UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                        Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

VIVINT SMART HOME, INC.

(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):

 

☒		No fee required.
☐		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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☐		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:

 

 

 

April 21, 2021

Dear Stockholder:

Please join us for Vivint Smart Home, Inc.’s Annual Meeting of Stockholders on Wednesday, June 2, 2021, at 9:00 a.m., Mountain Time. Due to the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our stockholders and associates, the Annual Meeting will be held in a virtual meeting format only and will be conducted via live audio webcast. You will be able to attend the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting via a live audio webcast by visiting www.virtualshareholdermeeting.com/VVNT2021.

We are also pleased to be using the Securities and Exchange Commission rule allowing companies to furnish proxy materials to stockholders over the Internet. We believe that the e-proxy process will expedite our stockholders’ receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our annual meeting.

In accordance with this rule, we sent a Notice of Internet Availability of Proxy Materials on or about April 21, 2021 to our stockholders of record as of the close of business on April 5, 2021. The notice contains instructions on how to access our Proxy Statement and Annual Report and vote online. If you would like to receive a printed copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting such materials included in the notice, as well as in the attached Proxy Statement.

Attached to this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business to be conducted at the meeting. We urge you to read the accompanying materials regarding the matters to be voted on at the meeting and to submit your voting instructions by proxy.

Whether or not you plan to attend the meeting, your vote is important to us. You may vote your shares by proxy on the Internet, by telephone or by completing, signing and promptly returning a proxy card, or you may vote via the internet at the Annual Meeting. We encourage you to vote by proxy on the Internet, by telephone or by proxy card even if you plan to attend the Annual Meeting. By doing so, you will ensure that your shares are represented and voted at the Annual Meeting.

Thank you for your continued support of Vivint Smart Home, Inc.

 

Sincerely,
David F. D’Alessandro		Todd R. Pedersen
Chairman of the Board of Directors		Chief Executive Officer

VIVINT SMART HOME, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

TIME		9:00 a.m., Mountain Time, on Wednesday, June 2, 2021
VIRTUAL LOCATION		You can attend the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/VVNT2021.   You will need to have your 16-Digit Control Number included on your proxy card or the instructions that accompanied your proxy materials in order to join the Annual Meeting.
ITEMS OF BUSINESS		1.  To elect the director nominee listed in the Proxy Statement.
		2.  To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021.
		3.  To approve, in a non-binding advisory vote, the compensation paid to our named executive officers.
		4.  To consider such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
RECORD DATE		You may vote at the Annual Meeting if you were a stockholder of record at the close of business on April 5, 2021. A list of the stockholders of record at the close of business on April 5, 2021 will be available electronically during the Annual Meeting at www.virtualshareholdermeeting.com/VVNT2021 when you enter your 16-Digit Control Number.
VOTING BY PROXY		To ensure your shares are voted, you may vote your shares by proxy over the Internet, by telephone or by mail. Voting procedures are described on the following page and on the proxy card.

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on Wednesday, June 2, 2021: The Notice of Internet Availability, this Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com. A list of the stockholders of record at the close of business on April 5, 2021 will also be available electronically during the Annual Meeting at www.virtualshareholdermeeting.com/VVNT2021.

PROXY VOTING METHODS

If at the close of business on April 5, 2021, you were a stockholder of record, you may vote your shares by proxy at the Annual Meeting. If you were a stockholder of record, you may vote your shares over the Internet, by telephone or by mail, or you may vote via the Internet at the Annual Meeting. You may also revoke your proxies at the times and in the manners described in the General Information section of this Proxy Statement. For shares held through a broker, bank or other nominee, you may submit voting instructions to your broker, bank or other nominee. Please refer to information from your broker, bank or other nominee on how to submit voting instructions.

If you are a stockholder of record, your Internet, telephone or mail vote must be received by 11:59 p.m., Eastern Time, on June 1, 2021 to be counted.

To vote by proxy if you are a stockholder of record:

BY INTERNET

 

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Go to the website www.proxyvote.com and follow the instructions, 24 hours a day, seven days a week.

 

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You will need the 16-digit number included on your proxy card to obtain your records and to create an electronic voting instruction form.

BY TELEPHONE

 

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From a touch-tone telephone, dial 1-800-690-6903 and follow the recorded instructions, 24 hours a day, seven days a week.

 

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You will need the 16-digit number included on your proxy card in order to vote by telephone.

BY MAIL

 

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Mark your selections on the proxy card if you have received a paper copy of the proxy.

 

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Date and sign your name exactly as it appears on your proxy card.

 

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Mail the proxy card in the enclosed postage-paid envelope provided to you.

YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.

TABLE OF CONTENTS

 

GENERAL INFORMATION			1
PROPOSAL NO. 1—ELECTION OF DIRECTORS			6
THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS			10
PROPOSAL NO. 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			20
REPORT OF THE AUDIT COMMITTEE			23
PROPOSAL NO. 3—NON-BINDING VOTE ON EXECUTIVE COMPENSATION			24
EXECUTIVE OFFICERS OF THE COMPANY			25
REPORT OF THE COMPENSATION COMMITTEE			27
EXECUTIVE COMPENSATION			28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			56
TRANSACTIONS WITH RELATED PERSONS			58
STOCKHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING			63
HOUSEHOLDING OF PROXY MATERIALS			64
OTHER BUSINESS			64

VIVINT SMART HOME, INC.

4900 North 300 West

Provo, Utah 84604

Telephone: (801) 377-9111

PROXY STATEMENT

Annual Meeting of Stockholders

June 2, 2021

GENERAL INFORMATION

Why am I being provided with these materials?

We sent a notice of Internet Availability of Proxy Materials (the “Notice”) on or about April 21, 2021 to our stockholders of record entitled to vote at the Annual Meeting. All stockholders have the ability to access the proxy materials online and to download printable versions of the proxy materials or to request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy can be found on the Notice. We have made these proxy materials available to you in connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”) of Vivint Smart Home, Inc. (“we,” “our,” “us” and the “Company”) of proxies to be voted at our Annual Meeting of Stockholders to be held on June 2, 2021 at 9:00 a.m. Mountain Time (the “Annual Meeting”), and at any postponements or adjournments of the Annual Meeting. This year’s Annual meeting will be a completely “virtual” meeting of stockholders. You are invited to attend the virtual Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/VVNT2021.

What am I voting on?

There are three proposals scheduled to be voted on at the Annual Meeting:

 

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Proposal No. 1: Election of the director nominees listed in this Proxy Statement.

 

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Proposal No. 2: Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021.

 

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Proposal No. 3: Approval, in a non-binding advisory vote, of the compensation paid to our named executive officers.

Who is entitled to vote?

Stockholders as of the close of business on April 5, 2021 (the “Record Date”) may vote at the Annual Meeting. As of that date, there were 208,809,513 shares of common stock outstanding. You have one vote for each share of common stock held by you as of the Record Date, including shares:

 

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Held directly in your name as “stockholder of record” (also referred to as “registered stockholder”); and

 

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Held for you in an account with a broker, bank or other nominee (shares held in “street name”)—Street name holders generally cannot vote their shares directly and instead must instruct the brokerage firm, bank or nominee how to vote their shares.

What constitutes a quorum?

The holders of record of a majority of the voting power of the issued and outstanding shares of common stock entitled to vote at the Annual Meeting must be present in person or represented by proxy to constitute a quorum

 

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for the Annual Meeting. Abstentions and “broker non-votes” that are present and entitled to vote are counted for purposes of determining a quorum.

What is a “broker non-vote”?

A broker non-vote occurs when shares held through a broker are not voted with respect to a proposal because (1) the broker has not received voting instructions from the stockholder who beneficially owns the shares and (2) the broker lacks the authority to vote the shares at its discretion. Under current New York Stock Exchange (“NYSE”) interpretations that govern broker non-votes, Proposal Nos. 1 and 3 are considered non-routine matters, and a broker will lack the authority to vote uninstructed shares at their discretion on such proposals. Proposal No. 2 is considered a routine matter, and a broker will be permitted to exercise its discretion to vote uninstructed shares on this proposal.

How many votes are required to approve each proposal?

Under our Amended and Restated Bylaws (the “Bylaws”), directors are elected by a plurality vote, which means that the director nominees with the greatest number of votes cast, even if less than a majority, will be elected. There is no cumulative voting.

For any other proposal being considered at the Annual Meeting, under our Bylaws, approval of the proposal requires a majority of the of the voting power of the shares of stock present in person or represented by proxy and entitled to vote on the proposal.

It is important to note that the proposals to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021 (Proposal No. 2) and to approve the compensation of our named executive officers (Proposal No. 3) are non-binding and advisory. While the ratification of Ernst & Young LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise, if our stockholders fail to ratify the selection, we will consider it notice to the Board and the Audit Committee to consider the selection of a different firm. While the vote on executive compensation is advisory in nature and non-binding, the Board will review the voting results and expects to take them into consideration when making future decisions regarding executive compensation.

How are votes counted?

With respect to the election of directors (Proposal No. 1), you may vote “FOR” or “WITHHOLD” with respect to each nominee. Votes that are “withheld” will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director because directors are elected by plurality voting. Broker non-votes will have no effect on the outcome of Proposal No. 1.

With respect to the ratification of our independent registered public accounting firm (Proposal No. 2) and the approval of the compensation of our named executive officers (Proposal No. 3), you may vote “FOR,” “AGAINST” or “ABSTAIN.”

For each of Proposal Nos. 2 and 3, abstentions will count as votes “AGAINST” the proposal. For Proposal No. 3, broker non-votes will have no effect on the outcome of the proposals.

If you sign and submit your proxy card without voting instructions, your shares will be voted in accordance with the recommendation of the Board with respect to the Proposals and in accordance with the discretion of the holders of the proxy with respect to any other matters that may be voted upon.

How does the Board recommend that I vote?

Our Board recommends that you vote your shares:

 

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“FOR” the director nominee set forth in this Proxy Statement.

 

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“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021.

 

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“FOR” the approval, on a non-binding, advisory basis, of the compensation paid to our named executive officers.

Who will count the vote?

Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes.

How do I vote my shares without attending the Annual Meeting?

If you are a stockholder of record, you may vote by authorizing a proxy to vote on your behalf at the Annual Meeting. Specifically, you may authorize a proxy:

 

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By Internet—If you have internet access, you may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your proxy card in order to vote by internet.

 

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By Telephone—If you have access to a touch-tone telephone, you may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your proxy card in order to vote by telephone.

 

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By Mail—If you have received a printed copy of the proxy materials by mail, you may vote by mail by indicating your vote, signing and dating the enclosed proxy card where indicated and by mailing or otherwise returning the card in the postage-paid envelope provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity.

Internet and telephone voting facilities will close at 11:59 p.m., Eastern Time, on June 1, 2021, for the voting of shares held by stockholders of record as of the Record Date. Proxy cards with respect to shares held of record must be received no later than June 1, 2021.

If you hold your shares in street name, you may submit voting instructions to your broker, bank or other nominee. In most instances, you will be able to do this over the internet, by telephone or by mail. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.

