Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Filed by the Registrant   x                             Filed by a Party other than the Registrant   o
Check the appropriate box: 
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to § 240.14a-12
INSEEGO CORP.
(Name of Registrant as Specified in Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
x
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
 
(1)
Title of each class of securities to which transaction applies:     
 
(2)
Aggregate number of securities to which transaction applies:     
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):    
 
(4)
Proposed maximum aggregate value of transaction:    
 
(5)
Total fee paid:    
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Fee paid previously with preliminary materials:
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1)
Amount previously paid: 
 
(2)
Form, Schedule or Registration Statement No.:   
 
(3)
Filing Party:  
 
(4)
Date Filed:   
 
 







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2017 PROXY STATEMENT
AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS





















June 14, 2017 | San Diego, California




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April 28, 2017
Dear Stockholder:
You are cordially invited to attend the 2017 Annual Meeting of Stockholders (theAnnual Meeting) of Inseego Corp., a Delaware corporation (the Company). The Annual Meeting will be held on Wednesday, June 14, 2017 at 1:00 p.m., local time, at the Company’s headquarters located at 9605 Scranton Road, Suite 300, San Diego, California 92121.
We are pleased to take advantage of the Securities and Exchange Commission (the SEC) rule that allows companies to furnish proxy materials to their stockholders over the Internet. As a result, on or about May 3, 2017, we are mailing to most of our stockholders a Notice of Internet Availability of Proxy Materials (the Notice) instead of a paper copy of our proxy materials, which include our Notice of Annual Meeting of Stockholders, this proxy statement, our 2016 Annual Report on Form 10-K (the 2016 Annual Report) and a proxy card or voting instruction form. We believe that this process allows us to provide our stockholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. The Notice contains instructions on how to access those documents on the Internet. The Notice also contains instructions on how to request a paper copy of our proxy materials. All stockholders who have previously requested a paper copy of our proxy materials will continue to receive a paper copy of the proxy materials by mail.
It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend, please vote online, by telephone or, if you requested printed copies of these materials, by signing and returning your proxy card. Any stockholder who attends the Annual Meeting may vote in person, even if the stockholder has voted online, by telephone or by mail, provided that if your shares are registered in the name of a broker, dealer, bank or other nominee, you must obtain a legal proxy from your broker, dealer, bank or other nominee and bring it with you to the Annual Meeting. If you hold your shares through an account with a broker, dealer, bank or other nominee, please follow the instructions you receive from them to vote your shares.
We hope that you will be able to attend the Annual Meeting and we look forward to seeing you.
Sincerely,
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Lance Bridges
Senior Vice President, General Counsel and Secretary





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9605 Scranton Road
Suite 300
San Diego, CA 92121

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 
 
 
 
 
Date
 
 
Wednesday, June 14, 2017
 
 
 
 
Time
 
 
1:00 p.m., local time
 
 
 
 
Location
 
 
Inseego Corp.
9605 Scranton Road, Suite 300
San Diego, California 92121
 
 
 
 
 
Items of Business
 
 
(1)
Elect one director to serve until the 2020 annual meeting of stockholders;
 
 
 
(2)
Approve the amendment of the Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan to increase the number of shares issuable under the plan by 1,000,000 shares and extend the term of the plan by five years;
 
 
 
(3)
Hold an advisory vote on executive compensation;
 
 
 
(4)
Hold an advisory vote on the frequency of the advisory vote on executive compensation;
 
 
 
(5)
Ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017; and
 
 
 
(6)
Transact any other business properly brought before the Annual Meeting or any adjournment or postponement thereof.
 
 
 
 
 
Record Date
 
 
Close of business on April 28, 2017
 
 
 
 
 
Information concerning the matters to be voted upon at the Annual Meeting is set forth in the proxy statement accompanying this notice.
Your vote is very important. Whether or not you plan to attend the Annual Meeting, please vote your shares online, by telephone or, if you requested printed copies of these materials, by signing and returning your proxy card. If you hold shares through an account with a broker, dealer, bank or other nominee, please follow the instructions you receive from them to vote your shares.
By Order of the Board of Directors,
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Lance Bridges
Senior Vice President, General Counsel and Secretary

April 28, 2017
San Diego, California


IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 14, 2017:
The Notice of Annual Meeting of Stockholders, Proxy Statement and the Company’s 2016 Annual Report on Form 10-K are available at www.inseego.com/proxymaterials.





PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
2017 Annual Meeting of Stockholders
Time and Date
1:00 p.m., local time on Wednesday, June 14, 2017
Location
Inseego Corp., 9605 Scranton Road, Suite 300, San Diego, California 92121
Record Date
Close of business on April 28, 2017
Voting
Shareholders of record as of the Record Date are entitled to one vote per share on each matter to be voted upon at the Annual Meeting.
Entry
Everyone attending the Annual Meeting will be required to present both proof of ownership of the Company's common stock and valid picture identification, such as a driver's license or passport. If your shares are held through an account with a broker, dealer, bank or other nominee, you will need a recent brokerage account statement or letter from your broker, dealer, bank or other nominee reflecting stock ownership as of the Record Date. If you do not have both proof of ownership of the Company's common stock and valid picture identification, you may not be admitted to the Annual Meeting. If you need directions to the Annual Meeting so that you may attend or vote in person, please contact Inseego Corp., 9605 Scranton Road, Suite 300, San Diego, California 92121, Attn: Secretary, or contact the Company’s Secretary by telephone at (858) 812-3400.
Voting Matters and Board Recommendations
The Board of Directors of the Company (the Board) is not aware of any matter that will be presented for a vote at the Annual Meeting other than those shown below.
Proposal
Board Recommendation
Page Reference
Proposal 1: Election of Director
FOR the nominee
Proposal 2: Approval of the Amendment of the Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan
FOR
Proposal 3: Advisory Vote on Executive Compensation
FOR
Proposal 4: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
1 YEAR
Proposal 5: Ratification of the Appointment of Mayer Hoffman McCann P.C. as the Company's Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2017
FOR
Voting Methods
If you are a holder of record on the Record Date, you can vote your shares:
:
By Internet. By logging onto the secure website included on the proxy card and following the instructions provided any time up until 1:00 a.m., Pacific Time, on June 14, 2017.
 
(
By Telephone. By calling the telephone number listed on the proxy card and following the instructions provided by the recorded message any time up until 1:00 a.m., Pacific Time, on June 14, 2017.
 
 
 
 
 
+
By Mail. If you requested printed copies of these materials, by completing, signing, dating and promptly returning the proxy card in the postage-paid return envelope provided with the proxy materials for receipt prior to the Annual Meeting.
 
I
In Person.  By voting in person at the Annual Meeting (if you satisfy the admission requirements, as described above). Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting.





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Table of Contents
 
 



TABLE OF CONTENTS
  
 
Questions and Answers About This Proxy Statement
 
 
Proposal 1: Election of Director
 
 
Corporate Governance
 
 
Information Regarding the Board and Its Committees
 
 
Executive Officers
 
 
Compensation Discussion and Analysis
 
 
Report of the Compensation Committee
 
 
Compensation of Named Executive Officers
 
 
Review and Approval of Transactions With Related Persons
 
 
Security Ownership of Management and Certain Beneficial Owners
 
 
Proposal 2: Approval of the Amendment of the Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan
 
 
Proposal 3: Advisory Vote on Executive Compensation
 
 
Proposal 4: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
 
 
Proposal 5: Ratification of the Appointment of Mayer Hoffman McCann P.C. as the Company's Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2017
 
 
Report of the Audit Committee
 
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
 
Stockholder Proposals
 
 
Miscellaneous and Other Matters
 
 
Appendix A
 
 






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Questions and Answers About This Proxy Statement
 
 
 


INSEEGO CORP.
9605 Scranton Road, Suite 300
San Diego, California 92121
 
PROXY STATEMENT
 
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
What is the purpose of this proxy statement?
This proxy statement (the Proxy Statement) is being furnished to you on behalf of the Board to solicit your proxy to vote at the Annual Meeting of the Company to be held on Wednesday, June 14, 2017, at 1:00 p.m., local time, at the Company’s headquarters located at 9605 Scranton Road, Suite 300, San Diego, California 92121. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?
As permitted by the SEC, we are making this Proxy Statement and our 2016 Annual Report available to our stockholders electronically via the Internet. On or about May 3, 2017, we are mailing to most of our stockholders the Notice in lieu of a printed copy of the proxy materials. All stockholders who have previously requested a printed copy of the Company’s proxy materials will continue to receive a printed copy of the proxy materials. All other stockholders will not receive a printed copy of the proxy materials unless one is requested.
Who is entitled to vote at the Annual Meeting?
Holders of record of our common stock as of the close of business on April 28, 2017 (the Record Date), are entitled to notice of, and to vote at, the Annual Meeting. If your shares of common stock were registered directly in your name with our transfer agent, Computershare Trust Company, at the close of business on the Record Date, then you are a holder of record and are entitled to notice of, and to vote at, the Annual Meeting. If your shares were not directly held in your name, but were held through an account with a broker, dealer, bank or other nominee at the close of business on the Record Date, then your shares are held in street name and the organization holding your account is considered the holder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct
 
your broker, dealer, bank or other nominee on how to vote your shares and are invited to attend the Annual Meeting. However, since you are not the holder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker, dealer, bank or other nominee.
What matters will be considered at the Annual Meeting?
At the Annual Meeting, our stockholders will be asked to:
(1)
Elect one director to serve until the 2020 annual meeting of stockholders;
(2)
Approve the amendment of the Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan (the Purchase Plan) to increase the number of shares issuable under the Purchase Plan by 1,000,000 shares and extend the term of the Purchase Plan by five years;
(3)
Hold an advisory vote on executive compensation;
(4)
Hold an advisory vote on the frequency of the advisory vote on executive compensation;
(5)
Ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017; and
(6)
Transact any other business properly brought before the Annual Meeting or any adjournment or postponement thereof.
How many votes do I have?
Each holder of record as of the Record Date is entitled to one vote for each share of common stock held by such holder on the Record Date. As of the close of business on April 27, 2017, 55,971,423 shares of common stock were outstanding and entitled to vote at the Annual Meeting. The Company does not expect the number of outstanding shares to materially change between April 27, 2017 and the Record Date.


 
 
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Questions and Answers About This Proxy Statement
 
 
 


What are the Board’s recommendations on how I should vote my shares?
Proposal
Board Recommendation
Page Reference
Proposal 1: Election of Director
FOR the nominee
Proposal 2: Approval of the Amendment of the Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan
FOR
Proposal 3: Advisory Vote on Executive Compensation
FOR
Proposal 4: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
1 YEAR
Proposal 5: Ratification of the Appointment of Mayer Hoffman McCann P.C. as the Company's Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2017
FOR
How do I cast my vote?
If you are a holder of record on the Record Date, you can vote your shares:
I
In Person.  By voting in person at the Annual Meeting (if you satisfy the admission requirements, as described above). Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting.
(
By Telephone. By calling the telephone number listed on the proxy card and following the instructions provided by the recorded message.
:
By Internet. By logging onto the secure website listed on the proxy card and following the instructions provided.
+
By Mail. If you requested printed copies of these materials, by completing, signing, dating and promptly returning the proxy card in the postage-paid return envelope provided with the proxy materials.
If you submit a valid proxy to us before the Annual Meeting, we will vote your shares as you direct (unless your proxy is subsequently revoked in the manner described below). Telephone and Internet voting is available through 1:00 a.m., Pacific Time, on Wednesday, June 14, 2017. If you vote by mail, your proxy card must be received before the Annual Meeting to ensure that your vote is counted.
 
 
 
 
 
If your shares are held in “street name, your broker, dealer, bank or other nominee will provide you with instructions on how to vote your shares. To be sure your shares are voted in the manner you desire, you should instruct your broker, dealer, bank or other nominee on how to vote your shares.
 
 
 
 
Instructing your broker, dealer, bank or other nominee how to vote your shares is important due to the stock exchange rule that prohibits your broker, dealer, bank or other nominee from voting your shares with respect to certain proposals without your express voting instructions.
If you hold your shares in street name and wish to attend the Annual Meeting and vote your shares in person, you must obtain a valid proxy from your broker, dealer, bank or other nominee.
Can I revoke my proxy?
Yes. However, your presence at the Annual Meeting will not automatically revoke your proxy. If you are a registered holder, you may change or revoke your proxy at any time before a vote is taken at the Annual Meeting by giving notice to the Company’s Secretary in writing during the Annual Meeting or in advance of the Annual Meeting by executing and forwarding to the Company’s Secretary a later-dated proxy or by voting a later proxy over the telephone or the Internet. If your shares are held in street name, you should check with the broker, dealer, bank or other nominee that holds your shares to determine how to change or revoke your vote.


