Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Chief Financial Officer Transition
On August 22, 2022, Gordon Mattingly informed Arlo Technologies, Inc.
("Company") of his resignation from the positions of Chief Financial Officer,
principal financial officer and principal accounting officer of the Company, to
be effective as of September 21, 2022. Mr. Mattingly's resignation is not a
result of any disagreement with the Company on any matter relating to the
Company's operations, policies or practices.
On August 22, 2022, the Board of Directors of the Company (the "Board")
appointed Kurt Binder as the Company's Chief Financial Officer, principal
financial officer and principal accounting officer, to be effective as of
September 26, 2022 ("Start Date").
Mr. Binder, 52, currently serves as Executive Vice President and Chief Financial
Officer of CalAmp Corp., a publicly-held provider of Internet of things software
applications, cloud services, data intelligence, and telematics products and
services. Prior to joining CalAmp in July 2017, Mr. Binder served as the Chief
Financial Officer at VIZIO, Inc., a television and consumer electronics company
headquartered in the United States since April 2010. Prior to joining VIZIO,
Mr. Binder served as the Chief Accounting Officer for Applied Medical Resources,
Inc. since December 2009. Mr. Binder was also employed by Ernst & Young LLP from
October 1997 to July 2009 and served as an Assurance and Advisory Business
Services Partner. Mr. Binder began his career with Price Waterhouse, and holds a
BBA in Accounting and an MBA in Finance, both from Loyola University Maryland.
In connection with his appointment as the Company's Chief Financial Officer, the
Company entered into an Employment Offer Letter ("Offer Letter") with
Mr. Binder, that will become effective on the Start Date. Pursuant to the Offer
Letter, Mr. Binder will receive an annual base salary of $500,000 and is
eligible to receive an annual target bonus of 70% of his annual base salary.
Contingent upon and following the Start Date, Mr. Binder will be granted an
inducement award pursuant to the Company's 2018 Equity Incentive Plan ("2018
EIP") comprised of (i) 750,000 restricted stock units ("RSUs") and (ii) 750,000
performance-vesting RSUs ("PSUs"). The RSUs will vest in five equal annual
installments during a five-year period beginning on the vesting commencement
date. The PSUs are eligible to vest in three equal installments of 250,000 PSUs
based on the extent to which the Company achieves 3, 4 and/or 5 million
Cumulative Paid Subscribers (as defined below) on or before the fifth
anniversary of the PSU grant date. Upon achievement of the requisite number of
Cumulative Paid Subscribers, the corresponding PSUs will be fully vested.
Mr. Binder will also be eligible to participate in the Company's equity
compensation plans and employee benefit plans available to other employees of
the Company. Mr. Binder will enter into the Company's standard form of (i)
Indemnification Agreement (a copy of which is filed as Exhibit 10.16 to the
Company's Registration Statement on Form S-1 (File No. 333-226088), as amended,
filed with the Securities and Exchange Commission on July 23, 2018), and
(ii) Change in Control and Severance Agreement for executives (a copy of which
is filed as Exhibit 10.11 to the Company's Current Report on Form 8-K (File
No. 001-38618), filed with the Securities and Exchange Commission on August 7,
2018) ("Severance Agreement").
There is no arrangement or understanding between Mr. Binder and any other person
pursuant to which he was selected as an officer of the Company, and there are no
family relationships between Mr. Binder and any of the Company's directors or
executive officers. There are no transactions to which the Company is a party
and in which Mr. Binder has a direct or indirect material interest that would be
required to be disclosed under Item 404(a) of Regulation S-K.
A copy of the Offer Letter is filed herewith as Exhibit 10.1. The above summary
of the Offer Letter does not purport to be complete and is qualified in its
entirety by reference to Exhibit 10.1.
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On August 26, 2022, the Company issued a press release announcing Mr. Binder's
appointment and Mr. Mattingly's resignation. A copy of this press release is
attached hereto as Exhibit 99.1.
Amendment to 2018 Equity Incentive Plan
On August 22, 2022, the Board unanimously approved an amendment to the 2018 EIP
to reserve an additional 1,500,000 shares of the Company's common stock to be
used exclusively for grants of awards to individuals who were not previously
employees or non-employee directors of the Company (or following a bona fide
period of non-employment with the Company), as an inducement material to such
individual's entry into employment with the Company within the meaning of Rule
303A.08 of the New York Stock Exchange Listed Company Manual ("Rule 303A.08").
The 2018 EIP was amended by the Board without stockholder approval pursuant to
Rule 303A.08.