How do I attend and vote my shares at the Annual Meeting?

This year’s Annual Meeting will be a completely “virtual” meeting of stockholders. You may attend the Annual Meeting via the Internet. Any stockholder can attend the Annual Meeting live online at www.virtualshareholdermeeting.com/VVNT2021. If you virtually attend the Annual Meeting you can vote your shares electronically, and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/VVNT2021. A summary of the information you need to attend the Annual Meeting and vote via the Internet is provided below:

 

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Instructions on how to attend and participate via the internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/VVNT2021;

 

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Assistance with questions regarding how to attend and participate via the internet will be provided at www.virtualshareholdermeeting.com/VVNT2021 on the day of the Annual Meeting;

 

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Stockholders may vote and submit questions while attending the Annual Meeting via the internet; and

 

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You will need your 16-Digit Control Number that is included in your proxy card or the instructions that accompanied your proxy materials in order to enter the Annual Meeting and to vote during the Annual Meeting.

Whether you plan to attend the Annual Meeting or not, we encourage you to vote by proxy in advance over the internet, by telephone or mail so that your vote will be counted if you do not vote at the Annual Meeting.

Will I be able to participate in the online Annual Meeting on the same basis I would be able to participate in a live annual meeting?

In light of the public health concerns due to the COVID-19 outbreak and to support the health and well-being of our stockholders and associates, the Annual Meeting will be held in a virtual meeting format only and will be conducted via live audio webcast. The online meeting format for the Annual Meeting will enable full and equal participation by all our stockholders from any place in the world at little to no cost.

We designed the format of the online Annual Meeting to ensure that our stockholders who attend our Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting and to enhance stockholder access, participation and communication through online tools. We will take the following steps to ensure such an experience:

 

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providing stockholders with the ability to submit appropriate questions up to 15 minutes in advance of the meeting to ensure thoughtful responses from management and the Board;

 

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providing stockholders with the ability to submit appropriate questions real-time via the meeting website, limiting questions to one per stockholder unless time otherwise permits; and

 

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answering as many questions submitted in accordance with the meeting rules of conduct as possible in the time allotted for the meeting without discrimination.

What does it mean if I receive more than one Notice or proxy card on or about the same time?

It generally means you hold shares registered in more than one account. To ensure that all your shares are voted, please sign and return each proxy card or, if you vote by internet or telephone, vote once for each Notice or proxy card you receive.

May I change my vote or revoke my proxy?

Yes. Whether you have voted by internet, telephone or mail, if you are a stockholder of record, you may change your vote and revoke your proxy by:

 

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sending a written statement to that effect to our Secretary, provided such statement is received no later than June 1, 2021;

 

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voting by internet or telephone at a later time than your previous vote and before the closing of those voting facilities at 11:59 p.m., Eastern Time, on June 1, 2021;

 

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submitting a properly signed proxy card, which has a later date than your previous vote, and that is received no later than June 1, 2021; or

 

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attending the virtual Annual Meeting and voting via the internet.

If you hold shares in street name, please refer to information from your bank, broker or other nominee on how to revoke or submit new voting instructions.

Could other matters be decided at the Annual Meeting?

As of the date of this Proxy Statement, we do not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. If other matters are properly presented at the Annual Meeting for

 

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consideration and you are a stockholder of record and have submitted a proxy card, the persons named in your proxy card will have the discretion to vote on those matters for you.

Who will pay for the cost of this proxy solicitation?

We will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees of the Company (for no additional compensation) in person or by telephone, electronic transmission and facsimile transmission. Brokers and other nominees will be requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses.

 

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PROPOSAL NO. 1—ELECTION OF DIRECTORS

Our Amended and Restated Certificate of Incorporation provides for a classified board of directors divided into three classes. Peter F. Wallace constitutes a class with a term that expires at the Annual Meeting (the “Class II Director”); Bruce McEvoy, Paul S. Galant and Jay D. Pauley constitute a class with a term that expires at our annual meeting of stockholders in 2022 (the “Class III Directors”); and Todd R. Pedersen, David F. D’Alessandro and Joseph S. Tibbetts, Jr. constitute a class with a term that expires at our annual meeting of stockholders in 2023 (the “Class I Directors”).

Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board of Directors has considered and nominated the following nominee for a three-year term expiring in 2024: Peter F. Wallace. Action will be taken at the Annual Meeting for the election of this Class II nominee.

Unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) attached to this proxy statement intend to vote the proxies held by them for the election of Peter F. Wallace. If this nominee ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.

Nominee for Election to the Board of Directors in 2021

The following information describes the offices held, other business directorships and the term of service of our director nominee. Beneficial ownership of equity securities of the director nominee is shown under “Ownership of Securities” below.

Class II—Nominee for Term Expiring in 2024

 

Name		Age		Principal Occupation and Other Information
Peter F. Wallace		46		Mr. Wallace has served as a Director of Legacy Vivint Smart Home since November 2012 and of Vivint Smart Home since January 2020. Mr. Wallace is a Senior Managing Director and serves as co-head of U.S. Acquisitions for The Blackstone Group Inc.’s Private Equity Group. Since joining Blackstone in 1997, Mr. Wallace has led or been involved in Blackstone’s investments in Alight Solutions, AlliedBarton Security Services, Allied Waste, American Axle & Manufacturing, Centennial Communications, Centerplate (formerly Volume Services America), CommNet Cellular, GCA Services, LocusPoint Networks, Merlin Entertainments, Michaels Stores, New Skies Satellites, Outerstuff, Ltd., Pinnacle Foods/Birds Eye Foods, PSAV, PSSI, SeaWorld Parks & Entertainment (formerly Busch Entertainment Corporation), Service King, Servpro, Sirius Satellite Radio, Tradesmen International, Universal Orlando, Vivint, Vivint Solar, Inc. (“Vivint Solar”) and the Weather Channel. He currently serves on the Board of Directors of Alight Solutions, Merlin Entertainments, PSAV, PSSI, Service King, Servpro, Tradesmen International, and Vivint. Mr. Wallace has also formerly served as a director of Vivint Solar, including as chairman from March 2014 through October 2020. Mr. Wallace is a trustee of Children’s Aid Society, one of America’s oldest and largest children’s nonprofits. Mr. Wallace received a BA from Harvard College, where he graduated magna cum laude.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE

ELECTION THE DIRECTOR NOMINEE NAMED ABOVE.

 

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Continuing Members of the Board of Directors

The following information describes the offices held, other business directorships, the class and term of each director whose term continues beyond the Annual Meeting and who is not subject to election this year. Beneficial ownership of equity securities for these directors is also shown under “Ownership of Securities” below.

Class III—Directors Whose Term Expires in 2022

 

Name		Age		Principal Occupation and Other Information
Paul S. Galant		53		Mr. Galant has served as a Director of Legacy Vivint Smart Home since October 2015 and of Vivint Smart Home since January 2020. Mr. Galant currently serves as an Operating Partner of Churchill Capital and is President of MultiPlan, Inc. Prior to that, Mr. Galant served as Chief Executive Officer of Brightstar Corp., a leading mobile services company for managing devices and accessories and subsidiary of SoftBank Group Corp., and he has served as an Operating Partner of SoftBank. Prior to joining Brightstar, Mr. Galant was the Chief Executive Officer of VeriFone Systems, Inc., and a member of VeriFone’s board of directors, since October 2013. Prior to joining Verifone, Mr. Galant served as the CEO of Citigroup Inc.’s Enterprise Payments business since 2010. In this role, Mr. Galant oversaw the design, marketing and implementation of global business-to-consumer and consumer-to-business digital payments solutions. From 2009 to 2010, Mr. Galant served as CEO of Citi Cards, heading Citigroup’s North American and International Credit Cards business. From 2007 to 2009, Mr. Galant served as CEO of Citi Transaction Services, a division of Citi’s Institutional Clients Group. From 2002 to 2007, Mr. Galant was the Global Head of the Cash Management business, one of the largest processors of payments globally. Mr. Galant joined Citigroup, a multinational financial services corporation, in 2000. Prior to joining Citigroup, Mr. Galant held positions at Donaldson, Lufkin & Jenrette, Smith Barney, and Credit Suisse. Mr. Galant also brings broad financial industry experience from his time as chairman of the NY Federal Reserve Bank Payments Risk Committee and chairman of The Clearing House Secure Digital Payments LLC. Mr. Galant was on the board of directors of Conduent Incorporated, a leading provider of diversified business services with leading capabilities in transaction processing, automation and analytics. Mr. Galant holds a B.S. in Economics from Cornell University where he graduated a Phillip Merrill Scholar.
Bruce McEvoy		43		Mr. McEvoy has served as a Director of Legacy Vivint Smart Home since November 2012 and of Vivint Smart Home since January 2020. Mr. McEvoy is a Senior Managing Director at The Blackstone Group Inc. in the Private Equity Group. Before joining The Blackstone Group Inc. in 2006, Mr. McEvoy worked at General Atlantic from 2002 to 2004, and was a consultant at McKinsey & Company from 1999 to 2002. Mr. McEvoy currently serves on the board of directors of the Center for Autism and Related Disorders, MB Aerospace, RGIS Inventory Specialists, an TeamHealth. Mr. McEvoy was formerly a director of Performance Food Group Company, Catalent, Inc., GCA Services Group, Inc., SeaWorld Entertainment, Inc., Vistar Corporation, and Vivint Solar. Mr. McEvoy holds an A.B. in History from Princeton University and an MBA from the Harvard Business School.

 

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Name		Age		Principal Occupation and Other Information
Jay D. Pauley		43		Mr. Pauley has served as a Director of Legacy Vivint Smart Home since October 2015 and of Vivint Smart Home since January 2020. Mr. Pauley is a Managing Director at Summit Partners, which he joined in 2010. Prior to joining Summit Partners, Mr. Pauley was Vice President at GTCR, a private equity firm, and an associate at Apax Partners, a private equity and venture capital firm. Before that, he worked for GE Capital. Mr. Pauley currently serves on the boards of directors of numerous private companies and has formerly served as a director of Vivint Solar. Mr. Pauley holds a B.S. from Ohio State University and an MBA from the Wharton School at the University of Pennsylvania.

Class I— Directors Whose Term Expires in 2023

 

Name		Age		Principal Occupation and Other Information
Todd R. Pedersen		52		Mr. Pedersen founded Legacy Vivint Smart Home in 1999 and served as Legacy Vivint Smart Home’s President, Chief Executive Officer and Director. In February 2013, Mr. Pedersen relinquished his title as Legacy Vivint Smart Home’s President and remained its Chief Executive Officer and Director. He has served as our Chief Executive Officer and Director since January 2020. In 2011, Mr. Pedersen founded Vivint Solar and served as its Chief Executive Officer from August 2011 through January 2013. Mr. Pedersen was formerly a director of Vivint Solar. Mr. Pedersen was named the Ernst & Young Entrepreneur of the Year in 2010 in the services category for the Utah Region. Mr. Pedersen attended Brigham Young University.
David F. D’Alessandro		70		Mr. D’Alessandro has served as a Director of Legacy Vivint Smart Home’s since July 2013 and as a Director and the Chairman of our Board of Directors since January 2020. Mr. D’Alessandro serves on the boards of directors of several private companies. From 2010 to September 2017, Mr. D’Alessandro also served as chairman of the board of directors of SeaWorld Entertainment, Inc. and has formerly served as a director of Vivint Solar. He served as chairman, president and chief executive officer of John Hancock Financial Services, Inc. from 2000 to 2004, having served as president and chief operating officer of the same entity from 1996 to 2000, and guided it through a merger with ManuLife Financial Corporation in 2004. Mr. D’Alessandro served as president and chief operating officer of ManuLife in 2004. He is a former partner of the Boston Red Sox. A graduate of Syracuse University, he holds honorary doctorates from three colleges and served as vice chairman and a trustee of Boston University.