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Questions and Answers About This Proxy Statement
 
 
 


What if I return a signed proxy card but do not provide voting instructions?
All properly submitted proxies, unless revoked in the manner described above, will be voted at the Annual Meeting in accordance with your instructions on the proxy. If a properly executed proxy gives no specific voting instructions, the shares of common stock represented by such proxy will be voted:
FOR the election of the one director nominee to serve until the 2020 annual meeting of stockholders;
FOR the approval of the amendment of the Purchase Plan;
FOR the advisory vote on executive compensation;
FOR the selection of ONE YEAR as the frequency of the advisory vote on executive compensation;
FOR the ratification of the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2017; and
at the discretion of the proxy holders with respect to any other matter that is properly presented at the Annual Meeting.
What will constitute a quorum at the Annual Meeting?
Holders of a majority of shares of our outstanding common stock entitled to vote at the Annual Meeting must be present at the Annual Meeting, in person or by proxy, to constitute a quorum, which is necessary to conduct the Annual Meeting. Your shares will be counted toward the quorum if you submit a properly executed proxy or are present and vote at the Annual Meeting. In addition, votes withheld from the director nominee, abstentions and broker non-votes will be treated as present for the purpose of determining the presence of a quorum for the transaction of business at the Annual Meeting. A broker non-vote occurs when a broker, dealer, bank or other nominee holding shares for a beneficial owner submits a proxy for a meeting but does not vote on a particular proposal because that holder does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. If there is no quorum, then either the chairman of the meeting or the holders of a majority in voting power of the shares of common stock that are entitled to vote at the meeting, present in person or by proxy, may
 
adjourn the meeting until a quorum is present or represented.
How many votes are required to approve each proposal?
Proposal 1. Assuming that a quorum is present, the director will be elected by a plurality of the votes cast by holders of our common stock present, in person or by proxy, and entitled to vote at the Annual Meeting. Shares subject to instructions to withhold authority to vote on Proposal 1 will not be voted. This will have no effect on Proposal 1. Broker non-votes will also have no effect on Proposal 1.
Proposal 2. Assuming that a quorum is present, the approval of the amendment of the Purchase Plan to increase the number of shares issuable under the Purchase Plan by 1,000,000 shares and extend the term of the Purchase Plan by five years will require the affirmative vote of the holders of a majority of the common stock present, in person or by proxy, and entitled to vote at the Annual Meeting. Abstentions will have the same effect as votes against Proposal 2. Broker non-votes will have no effect on Proposal 2.
Proposal 3. Assuming that a quorum is present, the approval of the advisory vote on executive compensation will require the affirmative vote of the holders of a majority of the common stock present, in person or by proxy, and entitled to vote at the Annual Meeting. Abstentions will have the same effect as votes against Proposal 3. Broker non-votes will have no effect on Proposal 3.
Proposal 4. Assuming that a quorum is present, the frequency that receives a plurality of the votes cast will be considered the advisory vote of the Company’s stockholders. The proxy holders will vote all proxies received for ONE YEAR unless instructed otherwise. Abstentions and Broker non-votes will not have any effect on Proposal 4.
Proposal 5. Assuming that a quorum is present, the ratification of the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2017 will require the affirmative vote of the holders of a majority of the common stock present, in person or by proxy, and entitled to vote at the Annual Meeting. Abstentions will have the same effect as votes against Proposal 5. Proposal 5 is considered a routine matter under applicable rules. A broker, dealer, bank or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected in connection with Proposal 5.


 
 
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Questions and Answers About This Proxy Statement
 
 
 


What happens when multiple stockholders share an address?
A number of brokers with account holders who are stockholders of the Company will be householding our proxy materials or other annual meeting materials. A single copy of the proxy materials or other annual meeting materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate copy of the documents, please notify your broker and direct a written request to Inseego Corp., 9605 Scranton Road, Suite 300, San Diego, California 92121, Attn: Secretary, or contact the Company’s Secretary by telephone at (858) 812-3400. Stockholders who currently receive multiple copies of the proxy materials or other annual meeting materials at their address and would like to request householding of future communications should contact their broker. In addition, upon written or oral request to the address or telephone number set forth above, we will promptly deliver a separate copy of the proxy materials or other annual meeting materials to any stockholder at a shared address to which a single copy of the documents was delivered.
What does it mean if I received more than one proxy card?
If you requested printed copies of these materials and you received more than one proxy card, your shares are likely registered in more than one name or are held in more than one account. Please complete, sign, date and promptly return each proxy card to ensure that all of your shares are voted.
Where else are the proxy materials available?
Our Notice of Annual Meeting of Stockholders, this Proxy Statement, the 2016 Annual Report and related materials are available for your review at www.inseego.com/proxymaterials.
 
Who will bear the costs of soliciting votes for the Annual Meeting?
The Company will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners for their reasonable expenses in forwarding solicitation material to such beneficial owners. Our directors, officers and employees may also solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation.
Where can I find the voting results of the Annual Meeting?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be reported in a current report on Form 8-K, which will be filed with the SEC within four business days after the Annual Meeting. If our final voting results are not available within four business days after the Annual Meeting, we will file a current report on Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the current report on Form 8-K within four business days after the final voting results are known to us.
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 14, 2017: The Notice of Annual Meeting of Stockholders, this Proxy Statement and the 2016 Annual Report are available at www.inseego.com/proxymaterials.



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Proposal 1: Election of Director
 
 


PROPOSAL 1: ELECTION OF DIRECTOR
The Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors constituting the entire Board, and each class has a three-year term. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of their election and qualification until the third annual meeting of stockholders following such election. There are currently five directors serving on the Board and one director whose term of office is scheduled to expire at the upcoming Annual Meeting.
The Nominating and Corporate Governance Committee of our Board (the Nominating and Corporate Governance Committee) has recommended that Philip Falcone be elected to serve a three-year term expiring at the 2020 annual meeting of stockholders. Mr. Falcone is an incumbent director and was originally appointed to the board of directors of Novatel Wireless, Inc., our predecessor issuer, in October 2014 pursuant to the terms of an Investors’
 
Rights Agreement, dated September 8, 2014 (the Investors’ Rights Agreement), by and between Novatel Wireless, Inc. and HC2 Holdings 2, Inc. (HC2 Holdings). All directors of Novatel Wireless, Inc. became directors of Inseego Corp. in connection with the internal reorganization that was completed in November 2016.
This section contains information about the director nominee and the directors whose terms of office continue after the Annual Meeting. The director will be elected by a plurality of the votes cast by holders of our common stock at the Annual Meeting. Shares subject to instructions to withhold authority to vote on this proposal will not be voted. This will have no effect on the election of the director because, under plurality voting rules, the director nominee receiving the highest number of for votes will be elected. Broker non-votes will also have no effect on this proposal. Proxies cannot be voted for a greater number of persons than one, the number of nominees named above.


 
 
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Proposal 1: Election of Director
 
 


Nominee to be Elected for a Term Expiring at the 2020 Annual Meeting of Stockholders
 
 
 
 
 
 
 
 
 
Philip Falcone
Director since October 2014
 
 
 
 
 
 
 
 
 
 
Mr. Falcone, age 54, was originally appointed to the board of directors of Novatel Wireless, Inc. in October 2014 pursuant to the terms of the Investors’ Rights Agreement and became a member of the Board in connection with the internal reorganization that was completed in November 2016. Mr. Falcone has served as a director of HC2 Holdings, Inc., a Delaware corporation (HC2), since January 2014 and as Chairman of the Board, President and Chief Executive Officer of HC2 since May 2014. Mr. Falcone served as President of HRG Group, Inc. (formerly known as Harbinger Group Inc.), a diversified holding company (HGI), from 2009 to 2011 and as a director, Chairman of the Board and Chief Executive Officer of HGI from 2009 to 2014. Mr. Falcone has also served as Chief Investment Officer and Chief Executive Officer of Harbinger Capital Partners LLC (Harbinger Capital) and certain of its affiliates since 2001. Prior to joining the predecessor of Harbinger Capital, Mr. Falcone served as Head of High Yield trading for Barclays Capital where he managed the Barclays High Yield and Distressed trading operations. Mr. Falcone began his career in 1985, trading high yield and distressed securities at Kidder, Peabody & Co. Mr. Falcone received a Bachelor of Arts in Economics from Harvard University. Mr. Falcone has over two decades of experience in leveraged finance, distressed debt and special situations. Mr. Falcone has a strong financial background, including significant experience working with companies in the information technology and broadband industry, and experience serving on public company boards of directors which makes him well-suited to serve on our Board.
On September 16, 2013, the United States District Court for the Southern District of New York entered a final Judgment (the Final Judgment) approving a settlement between the SEC and Harbinger Capital, Harbinger Capital Partners Special Situations GP, LLC, Harbinger Capital Partners Offshore Manager, L.L.C., and Mr. Falcone (collectively, the HCP Parties), in connection with two civil actions previously filed against the HCP Parties by the SEC. One civil action alleged that Harbinger Capital Partners Special Situations GP, LLC, Harbinger Capital Partners Offshore Manager, L.L.C., and Mr. Falcone violated the anti-fraud provisions of the federal securities laws by engaging in market manipulation in connection with the trading of the debt securities of a particular issuer from 2006 to 2008. The other civil action alleged that Harbinger Capital and Mr. Falcone violated the anti-fraud provisions of the federal securities laws in connection with a loan made by Harbinger Capital Partners Special Situations Fund, L.P. to Mr. Falcone in October 2009 and in connection with the circumstances and disclosure regarding alleged preferential treatment of, and agreements with, certain fund investors. The Final Judgment bars and enjoins Mr. Falcone for a period of five years (after which he may seek to have the bar and injunction lifted) from acting as or being an associated person of any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization (as those terms are defined under the federal securities laws). Additionally, on October 7, 2013, Mr. Falcone delivered a commitment to the Department of Financial Services of the State of New York pursuant to which Mr. Falcone agreed for a period of up to seven years that he will not, directly or indirectly, individually or through any person or entity, exercise control over any New York-licensed insurer.
 
 
 
 
 
 
 


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Proposal 1: Election of Director
 
 


Directors with Terms Expiring at the 2018 Annual Meeting of Stockholders
 
 
 
 
 
 
 
 
 
Robert Pons
Director since October 2014
 
 
 
 
 
 
 
 
 
 
Mr. Pons, age 60, was originally appointed to the board of directors of Novatel Wireless, Inc. in October 2014 pursuant to the terms of the Investors’ Rights Agreement and became a member of the Board in connection with the internal reorganization that was completed in November 2016. Mr. Pons is the President of Spartan Advisors, a management consulting firm specializing in microcap telecom and technology companies. Mr. Pons served as a director of HC2 from September 2011 to May 2016. Mr. Pons also served as President and Chief Executive Officer of HC2 from August 2013 to January 2014 and Executive Chairman of HC2 from January 2014 to April 2014 and served as Executive Vice President of Business Development of HC2 from April 2014 to May 2016. From May 2016 to January 2017 he served as Executive Vice President of PTGi, a wholly owned subsidiary of HC2. From February 2011 to April 2014, Mr. Pons was Chairman of Live Microsystems, formerly Livewire Mobile, Inc., a comprehensive one-stop digital content solution for mobile carriers. From January 2008 until February 2011, Mr. Pons was Senior Vice President of TMNG Global, a leading provider of professional services to the communications, converging media and entertainment industries and the capital formation firms that support them. From January 2004 until April 2007, Mr. Pons served as President and Chief Executive Officer of Uphonia, Inc. (formerly known as SmartServ Online, Inc.), a wireless applications service provider. From August 2003 to January 2004, Mr. Pons served as interim Chief Executive Officer of SmartServ Online, Inc. on a consulting basis. From March 1999 to August 2003, Mr. Pons was President of FreedomPay, Inc., a wireless device payment processing company. During the period from January 1994 to March 1999, Mr. Pons was President of Lifesafety Solutions, Inc., an enterprise software company. Mr. Pons currently serves on the board of directors of Concurrent Computer Corporation, a global leader in multi-screen video delivery, media data management and monetization platforms and as Vice-Chairman of the board of directors of MRV Communications. Within the past five years, he has also served on the boards of directors of Proxim Wireless Corporation, Network-1 Security Solutions, Inc., Arbinet Corporation and DragonWave, Inc. Mr. Pons holds a Bachelor of Arts from Rowan University with Honors. Mr. Pons’s experience serving on public company boards of directors and his industry experience, knowledge and relationships provide a relevant and informed background for him to serve as a member of our Board, our lead independent director, a member of the Audit Committee of our Board (the Audit Committee) and the Compensation Committee of our Board (the Compensation Committee) and as Chair of the Nominating and Corporate Governance Committee.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
David Werner
Director since January 2004
 