A copy of the 2018 EIP, as amended, is filed herewith as Exhibit 10.2. The above
summary of the amendment to the 2018 EIP does not purport to be complete and is
qualified in its entirety by reference to Exhibit 10.2.
Approval of Executive Retention Plan
On August 22, 2022, the Board approved the material terms of an Executive
Retention Plan ("Retention Plan") and delegated authority to the Compensation
and Human Capital Committee of the Board ("Committee") and the Chair of the
Committee to approve individual Retention Agreements to be substantially
consistent with the material terms of the Retention Plan approved by the Board
("Retention Agreements"). The material terms of the Retention Plan were approved
following an assessment of the Company's executive compensation program
conducted by Compensia, Inc., the Company's compensation consultant, and
included a comparison to executive compensation programs at selected
publicly-traded peer companies. Matthew McRae, the Company's Chief Executive
Officer and Brian Busse, the Company's General Counsel ("Participants") will
initially be eligible to participate in the Retention Plan and will each enter
into a Retention Agreement. The Company is implementing the Retention Plan in
recognition of the significant benefits to the Company in retaining and
incentivizing such Participants to continue their respective employment
relationships with the Company.
Pursuant to the Retention Agreements, Participants will be eligible to receive
PSUs ("Retention PSUs") and cash payments upon the achievement of a specified
number of Cumulative Paid Subscribers during a five-year performance period
beginning on the date the Participants execute the Retention Agreements.
For purposes of the Retention Agreements, "Cumulative Paid Subscribers" shall
mean on a cumulative basis ordinary course paid subscription accounts generated
by the Company which collectively are expected to generate at least a blended
60% margin (or such lesser percentage as determined in the sole discretion of
the Board, the Committee or their designee), as reasonably determined in the
sole discretion of the Board, the Committee or their designee. Upon achievement
by the Company during the performance period of 2 million Cumulative Paid
Subscribers, each Participant will be entitled to receive a cash payment equal
to such Participant's base amount ("Cash Base Amount"); provided, that, upon
achievement of 3, 4 and 5 million Cumulative Paid Subscribers, the cash payments
will be increased by an additional incremental amount of 50%, 50% and 100%,
respectively, of the Cash Base Amount. The Cash Base Amount for Mr. McRae and
Mr. Busse will be $2,000,000 and $200,000, respectively. The Participants will
also be granted unvested Retention PSUs in an amount equal to such Participant's
base amounts ("Equity Base Amount"). The Equity Base Amount for Mr. McRae and
Mr. Busse will be 1,000,000 and 100,000 Retention PSUs, respectively ("Base PSU
Award"). Upon achievement by the Company during the performance period of
2 million Cumulative Paid Subscribers, the Base PSU Award for each Participant
will become fully vested; provided, that, upon achievement of 3, 4 and 5 million
Cumulative Paid Subscribers, the Retention PSUs awarded to the Participants will
be increased by an additional incremental amount of 50%, 50% and 100%,
respectively of the Equity Base Amount. In order to receive such cash payments
and Retention PSUs, the Participants must remain employed at the Company through
the applicable payment date and grant date.
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In the event of a Change in Control (as defined in the 2018 Plan) during the
performance period, the right to receive any remaining cash payments and
Retention PSUs not previously paid or granted, respectively, shall be converted
to a time-vesting right over the remainder of the performance period, payable
and vesting, as applicable, in equal installments on a quarterly basis following
such Change in Control, subject to continued employment with the surviving
company in such Change in Control. In the event of a Qualifying CIC Termination
(as defined in the Participant's Severance Agreement) during such remaining
performance period, the vesting of such time-vesting right will accelerate in
full in accordance with the terms of the Participant's Severance Agreement.
Further, if during the performance period, a Participant is subject to a
Qualifying Non-CIC Termination (as defined in the Participant's Severance
Agreement), such Participant will be entitled to the next incremental cash
payment and Retention PSU grant not previously awarded, if any.
The foregoing description of the Retention Agreements do not purport to be
complete and are qualified in their entirety by reference to the full text of
the Retention Agreements, a form of which will be filed with the Securities and
Exchange Commission as an exhibit to the Company's Quarterly Report on
Form 10-Q for the third quarter ended October 2, 2022.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
10.1 Employment Offer Letter with Kurt Binder, dated August 23, 2022.
10.2 Arlo Technologies, Inc. 2018 Equity Incentive Plan, as amended.
99.1 Press Release, dated August 26, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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