 

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Name		Age		Principal Occupation and Other Information
Joseph S. Tibbetts, Jr.		68		Mr. Tibbetts has served as a Director of Legacy Vivint Smart Home since October 2015 and of Vivint Smart Home since January 2020. From March 2017 to March 2018, Mr. Tibbetts served as the interim chief financial officer of Acquia Corporation, a private company that is a leading provider of cloud-based, digital experience management solutions. Prior to that Mr. Tibbetts served as the senior vice president and chief financial officer of Publicis Sapient, part of Publicis Group SA, from February 2015, when Publicis acquired Sapient Corporation, to September 2015. Prior to that Mr. Tibbetts served as senior vice president and global chief financial officer of Sapient Corporation from October 2006 to February 2015. He began serving as Sapient Corporation’s treasurer in December 2012 and was reappointed as Sapient Corporation’s chief accounting officer in June 2013, a role he previously held from 2009 to 2012. In addition to being Sapient Corporation’s chief financial officer, Mr. Tibbetts also served as Sapient Corporation’s managing director- SapientNitro Asia Pacific. Prior to joining Sapient Corporation, Mr. Tibbetts was the chief financial officer of Novell, Inc. from February 2003 to June 2006 and, prior to that, he held a variety of senior financial management positions at Charles River Ventures, Lightbridge, Inc., and SeaChange International, Inc. Mr. Tibbetts was also formerly a partner with Price Waterhouse LLP. Mr. Tibbetts formerly served as a director of Vivint Solar. Mr. Tibbetts holds a B.S. in business administration from the University of New Hampshire.

 

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THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS

Our Board manages or directs the business and affairs of the Company, as provided by Delaware law, and conducts its business through meetings of the Board and three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.

Our Board evaluates the Company’s corporate governance policies on an ongoing basis with a view towards maintaining the best corporate governance practices in the context of the Company’s current business environment and aligning our governance practices closely with the interests of our stockholders. Our Board and management value the perspective of our stockholders and encourage stockholders to communicate with the Board as described under “—Communications with the Board” below.

The Merger

On January 17, 2020, the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Maiden Merger Sub, Inc., a subsidiary of the Company (“Merger Sub”), and Legacy Vivint Smart Home, Inc. (“Legacy Vivint Smart Home”), as amended by Amendment No. 1 to the Agreement and Plan of Merger (the “Amendment” and as amended, the “Merger Agreement”), dated as of December 18, 2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home surviving as the surviving company (the “Merger”). Effective as of immediately prior to the effective time of the Merger (the “Effective Time”), the size of our Board was increased from five members to ten members and Messrs. Pedersen, Dunn, D’Alessandro, Galant, McEvoy, Pauley, Tibbetts and Wallace were appointed to serve as directors of the Company. Eugene I. Davis, Tyler S. Kolarik, Andrew A. McKnight and Joshua A. Pack resigned as directors of the Company. Alex J. Dunn resigned as a director of the Company effective as of March 2, 2020, and David M. Maura resigned as a director of the Company on March 26, 2020. The size of our Board was subsequently reduced to seven members. In connection with the Merger, the name of the Company was changed from “Mosaic Acquisition Corp.” to “Vivint Smart Home, Inc.” All references herein to “Mosaic” are to the Company prior to the Merger.

Controlled Company Exemption

Certain investment funds managed by affiliates of The Blackstone Group Inc. (such investment funds, collectively, “Blackstone”) beneficially own a majority of the voting power of all outstanding shares of our common stock. As a result, we are a “controlled company” within the meaning of the NYSE’s corporate governance standards. Under these corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements that (1) a majority of our Board consist of independent directors, (2) our Board has a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (3) our Board have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. We may choose to utilize certain of these exemptions. If we cease to be a “controlled company” and our shares continue to be listed on the NYSE, we will be required to comply with these standards and, depending on the Board’s independence determination with respect to our then-current directors, we may be required to add additional directors to our Board in order to achieve such compliance within the applicable transition periods.

 

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Director Independence and Independence Determinations

Under our Corporate Governance Guidelines and NYSE rules, a director is not independent unless our Board of Directors affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries.

Our Corporate Governance Guidelines define independence in accordance with the independence definition in the current NYSE corporate governance rules for listed companies. Our Corporate Governance Guidelines require our Board of Directors to review the independence of all directors at least annually.

In the event a director has a relationship with the Company that is relevant to his or her independence and is not addressed by the objective tests set forth in the NYSE independence definition, our Board of Directors will determine, considering all relevant facts and circumstances, whether such relationship is material.

Our Board of Directors has affirmatively determined that each of Messrs. D’Alessandro, Galant, Pauley, McEvoy, Tibbetts and Wallace is independent under the guidelines for director independence set forth in the Corporate Governance Guidelines and under all applicable NYSE guidelines, including with respect to committee membership. Our Board also has determined that each of Messrs. Galant, Pauley and Tibbetts is “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that each of Messrs. D’Alessandro, McEvoy and Wallace is “independent” for purposes of Section 10C(a)(3) of the Exchange Act. In making its independence determinations, our Board of Directors considered and reviewed all information known to it (including information identified through annual directors’ questionnaires).

Director Nomination Process

The Nominating and Corporate Governance Committee weighs the characteristics, experience, independence and skills of potential candidates for election to the Board and recommends nominees for director to the Board for election. In considering candidates for the Board, the Nominating and Corporate Governance Committee also assesses the size, composition and combined expertise of the Board. As the application of these factors involves the exercise of judgment, the Nominating and Corporate Governance Committee does not have a standard set of fixed qualifications that is applicable to all director candidates, although the Nominating and Corporate Governance Committee does at a minimum assess each candidate’s strength of character, judgment, industry knowledge or experience, his or her ability to work collegially with the other members of the Board and his or her ability to satisfy any applicable legal requirements or listing standards. In addition, although the Board considers diversity of viewpoints, background and experiences, the Board does not have a formal diversity policy. In identifying prospective director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources, including third party recommendations. The Nominating and Corporate Governance Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. When considering director candidates, the Nominating and Corporate Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.

In recommending that, or determining whether, members of the Board should stand for re-election, the Nominating and Corporate Governance Committee also may assess the contributions of incumbent directors in the context of the Board evaluation process and other perceived needs of the Board.

In addition, the Stockholders Agreement (as defined and described further under “Transactions with Related Persons—Stockholders Agreement”) provides that Blackstone has the right to nominate to our Board of Directors a number of designees approximately equal to the percentage of our Class A common stock entitled to vote

 

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generally in the election of directors as collectively beneficially owned by 313 Acquisition LLC (“313 Acquisition”), Blackstone and their respective affiliates (collectively, the “313 Acquisition Entities”). In addition, Fortress Investment Group LLC (“Fortress”) has the right to nominate to our Board of Directors one director so long as Fortress beneficially owns at least 50% of the shares of our Class A common stock it owned immediately following the consummation of the Merger; provided that the Fortress designee must be (A) Andrew McKnight, (B) Max Saffian or (C) another senior employee or principal of Fortress who is acceptable to a majority of the members of the Board of Directors. Under the Stockholders Agreement, Summit Partners, L.P. (“Summit”) has the right to nominate one director to our Board of Directors so long as the Summit Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of our Class A common stock they owned immediately following the consummation of the Merger. Currently, we have two directors on our Board who are current employees of Blackstone and who were recommended by Blackstone as director nominees pursuant to the Stockholders Agreement (Messrs. McEvoy and Wallace), and we have one director on our Board who was designated by Summit (Mr. Pauley). The provisions of the Stockholders’ Agreement regarding the nomination of directors will remain in effect until Blackstone is no longer entitled to nominate a director to our Board of Directors, unless Blackstone requests that they terminate at an earlier date.

When considering whether the nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed in each of the board member’s biographical information set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, the members of our Board of Directors considered the following important characteristics:

 

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Mr. Pedersen’s extensive knowledge of our industry and significant experience, as well as his insights as the original founder of our firm. Mr. Pedersen has played a critical role in our firm’s successful growth since its founding and has developed a unique and unparalleled understanding of our business.

 

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Mr. D’Alessandro’s extensive business and leadership experience, including as Chairman, President and Chief Executive Officer of John Hancock Financial Services, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the boards of directors of public companies.

 

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Mr. Galant’s significant business and leadership experience, including as the Chief Executive Officer of Citigroup’s Enterprise Payments business, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the board of directors of VeriFone Systems.

 

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Mr. McEvoy’s significant financial and investment experience, including as a Senior Managing Director in the Private Equity Group at Blackstone, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the boards of directors of public companies.

 

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Mr. Pauley’s significant financial expertise and business experience, including as a Managing Director at Summit Partners, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the boards of directors of public companies.

 

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Mr. Tibbetts’ significant financial expertise and business experience, including as Senior Vice President and Chief Financial Officer of Sapient Corporation and 20 years at Price Waterhouse LLP (now PricewaterhouseCoopers LLP) including his experience as an Audit Partner and National Director of the firm’s Software Services Group, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the boards of directors of public companies.

 

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Mr. Wallace’s significant financial expertise and business experience, including as a Senior Managing Director in the Private Equity Group at Blackstone, as well as his familiarity with board responsibilities, oversight and control resulting from serving on the boards of directors of public companies.

 

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This process resulted in the Board’s nomination of the one incumbent Class II director named in this Proxy Statement and proposed for election by you at the upcoming Annual Meeting.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders on the same basis as director candidates recommended by current directors, management or other sources. Any recommendation submitted to the Secretary of the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the U.S. Securities and Exchange Commission (the “SEC”) to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected. Stockholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Secretary, Vivint Smart Home, Inc., 4931 North 300 West, Provo, Utah 84604. All recommendations for nomination received by the Secretary that satisfy the requirements in our Bylaws relating to director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent and information requirements set forth in our Bylaws. These requirements are also described under “Stockholder Proposals for the 2021 Annual Meeting.”

Board Structure

Our Board of Directors is led by Mr. D’Alessandro, our Chairperson. The Chief Executive Officer position is separate from the Chairperson position. We believe that the separation of the Chairperson and Chief Executive Officer positions is appropriate corporate governance for us at this time. Accordingly, Mr. D’Alessandro serves as Chairperson, while Mr. Pedersen serves as our Chief Executive Officer. Our Board of Directors believes this structure best encourages the free and open dialogue of competing views and provides for strong checks and balances. Additionally, Mr. D’Alessandro’s attention to Board of Directors and committee matters allows Mr. Pedersen to focus more specifically on overseeing the Company’s day-to-day operations, as well as strategic opportunities and planning.