 
 
 
 
 
 
 
 
 
Mr. Werner, age 65, served as Co-Chief Executive Officer of Consolidated Aerospace Manufacturing, LLC, an engineered component manufacturer, from December 2012 until his retirement in September 2016. Previously, Mr. Werner also was the Co-Chief Executive Officer of Aerofit, LLC, an engineered component manufacturer, from December 2012 to August 2015, and a co-owner of Aerofit, Inc., from March 2004 to December 2012. From 2002 to 2004, Mr. Werner was a partner in an acquisition and business development venture serving the engineered components market. Mr. Werner also served as Executive Vice President and Chief Financial Officer of Day Runner, Inc. from 1999 to 2002. From 1994 to 1999, Mr. Werner was Executive Vice President and a member of the board of directors of Kaynar Technologies, Inc., a specialty component manufacturer. From 1990 to 1993, Mr. Werner served as Vice President and Chief Financial Officer of Microdot, Inc. From 1978 to 1990, Mr. Werner served in various accounting, financial, operating and executive positions with Lear Siegler. From 1974 to 1978, Mr. Werner worked for Peat, Marwick, Mitchell & Co. (currently KPMG). Mr. Werner is a certified public accountant (inactive) and received a Bachelor of Science in Business Administration and a Master of Business Administration from the University of Southern California. Mr. Werner brings leadership, financial experience and a background in executive management to the Board. Mr. Werner’s strong understanding of the issues affecting the Company as a result of more than 20 years of executive experience in various industries provides a relevant and informed background for him to serve as a member of the Nominating and Corporate Governance Committee and the Audit Committee and as Chair of the Compensation Committee. With his background in accounting and finance, Mr. Werner also brings an understanding of financial issues to the Board and the Audit Committee.
 
 
 
 
 
 
 


 
 
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Proposal 1: Election of Director
 
 



Directors with Terms Expiring at the 2019 Annual Meeting of Stockholders
 
 
 
 
 
 
 
 
 
James Ledwith
Director since March 2008
 
 
 
 
 
 
 
 
 
 
Mr. Ledwith, age 71, served as our lead independent director from April 2010 through April 2014. Mr. Ledwith served as a partner at Cohn Reznick, LLP, formerly J.H. Cohn LLP, an accounting and consulting firm, from 1992 until his retirement in 2009 and has been a lecturer at San Diego State University from 2000 to 2007 and from 2011 to the present. Mr. Ledwith served as a director of San Diego Trust Bank, a privately held community bank, from 2004 until its sale in June 2013. Mr. Ledwith is a certified public accountant and received a Bachelor of Science in Business Administration from Babson College and a Masters of Business Administration from the Wharton Graduate Division of the University of Pennsylvania. Mr. Ledwith spent his career primarily in public accounting and has extensive knowledge of accounting and financial reporting rules and regulations. Mr. Ledwith’s educational background and accounting expertise provide a solid background for him to advise and consult with the Board on financial and audit-related matters as Chair of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sue Swenson
Chief Executive Officer since October 2015, Director since June 2012 and Chair of the Board since April 2014
 
 
 
 
 
 
 
 
 
 
Ms. Swenson, age 68, is the Company’s Chief Executive Officer and Chair of the Board, and has more than 20 years of executive management experience in the telecommunications industry and considerable experience serving on the boards of directors of growing technology companies. Since 1994, she has been a director of Wells Fargo & Company and sits on their Audit and Examination Committee, Governance and Nominating Committee and Regulatory Compliance Oversight Committee. Ms. Swenson also serves as a director on the boards of directors of Harmonic, Inc. and FirstNet, and has previously served on boards of directors of numerous public and private companies, including Spirent Communications Plc, Leap Wireless International, Inc., mBlox and Palm. Ms. Swenson retired in 2011 as President and Chief Executive Officer of Sage Software, Inc., a position she had held since 2008. Before joining Sage Software, Inc. Ms. Swenson held positions at a variety of telecom companies, including as Chief Operating Officer of T-Mobile USA, President and Chief Executive Officer of Leap Wireless International, Inc., and President and Chief Executive Officer of Cellular One. Ms. Swenson holds a Bachelor of Arts from San Diego State University. Ms. Swenson’s substantial experience at, and knowledge regarding, high technology companies, including wireless communication companies, provide a particularly relevant and informed background for her to use on the Board.
 
 
 
 
 
 
 

In the vote on the election of the director nominee, stockholders may:
Vote FOR the nominee; or
WITHHOLD authority to vote for the nominee.

ü
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE-NAMED NOMINEE AS A DIRECTOR.


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Corporate Governance
 
 


CORPORATE GOVERNANCE
Director Independence
Under the listing requirements of The NASDAQ Stock Market LLC (NASDAQ), a majority of the members of our Board must be independent. The Board has determined that our current non-management directors, Messrs. Falcone, Ledwith, Pons and Werner, are each independent of the Company and management within the meaning of the NASDAQ listing requirements. Ms. Swenson is not independent under the NASDAQ listing requirements because she is an employee of the Company.
Director Nominations
Qualifications. The Nominating and Corporate Governance Committee considers a number of factors in its evaluation of director candidates, including the members of the Board eligible for re-election. These factors include relevant business experience, expertise, character, judgment, length of potential service, diversity, independence, other commitments and the current needs of the Board and its committees. In the case of incumbent directors, the Nominating and Corporate Governance Committee also considers a director’s overall service to the Company during his or her term, including the number of meetings attended, level of participation and quality of performance.
While the Nominating and Corporate Governance Committee has not established specific criteria related to a director candidate’s education, experience level or skills, it expects qualified candidates will have appropriate experience and a proven record of business success and leadership. The Nominating and Corporate Governance Committee believes the Board should be comprised of a diverse group of individuals with significant and relevant senior management and leadership experience, an understanding of technology relevant to the Company and its business, a long-term and strategic perspective and the ability to advance constructive debate and a global perspective. While the Board considers diversity in its evaluation of candidates, the Board does not have a policy specifically focused on diversity.
The Nominating and Corporate Governance Committee has adopted a retirement policy that provides that a non-management director will not be nominated for a term that would begin after such
 
director’s 72nd birthday. The policy enables the Board to approve the nomination of a non-management director after the age of 72 if, due to special or unique circumstances, it is in the best interest of the Company and its stockholders that such director continue to be nominated for re-election to the Board.
Stockholder Recommendations. The Nominating and Corporate Governance Committee considers recommendations of potential director candidates from stockholders based on the same criteria as a candidate identified by an individual director or the Nominating and Corporate Governance Committee.
Stockholders may recommend candidates at any time. However, to be considered by the Nominating and Corporate Governance Committee for inclusion in the proxy statement for our next annual meeting of stockholders, the recommendations must be in proper form and delivered to, or mailed and received at, the principal executive offices of the Company not earlier than the 120th day nor later than the close of business on the 90th day prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting of stockholders is more than 30 days before or more than 60 days after such anniversary date, the recommendation must be delivered, or mailed and received, not earlier than the close of business on the 120th day prior to such annual meeting of stockholders and not later than the close of business on the 90th day prior to such annual meeting of stockholders or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting of stockholders was first made. A stockholder’s notice recommending a candidate must include the following:
As to each Nominating Person (as defined below), the:
(i)
the name and address of such Nominating Person (including, if applicable, the name and address that appear on the Company’s books and records); and
(ii)
the class or series and number of shares of the Company’s common stock that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the


 
 
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Corporate Governance
 
 


Exchange Act)) by such Nominating Person;
As to each Nominating Person, any Disclosable Interests (as defined in Section 5(c)(ii) of the Amended and Restated Bylaws of the Company (the Bylaws));
As to each Nominating Person:
(i)
a representation that the Nominating Person is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose the recommendation; and
(ii)
a representation as to whether the Nominating Person intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to approve or adopt the recommendation and/or (2) otherwise to solicit proxies or votes from stockholders in support of the recommendation; and
As to each person whom a Nominating Person proposes to nominate for election as a director:
(i)
all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);
(ii)
a description of all direct and indirect compensation and other material agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among any Nominating Person, on the one hand, and each proposed nominee, his or her respective associates or any other participants in such solicitation, and any other persons with whom such proposed nominee (or any of his or her respective associates or other participants in such solicitation) is Acting in Concert (as defined in Section 5(c) of the Bylaws), on the other hand; and
(iii)
a completed and signed questionnaire, representation, and agreement as provided in Section 6(h) of the Bylaws.
 
For purposes of this Proxy Statement, the term Nominating Person shall mean:
(i)
the stockholder providing the notice of the nomination proposed to be made at the meeting;
(ii)
the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made;
(iii)
any participant with such stockholder or beneficial owner in such solicitation or associate of such stockholder or beneficial owner; and
(iv)
any other person with whom such stockholder or such beneficial owner (or any of their respective associates or other participants in such solicitation) is Acting in Concert (as defined in Section 5(c) of the Bylaws).
The Nominating Person’s notice must be signed and delivered to the following address:
Inseego Corp.
c/o Secretary
9605 Scranton Road, Suite 300
San Diego, California 92121
Communications with the Board
Stockholders and other interested parties may communicate with the Board, the non-management directors or specific directors by mail addressed to:
Inseego Corp.
c/o Secretary
9605 Scranton Road, Suite 300
San Diego, California 92121
The communication should clearly indicate whether it is intended for the Board, the non-management directors or a specific director. Our Secretary will review all communications and will, on a periodic basis, forward all communications to the appropriate director or directors, other than those communications that are merely solicitations for products or services or that relate to matters that are clearly improper or irrelevant to the functioning of the Board.
Code of Conduct and Ethics
The Board has adopted a code of conduct and ethics that is applicable to all of our directors, officers and employees. The purpose of the code of conduct and ethics is to, among other things, focus our directors, officers and employees on areas of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report


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Corporate Governance
 
 


concerns regarding possible unethical or unlawful conduct and to help enhance and formalize our culture of integrity, respect and accountability. We distribute copies of the code of conduct and ethics to, and conduct periodic training sessions regarding its content for, our newly elected directors and newly hired officers and employees. We will post
 
information regarding any amendment to, or waiver from, our code of conduct and ethics on our website in the Investors tab under Corporate Governance as required by applicable law. A copy of our code of conduct and ethics is available on our website under the Investors tab under Corporate Governance at www.inseego.com.




 
 
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Information Regarding the Board and Its Committees
 
 
 

INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Board currently consists of five members, four of whom are non-management directors. The Board is divided into three classes with each class serving a three-year term. The term of one class expires at each annual meeting of stockholders of the Company.
There are no family relationships among any of our directors. Except as described in this Proxy Statement, there are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors.
Board Meetings and Director Attendance
Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of his or her duties and to attend all meetings of the Board and the committees on which he or she serves. In 2016, the Board met eleven times, six of which were telephonic meetings. Each Board member attended at least 75% of the meetings of the Board and the committees on which he or she served during
 
the period for which he or she was a director or committee member.
Annual Meeting of Stockholders
While we encourage our directors to attend our annual meetings of stockholders, we do not have a formal policy regarding their attendance thereof. Ms. Swenson and Mr. Ledwith attended the 2016 annual meeting of stockholders in person and Mr. Pons attended via telephone.
Board Committees
The Board currently has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee operates under a written charter adopted by the Board. All of the charters are publicly available on our website at www.inseego.com in the Investors tab under Corporate Governance. You may also obtain a copy of these charters upon sending a written request to our Secretary at our principal executive offices.

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board appoints committee members annually. The table below sets forth the current composition of our Board committees:
Name
Audit Committee 
Compensation Committee 
Nominating and Corporate Governance Committee
Sue Swenson
 
 
 
Philip Falcone
 
 
 
James Ledwith
þ
ü
ü
Robert Pons «
ü
ü
þ
David Werner
ü
þ
ü
þ Chair    ü Member    « Lead Independent Director


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Information Regarding the Board and Its Committees
 
 
 

Audit Committee
The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements and internal control over financial reporting.
 
