November 2020, the compensation committee completed
a compensation risk assessment to assess whether the Company’s executive compensation program might encourage aggressive risk taking. The assessment indicated that the Company’s executive and
overall compensation pay practices
do not encourage excessive or inappropriate risk taking and the compensation committee
determined such policies or practices are not reasonably likely to have a material adverse effect on our business.
|
VIRGIN GALACTIC HOLDINGS, INC. 2021 PROXY STATEMENT
|
57
|