Executive Sessions

Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition, at least once a year, the independent directors meet in a private session that excludes management and any non-independent directors. Our Chairperson, Mr. D’Alessandro, presides at the executive sessions.

Communications with the Board

As described in our Corporate Governance Guidelines, stockholders or other interested parties who would like to communicate with, or otherwise make their concerns known directly to the chairperson of any of the Audit, Nominating and Corporate Governance and Compensation Committees, any then-serving lead director or the director designated by the non-management or independent directors as the presiding director, or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the Company’s Chief Legal Officer, 4931 North 300 West, Provo UT 84604, who will forward such communications to the appropriate party.

 

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Board Committees and Meetings

The following table summarizes the membership of each of the Board’s Committees, and the number of meetings held by each committee during the year ended December 31, 2020.

 

		Audit Committee		Compensation Committee		Nominating and Corporate Governance Committee
David F. D’Alessandro				Chair		X
Bruce McEvoy				X
Jay D. Pauley		X
Joseph S. Tibbetts, Jr.		Chair
Paul S. Galant		X				X
Peter F. Wallace				X		Chair
Number of meetings held in 2020:		14		5		1

All directors are expected to attend all meetings of the Board, meetings of the committees of which they are members and the annual meeting of stockholders. During the year ended December 31, 2020, the Board held 14 meetings. In 2020, all of our directors attended at least 75% of the meetings of the Board and committees during the time in which he served as a member of the Board or such committee. In 2020, all of the members of our Board attended the annual meeting of stockholders.

Audit Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Audit Committee as follows: Joseph S. Tibbetts, Jr., chair; Jay D. Pauley, member; and Paul S. Galant, member.

Each member of the Audit Committee qualifies as an independent director under the NYSE corporate governance standards and the independence requirements of Rule 10A-3 of the Exchange Act. Each member of the Audit Committee meets the financial literacy requirements of the NYSE and our Board has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.

The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found at www.vivint.com under Investor Relations: Governance: Governance Documents: Audit Committee Charter, and include oversight of the following:

 

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the Company’s accounting and financial reporting processes and internal control over financial reporting, as well as the audit and integrity of the Company’s financial statements;

 

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the independent registered public accounting firm’s qualifications, performance and independence;

 

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the performance of our internal audit function;

 

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the Company’s compliance with applicable law (including U.S. federal securities laws and other legal and regulatory requirements); and

 

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risk assessment and risk management, including, but not limited to, the Company’s IT security program.

The Audit Committee also prepares the report of the committee required by the rules and regulations of the SEC to be included in our annual proxy statement.

With respect to our reporting and disclosure matters, the responsibilities and duties of the Audit Committee include reviewing and discussing with management and the independent registered public accounting firm our

 

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annual audited financial statements and quarterly financial statements prior to inclusion in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or other public filings in accordance with applicable rules and regulations of the SEC.

The charter of the Audit Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition, the Audit Committee has the authority under its charter to engage independent counsel and other advisors as it deems necessary or advisable.

Compensation Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Compensation Committee as follows: David F. D’Alessandro, chair; Bruce McEvoy, member; and Peter F. Wallace, member. Each of Messrs. D’Alessandro, McEvoy and Wallace has been determined to be “independent” as defined by our Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and compensation committees in particular.

The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found at www.vivint.com under Investor Relations: Governance: Governance Documents: Compensation Committee Charter, and include the following:

 

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oversight of the Company’s compensation policies, plans and benefit programs, and overall compensation philosophy;

 

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oversight of the compensation of the Company’s Chief Executive Officer and other executive officers;

 

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approving and evaluating the executive officer compensation plans, policies and programs of the Company; and

 

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administering the Company’s equity compensation plans.

With respect to our reporting and disclosure matters, the responsibilities and duties of the Compensation Committee include overseeing the preparation of the Compensation Discussion and Analysis for inclusion in our annual proxy statement and Annual Report on Form 10-K in accordance with applicable rules and regulations of the SEC.

The charter of the Compensation Committee permits the committee to delegate any or all of its authority to one or more subcommittees and to delegate to one or more of our officers the authority to make awards to team members other than any Section 16 officer under our incentive compensation or other equity-based plan, subject to compliance with the plan and the laws of our state of jurisdiction. In addition, the Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable.

See “Executive Compensation—Compensation Discussion and Analysis—Compensation Determination Process” for a description of our process for determining compensation, and “Executive Compensation—Compensation Discussion and Analysis—Role of Compensation Consultant” for a description of the role of our independent compensation consultant.

Nominating and Corporate Governance Committee

In connection with the Merger, on January 17, 2020, our Board reconstituted the Nominating and Corporate Governance Committee as follows: Peter F. Wallace, chair; David F. D’Alessandro, member; and Paul S. Galant, member. Each of Messrs. Wallace, D’Alessandro and Galant has been determined to be “independent” as defined by our Corporate Governance Guidelines and the NYSE listing standards.

 

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The duties and responsibilities of the Nominating and Corporate Governance Committee are set forth in its charter, which may be found at www.vivint.com under Investor Relations: Governance: Governance Documents: Nominating and Corporate Governance Committee Charter, and include the following:

 

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identifying individuals qualified to become new board of directors members, consistent with criteria approved by the board of directors;

 

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reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the Board select, the director nominees for the next annual meeting of stockholders;

 

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recommending members of the Board to serve on committees of the Board and evaluating the functions and performance of such committees;

 

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reviewing and recommending to the Board corporate governance principles applicable to us;

 

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overseeing the evaluation of the Board and management;

 

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overseeing and approving the management continuity planning process; and

 

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shaping the corporate governance of the Company.

The charter of the Nominating and Corporate Governance Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition, the Nominating and Corporate Governance Committee has the authority under its charter to retain outside counsel or other experts as it deems necessary or advisable.

Committee Charters and Corporate Governance Guidelines

Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which describe our Board of Directors’ views and policies on a wide range of governance topics. These Corporate Governance Guidelines are reviewed from time to time by our Nominating and Corporate Governance Committee and, to the extent deemed appropriate in light of emerging practices, revised accordingly, upon recommendation to and approval by our Board of Directors.

Our Corporate Governance Guidelines, Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee charters, and other corporate governance information are available on our website at www.vivint.com under Investor Relations: Governance: Governance Documents. Any stockholder also may request them in print, without charge, by contacting the Secretary of Vivint Smart Home, Inc., 4931 North 300 West, Provo UT 84604.

Code of Business Conduct and Ethics

We maintain a Code of Business Conduct and Ethics that is applicable to all of our directors, officers and employees, including our Chairperson, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and other senior officers. The Code of Business Conduct and Ethics sets forth our policies and expectations on a number of topics, including conflicts of interest, corporate opportunities, confidentiality, compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing. This Code of Business Conduct and Ethics also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. The Code of Business Conduct and Ethics may be found on our website at www.vivint.com under Investor Relations: Governance: Governance Documents: Code of Business Conduct and Ethics.

We will disclose within four business days any substantive changes in or waivers of the Code of Business Conduct and Ethics granted to our principal executive officer, principal financial officer, principal accounting

 

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officer or controller, or persons performing similar functions, by posting such information on our website as set forth above rather than by filing a Current Report on Form 8-K. In the case of a waiver for an executive officer or a director, the required disclosure also will be made available on our website within four business days of the date of such waiver.

Oversight of Risk Management

The Board has extensive involvement in the oversight of risk management related to us and our business. The Board accomplishes this oversight both directly and through its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, each of which assists the Board in overseeing a part of our overall risk management and regularly reports to the Board. The Audit Committee represents the Board by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls, our compliance with legal and regulatory requirements and our enterprise risk management program, including our IT security program. Through its regular meetings with management, including the finance, legal and internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the Board all areas of risk and the appropriate mitigating factors. The Compensation Committee considers, and discusses with management, management’s assessment of certain risks, including whether any risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us. The Nominating and Corporate Governance Committee oversees and evaluates programs and risks associated with Board organization, membership and structure, succession planning and corporate governance. In addition, our Board receives periodic detailed operating performance reviews from management.

Anti-Hedging and Pledging Policies

The Company’s insider trading policy prohibits directors, officers, employees and agents (such as consultants and independent contractors) of the Company from pledging Company securities as collateral for loans and from engaging in transactions in publicly traded options, such as puts and calls, and other derivative securities with respect to the Company’s securities. This prohibition extends to any hedging or similar transactions designed to decrease the risks associated with holding Company securities.

Compensation Committee Interlocks and Insider Participation

During 2020, our Compensation Committee was comprised of David F. D’Alessandro, Bruce McEvoy and Peter F. Wallace. No member of the Compensation Committee was at any time during fiscal year 2020, or at any other time, one of our employees. None of our executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of our Compensation Committee.

Compensation of Directors in 2020

On January 17, 2020, our Board of Directors approved a non-employee director compensation program, effective immediately, under which directors (other than directors employed by Blackstone, Fortress and Summit) was entitled to receive (i) annual compensation consisting of $150,000 in cash and $120,000 in RSUs; and (ii) reimbursement, in accordance with our policy or practice, for all reasonable out-of-pocket expenses associated with attendance at board and committee meetings. The chairpersons of the Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee were also entitled to receive an additional $10,000, $20,000 and $10,000, respectively, in cash. Annual RSU grants to non-employee directors are made immediately following each annual meeting of stockholders and vest on the date of the next annual meeting of stockholders following the grant date. On June 9, 2020, Messrs. D’Alessandro, Galant and Tibbetts each were granted 8,385 RSUs, which will vest in full on June 2, 2021.

 

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Equity Awarded to our Directors in Prior Years

In addition, in 2013, an affiliate of Mr. D’Alessandro was granted 500,000 Class B Units (“Class B Units”) in 313 Acquisition, Legacy Vivint Smart Home’s parent, which are similar to the Class B Units granted to our NEOs as described below under “Executive Compensation—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—Treatment of Equity Incentive Awards Granted in Previous Years in Connection with the Merger”. The Class B Units were initially divided into a time-vesting portion (one-third of the Class B Units granted), a 2.0x exit-vesting portion (one-third of the Class B Units granted), and a 3.0x exit-vesting portion (one-third of the Class B Units granted). The vesting terms of these units, which have a “vesting reference date” of July 18, 2013, are substantially similar to the Class B Units previously granted to our NEOs and are described under “Executive Compensation—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—313 Acquisition LLC Equity Awards Granted in Previous Years”. Subsequently, in March 2019, 313 Acquisition entered into an agreement with the affiliate of Mr. D’Alessandro which provided that the 2.0x exit-vesting portion of the Class B Units and 3.0x exit portion of the Class B Units would be further modified such that (i) the 2.0x exit-vesting portion will instead vest on the earlier to occur of (x) March 4, 2020, and (y) a change of control and (ii) the 3.0x exit-vesting portion will instead vest on the earlier to occur of (x) March 4, 2021, and (y) a change of control, subject, in each case, to Mr. D’Alessandro continuing to serve on Legacy Vivint Smart Home’s board of directors as of such date.