 
 
 
 
The functions and responsibilities of the Audit Committee include:
 
 
l
engaging our independent registered public accounting firm and conducting an annual review of the independence of that firm;
 
 
l
reviewing with management and the independent registered public accounting firm the scope and the planning of the annual audit;
 
 
l
reviewing the annual audited financial statements and quarterly unaudited financial statements with management and the independent registered public accounting firm;
 
 
l
reviewing the findings and recommendations of the independent registered public accounting firm and management’s response to the recommendations of that firm;
 
 
l
discussing with management and the independent registered public accounting firm, as appropriate, the Company’s policies with respect to financial risk assessment and financial risk management;
 
 
l
overseeing compliance with applicable legal and regulatory requirements, including ethical business standards;
 
 
l
establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters;
 
 
l
establishing procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
 
 
l
preparing the Audit Committee Report to be included in our annual proxy statement;
 
 
l
monitoring ethical compliance, including review of related party transactions; and
 
 
l
periodically reviewing the adequacy of the Audit Committee charter.
 
 
 
 
 
In 2016, the Audit Committee met five times, none of which was a telephonic meeting.
Our independent registered public accounting firm reports directly to the Audit Committee. Each member of the Audit Committee must have the ability to read and understand fundamental financial statements and at least one member must have past employment experience in finance or accounting, and the requisite professional certification in accounting or another
 
comparable experience or background. The Board has determined that each member of the Audit Committee is independent as defined by the NASDAQ listing requirements and SEC rules. The Board has also determined that Mr. Ledwith, the Chair of the Audit Committee, meets the requirements of an audit committee financial expert as defined by SEC rules.
Compensation Committee
The Compensation Committee establishes, administers and oversees compliance with our policies, programs and procedures for compensating our executive officers and the Board.
 
 
 
 
 
The functions and responsibilities of the Compensation Committee include:
 
 
l
establishing and reviewing our general compensation policies and levels of compensation applicable to our executive officers and our non-management directors;
 
 
l
evaluating the performance of, and determining the compensation for, our executive officers, including our Chief Executive Officer;
 
 
l
reviewing regional and industry-wide compensation practices in order to assess the adequacy and competitiveness of our executive compensation programs;
 
 
l
administering our employee benefits plans, including approving awards of stock, restricted stock units (RSUs) and stock options to employees and other parties under our equity incentive compensation plans;
 
 
l
reviewing and discussing with management the disclosures contained in the Compensation Discussion and Analysis to be included in our annual reports on Form 10-K, registration statements, proxy statements or information statements;
 
 
l
preparing the Compensation Committee Report to be included in our annual proxy statement; and
 
 
l
periodically reviewing the adequacy of the Compensation Committee charter.
 
 
 
 
 
In 2016, the Compensation Committee met four times, none of which were telephonic meetings. The Board has determined that each member of the Compensation Committee is independent as defined by the NASDAQ listing requirements.
The Compensation Committee has the sole authority to retain and supervise one or more outside advisors, including outside counsel and consulting firms, to advise the Committee on executive and director


 
 
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compensation matters and to terminate any such adviser. In addition, the Committee has the sole authority to approve the fees of an outside adviser and other terms of such adviser’s retention by the Company.
Since late 2014, the Compensation Committee has retained Compensia, Inc. (Compensia) as its compensation consultant.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee considers, evaluates and nominates director candidates, including the members of the Board eligible for re-election and the recommendations of potential director candidates from stockholders.
 
 
 
 
 
The functions and responsibilities of the Nominating and Corporate Governance Committee include:
 
 
l
developing and recommending a set of corporate governance guidelines applicable to the Company;
 
 
l
identifying and evaluating candidates to serve on the Board, including determining whether incumbent directors should be nominated for re-election to the Board, and reviewing and evaluating director nominees submitted by stockholders;
 
 
l
reviewing possible conflicts of interest of prospective Board members;
 
 
l
recommending director nominees;
 
 
l
establishing procedures and guidelines for individuals to be considered to become directors;
 
 
l
recommending the appropriate size and composition of the Board and each of its committees;
 
 
l
overseeing periodic evaluations of the performance of the Board, the Board committees and the directors;
 
 
l
monitoring the continued legal compliance of our established principles and policies; and
 
 
l
periodically reviewing the adequacy of the Nominating and Corporate Governance Committee charter.
 
 
 
 
 
In 2016, the Nominating and Corporate Governance Committee met four times, none of which was a telephonic meeting. The Board has determined that each member of the Nominating and Corporate
 
Governance Committee is independent as defined by the NASDAQ listing requirements.
Board Leadership Structure
The Company’s policy as to whether the roles of Chair of the Board and Chief Executive Officer should be combined is based on the Company’s needs at any particular time. Prior to April 2014, the Company combined the positions of Chair of the Board and Chief Executive Officer and the Board annually elected an independent director to serve as lead director. In April 2014, the Board separated these two roles and created the role of Chair of the Board to be filled by an independent director. Ms. Swenson was elected to serve as Chair of the Board. When Ms. Swenson was appointed as the Company’s Chief Executive Officer in October 2015, the Company again combined the positions of the Chair of the Board and Chief Executive Officer. Accordingly, the Board has elected Robert Pons to serve as lead independent director. The Board believes that the current structure is appropriate and provides the most effective leadership for the Company given Ms. Swenson’s more than 20 years of executive management experience in the telecommunications industry and considerable experience serving on the boards of directors of growing technology companies. The current structure allows Ms. Swenson to act as a bridge between management and the Board.
 
 
 
 
 
The primary responsibilities of the lead independent director include, among other things:
 
 
l
advising the Chair of the Board as to the schedule of, agenda for and the information to be provided in connection with, Board meetings;
 
 
l
convening and presiding at meetings of directors at which the Chair of the Board is not present;
 
 
l
acting as a liaison between the non-management directors, the Company’s executive officers and the Chair of the Board, when appropriate; and
 
 
l
acting as a liaison for communications with Company stockholders.
 
 
 
 
 
Board’s Role in Risk Oversight
The Board plays an active role in the Company’s risk oversight and is responsible for overseeing the processes established to report and monitor systems that mitigate material risks applicable to the Company. The Board delegates certain risk management responsibilities to the committees of the Board. The Audit Committee reviews and discusses


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Information Regarding the Board and Its Committees
 
 
 

with management the Company’s policies regarding risk assessment and risk management and the Company’s significant financial risk exposures and the actions that management has taken to limit, monitor or control those exposures. The Compensation Committee reviews the compensation of the Company’s executive officers at least annually and considers the design of compensation programs and arrangements and potential risks presented thereby. The Nominating and Corporate Governance Committee considers potential risks presented by corporate governance issues affecting the Company and makes recommendations to the Board as appropriate. Each of these committees regularly reports to the Board on matters that involve the specific areas of risk that each committee oversees. The Board also receives regular reports on the Company’s risk management from senior representatives of the Company’s independent registered public accounting firm.
Director Compensation
We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on the Board. Upon the recommendation of the Compensation Committee, the Board makes all compensation decisions for our non-management directors. In recommending director compensation, the Compensation Committee considers, among other things, the amount of time required of directors to fulfill their duties. A director
 
who is also an employee of the Company does not receive additional compensation for serving as a director.
Cash Compensation. In February 2016, the Board approved the Compensation Committee’s recommendation to pay the below components of the annual cash retainer fee to our non-management directors for Board and Board committee service in 2016:
 
Chair
 
Each Other Member
Board of Directors(1) 
$

 
$
40,000

Audit Committee
$
20,000

 
$
10,000

Compensation Committee
$
14,000

 
$
6,000

Nominating and Corporate Governance Committee
$
10,000

 
$
5,000

(1)
Ms. Swenson serves on the Board but does not receive additional compensation for her duties as a director or as Chair of the Board.
Equity-Based Compensation. In February 2016, the Board approved the Compensation Committee’s recommendation that the Company grant each non-management director 42,500 RSUs, which on the grant date yielded an economic value of $68,850, as partial compensation for their Board service in 2016. The RSUs were granted on March 1, 2016 and vested in full on March 1, 2017.
Director Compensation Table. The table below summarizes the compensation paid to our non-management directors for service on the Board for the year ended December 31, 2016. In addition to the payments below, the Company reimburses directors for reasonable out-of-pocket expenses incurred in connection with attending Board and Board committee meetings.
Name
Fees Earned or Paid in Cash
 
Stock Awards (1) (2)
 
Total
James Ledwith
$
71,000

 
$
68,850

 
$
139,850

Philip Falcone
$
40,000

 
$
68,850

 
$
108,850

Robert Pons
$
66,000

 
$
68,850

 
$
134,850

David Werner
$
69,000

 
$
68,850

 
$
137,850

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(1)
Represents the aggregate grant date fair value of the equity awards granted in 2016 as computed in accordance with Accounting Standards Codification (ASC) Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the 2016 Annual Report.


 
 
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(2)
The following table shows, for each of our non-management directors, the aggregate number of stock and option awards outstanding as of December 31, 2016. All option awards reported in the table below were vested in full as of December 31, 2016.
Name
Option Awards
 
Stock Awards
James Ledwith
38,746

 
59,449

Philip Falcone

 
52,434

Robert Pons

 
52,434

David Werner
38,746

 
59,449





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Executive Officers
 
 


EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our current executive officers:
Executive
Age 
 
Title
Sue Swenson
68
 
Chief Executive Officer
Michael Newman
48
 
Executive Vice President and Chief Financial Officer
Stephen Sek
51
 
Senior Vice President and Chief Technology Officer
Lance Bridges
55
 
Senior Vice President, General Counsel and Secretary
Sue Swenson has served as a director since June 2012, as Chair of the Board since April 2014, and as Chief Executive Officer since October 2015. Ms. Swenson has more than 20 years of executive management experience in the telecommunications industry and considerable experience serving on the boards of directors of growing technology companies. Since 1994, she has been a director of Wells Fargo & Company and sits on their Audit and Examination Committee, Governance and Nominating Committee and Regulatory Compliance Oversight Committee. Ms. Swenson also serves as a director on the boards of directors of Harmonic, Inc. and FirstNet, and has previously served on boards of directors of numerous public and private companies, including Spirent Communications Plc, Leap Wireless International, Inc., mBlox and Palm. Ms. Swenson retired in 2011 as President and Chief Executive Officer of Sage Software, Inc., a position she had held since 2008. Before joining Sage Software, Ms. Swenson held positions in a variety of telecom companies, including as Chief Operating Officer of T-Mobile USA, President and Chief Executive Officer of Leap Wireless International, Inc., and President and Chief Executive Officer of Cellular One. Ms. Swenson holds a Bachelor of Arts from San Diego State University.
Michael Newman has served as our Executive Vice President and Chief Financial Officer since September 2014. He also served as Secretary of the Company from October 2014 to May 2015. Prior to joining the Company, Mr. Newman served as Chief Financial Officer of Websense, Inc. (now ForcePoint, a Raytheon company), a global leader of advanced IT security solutions (Websense), from 2011 to 2014. From 2002 to 2011, he served in several other senior executive level positions at Websense, including General Counsel and Chief Administrative Officer. During his time with Websense, Mr. Newman was responsible for accounting, finance, tax, human resources, legal, information technology, facilities and sales operations functions. Prior to joining Websense, Mr. Newman managed securities and corporate
 
development matters in the legal department for Gateway, Inc., a publicly-traded computer manufacturer. Mr. Newman holds a Juris Doctor from Harvard Law School and a Bachelor of Science in Business Administration from Georgetown University.
 
Stephen Sek has served as our Senior Vice President and Chief Technology Officer since March 2015. Prior to his appointment to serve as Senior Vice President and Chief Technology Officer, Mr. Sek had been employed by the Company as its Vice President of Global Products since September 2013, and had previously worked at the Company from August 2000 to November 2006 serving in various capacities, including as the Company’s director of technology and standards, systems, test and accreditation engineering, general manager of Asia-Pacific, and director of customer technical solutions and technologies. Between 2006 and 2013, he served as Chief Technology Officer for Axesstel, Inc., a San Diego-based provider of wireless broadband access and connected home and voice solutions for the worldwide telecommunications market. At Axesstel, Inc., he was responsible for leading the patent committee and the company’s technology realization, he was also responsible for introducing new products and technologies to customers. From 1990 to 2000, Mr. Sek worked at Motorola Inc., where he served in various senior research, engineering and managerial roles for the PCS Advanced Technology Lab, PCS FLEX Technology Systems Division, and Paging and Wireless Data Group. Mr. Sek holds a Bachelor of Science from Boston University and a Master of Science in Electrical Engineering from the University of Southern California.
Lance Bridges has served as our Senior Vice President, General Counsel and Secretary since May 2015. Prior to joining the Company, Mr. Bridges served as Senior Vice President and General Counsel of Entropic Communications, a semiconductor company, from 2007 to 2015. Prior to joining Entropic Communications, Mr. Bridges was a


 
 
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Executive Officers
 
 


partner at Cooley LLP, serving as outside general counsel to venture backed private companies and publicly traded companies across multiple industries. Mr. Bridges received his Juris Doctor from the University of California, Berkeley School of Law (Boalt Hall) and his Master of Business Administration from The Walter A. Haas School of Business Administration, University of California at Berkeley.
 
There are no family relationships among any of our executive officers. There are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our current executive officers.



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COMPENSATION DISCUSSION AND ANALYSIS
Overview
Decisions with respect to compensation for our executive officers, including our Chief Executive Officer, are made by the Compensation Committee. The following discussion and analysis is focused primarily on the compensation of our named executive officers (NEOs). The compensation of our NEOs is presented in the tables and related information and discussed in the Compensation of Named Executive Officers section of this Proxy Statement beginning on page 28. Under SEC rules, our NEOs for 2016 were:
Executive
 
Title
Sue Swenson
 
Chief Executive Officer
Michael Newman
 
Executive Vice President and Chief Financial Officer
Stephen Sek
 
Senior Vice President and Chief Technology Officer
Lance Bridges
 
Senior Vice President, General Counsel and Secretary
Compensation Philosophy and Objectives
In making decisions with respect to compensation for our executive officers, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each executive’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our executive officers, the Compensation Committee seeks to achieve the following key objectives:
Motivate Executives. The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals.
Align Interests with Stockholders. The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term.
Attract and Retain Talented Executives. The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company.
Committee’s Role in Establishing Compensation
Our Compensation Committee is currently comprised of Messrs. Werner, Ledwith and Pons, each of whom is an independent director under the Internal Revenue Code of 1986, as amended (the Code), and the rules of the NASDAQ and the SEC. The
 
Compensation Committee makes all compensation decisions for our executive officers, including grants of equity awards. The Compensation Committee believes that one of its key functions is to help ensure that our executives are fairly and reasonably compensated based on their performance and contribution to the Company’s growth and profitability, and it seeks to make compensation decisions that support our compensation philosophy and objectives. The agenda for meetings of the Compensation Committee is determined by its Chair, with the assistance of our Chief Financial Officer, who has responsibility for human resources and compensation matters for non-executive employees of the Company.
The Compensation Committee is authorized to retain advisors with respect to compensation matters. The compensation consultant’s role is to provide independent third-party advice to assist the Compensation Committee in evaluating and designing our executive compensation policies and programs, including:
providing recommendations regarding the composition of our comparator group, as described below;
reviewing and assisting with recommendations regarding current executive compensation levels relative to the market and our performance, including with respect to the retention and promotion of executive officers;
advising on trends in executive compensation, including best practices; and
advising on aligning pay and performance.


 
 
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The Compensation Committee engaged Compensia to advise it on compensation matters for newly appointed executive officers and for non-management directors in 2014. The Compensation Committee subsequently re-engaged Compensia to advise on compensation for our executive officers and certain other key management positions in 2015 and 2016. The Compensation Committee is responsible for reviewing fees paid to compensation consultants to ensure that the consultants maintain their objectivity and independence when rendering advice to the Compensation Committee regarding executive compensation matters. Compensia has been re-engaged in 2017 to advise on compensation for our NEOs and certain other key management positions.
The Compensation Committee reviewed the services provided by Compensia to the Compensation Committee and based on this review has determined that the provision of such services did not give rise to any conflict of interest, taking into account such factors as required by the SEC and applicable law and such other factors as the Compensation Committee determined to be relevant.
Management’s Role in Establishing Compensation
Our Chief Executive Officer and our Chief Financial Officer attend Compensation Committee meetings to discuss matters under consideration by the Compensation Committee and to answer questions regarding those matters. The Compensation Committee also regularly meets in executive sessions without any members of management present.
The Compensation Committee members hold discussions with our Chief Executive Officer concerning the compensation for other executive officers. Our Chief Executive Officer provides her assessment of each individual’s responsibilities, contribution to the Company’s results and potential for future contributions to the Company’s success. The Compensation Committee considers this input, but has final authority to set the compensation amounts for all executive officers in its discretion. The Compensation Committee discusses proposals for our Chief Executive Officer’s compensation package
 
with her but always makes final decisions regarding her compensation when she is not present. The Compensation Committee also reviews market data and other relevant information provided by the compensation consultant when considering competitive and market factors in compensation, elements of compensation packages and possible changes to the compensation of our executive officers.
With oversight by the Compensation Committee, our human resources department administers our executive compensation program to implement the compensation decisions made by the Compensation Committee for our executive officers.
Consideration of 2016 Stockholder Advisory Vote
At our 2016 annual meeting of stockholders, our stockholders cast an advisory vote on the Company’s executive compensation decisions and policies, as disclosed in the proxy statement issued by the Company in April 2016, pursuant to Item 402 of SEC Regulation S-K (commonly known as the say-on-pay vote). Our stockholders approved the compensation of our executive officers, with approximately 95% of shares cast voting in favor of the say-on-pay proposal. As we evaluated our compensation practices and talent needs throughout 2016, we were mindful of the support our stockholders expressed for our philosophy of linking compensation to our financial, operational and strategic goals to incentivize the enhancement of stockholder value. As a result, the Compensation Committee decided to retain our general approach with respect to our executive compensation program.
Comparator Group
Due to changes in the Company’s business, primarily as a result of the acquisitions of Feeney Wireless LLC and DigiCore Holdings Limited during 2015, in December 2015, at the Compensation Committee’s request, Compensia reevaluated the Company’s comparator group and advised the Compensation Committee to make certain changes to the peer group used for evaluating executive officer and non-management director compensation and composition for 2016.



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In determining executive officer and non-management director compensation for 2016, the Compensation Committee relied upon the new compensation peer group, developed by Compensia and accepted by the Compensation Committee, which consisted of the following 20 publicly traded companies:
 
 
 
 
 
 
 
l
8x8, Inc.
l
LivePerson, Inc.
 
 
l
Bazaarvoice, Inc.
l
MobileIron, Inc.
 
 
l
BroadSoft, Inc.
l
MRV Communications, Inc.
 
 
l
CalAmp, Inc.
l
Oclaro
 
 
l
Calix, Inc.
l
Oclaro, Inc.
 
 
l
Digi International, Inc.
l
ShoreTel, Inc.
 
 
l
Epiq Systems, Inc.
l
Silver Spring Networks, Inc.
 
 
l
Fleetmatics Group PLC
l
TeleCommunication Systems, Inc.
 
 
l
Harmonic Inc.
l
Telenav, Inc.
 
 
l
Jive Software, Inc.
l
United Online, Inc.
 
 
 
 
 
 
 
In November 2016, at the Compensation Committee’s request, Compensia again reevaluated the Company’s comparator group and advised the Compensation Committee to make certain changes to the peer group used for evaluating executive officer and non-management director compensation and composition for 2017. The new peer group reflects the Company’s strategic shift away from its historical hardware business and its current objective of becoming a leading global provider of software-as-a-service and solutions for the Internet of Things.
In determining executive officer and non-management director compensation for 2017, the Compensation Committee relied upon the new compensation peer group, developed by Compensia and accepted by the Compensation Committee, which consisted of the following 18 publicly traded companies:
 
 
 
 
 
 
 
l
American Software, Inc.
l
LivePerson, Inc.
 
 
l
Apigee Corporation
l
Marin Software Inc.
 
 
l
ARI Network Services, Inc.
l
MobileIron, Inc.
 
 
l
Bazaarvoice, Inc.
l
Model N, Inc.
 
 
l
BSQUARE Corporation
l
NetSol Technologies, Inc.
 
 
l
ChannelAdvisor Corporation
l
Support.com, Inc.
 
 
l
Covisint Corporation
l
Telenav, Inc.
 
 
l
eGain Corporation
l
Upland Software, Inc.
 
 
l
Jive Software, Inc.
l
Xactly Corporation
 
 
 
 
 
 
 
 
The Compensation Committee expects to periodically review and update this peer group and the underlying criteria as our business and market environment continue to evolve.
Review of Compensation Program
In developing an annual compensation program for our executive officers, the Compensation Committee typically considers the following three main factors:
Market Competitiveness. The Compensation Committee reviews market data provided by the compensation consultant to evaluate whether changes to the compensation program and pay levels of our executive officers may be appropriate. The Compensation Committee generally seeks to compensate our executive officers by using median compensation levels of the closest corresponding executive positions among our comparator group companies as a data point in determining target pay opportunities.
Internal Equity. The Compensation Committee considers the level of total compensation opportunity for the executive officers in relation to one another to ensure that each executive’s contribution to Company performance is appropriately reflected.
Individual Performance. The Compensation Committee considers each individual executive’s experience serving in his or her position and the potential for the executive to expand his or her responsibilities and increase his or her contributions to the Company.
Executive Compensation Programs and Policies
The components of our executive compensation program typically provide for a combination of fixed and variable compensation. As described in more detail below, these components are:
base salary;
annual incentive compensation;
long-term incentive awards; and
severance and change-in-control benefits.
The Compensation Committee typically allocates a significant percentage of the total compensation for our executive officers to annual and long-term incentives as a result of the compensation philosophy and objectives described above. In evaluating the levels of total compensation, the Compensation Committee reviews tally sheets for each executive officer. The tally sheets detail current and historical


 
 
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compensation for each officer, including target and actual base and bonus compensation, equity grants and other benefits generally available to Company employees (e.g., life and health insurance).
Base Salary
The base salary for each of the executive officers is generally paid in cash and represents the fixed portion of his or her total compensation. Base salary compensation is intended to provide a reliable source of income for our executive officers, an important part of retaining our executives, and is not subject to the variability of the annual incentive compensation and long-term incentive compensation components of our executive compensation programs. The base salary of each of our executive officers is reviewed by the Compensation Committee annually. Base salaries are determined on the basis of the factors described above, as well as management responsibilities, level of experience and individual contributions to the Company. In 2014 and 2015, due to cash constraints experienced by the Company, certain executive officers of the Company agreed to accept RSUs in substitution for a portion of their base salary. Beginning January 1, 2016, all of our executive officers receive their total base salary in cash.
Annual Incentive Compensation
The Compensation Committee believes annual incentive compensation should be a key element of the total compensation opportunity of each executive officer. The Compensation Committee also believes that placing a portion of executive compensation at risk each year appropriately motivates executives to achieve Company and individual goals, thereby enhancing stockholder value.
Annually, the Compensation Committee establishes the performance metrics and goals that must be achieved for an executive officer to earn an annual incentive compensation award. In establishing performance metrics for each of our executive officers, the Compensation Committee considers both Company objectives and individual objectives. The Company objectives are based on certain financial, operational and strategic goals of the Company as set forth in our operating plan for that year. Individual objectives may be established for each executive in light of his or her functional group responsibilities and accompanying goals and expectations.
The Compensation Committee assesses performance by comparing actual results to the performance goals established.
 