On September 20, 2016, each of Messrs. Galant and Tibbetts was granted an award of stock appreciation rights (“SARs”) pursuant to the Vivint Group Plan (as defined in “Executive Compensation—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—Vivint Group, Inc. Stock Appreciation Rights Granted in Previous Years”) covering 84,034 shares of common stock of Vivint Group, Inc. (“Vivint Group”) with a strike price of $1.19 per share, which became vested and exercisable on July 1, 2017. In connection with the spin-off of Vivint Wireless, Inc. from Legacy Vivint Smart Home in 2019, the strike price of the SARs held by Messrs. Galant and Tibbetts was reduced to $1.1637. Upon exercise of a vested SAR, Vivint Group was to pay the holder an amount in cash, shares of common stock of Vivint Group, shares or units of capital stock of 313 Acquisition or one of 313 Acquisition’s majority-owned subsidiaries that beneficially owns, directly or indirectly, a majority of the voting power of Vivint Group’s capital stock valued at fair market value, or any combination thereof equal to the number of shares subject to such vested SAR which are being exercised, multiplied by the excess of the fair market value of one share over the applicable strike price, and reduced by the aggregate amount of all applicable income and employment taxes required to be withheld.

In addition, on June 8, 2018, each of Messrs. Galant and Tibbetts was granted an award of 180,000 restricted stock units (“RSUs”) and on March 4, 2019, an affiliate of Mr. D’Alessandro was granted an award of 236,111 RSUs, in each case covering an equivalent number of shares of Vivint Group common stock and pursuant to the Vivint Group Plan. The RSUs granted to Messrs. Galant and Tibbetts become vested on each of the first three anniversaries of June 8, 2018. The RSUs granted to the affiliate of Mr. D’Alessandro become vested on each of the first three anniversaries of September 20, 2018. Vested RSUs will be settled as soon as reasonably practicable (and, in any event, within two and one-half months) following the earliest to occur of (x) the termination of a director’s service other than (1) a removal of such director for Cause (as defined in the Vivint Group Plan) or (2) a resignation of such director at a time when grounds exist for a removal for Cause, (y) a Change of Control (as defined in the Vivint Group Plan) and (z) the fifth anniversary of the grant date. Upon settlement of a vested RSU, Vivint Group was to pay the holder an amount equal to one share of common stock of Vivint Group in cash, shares of common stock of Vivint Group, shares or units of capital stock of 313 Acquisition or one of 313 Acquisition’s majority-owned subsidiaries that beneficially owns, directly or indirectly, a majority of the voting power of Vivint Group’s capital stock valued at fair market value or any combination thereof. Prior to an initial public offering, if a director’s service was terminated due to death or disability, such director had the right, subject to specified limitations and for a specified period following the termination date, to cause the Company to purchase on one occasion all, but not less than all, of such director’s vested RSUs, in either case, at the fair market value of such units. In addition, if the director’s service is terminated for any reason other than cause or,

 

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with respect to the RSUs granted to Messrs. Galant and Tibbetts, a restrictive covenant violation, if the director terminates his service voluntarily when grounds do not exist for a termination with cause or, with respect to Messrs. Galant and Tibbetts, if the director engages in any conduct that would be a violation of a restrictive covenant set forth in the applicable award agreement but for the fact that the conduct occurred outside the relevant periods (any such conduct a “Competitive Activity”), then the Company has the right, for a specified period following the termination of such director’s service, to purchase all of such director’s vested RSUs at fair market value.

In connection with the merger, the Class B Units, SARs and RSUs held by Messrs. D’Alessandro, Galant and Tibbetts were treated as described under “Executive Compensation—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—Treatment of Equity Incentive Awards Granted in Previous Years in Connection with the Merger”.

The following table provides information on the compensation of our non-management directors in fiscal 2020.

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($) (1)				Total ($)
David F. D’Alessandro			157,083				119,989				277,072
Paul S. Galant			150,000				119,989				269,989
Bruce McEvoy(2)			—				—				—
Jay D. Pauley(2)			—				—				—
Joseph S. Tibbetts, Jr.			164,167				119,989				284,156
Peter F. Wallace(2)			—				—				—
David M. Maura(3)			—				—				—

 

(1)

The amounts reported in this column reflect the grant date fair value of the RSUs granted to our directors in fiscal 2020, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“Topic 718”). As of December 31, 2020, Mr. D’Alessandro held RSUs as follows: 8,385 RSUs that vest in-full on June 2, 2021. As of December 31, 2020, Mr. D’Alessandro held restricted stock as follows: 13,596 Restricted Stock that vest in-full on March 4, 2021. As of December 31, 2020, each of Messrs. Galant and Tibbetts held 7,261 stock appreciation rights covering shares of our Class A common stock of Vivint Group, which are vested and exercisable. As of December 31, 2020, Messrs. Galant and Tibbetts each held RSUs as follows: 8,385 RSUs that vest in-full on June 2, 2021.

(2)	Employees of Blackstone and Summit did not receive any compensation from us for their service on our Board of Directors in 2020.

(3)	Mr. Maura resigned as a director of the Company on March 26, 2020.

 

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PROPOSAL NO. 2—RATIFICATION OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Ernst & Young LLP to serve as our independent registered public accounting firm for 2021.

Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Ernst & Young LLP to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm. If our stockholders fail to ratify the selection, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.

A representative of Ernst & Young LLP is expected to be present at the Annual Meeting. The representative will also have the opportunity to make a statement if he or she desires to do so, and the representative is expected to be available to respond to appropriate questions.

The shares represented by your proxy will be voted “FOR” the ratification of the selection of Ernst & Young LLP unless you specify otherwise.

Change of the Company’s Independent Registered Public Accounting Firm

In a Current Report on Form 8-K filed on January 24, 2020 (as amended on January 27, 2020 and March 13, 2020, the “Form 8-K”), the Company disclosed that on January 17, 2020, the Audit Committee of the Board approved the engagement of Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2020. EY served as the independent registered public accounting firm of Legacy Vivint Smart Home prior to the Merger. Accordingly, WithumSmith+Brown, PC (“Withum”), the Company’s independent registered public accounting firm prior to the Merger, was informed that it would be replaced by EY as the Company’s independent registered public accounting firm following completion of the Company’s audit for the year ended December 31, 2019, which consisted only of the accounts of the pre-merger special purpose acquisition company.

In the Form 8-K, the Company disclosed that Withum’s report on the Company’s financial statements as of December 31, 2018 and 2017 and the related statements of operations, changes in shareholders’ equity and cash flows for the years ended December 31, 2018 and the period from July 26, 2017 (inception) through December 31, 2017 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

In addition, in the Company’s definitive proxy statement on Schedule 14A filed on April 27, 2020 (the “2020 Proxy”), the Company disclosed that Withum’s report on the Company’s financial statements as of December 31, 2019 and the related statements of operations, changes in shareholders’ equity and cash flows for the year ended December 31, 2019 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

In the Form 8-K, the Company disclosed that during the period from July 26, 2017 (inception) through December 31, 2018 and the subsequent period through January 24, 2020, there were no: (i) disagreements with Withum on any matter of accounting principles or practices, financial statement disclosures or audited scope or procedures, which disagreements if not resolved to Withum’s satisfaction would have caused Withum to make reference to the subject matter of the disagreement in connection with its report or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

 

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In addition, in the 2020 Proxy, the Company disclosed that during the subsequent period through March 13, 2020, the date of Withum’s opinion with respect to the balance sheets of the Company as of December 31, 2019 and 2018, and the related statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2019 and 2018, and the related notes, there were no: (i) disagreements with Withum on any matter of accounting principles or practices, financial statement disclosures or audited scope or procedures, which disagreements if not resolved to Withum’s satisfaction would have caused Withum to make reference to the subject matter of the disagreement in connection with its report or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

In the Form 8-K, the Company disclosed that during the year period from July 26, 2017 (inception) to December 31, 2017, the year ended December 31, 2018 and the interim period through January 24, 2020, the Company did not consult EY with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by EY that EY concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.

In addition, in the 2020 Proxy, the Company disclosed that during the subsequent period through March 13, 2020, the Company did not consult EY with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by EY that EY concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.

The Company provided Withum with a copy of the disclosures made by the Company in the Form 8-K and the 2020 Proxy and requested that Withum furnish the Company with a letter addressed to the SEC stating whether it agreed with the statements made by the Company in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it did not agree. A letter from Withum with respect to the disclosures made by the Company in the Form 8-K was filed as Exhibit 16.1 to the Form 8-K. A letter from Withum with respect to the disclosures made by the Company in the 2020 Proxy was filed as Exhibit 16.1 to the 2020 Proxy.

Audit and Non-Audit Fees

In connection with the audit of the Company’s 2020 financial statements, we entered into an agreement with EY which set forth the terms by which EY would perform audit services for the Company. In connection with the audit of the Company’s 2019 financial statements, we entered into an agreement with Withum which set forth the terms by which Withum would perform audit services for the Company.

 

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The following table presents fees for professional services rendered by EY for the audits of our annual financial statements for the year ended December 31, 2020 and by Withum for the audit of our annual financial statements for the year ended December 31, 2019:

 

		2020				2019
Audit fees(1)		$	2,583,026			$	87,870
Audit-related fees(2)			—				—
Tax fees(3)			14,602				3,500
All other fees(4)			—				—
Total:		$	2,597,628			$	91,370

 

(1)

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and services that are normally provided by the independent registered public accounting firm in connection with regulatory filings. The aggregated fees billed by EY in 2020 were for professional services rendered for the audit of our annual financial statements included in our 2020 Form 10-K, review of the quarterly financial information included in our Exchange Act filings and review of the financial information in connection with other regulatory filings. The aggregate fees billed by Withum in 2019 were for professional services rendered for the audit of our annual financial statements included in our 2019 Form 10-K, review of the quarterly financial information included in our Exchange Act filings and review of the financial information included in our Form S-4 related to our pro forma.

(2)

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. We did not pay EY or Withum for consultations concerning financial accounting and reporting standards for the years ended December 31, 2020 and 2019.

(3)	Tax fees consist of fees billed for professional services relating to tax compliance, planning and support services.

(4)	All other fees consist of fees billed for all other services. We did not pay EY or Withum for other services for the years ended December 31, 2020 and 2019.

The Audit Committee considered whether providing the non-audit services shown in this table was compatible with maintaining EY’s independence and concluded that it was.

Pre-Approval Policy for Services of Independent Registered Public Accounting Firm

Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit Committee has responsibility for engaging, setting compensation for and reviewing the performance of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee has established procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm and, subject to the next sentence, pre-approves all audit and permitted non-audit services provided by any independent registered public accounting firm prior to each engagement. As part of such procedures, the Audit Committee has delegated to its chair the authority to review and pre-approve any such services in between the Audit Committee’s regular meetings. Any such pre-approval will be presented to and ratified by the full Audit Committee at the next regularly scheduled meeting and reflected in the minutes thereof.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021.

 

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under “The Board of Directors and Certain Governance Matters—Board Committees and Meetings—Audit Committee.” Under the Audit Committee charter, our management is responsible for the preparation, presentation and integrity of our financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.

In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Company with management and with the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm their independence.

Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC.

Submitted by the Audit Committee of the Company’s Board of Directors:

Joseph S. Tibbetts, Jr., Chair

Paul S. Galant

Jay D. Pauley

 

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PROPOSAL NO. 3—NON-BINDING VOTE ON EXECUTIVE COMPENSATION

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, stockholders are being asked to approve, in a non-binding advisory vote, the compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. While the results of the vote are non-binding and advisory in nature, the Board intends to carefully consider the results of this vote.

The text of the resolution in respect of Proposal No. 3 is as follows:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion, is hereby APPROVED.”

As described in the Compensation Discussion and Analysis section of this Proxy Statement, our executive compensation programs and underlying principles, as developed and administered by the Compensation Committee, are designed to provide competitive pay opportunities within the labor markets in which we compete to support the attraction and retention of highly qualified executives while promoting our core values. Our executive compensation programs are structured to be consistent with our pay for performance philosophy and utilize performance measures that are intended to align the executive team’s incentives with the long-term interests of the Company and its stockholders.

In considering their vote, stockholders may wish to review with care the information on our compensation policies and decisions regarding the named executive officers presented in the Compensation Discussion and Analysis on pages 28 to 55, as well as the discussion regarding the Compensation Committee on page 15.

The shares represented by your proxy will be voted “FOR” the approval of the compensation paid to our named executive officers unless you specify otherwise.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.

 

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Executive Officers of the Company

Set forth below is certain information regarding each of our current executive officers other than Mr. Pedersen, whose biographical information is presented under “Continuing Members of the Board of Directors.”

 

Name and Title		Age		Principal Occupation and Other Information
Dale R. Gerard Chief Financial Officer		50		Mr. Gerard was named our Chief Financial Officer in March 2020. Prior to this, he served as Legacy Vivint Smart Home’s interim Chief Financial Officer in October 2019 and our interim Chief Financial Officer in January 2020. Prior to this, he served as Legacy Vivint Smart Home’s Senior Vice President of Finance and Treasurer from September 2014 to October 2019 and Vice President of Finance and Treasurer from January 2013 to September 2014. Previously, he served as Legacy Vivint Smart Home’s Treasurer from March 2010 to January 2013. Prior to that, Mr. Gerard served as the Assistant Treasurer and Director of Finance for American Commercial Lines Inc. from 2007 to 2010 (at the time it was publicly traded on the NASDAQ: ACLI). Prior to that, Mr. Gerard served as a Senior Financial Analyst at Wabash National Corporation from 2003 to 2007 and a Financial Analyst at Chemtura from 2000 to 2003. Mr. Gerard currently serves on the board of directors for M3-Bridage Acquisition II Corp. Mr. Gerard also serves as President of Vivint Gives Back. Mr. Gerard holds a B.S. in Accounting and an MBA from Purdue University.
JT Hwang Chief Technology Officer		46		Mr. Hwang was appointed our Chief Technology Officer effective March 2020. Prior to this, he served as Legacy Vivint Smart Home’s Chief Engineering Officer from February 2017 and our Chief Engineering Officer from January 2020, Legacy Vivint Smart Home’s Chief Information Officer from June 2010 to January 2013 and from August 2014 to February 2017, and Legacy Vivint Smart Home’s Chief Technology Officer from March 2008 to June 2010 and January 2013 to August 2014. He has over 19 years of experience in the computer science field. Prior to joining Legacy Vivint Smart Home, Mr. Hwang was Chief Architect at Netezza Corporation, a global provider of data warehouse appliance solutions. He also served as Chief Architect of Hewlett-Packard’s Advanced Solutions Lab. Mr. Hwang holds a B.S. of science and a Master of Engineering, Computer Science from Massachusetts Institute of Technology.
Patrick E. Kelliher Chief Accounting Officer		58		Mr. Kelliher has served as Legacy Vivint Smart Home’s Chief Accounting Officer since February 2014 and our Chief Accounting Officer since January 2020. Prior to this, he served as Legacy Vivint Smart Home’s Vice President of Finance and Corporate Controller from March 2012 to February 2014. Prior to joining Legacy Vivint Smart Home, Mr. Kelliher served as Senior Director of Finance and Business Unit Controller of Adobe, Inc. from November 2009 to March 2012. Prior to Adobe, Mr. Kelliher was the Vice President of Finance and Controller for Omniture, Inc. Before that he has served in various senior finance roles at other high growth technology companies. Mr. Kelliher holds a B.S. in Accounting and Finance from Northern Illinois University and an MBA from the University of Chicago Graduate School of Business.

 

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Name and Title		Age		Principal Occupation and Other Information
Shawn J. Lindquist Chief Legal Officer and Secretary		51		Mr. Lindquist has served as Legacy Vivint Smart Home’s Chief Legal Officer and Secretary since May 2016 and our Chief Legal Officer and Secretary since January 2020. From February 2014 to May 2016, Mr. Lindquist served as Chief Legal Officer, Executive Vice President and Secretary of Vivint Solar, Inc., a leading distributed solar energy company acquired by Sunrun Inc. in 2020. From February 2010 to February 2014, Mr. Lindquist served as Chief Legal Officer, Executive Vice President and Secretary of Fusion-io, Inc., a leading provider of flash memory solutions for application acceleration, which was acquired by Sandisk Corporation in 2014. From 2005 to 2010, Mr. Lindquist served as Chief Legal Officer, Senior Vice President and Secretary of Omniture, Inc., through the completion and integration of its merger with Adobe Inc. Prior to Omniture, Mr. Lindquist was a corporate and securities attorney at Wilson Sonsini Goodrich & Rosati, P.C., the leading legal advisor to technology, life sciences and other growth enterprises worldwide. Mr. Lindquist has also served as in-house corporate and mergers and acquisitions counsel for Novell, Inc., a global software and services company, and as Vice President and General Counsel of a privately held, venture-backed software company. Mr. Lindquist has also served as an adjunct professor of law at the J. Reuben Clark Law School at Brigham Young University. Mr. Lindquist holds a B.S. in Business Management and J.D. from Brigham Young University.
Todd M. Santiago Chief Revenue Officer		48		Mr. Santiago has served as our Chief Revenue Officer since March 2020. Prior to that, Mr. Santiago served as Legacy Vivint Smart Home’s Executive Vice President, General Manager of Retail since November 2018 and our Executive Vice President, General Manager of Retail since January 2020. Prior to this, he served as Legacy Vivint Smart Home’s Chief Revenue Officer from February 2013 to November 2018. Prior to joining Legacy Vivint Smart Home, Mr. Santiago was President of 2GIG from December 2008 to March 2013. Prior to joining 2GIG, Mr. Santiago was Partner and General Manager of Signature Academies in Boise, ID and VP and General Manager at NCH Corporation in Irving, TX. Mr. Santiago is the brother-in-law of Mr. Pedersen. Mr. Santiago holds a B.A. in English from Brigham Young University and an MBA from the Harvard Business School.

 

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors:

David F. D’Alessandro, Chair

Bruce McEvoy

Peter F. Wallace

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

Our executive compensation program is designed to attract and retain individuals with the qualifications to manage and lead the Company as well as to motivate them to develop professionally and contribute to the achievement of our financial goals and ultimately create and grow our overall enterprise value.

Our named executive officers (“NEOs”) for 2020 were:

 

•

Todd R. Pedersen, our Chief Executive Officer;

 

•

Dale R. Gerard, our Chief Financial Officer;

 

•

Todd M. Santiago, our Chief Revenue Officer;

 

•

Shawn J. Lindquist, our Chief Legal Officer and Secretary;

 

•

JT Hwang, our Chief Technology Officer;

 

•

Alex J. Dunn, our former President; and

 

•

Matthew J. Eyring, our former Executive Vice President, General Manager of Inside Sales.

Leadership Changes

Dale R. Gerard was appointed as our Chief Financial Officer, effective as of March 2, 2020, after serving as interim Chief Financial Officer. Todd M. Santiago was promoted to Chief Revenue Officer, effective as of March 2, 2020.

Mr. Dunn stepped down from his position as our President, effective March 2, 2020, and Mr. Eyring ceased to serve as our Executive Vice President, General Manager of Inside Sales, effective March 13, 2020. In connection with his departure, Mr. Dunn also resigned as a director of the Company, effective as of March 2, 2020, and from all positions as an employee of the Company, effective March 13, 2020. In connection with their departures we entered into separation agreements with Messrs. Dunn and Eyring. The terms of such separation agreements are described under “Potential Payments upon Termination or Change in Control” below.

Impact of COVID-19 on Executive Compensation in 2020

The impact of the COVID-19 pandemic was a consideration in our compensation decisions in 2020. For example, for 2020, we suspended annual merit-based salary increases for all officers, including our NEOs (excluding any increases as a result of promotions occurring prior to the impact of the COVID-19 pandemic). We also suspended our 401(k) matching program, effective May 2, 2020.

Executive Compensation Objectives and Philosophy

Our primary executive compensation objectives are to:

 

•

attract, retain and motivate senior management leaders who are capable of advancing our mission and strategy and ultimately, creating and maintaining our long-term equity value. Such leaders must engage in a collaborative approach and possess the ability to execute our business strategy in an industry characterized by competitiveness and growth;

 

•

reward senior management in a manner aligned with our financial performance; and

 

•

align senior management’s interests with our equity owners’ long-term interests through equity participation and ownership.

 

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To achieve our objectives, we deliver executive compensation through a combination of the following components:

 

•

Base salary;

 

•

Cash bonus opportunities;

 

•

Long-term incentive compensation;

 

•

Broad-based employee benefits;

 

•

Supplemental executive perquisites; and

 

•

Severance benefits.

Base salaries, broad-based employee benefits, supplemental executive perquisites and severance benefits are designed to attract and retain senior management talent. We also use annual cash bonuses and long-term equity awards to promote performance-based pay that aligns the interests of our NEOs with the long-term interests of our equity-owners and to enhance executive retention.

Say on Pay and Say on Frequency Votes. In 2020, the Compensation Committee of our Board of Directors (the “Compensation Committee”) considered the outcome of the stockholder advisory vote on 2019 executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation program and policies. Our stockholders voted at our 2020 annual meeting, in a non-binding, advisory vote, on the 2019 compensation paid to our NEOs. Over 99% of the votes were cast in favor of the Company’s 2019 compensation decisions. Based on this level of support, the Compensation Committee decided that the say on pay vote result did not necessitate any substantive changes to our compensation program.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders can vote on the frequency of say-on-pay voting once every six years. We expect this vote to next occur at our 2026 annual meeting. Until that time, we expect to hold an advisory, non-binding say-on-pay vote on an annual basis.