The target annual incentive compensation award as a percentage of annual base salary for each executive level at December 31, 2016 was as follows:
Executive Level
Target
Chief Executive Officer(1) 
%
Chief Financial Officer
60
%
Senior Vice President
35
%
(1)
Our current Chief Executive Officer receives solely long-term incentive compensation.
In approving annual incentive payouts, the Compensation Committee may use its discretion to determine the amounts that otherwise would be payable based on Company and individual performance, subject to the maximum awards payable. For financial and revenue goals in incentive plans, there may be threshold minimum levels that must be achieved before any payments will be made for the achievement of such goals. In addition, for these types of goals, there may be over-achievement levels specified up to a maximum amount payable if these goals are over-achieved.
Long-Term Incentive Awards
Long-term incentive awards are granted to our executive officers under our 2009 Omnibus Incentive Compensation Plan (the 2009 Incentive Plan), which was originally approved by our stockholders in June 2009. These awards are intended to align the interests of our executives with those of our stockholders and are intended as a long-term incentive for future performance. The 2009 Incentive Plan is administered by the Compensation Committee.
Our 2009 Incentive Plan provides for grants of both equity and cash awards, which affords the Compensation Committee the flexibility to design long-term incentive awards that are responsive to our business needs and advance our interests and long-term success. To date, only stock options and RSUs have been granted under the 2009 Incentive Plan. The Compensation Committee believes these forms of equity grants motivate employees and align their interests with the Company’s stockholders. The Compensation Committee also believes that conserving the Company’s cash is important and therefore has not made any cash awards under the 2009 Incentive Plan.
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retention because these awards vest over a specified period of time. The Compensation Committee typically consults with its compensation consultants regarding long-term incentive awards to the Company’s executive officers and considers the level of total compensation opportunity for the executive officers in relation to one another. The Compensation Committee has historically granted the executive officers a mix of stock option and RSU awards. When making long-term incentive award decisions, the Compensation Committee does not consider existing ownership levels because the Compensation Committee does not want to discourage our executive officers from holding significant amounts of the Company’s common stock. To that end, and to better align executives' interests with those of our stockholders, in 2015 the Board adopted a stock ownership policy, which sets forth that the Company's executive officers and non-management directors must own a minimum value of the Company's common stock. Our Chief Executive Officer must own at least three times her base salary, all executive officers must own an amount equal to their base salary and non-management directors must own an amount equal to their annual cash retainer. If the Company appoints a Chief Operating Officer or a President who is not also the Chief Executive Officer, such individuals must own at least two times their base salary. All who are subject to the stock ownership policy must be in compliance with their minimum ownership requirement before the first year end following the fifth anniversary of being subject to the policy.
The Compensation Committee has adopted an equity granting policy that provides for grants to be made to our executive officers and non-management directors on a specific date each year. The Compensation Committee determines the amount and form of the equity to be granted to each individual based on market competitive data, internal equity considerations, management responsibilities, level of experience, and past and expected future contributions to the Company.
Severance and Change-in-Control Benefits
We have entered into change-in-control and severance agreements with Ms. Swenson and Messrs. Newman, Sek and Bridges. For information about the terms of these severance agreements, see Compensation of Named Executive OfficersPotential Payments Upon Termination or Change-in-ControlSeverance Agreements.
 
Employee Benefits
We do not provide our executive officers or other employees with defined pension benefits, supplemental retirement benefits, post-retirement payments or deferred compensation programs. We do provide a 401(k) defined contribution plan that is available to all of our U.S. employees who meet certain eligibility requirements.
Except as described below, we provide health, life and other insurance benefits to our executive officers on the same basis as our other full-time employees. All of our U.S. employees are eligible to be enrolled in our group disability and life insurance plans. Each of our executive officers is entitled to receive a life insurance benefit upon his or her death equal to two times his or her annual base salary in effect on the date of death, up to a maximum benefit of $500,000. Each of our other salaried employees is entitled to a life insurance benefit equal to two times his or her annual base salary in effect on the date of death, up to a maximum benefit of $300,000.
All of our employees, including our executive officers, are eligible to participate in our Purchase Plan, which has been designed to comply with Section 423 of the Code. The Compensation Committee believes that the Purchase Plan encourages employees, including our executive officers, to increase their ownership in the Company and further aligns their economic interests with those of our stockholders. The Purchase Plan is designed to appeal primarily to non-executive employees and is not intended to be a meaningful element of our executive compensation program.
We do not provide other perquisites or personal benefits to our executive officers. The Compensation Committee believes that this policy is consistent with its pay-for-performance philosophy. We also do not provide any additional cash compensation to our executive officers to reimburse them for any income tax liability that may arise and become due and payable as a result of their receipt of any cash or equity compensation or benefits.
Code Section 162(m)
Section 162(m) of the Code provides that compensation in excess of $1 million paid to the Chief Executive Officer or to any of the other three most highly compensated executive officers (other than the Chief Financial Officer) of a public company is not deductible for federal income tax purposes unless the


 
 
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compensation qualifies as performance-based compensation.
In reviewing our executive compensation program, the Compensation Committee considers the anticipated tax treatment of various payments and benefits to the Company and our executive officers. However, the deductibility of certain compensation payments depends upon the timing of an executive’s vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the Compensation Committee’s control. For these and other reasons, including the need to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee will not necessarily, or in all circumstances, limit executive compensation to that which is deductible under Section 162(m) of the Code and has not adopted a policy requiring that all compensation be deductible.
Anti-hedging and Pledging Policy
The Company’s Insider Trading Policy prohibits any pledging or hedging activities in the Company’s stock by the Company’s executive officers, members of the Board and certain other Company employees. The prohibited activities include any pledge of Company stock as well as transactions such as short sales, puts or calls.
2016 Compensation
Base Salaries
During the first quarter of 2016, the Compensation Committee reviewed recommendations from Compensia, based on data from the relevant comparator group and published studies regarding the compensation of executive officers at other public companies, to reevaluate the base salaries of our executive officers. The Compensation Committee also considered the Company’s achievement of several significant milestones during 2015, including its success in evolving its portfolio and efforts towards software-as-a-service and solutions for the Internet of Things. Based on these achievements and Compensia’s recommendation, the Compensation Committee increased the annual base salaries for our
 
executive officers, other than our CEO, to the following:
Name
Base Salary
Sue Swenson
$
1

Michael Newman
$
330,000

Stephen Sek
$
264,600

Lance Bridges
$
302,500

Annual Incentive Compensation
From January 1, 2016 through December 31, 2016 (the 2016 Performance Period), certain officers and employees of the Company (the 2016 Participants) were eligible to receive bonuses under the 2016 Corporate Bonus Plan (the 2016 Plan), with target bonus amounts set as a percentage of base salary based on the 2016 Participant’s position within the Company (2016 Bonus Awards). See Review of Compensation ProgramAnnual Incentive Compensation above for the target bonus percentages applicable to our executive officers.
The 2016 Bonus Awards were based on the Company meeting its quarterly revenue and adjusted EBITDA objectives established in the first quarter of 2016, as well as the Company’s other 2016 corporate goals, which the Board adopted in the first quarter of 2016 as the criteria for determining 2016 bonus eligibility for the NEOs under their individual employment agreements.
Under the terms of the 2016 Plan, achievement of at least 85% of the revenue or adjusted EBITDA performance goal was required for any payment of the portion of each 2016 Bonus Award that was based on achievement by the Company of such goals. Achievement of the Company’s other 2016 corporate bonus goals was determined in the first quarter of 2017 by the Compensation Committee in consultation with the Chief Executive Officer. The 2016 Bonus Awards were permitted to be adjusted upward or downward by 25% based on individual performance during the 2016 Performance Period. Only those 2016 Participants who continued to be employed by the Company on any applicable payment dates were eligible to receive bonus awards under the 2016 Plan.


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The foregoing description of the 2016 Plan does not purport to be complete and is subject to, and qualified in its entirety by, the terms of such plan which are incorporated herein by reference.
The table below sets forth the quarterly revenue and adjusted EBITDA targets under the 2016 Plan and the applicable bonus payout percentage determined by the Compensation Committee based on the Company’s actual results for each period (dollars in thousands):
 
Revenue
(40% weight)
 
Adjusted EBITDA
(40% weight)
Quarter
Target
Payout % Based on Actual
 
Target
Payout % Based on Actual
First
$
62,687

123
%
 
$
511

150
%
Second
$
62,460

102
%
 
$
2,106

%
Third
$
66,405

72
%
 
$
3,631

%
Fourth
$
69,426

%
 
$
3,801

%
In calculating adjusted EBITDA, management excludes certain non-cash and one-time items in order to facilitate comparability of the Company's operating performance on a period-to-period basis because such expenses are not, in management's view, related to the Company's ongoing operating performance.
For the year ended December 31, 2016, the bonus payout percentage determined by the Compensation Committee based on the Company’s actual results was 74% for revenue and 38% for adjusted EBITDA.
Each of the targets shown above received a weighting of 40% of each executive’s target bonus award. The remaining 20% weighting related to strategic corporate goals established by the Compensation Committee in areas such as innovation and product quality improvements, increasing the number of customers and subscriptions, and becoming more efficient in areas related to cash management and cost savings. The Compensation Committee awarded a 56% payout against these strategic corporate criteria, resulting in an overall bonus payout of 56% of target before applying individual performance criteria which could increase or decrease each executive’s actual bonus award by up to 25%.
In evaluating whether any discretionary changes should be made to the 2016 Bonus Awards the Compensation Committee considered each individual
 
NEO’s personal performance and contribution to the Company’s overall 2016 performance. Based on that evaluation, the 2016 Bonus Awards to certain executive officers and employees including the Company’s Chief Financial Officer and General Counsel were increased by 25% in recognition of the Company’s 2016 achievements, including successful divestiture of certain hardware modules and related assets, the execution of a Stock Purchase Agreement relating to the pending sale of Novatel Wireless, Inc. which includes the Company’s MiFi branded hotspots and USB modem product lines (the MiFi Business), the successful reorganization of the Company in order to facilitate the sale of the MiFi Business and the successful completion of the exchange offer and consent solicitation with respect to the 5.50% convertible senior notes due 2020 issued by Novatel Wireless, Inc. The 2016 Bonus Awards to certain executive officers and employees in the Company’s engineering department were decreased by 25% as a result of certain delays in key product launches during 2016 that had a negative impact on the Company’s financial performance.
After evaluating all of the foregoing criteria, the Compensation Committee determined each NEO’s bonus award under the 2016 Plan. The table below sets forth the amount of 2016 Bonus Awards paid to our NEOs:
Name
Bonus Award(1)
Sue Swenson
$

Michael Newman
$
156,735

Stephen Sek
$
28,367

Lance Bridges
$
83,810

(1)
These 2016 Bonus Awards were calculated using the 2016 salaries disclosed in the Summary Compensation Table below which reflect the increases in base salary that went into effect during the first quarter of 2016.
Long-Term Incentive Compensation
In 2016, the Compensation Committee considered several scenarios to address long-term incentive award compensation. The Compensation Committee reviewed the equity grants of the previous several years and received recommendations from Compensia based on the equity compensation practices of the Company’s peer group. Based on these considerations, in 2016, the Compensation Committee determined to grant only restricted stock units rather than a combination of restricted stock units and stock options. This was done primarily to


 
 
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conserve shares under the Company’s 2009 Incentive Plan and reduce dilution to stockholders, while still achieving target levels of economic value of awards consistent with the 50th percentile of the Comparator Group.
The following table sets forth the economic value (at the date of grant) of the long-term incentive awards granted to each of our NEOs in 2016.
Name
Economic Value of Award at Time of Grant
($)
 
Number of Stock Options 
(#)
Number of Restricted Stock Units
(#)
Sue Swenson(1)
$
1,555,200

 

960,000

Michael Newman
$
575,100

 

355,000

Stephen Sek
$
243,000

 

150,000

Lance Bridges
$
405,000

 

250,000

(1)
Excludes 951,550 stock options with a per share exercise price of $1.66 granted to Ms. Swenson in January 2016 as an inducement award pursuant to her December 2015 employment offer letter, which had an economic value of $1,009,214 at the time of grant.
The number of restricted stock units awarded to Ms. Swenson in 2016 was based on the
 
recommendation of Compensia, which took into account that Ms. Swenson does not receive cash compensation (base salary and bonus) and receives instead long-term compensation in the form of restricted stock units.
The stock option award granted to Ms. Swenson in January 2016 vests over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. The restricted stock unit awards granted to our NEOs in 2016 vest over a four-year period, with one-fourth vesting on each anniversary of the grant date through the fourth anniversary of the grant date. The Compensation Committee approved equity awards with time-based vesting to create a significant incentive for our NEOs to be employed by the Company for at least four years after the grant date.
Prior to October 2015, equity awards vested over a three-year period. To be more consistent with other companies in its peer group and strengthen the value of such awards as a long-term retention tool, the Company changed the vesting period for equity awards to four years beginning in October 2015.



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REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE
David Werner, Chair
Robert Pons
James Ledwith

The foregoing Report of the Compensation Committee is not soliciting material, is not deemed filedwith the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this report by reference.
Compensation Committee Interlocks and Insider Participation
No current member of the Compensation Committee was at any time during fiscal 2016 or at any other time an officer or employee of the Company, and no member had any relationship with the Company requiring disclosure as a related person transaction. No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or Compensation Committee during fiscal 2016.


 
 
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COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following executive compensation tables and related information are intended to be read with the more detailed disclosure regarding our executive compensation program presented in the Compensation Discussion and Analysis.
Summary Compensation Table
The following table sets forth information regarding the compensation of our NEOs for the years ended December 31, 2016, 2015 and 2014:  
Name and Principal Position 
Year 
Salary
($)
 
Stock Awards
($)(1)
Option Awards
($)(1)
Non-Equity Incentive Plan Compensation
($)(2)
All Other Compensation
($)(3)
Total
($)
Sue Swenson(4)(5) 
Chief Executive Officer
2016
1

 
1,555,200

1,009,214


480

2,564,895

2015

 
84,998

1,363,571


70,890

1,519,459

Michael Newman 
Executive Vice President and Chief Financial Officer
2016
322,500

 
575,100


156,735

8,970

1,063,305

2015
299,997

(6)
462,576

246,915

42,750

1,020

1,053,258

2014
99,999

(6)
506,250

237,038


178

843,465

Stephen Sek(5) 
Senior Vice President and Chief Technology Officer
2016
261,450

 
243,000


28,367

8,490

541,307

2015
252,000

 
372,399

272,493

25,137

540

922,569

 
 
 
 
 
 
 
 
Lance Bridges(5) 
Senior Vice President, General Counsel and Secretary
2016
295,625

 
405,000


83,810

8,473

792,908

2015
179,279

 
254,000

271,540

23,949

555

729,323

 
 
 
 
 
 
 
 
(1)
Represents the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the Company’s 2016 Annual Report.
(2)
Represents cash awards under our annual incentive compensation plans.
(3)
See All Other Compensation table below for additional information.
(4)
Ms. Swenson served as a non-management director from January 1, 2015 through October 27, 2015. During that time, she accrued compensation for her service on the Board, which she received in the form of 18,722 RSUs on March 16, 2015 and $70,810 in the form of cash payments, which included three quarterly cash payments of $21,500 for each of the first, second and third quarters and $6,310 for the period October 1, 2015 through October 27, 2015. This compensation is included in the table above under Stock Awards and All Other Compensation.
(5)
Ms. Swenson and Messrs. Sek and Bridges were not executive officers for the year ended December 31, 2014; therefore, compensation of these NEOs is only disclosed for the years ended December 31, 2016 and 2015.
(6)
The Company paid 30% of Mr. Newman’s base salary from November 1, 2014 through December 31, 2015 in the form of RSUs. Mr. Newman’s RSUs for 2015 were granted on January 2, 2015 and vested ratably on a monthly basis until January 2, 2016.


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All Other Compensation
The following table sets forth information concerning All Other Compensation in the table above:
Name 
Year 
Life Insurance Premiums Paid by Company
($)
Taxable Cell Phone Allowance
($)
Compensation for Service as Non-Management Director
($)
401(k) Employer Match
($)
 
Total
($)
Sue Swenson
2016

480



 
480

 
2015

80

70,810


 
70,890

Michael Newman
2016
540

480


7,950

 
8,970

 
2015
540

480



 
1,020

 
2014
178




 
178

Stephen Sek
2016
540



7,950

 
8,490

 
2015
540




 
540

Lance Bridges
2016
540

480


7,453

 
8,473

 
2015
315

240



 
555

Grants of Plan-Based Awards
The following table sets forth information regarding the Company’s grants of plan-based awards to our NEOs during 2016 under the Company’s annual incentive plan and 2009 Incentive Plan.
Name
Grant Date
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
 
All Other Stock Awards: Shares of Stock or Units
(#)(2) 
 
All Other Option Awards: Securities Underlying Options
(#)(3) 
 
Exercise or Base Price of Option Awards
($)
 
Grant Date Fair Value of Stock and Option Awards
($)
Target(1)
 
Sue Swenson
 
$

 
 
 
 
 
 
 
 
 
1/4/2016
 
 

 
951,550

 
$
1.66

 
$
1,009,214

 
3/1/2016
 
 
960,000

 

 
$

 
$
1,555,200

Michael Newman
 
$
156,735

 
 
 
 
 
 
 
 
 
3/1/2016
 
 
355,000

 

 
$

 
$
575,100

Stephen Sek
 
$
28,367

 
 
 
 
 
 
 
 
 
3/1/2016
 
 
150,000

 

 
$

 
$
243,000

Lance Bridges
 
$
83,810

 
 
 
 
 
 
 
 
 
3/1/2016
 
 
250,000

 

 
$

 
$
405,000

(1)
Represents actual cash amounts paid to our NEOs in April 2017 under the 2016 Bonus Plan.
(2)
These RSUs are scheduled to vest over a four-year period, with one-fourth vesting on each anniversary of the grant date.
(3)
These stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date.
Employment Agreements
Sue Swenson. On October 29, 2015, in connection with her agreement to serve as the Company’s Chief Executive Officer, the Company granted Ms. Swenson stock options to purchase 951,550 shares of the Company’s common stock, with a per share exercise price of $2.27, the closing price of the Company’s common stock on the grant date, and which may only be exercised after vesting if the price of the Company’s common stock is at least $3.41 per
 
share on the date of exercise. On December 11, 2015, the Company entered into a formal employment offer letter agreement with Ms. Swenson. Under the terms of the offer letter, Ms. Swenson is entitled to receive an annual base salary of $1.00 as compensation for her services as Chief Executive Officer. On January 4, 2016, pursuant to the terms of the offer letter, the Company granted Ms. Swenson stock options to purchase an


 
 
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additional 951,550 shares of the Company’s common stock, with a per share exercise price of $1.66, the closing price of the Company’s common stock on the grant date. For a description of the benefits provided under this agreement and our other severance agreements, seePotential Payments Upon Termination or Change-in-Control—Employment Agreements.
Michael Newman. On September 2, 2014, the Board appointed Mr. Newman to serve as the Company’s Executive Vice President and Chief Financial Officer pursuant to the terms of an employment offer letter agreement. Under the terms of the offer letter, Mr. Newman is initially entitled to receive an annual base salary of $300,000 as compensation for his services as Executive Vice President and Chief Financial Officer, of which $90,000 is to be paid through the issuance of RSUs which will vest in 12 monthly installments from the date of grant; provided, however, that beginning in calendar year 2016, Mr. Newman has the right to elect, and did elect, to receive his full annual base salary in cash. For a description of the severance benefits provided under this agreement and our other severance agreements, seePotential Payments Upon Termination or Change-in-Control—Employment Agreements.
 
Stephen Sek. On March 13, 2015, the Board appointed Mr. Sek to serve as the Company’s Chief Technology Officer. Upon his appointment, Mr. Sek was initially entitled to receive an annual base salary of $252,000 as compensation for his services as Chief Technology Officer. For a description of the severance benefits provided under this agreement and our other severance agreements, see Potential Payments Upon Termination or Change-in-Control—Employment Agreements.
Lance Bridges. On May 7, 2015, the Company entered into an employment offer letter agreement with Mr. Bridges, pursuant to which Mr. Bridges is initially entitled to receive an annual base salary of $275,000 as compensation for his services as Senior Vice President and General Counsel. On May 7, 2015, pursuant to the terms of the offer letter, the Company granted Mr. Bridges 50,000 RSUs and stock options to purchase 100,000 shares of the Company’s common stock, with a per share exercise price of $5.08, the closing price of the Company’s common stock on the grant date. For a description of the severance benefits provided under this agreement and our other severance agreements, see Potential Payments Upon Termination or Change-in-Control—Employment Agreements.



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Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding the stock options and RSUs held by our NEOs that were outstanding at December 31, 2016.
 
 
 
Option Awards 
 
Stock Awards 
Name
Grant Date
 
Number of Securities Underlying Unexercised Options Exercisable
(#)
 
Number of Securities Underlying Unexercised Options Unexercisable
(#)(1) 
 
Option Exercise Price
($)
 
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested
(#)(2) 
 
Market Value of Shares or Units That Have Not Vested
($)(3) 
Sue Swenson
10/29/2015
 
277,536

 
674,014

 
 
$
2.27

 
10/29/2025
 
 
 
 
 
1/4/2016
 

 
951,550

 
 
$
1.66

 
1/4/2026
 
 
 


 
3/14/2014
 
 
 
 
 
 
 
 
 
 
16,949

 
$
41,356

 
3/1/2016
 
 
 
 
 
 
 
 
 
 
960,000

 
$
2,342,400

Michael Newman
9/2/2014
 
131,250

 
43,750

 
 
$
2.25

 
9/2/2024
 
 
 
 
 
3/16/2015
 
64,546

 
46,104

 
 
$
4.54

 
3/16/2025
 
 
 
 
 
9/2/2014
 
 
 
 
 
 
 
 
 
 
75,000

 
$
183,000

 
3/16/2015
 
 
 
 
 
 
 
 
 
 
45,900

 
$
111,996

 
3/1/2016
 
 
 
 
 
 
 
 
 
 
355,000

 
$
866,200

Stephen Sek
3/16/2015
 
17,500

 
12,500

 
 
$
4.54

 
3/16/2025
 
 
 
 
 
4/13/2015
 
38,889

 
31,111

 
 
$
5.51

 
4/13/2025
 
 
 
 
 
10/4/2013
 
 
 
 
 
 
 
 
 
 
7,500

 
$
18,300

 
3/16/2015
 
 
 
 
 
 
 
 
 
 
20,000

 
$
48,800

 
4/13/2015
 
 
 
 
 
 
 
 
 
 
13,334

 
$
32,535

 
3/1/2016
 
 
 
 
 
 
 
 
 
 
150,000

 
$
366,000

Lance Bridges
5/7/2015
 
52,778

 
47,222

 
 
$
5.08

 
5/7/2025
 
 
 
 
 
5/7/2015
 
 
 
 
 
 
 
 
 
 
33,334

 
$
81,335

 
3/1/2016
 
 
 
 
 
 
 
 
 
 
250,000

 
$
610,000

(1)
Unless otherwise indicated, stock options granted prior to October 2015 are scheduled to vest over a three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the third anniversary of the grant date and stock options granted after October 2015 are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date.
(2)
Unless otherwise indicated, RSUs granted prior to October 2015 are scheduled to vest over a three-year period, with one-third vesting on each anniversary of the grant date and RSUs granted after October 2015 are scheduled to vest over a four-year period, with one-fourth vesting on each anniversary of the grant date through the fourth anniversary of the grant date.
(3)
Calculated using a market value per share of $2.44, the closing price of our common stock on December 31, 2016.



 
 
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Option Exercises and Stock Vested
The following table sets forth information regarding the vesting of RSU awards for each of our NEOs during 2016:  
Name
 
Number of Shares Acquired on Vesting
Value Realized on Vesting(1) 
Sue Swenson
 
40,671

$
66,403

Michael Newman
 
100,243

$
274,320

Stephen Sek
 
24,166

$
50,649

Lance Bridges
 
16,666

$
24,666

(1)
Represents the number of shares acquired on vesting multiplied by the closing price of our common stock on the applicable vesting date.
Potential Payments Upon Termination or Change-in-Control
We have historically provided severance benefits to our NEOs in the event the executive’s employment is terminated under certain circumstances following a change-in-control of the Company. We currently provide these benefits to Ms. Swenson and Messrs. Newman, Sek and Bridges under separate severance agreements. We also provide severance benefits unrelated to a change-in-control to Ms. Swenson and Messrs. Newman, Sek and Bridges under their separate severance agreements. A description of the severance benefits payable under these agreements, if any, is set forth below.
Severance Agreements
Sue Swenson. Our Change-in-Control and Severance Agreement with Ms. Swenson provides for payments and benefits to her in the event there is a change-in-control of the Company or if her employment is terminated under the circumstances described below.
Ms. Swenson is entitled to the following benefits if her employment is terminated by the Company without cause or if she terminates her employment for good reason:
an amount equal to her unpaid base salary earned though the date of termination, accrued but unpaid vacation, incurred but unreimbursed business expenses payable in accordance with applicable law or Company policy, or vested benefits (other than severance) under any Company benefit plan.
In addition to the benefits described above, if Ms. Swenson is terminated by the Company without cause or for good reason during a during a change-in-control period, which commences 30 days before
 
and ends 12 months after a change-in-control (the Change-in-Control Period), each outstanding and unvested stock option granted to her pursuant to the agreement shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, as of immediately prior to the termination date.
In order to receive the aforementioned benefits, Ms. Swenson must deliver to the Company a general release of all claims against the Company and its affiliates effective no more than 55 days after termination of her employment.
Michael Newman, Stephen Sek and Lance Bridges. The Company entered into a Change-in-Control and Severance Agreement with Mr. Sek in April 2015 and with Mr. Bridges in May 2015 and into an Amended and Restated Change-in-Control and Severance Agreement with Mr. Newman in April 2015 (collectively, the Executives).
Under the terms of these agreements, if the employment of the Executive is terminated by the Company without cause or by the Executive for good reason not in connection with a change-in-control, then the Executive is entitled to the following severance benefits:
an amount equal to the Executive’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the Executive under our compensation plans;
an amount equal to six months of the Executive’s base salary, payable in cash in the form of salary continuation;
immediate vesting of the portion of the Executive’s outstanding equity awards under our compensation plans, other than compensatory RSUs, that would have vested or become exercisable had his employment continued