Compensation Determination Process

In 2020, the Compensation Committee oversaw our executive compensation program.

In 2020, Mr. Pedersen generally participated in discussions and deliberations with the Compensation Committee regarding the determinations of annual cash incentive awards for our executive officers. Specifically, he made recommendations to the Compensation Committee regarding the performance factors to be used under our annual bonus plan and the amounts of annual cash incentive awards. Mr. Pedersen did not participate in discussions or determinations regarding his individual compensation.

Role of Compensation Consultant

In 2020, the Compensation Committee engaged FW Cook & Co., Inc. (“FW Cook”) to perform an analysis of the compensation of our senior executives in comparison with industry peers and an analysis of senior executive stock ownership in comparison with industry peers, and advise it with respect to the structure and design of our short-term and long-term incentive plans as well as executive compensation policies and programs adopted in connection with the Merger. FW Cook also made recommendations to the Compensation Committee on the selection of companies for inclusion in a compensation peer group for 2020 (the “Compensation Peer Group”). FW Cook also provided advice regarding the equity grants made to the Company’s executive officers on March 24, 2020 under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (the “Plan”). For additional details regarding these equity grants, please see “—Compensation Elements—Long-Term Incentive Compensation—2020 Equity Grants” below. In February 2020 the Compensation Committee determined that FW Cook is independent from management and that FW Cook’s work has not raised any conflicts of interest.

 

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Use of Competitive Data

We do not target a specific market percentile when making executive compensation decisions; however, we believe that information regarding compensation practices at similar companies is a useful tool to help maintain practices that accomplish our executive compensation objectives. In 2020, as noted above, the Compensation Committee engaged FW Cook to assist and make recommendations regarding the selection of companies to be included in the Compensation Peer Group. The constituents of the Compensation Peer Group represent companies operating in broadly similar or related industries that fall within a reasonable range with us in certain metrics, including revenue, EBITDA and total enterprise value. The companies included in the Compensation Peer Group are listed below:

 

Akamai Technologies, Inc.		Terminix Global Holdings, Inc.		Logitech International S.A.		Rollins, Inc.
Black Knight, Inc.		Waste Management, Inc.		Match Group, Inc.
IMAX Corporation		Zillow Group, Inc.		Nu Skin Enterprises, Inc.
FireEye, Inc.		J2 Global, Inc.		Nuance Communications Inc.
Fitbit, Inc.		Garmin Ltd.		Endurance International Group, Inc.

In 2020, in addition to the Compensation Peer Group data, the Compensation Committee reviewed proprietary technology company survey data, size-adjusted to our revenue. The identity of individual companies comprising the survey data is not available to or considered by us in the evaluation process.

In 2020, the Compensation Committee used the information from both the Compensation Peer Group and the survey data as one factor to determine whether its compensation levels are competitive, and to make any necessary adjustments to reflect executive performance and its performance. As a part of this process, FW Cook measured our target pay levels for the NEOs versus the competitive data within each compensation component and in the aggregate. In order to evaluate the retentive and alignment power of their existing ownership stakes, FW Cook also prepared an analysis of the carried interest levels of our NEOs versus executives serving in similar positions at the Compensation Peer Group.

In late 2020, the Company engaged FW Cook to review the Compensation Peer Group for 2021, which resulted in the removal of Fitbit, Inc., Garmin Ltd., IMAX Corporation and Waste Management, Inc. as well as the addition of Alarm.com, Inc., Angi Homeservices Inc. and Pluralsight, Inc.. Going forward, the Compensation Committee intends to continue to periodically review the Compensation Peer Group to ensure that it remains an appropriate comparator frame for evaluating our executive compensation practices.

Employment Agreements

In March 2020 we entered into employment agreements with each of our NEOs other than Messrs. Dunn and Eyring. The employment agreements we entered into with Messrs. Pedersen, Santiago, Lindquist and Hwang were substantially similar to and superseded employment agreements they had previously entered into with a subsidiary of Legacy Vivint Smart Home. The employment agreements with our NEOs provide the terms of the executive’s compensation, including in the event of termination, and contain restrictive covenants. A full description of the material terms of the employment agreements with Messrs. Pedersen, Gerard, Santiago, Lindquist and Hwang is included below under “—Narrative Disclosure to Summary Compensation Table and 2020 Grants of Plan-Based Awards—Employment Agreements.”

 

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Compensation Elements

The following is a discussion and analysis of each component of our executive compensation program:

Base Salary

Annual base salaries compensate our executives, including our NEOs, for fulfilling the requirements of their respective positions and provide them with a predictable and stable level of cash income relative to their total compensation.

The Compensation Committee believes that the level of an executive’s base salary should reflect such executive’s performance, experience and breadth of responsibilities, salaries for similar positions within our industry and any other factors relevant to that particular job. The Compensation Committee, with the assistance of our Human Resources Department, also uses the experience, market knowledge and insight of its members in evaluating the competitiveness of current salary levels.

In the sole discretion of the Compensation Committee, base salaries for our executives may be periodically adjusted to take into account changes in job responsibilities or competitive pressures.

For 2020, due to the impact of the COVID-19 pandemic, we suspended annual merit-based salary increases for all officers and employees, including our NEOs. Accordingly, only Mr. Gerard, who was appointed as our Chief Financial Officer effective March 2, 2020, received an increase in base salary in 2020. Effective March 2, 2020, in connection with his appointment as Chief Financial Officer, our Compensation Committee approved an additional $10,303 per month in compensation to increase Mr. Gerard’s annual base salary from $532,000 to $655,636.

The “Summary Compensation Table” shows the base salary earned by each NEO during fiscal 2020.

Bonuses

Cash bonus opportunities are available to various managers, directors and executives, including our NEOs, to motivate their achievement of short-term performance goals and tie a portion of their cash compensation to performance.

Fiscal 2020 Management Bonus

In 2020, pursuant to our Incentive Compensation Plan (the “Cash Bonus Plan”), the NEOs were eligible to receive an annual cash incentive award, based on achievements of performance objectives determined by the Compensation Committee. As provided in their respective employment agreements, the target bonus amount for Mr. Pedersen was 100% of his base salary at the end of the performance period minus $300,000 and the target bonus amount for each of Messrs. Gerard, Santiago, Lindquist and Hwang was 60% of his base salary at the end of the performance period. Messrs. Dunn and Eyring were not eligible to participate in the 2020 Cash Bonus Plan, however they each received a pro-rated portion of their target bonus pursuant to their respective separation agreements. Payouts to our NEOs under the 2020 Cash Bonus Plan could range from 0% of target for below threshold performance, to 50% of target for threshold performance, 100% of target for target performance, and a maximum of 200% of target for significant outperformance.

To ensure our NEOs are focused on and accountable for the financial and operational metrics that the Company has communicated to the Board and to investors while also rewarding the NEOs for their individual performance under atypical circumstances, the Compensation Committee determined to base 75% of the NEOs’ bonus opportunity on financial metrics (the financial component) while retaining discretion to determine 25% of the bonus opportunity (the discretionary component). The financial component was comprised of: (1) company-wide

 

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Adjusted EBITDA (defined, with respect to 2020, as the Adjusted EBITDA which is publicly disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for fiscal year 2020 or as otherwise determined by the Audit Committee of the Board)(1/3 of the total financial component); (2) Net Cash (defined, with respect to 2020, as the amount of net cash provided by or used in financing activities for fiscal year 2020, excluding any equity proceeds, taxes paid related to vesting of equity awards, return of capital or re-financing fees, or as otherwise determined by the Audit Committee of the Board)(1/3 of the total financial component); and (3) Total Subscribers (defined as the aggregate number of active smart home and security subscribers at the end of fiscal year 2020, which is publicly disclosed in (or otherwise calculated in a manner consistent with) the Company’s earnings release for fiscal year 2020 or as otherwise determined by the Audit Committee of the Board)(1/3 of the total financial component) objectives. The actual bonus amounts to be paid to the NEOs for fiscal 2020 performance was calculated by multiplying each NEO’s bonus potential target by a weighted achievement factor based on our actual achievement relative to the company-wide performance objectives.

The following table sets forth the threshold, target and maximum performance targets for each of the operational metrics comprising the financial component, as well as the payout percentage for each category.

 

		Threshold		Target		Maximum
Adjusted EBITDA (weighted 1/3)		$510 million		$530 million		$570 million
Net Cash (weighted 1/3)		$(100 million)		$(50 million)		$50 million
Total Subscribers (weighted 1/3)		1.58 million		1.64 million		1.78 million
Payout Percentage		50%		100%		200%

To the extent that actual performance fell between the specified threshold, target and maximum performance levels set forth above, the resulting payout percentage was determined using linear interpolation.

The following table shows the actual results based on the Company’s fiscal 2020 performance, the payout percentages with respect to each metric, and the resulting weighted achievement factor associated with the financial component.

 

		Adjusted EBITDA		Net Cash		Total Subscribers		Financial Component Achievement Factor
Actual Performance		$588.8 million		$191.3 million		1.696 million
Payout Percentage		200%		200%		138%		179%

With respect to the discretionary component, the Compensation Committee determined that the final payout should be based on the average of the three financial component achievement factors, which resulted in the following payouts based on the factors set forth below.

 

Name		Factors Considered		Payout Percentage
Todd R. Pedersen		Adjusted EBITDA, Net Cash, Total Subscribers			179	%
Dale R. Gerard		Adjusted EBITDA, Net Cash, Total Subscribers			179	%
Todd M. Santiago		Adjusted EBITDA, Net Cash, Total Subscribers			179	%
Shawn J. Lindquist		Adjusted EBITDA, Net Cash, Total Subscribers			179	%
JT Hwang		Adjusted EBITDA, Net Cash, Total Subscribers			179	%

Actual amounts paid to our NEOs under the Cash Bonus Plan in 2020 were calculated by multiplying the NEO’s target bonus amount by a weighted achievement factor based on the Company’s performance with respect to the financial component and the payout percentage associated with NEO’s discretionary component.

The following table illustrates the calculation of the amounts earned by each of our NEOs (other than Messrs. Dunn and Eyring, who were not eligible to participate in the Cash Bonus Plan in 2020) pursuant to the Cash

 

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Bonus Plan for performance in 2020. The amounts earned by the NEOs with respect to the financial component are disclosed in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table while the amounts earned with respect to the discretionary component are disclosed in the “Bonus” column of the Summary Compensation Table.

 

Name		Salary ($)				Target Bonus Percentage				Target Bonus Amount ($) (1)				Combined Achievement Factor Percentage				Bonus Paid ($)
Todd R. Pedersen			1,021,200				100	%			721,200				179	%			1,290,946
Dale R. Gerard			655,636				60	%			393,382				179	%			704,153
Todd M. Santiago			655,636				60	%			393,382				179	%			704,153
Shawn J. Lindquist			592,250				60	%			355,350				179	%			636,077
JT Hwang			546,434				60	%			327,860				179	%			586,870

 

(1)	As provided in Mr. Pedersen’s employment agreement, the target bonus amount for Mr. Pedersen was 100% of his base salary at the end of the performance period minus $300,000.