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through the next vesting date, which stock option awards will remain exercisable until the applicable expiration date;
a lump-sum bonus payment equal to the pro-rated portion of the target bonus in the year of termination based on actual achievement of corporate performance goals and assumed full achievement of any individual performance goals; and
continued participation for up to nine months by the Executive and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately prior to the termination;
provided, however, that in order to receive the aforementioned severance benefits, the Executive must deliver to the Company a general release of all claims against the Company and its affiliates effective no more than 55 days after termination of his employment.
Under these agreements, the Executive is entitled to the following severance benefits, in lieu of the benefits described above, if the Executive’s employment is terminated by the Company without cause or by the Executive for good reason during a Change-in-Control Period:
an amount equal to the Executive’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the Executive under our compensation plans;
an amount equal to the sum of 18 months of the Executive’s base salary;
an amount equal to 12 months of the Executive’s target annual bonus opportunity;
immediate vesting of outstanding equity awards under our compensation plans, other than compensatory RSUs, which stock option awards will remain exercisable until the applicable expiration date; and
continued participation for up to 18 months by the Executive and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately before the termination.
Cause under all severance agreements above means:
any act of material misconduct or material dishonesty by the NEO in the performance of his or her duties;
any willful failure, gross neglect or refusal by the NEO to attempt in good faith to perform his or her
 
duties to the Company or to follow the lawful instructions of the Board (except as a result of physical or mental incapacity or illness) which is not promptly cured after written notice;
the NEO’s commission of any fraud or embezzlement against the Company (whether or not a misdemeanor);
any material breach of any written agreement with the Company, which breach has not been cured by the NEO (if curable) within 30 days after written notice thereof to the NEO by the Company;
the NEO’s being convicted of (or pleading guilty or nolo contendere to) any felony or misdemeanor involving theft, embezzlement, dishonesty or moral turpitude; and/or
the NEO’s failure to materially comply with the material policies of the Company in effect from time to time relating to conflicts of interest, ethics, codes of conduct, insider trading, or discrimination and harassment, or other breach of the NEO’s fiduciary duties to the Company, which failure or breach is or could reasonably be expected to be materially injurious to the business or reputation of the Company.
Good Reason under all severance agreements above means the occurrence, without the NEO’s consent, for more than thirty days after such NEO provides the Company a written notice detailing such conditions of:
a material diminution in his or her base compensation;
a material diminution in his or her job responsibilities, duties or authorities; or
a relocation of his or her principal place of work by more than 50 miles.
Change-in-Control under all severance agreements above means:
a transaction after which an individual, entity or group owns 50% or more of the outstanding shares of our common stock, subject to limited exceptions;
a sale of all or substantially all of the Company’s assets; or
a merger, consolidation or similar transaction, unless immediately following such transaction (a) the holders of our common stock immediately prior to the transaction continue to beneficially own more than 50% of the combined voting power of the surviving entity in substantially the


 
 
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same proportion as their ownership immediately prior to the transaction, (b) no person becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the outstanding shares of the voting securities eligible to elect directors of the surviving entity, and (c) at least a majority of the members of the board of directors of the surviving entity immediately following the transaction were also members of the Board at the time the Board approved the transaction.
On November 3, 2016, Mr. Sek entered into an Acknowledgement, Waiver and Consent (the Acknowledgement) with the Company and Novatel Wireless, Inc. acknowledging and agreeing that upon the consummation of the Company’s proposed sale (the Sale) of Novatel Wireless, Inc. to T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (collectively, the Purchasers), he will voluntarily resign from his employment with the Company and accept employment with Novatel Wireless, Inc. then-owned by the Purchasers, which resignation will not constitute a Covered Termination under, and as defined in, his change in control and severance agreement. As consideration for this Acknowledgment, the Company has agreed that, effective as of and contingent upon the closing of the Sale, each outstanding and unvested stock option and restricted stock unit award held by Mr. Sek shall immediately become vested and, if applicable, exercisable, and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse with respect to that number of shares of common stock that would have vested had Mr. Sek’s employment with the Company continued through April 13, 2018.
Equity Award Agreements
The following is a summary of the vesting provisions applicable to the outstanding equity awards held by our NEOs as of December 31, 2016.
 
2009 Incentive Plan. The award agreements covering grants of stock options and RSUs made to our NEOs under our 2009 Incentive Plan provide that the Board, in its discretion, may accelerate the vesting of any unvested stock options or RSUs in the event of a change-in-control.
Under our 2009 Incentive Plan, a change-in-control is defined as:
any person becoming the beneficial owner of 50% or more of the combined voting power of the then-outstanding shares of our common stock, subject to certain exceptions;
a majority of the Board ceasing to be comprised of directors who (a) were serving as members of the Board on June 18, 2009 or (b) became members of the Board after June 18, 2009 and whose nomination, election or appointment was approved by a vote of two-thirds of the then-incumbent directors;
a reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or similar transaction, unless the holders of our common stock immediately prior to the transaction beneficially own more than 50% of the combined voting power of the shares of the surviving entity and certain other conditions are satisfied; or
a liquidation or dissolution of the Company approved by the Company’s stockholders.
2000 Stock Incentive Plan. The award agreements covering stock option grants previously made to our NEOs under our 2000 Stock Incentive Plan provide that the stock options will remain exercisable for up to 270 days following the date of an executive’s employment termination for any reason.


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Summary of Potential Termination Benefits
The following table quantifies the compensation and benefits that would have been payable to our NEOs under the agreements described above if the NEOs employment had been terminated on December 31, 2016, given the NEO’s base salary, and, if applicable, the closing price of our common stock, as of that date. The amounts shown in the table do not include certain payments and benefits, such as accrued salary and accrued vacation, to the extent that such payments and benefits are generally provided on a non-discriminatory basis to salaried employees of the Company upon termination of employment.
Named Executive Officer
Benefit
Involuntary Termination Without Cause or Voluntary Termination for Good Reason
Involuntary Termination Without Cause or Voluntary Termination for Good Reason During a Change-in-Control Period
Death
Sue Swenson
Severance
 
$

 
 
$

 
 
$

 
 
Bonus
 
$

 
 
$

 
 
$

 
 
Accelerated Vesting of Equity Awards
 
$

 
 
$
3,240,547

 
 
$

 
 
Health Benefits Continuation
 
$

 
 
$

 
 
$

 
 
Insurance Benefits
 
$

 
 
$

 
 
$

 
Michael Newman
Severance
 
$
165,000

 
 
$
495,000

 
 
$

 
 
Bonus
 
$
108,360

 
 
$
193,500

 
 
$

 
 
Accelerated Vesting of Equity Awards
 
$
456,472

 
 
$
1,169,509

 
 
$

 
 
Health Benefits Continuation
 
$
20,214

 
 
$
40,427

 
 
$

 
 
Insurance Benefits
 
$

 
 
$

 
 
$
500,000

 
Stephen Sek(1)
Severance
 
$
132,300

 
 
$
396,900

 
 
$

 
 
Bonus
 
$
51,244

 
 
$
91,508

 
 
$

 
 
Accelerated Vesting of Equity Awards
 
$
150,465

 
 
$
465,635

 
 
$

 
 
Health Benefits Continuation
 
$
20,214

 
 
$
40,427

 
 
$

 
 
Insurance Benefits
 
$

 
 
$

 
 
$
500,000

 
Lance Bridges
Severance
 
$
151,250

 
 
$
453,750

 
 
$

 
 
Bonus
 
$
57,943

 
 
$
103,469

 
 
$

 
 
Accelerated Vesting of Equity Awards
 
$
193,167

 
 
$
691,335

 
 
$

 
 
Health Benefits Continuation
 
$
20,214

 
 
$
40,427

 
 
$

 
 
Insurance Benefits
 
$

 
 
$

 
 
$
500,000

 
(1)
In addition to the payments described above, upon the closing of the Sale, each outstanding and unvested stock option and restricted stock unit award held by Mr. Sek shall immediately become vested and, if applicable, exercisable, and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse with respect to that number of shares of common stock that would have vested had Mr. Sek’s employment with the Company continued through April 13, 2018. The value of such acceleration, if the Sale had closed on December 31, 2016, would have been approximately $282,635.



 
 
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Equity Compensation Plan Information
As of December 31, 2016, the Purchase Plan, the 2009 Incentive Plan and the 2015 Incentive Compensation Plan (the 2015 Incentive Plan) were the only compensation plans under which securities of the Company were authorized for grant. The Purchase Plan and the 2009 Incentive Plan, including all amendments thereto (other than the March 2015 amendment approving the issuance of inducement shares under the 2009 Incentive Plan), were approved by our stockholders. The 2015 Incentive Plan was adopted by the Board without stockholder approval pursuant to NASDAQ Listing Rule 5635. The 2015 Incentive Plan may only be used for inducement grants to individuals to induce them to become employees of the Company or any of its subsidiaries, or, in conjunction with a merger or acquisition, to convert, replace or adjust outstanding stock options or other equity compensation awards, or for any other reason for which there is an applicable exception from the stockholder approval requirements of NASDAQ Listing Rule 5635, in each such case, subject to the applicable requirements of the NASDAQ Listing Rules. The following table provides information as of December 31, 2016 regarding the Company’s existing and predecessor plans:
Plan category
Number of securities to be issued upon exercise of outstanding options
 
Weighted-average exercise price of options outstanding
 
Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders
3,767,856

 
 
 
$
3.44

(1)
 
3,961,342

(2)
Equity compensation plans not approved by security holders
2,588,347

 
 
 
$
1.47

 
 
1,332,035

(3)
(1)
Amount is based on the weighted-average exercise price of vested and unvested stock options outstanding under the 2009 Incentive Plan and predecessor plans. RSUs, which have no exercise price, are excluded from this calculation.
(2)
Represents shares available for future issuance under the Purchase Plan and the 2009 Incentive Plan. As of December 31, 2016, there were 89,676 shares of our common stock available for issuance under the Purchase Plan and 3,871,666 shares of our common stock available for issuance under the 2009 Incentive Plan.
(3)
Represents shares available for future issuance under the 2015 Incentive Plan.


36  |  2017 Proxy Statement
 
 



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Review and Approval of Transactions with Related Persons
 
 
 

REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS
Pursuant to the Audit Committee charter, the Audit Committee is responsible for implementing the Company’s written policies and procedures regarding transactions with a related person (as defined in SEC regulations). In considering related person transactions, the Audit Committee takes into account the relevant available facts and circumstances, including:
the risks, costs and benefits to the Company;
the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
the terms of the transaction;
 
the availability of other sources for comparable services or products; and
the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
In the event a director has an interest in the proposed transaction, the director must recuse himself from the deliberations. When reviewing a related person transaction, the Audit Committee determines in good faith whether the transaction is in, or is not inconsistent with, the best interests of the Company and its stockholders.



 
 
2017 Proxy Statement  |  37




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Security Ownership of Management and Certain Beneficial Owners
 
 
 


SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The tables below provide information regarding the beneficial ownership of our common stock as of March 31, 2017 by: (i) each of our directors; (ii) each of our NEOs; (iii) all current directors and executive officers as a group; and (iv) each beneficial owner of more than five percent of our common stock.
Beneficial ownership is determined in accordance with SEC rules and regulations, and generally includes voting power or investment power with respect to securities held. Unless otherwise indicated and subject to applicable community property laws, we believe that each of the stockholders named in the table below has sole voting and investment power with respect to the shares shown as beneficially
 
owned. Securities that may be beneficially acquired within 60 days after March 31, 2017 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the ownership of such person, but are not treated as outstanding for the purpose of computing the ownership of any other person.
The address for all directors and executive officers is 9605 Scranton Road, Suite 300, San Diego, California 92121. The tables below list the number and percentage of shares beneficially owned based on 55,955,138 shares of common stock outstanding as of March 31, 2017.
Directors and Named Executive Officers
Name of Beneficial Owner
Directly or Indirectly Held
(#)
Option Awards
(#)(1) 
Stock Awards
(#)(2) 
Total Shares of Common Stock
Beneficially Owned
(#)
 
Percentage
Sue Swenson
232,017

693,840


925,857

 
1.6
%
 
Michael Newman
250,599

235,470


486,069

 
0.9
%
 
Stephen Sek
109,974

70,278

6,667

186,919

 
0.3
%
 
Lance Bridges
68,139

66,667

16,667

151,473

 
0.3
%
 
James Ledwith
191,264

38,746


230,010

 
0.4
%
 
Philip Falcone
81,089



81,089

 
0.1
%
 
Robert Pons