Sign-On Bonuses

From time to time, we may award sign-on bonuses in connection with the commencement of an NEO’s employment with us. Sign-on bonuses are used only when necessary to attract highly skilled individuals to the Company. Generally, sign-on bonuses are used to incentivize candidates to leave their current employers or may be used to offset the loss of unvested compensation they may forfeit as a result of leaving their current employers.

Transaction Success Bonus

Pursuant to his employment agreement, Mr. Lindquist is entitled to receive a transaction bonus in the amount of $1,205,516 on the earliest to occur of a Change in Control (as defined therein) and January 17, 2021. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards.” Mr. Lindquist’s transaction bonus became payable and was paid on January 17, 2021.

Long-Term Incentive Compensation

2020 Equity Awards

The Compensation Committee believes that the interest of executives and stockholders should be closely aligned. Accordingly, a significant portion of the total compensation of our NEOs is in the form of equity incentive awards. In 2020, in order to closely align the focus of our executives on long-term value creation as well as the achievement of specific performance goals, the Compensation Committee determined to award a mix of time-vesting restricted stock units (“RSUs”) and performance-vesting restricted stock units (“PSUs”) (each representing the right to receive one share of our Class A common stock upon the settlement of each restricted stock unit) to Messrs. Pedersen, Gerard, Santiago, Lindquist and Hwang under the Company’s 2020 Omnibus Incentive Plan. These awards were approved in February 2020 and effective on the date that we filed our registration statement on Form S-8, which was the grant date.

 

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The table below sets forth the total target value of the 2020 equity awards as well as the fair market value on the grant date of the RSUs and the target value of the PSUs, assuming the target level of performance is achieved.

 

Name		Total Target Value				RSU Value				Target PSU Value
Todd R. Pedersen		$	26,762,934			$	13,381,467			$	13,381,467
Dale R. Gerard		$	12,043,311			$	7,828,156			$	4,215,155
Todd M. Santiago		$	13,939,022			$	9,060,355			$	4,878,667
Shawn J. Lindquist		$	15,054,156			$	9,785,200			$	5,268,956
JT Hwang		$	11,708,777			$	7,610,711			$	4,098,066

The RSUs granted to each of the executives will vest, subject to continued employment on each applicable vesting date, with respect to 25% of the restricted stock units on each of the first four anniversaries of January 17, 2020.

The performance period for the PSUs ran from January 1, 2020, through December 31, 2020 (the “performance period”). Vesting of PSUs is based upon the Company’s achievement of specified performance goals during the performance period and the passage of time. The PSU performance goals were based on the Company’s (1) Adjusted EBITDA (1/3 of the total award), (2) Net Cash (1/3 of the total award) and (3) Total Subscribers (1/3 of the total award) performance (each as defined above under “—Bonuses—Fiscal 2020 Management Bonus”), in each case during the performance period. The total number of PSUs that vested, or became eligible to vest upon satisfaction of the additional time-based vesting criteria (“Earned PSUs”), was based on the level of achievement of the performance goals and ranged from 0% (if below threshold performance) up to 100% (for target or above target performance). Fifty percent (50%) of Earned PSUs vested on the date the Compensation Committee certified in writing the achievement of the performance goals (the “determination date”) and the remaining 50% of such Earned PSUs will vest on the first anniversary of the determination date, in each case, subject to continued employment on the applicable vesting date.

The following table sets forth the threshold, target and maximum performance targets for each of the operational metrics, as well as the payout percentage for each category.

 

		Threshold		Target
Adjusted EBITDA (weighted 1/3)		$520 million		$530 million
Net Cash (weighted 1/3)		$(70 million)		$(50 million)
Total Subscribers (weighted 1/3)		1.61 million		1.64 million
Payout Percentage		80%		100%

The following table shows the actual results based on the Company’s fiscal 2020 performance, the payout percentages with respect to each metric, and the resulting weighted achievement factor.

 

		Adjusted EBITDA		Net Cash		Total Subscribers		Achievement Factor
Actual Performance		$588.8 million		$191.3 million		1.696 million
Payout Percentage		100%		100%		100%		100%

Accordingly, 50% of each NEO’s PSUs vested on the determination date and the remaining 50% of each NEO’s PSUs became eligible to vest on the first anniversary of the determination date. All Earned PSUs are reported in the “Stock Awards—Number of Shares or Units of Stock That Have Not Vested” column of the “Outstanding Equity Awards at 2020 Fiscal Year End” table.

313 Acquisition LLC Equity Awards Granted in Previous Years

313 Acquisition granted long-term equity incentive awards designed to promote our interest by providing these executives with the opportunity to acquire equity interests as an incentive for their remaining in our service and

 

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aligning the executives’ interests with those of the Company’s ultimate equity holders. The long-term equity incentive awards were in the form of Class B Units. Messrs. Pedersen, Dunn, Eyring, Santiago, Lindquist, Hwang and Gerard were previously awarded Class B Units.

The Class B Units were profits interests and represented the right to share in any increase in the equity value of 313 Acquisition. Therefore, the Class B Units only had value to the extent there was an appreciation in the value of our business from and after the applicable date of grant. In addition, the vesting of two-thirds of the Class B Units were initially subject to Blackstone achieving minimum internal rates of return and multiples on invested capital on its investment in Class A units of 313 Acquisition (the “Class A Units”), as described further below.

The Class B Units granted to our NEOs were designed to motivate them to focus on efforts that would increase the value of our equity while enhancing their retention. The specific sizes of the equity grants made were determined in light of Blackstone’s practices with respect to management equity programs at other private companies in its portfolio and the executive officer’s position and level of responsibility with us.

The Class B Units were initially divided into a time-vesting portion (one-third of the Class B Units granted), a 2.0x exit-vesting portion (one-third of the Class B Units granted), and a 3.0x exit-vesting portion (one-third of the Class B Units granted). In June 2018, the APX Group board of directors and the board of managers of 313 Acquisition approved a modification to the vesting terms of the Class B Units (the “Modification”), designed to motivate and retain our employees and align their interests with the interests of the Company. Following such modification, the Class B Units were divided into two time-vesting portions (each one-third of the Class B Units granted) (provided the one-third attributable to the 3.0x exit-vesting portion is still eligible to vest earlier if the original performance-vesting metrics are achieved) and a 2.0x exit-vesting portion (one-third of the Class B Units granted). Unvested Class B Units were not entitled to distributions from the Company. The incremental fair value in connection with this modification is reflected in the “Stock Awards” column of the Summary Compensation Table for 2018.

Another key component of our long-term equity incentive program was that at the time of Blackstone’s acquisition of us (the “2012 Blackstone Acquisition”), certain of our NEOs and other eligible employees were provided with the opportunity to invest in Class A Units on the same general terms as Blackstone and other co-investors. The Class A Units are equity interests, have economic characteristics that are similar to those of shares of common stock in a corporation and have no vesting schedule. We consider this investment opportunity an important part of our long-term equity incentive program because it encourages equity ownership and aligns the NEOs’ financial interests with those of our ultimate equity holders. Each of Messrs. Pedersen, Gerard, Dunn and Santiago, when presented with the opportunity, chose to invest in Class A Units.

Vivint Group, Inc. Stock Appreciation Rights Granted in Previous Years

The Company’s indirect subsidiary, Vivint Group, awarded SARs, representing the right to share in any increase in the equity value of Vivint Group, to Messrs. Gerard, Lindquist and Hwang pursuant to the Vivint Group, Inc. Amended and Restated 2013 Omnibus Incentive Plan (the “Vivint Group Plan”). The purpose of the SARs was to attract and retain personnel and provide an opportunity to acquire an equity interest of Vivint Group. The SARs were subject to vesting conditions, consistent with the Class B Units referenced above.

Treatment of Equity Incentive Awards Granted in Previous Years in Connection with the Merger

Vesting/Modifications. As of immediately prior to the effective time of the Merger (the “effective time”), 313 Acquisition and Legacy Vivint Smart Home modified the vesting schedule of each Company Group Class B Unit (as defined in the Merger Agreement) and Company Group SAR (as defined in the Merger Agreement) that would vest if Blackstone received cash proceeds in respect of its Class A Units equal to 2.0x Blackstone’s cumulative invested capital in respect of the Class A Units at such time (the “2.0x Company Group Equity Awards”) such that each 2.0x Company Group Equity Award will instead vest, subject to the holder’s continued

 

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employment on the applicable vesting date (or event), (i) in equal 25% annual installments on each of the first four anniversaries of the closing date of the Merger or (ii) if earlier, in full upon either (x) a Change of Control (as defined in the applicable Company Group Stock Plan (as defined in the Merger Agreement)) or (y) Blackstone receiving cash proceeds in respect of its Class A Units equal to 2.0x Blackstone’s cumulative invested capital in respect of the Class A Units at such time (the “2.0x Modification”). The incremental compensation expense recognized with respect to Class B Units and/or Company Group SARs in connection with the 2.0x Modification is set forth in the “Stock Awards” or “Option Awards” column, as applicable of the Summary Compensation Table.

Vested Company Group Class B Units. As of immediately prior to the effective time, each vested Company Group Class B Unit, including those held by our NEOs (other than Messrs. Pedersen and Dunn) and directors, was redeemed by 313 Acquisition for shares of common stock of Vivint Solar, Inc. (“VSLR common stock”) and Legacy Vivint Smart Home common stock, with an equivalent value as the Company Group Class B Unit so redeemed, in a manner determined by the board of managers of 313 Acquisition (the “313 Board”), pursuant to the terms and conditions of the Company Group Stock Plans (as defined in the Merger Agreement) and the limited liability company agreement of 313 Acquisition (the “313 LLCA”), assuming a hypothetical liquidation of 313 Acquisition. The number of shares of VSLR common stock and Legacy Vivint Smart Home common stock issued with respect to each vested Company Group Class B Unit in such redemptions was determined on a pro rata basis using the relative value of the shares of VSLR common stock and Legacy Vivint Smart Home common stock held by 313 Acquisition as of the effective time. Holders of shares of Legacy Vivint Smart Home common stock received in such redemptions were entitled to receive the merger consideration (shares of Class A common stock) in accordance with the Merger Agreement. To the extent that the deemed unit price of such vested Company Group Class B Unit was equal to or in excess of the fair market value of a Class A Unit as of the time of such redemptions, such vested Company Group Class B Unit was redeemed for $0.00 (including certain vested Company Group Class B Units held by our NEOs (other than Messrs. Pedersen and Dunn)).

Unvested Company Group Class B Units. As of immediately prior to the effective time, each unvested Company Group Class B Unit, including those held by our NEOs (other than Messrs. Pedersen and Dunn) and directors, was redeemed by 313 Acquisition for a number of shares of Legacy Vivint Smart Home restricted stock, with an equivalent value as the Company Group Class B Units so redeemed, in a manner determined by the 313 Board in accordance with the terms of the Company Group Stock Plans and the 313 LLCA, assuming a hypothetical liquidation of 313 Acquisition. Such shares of Legacy Vivint Smart Home restricted stock were subject to the same vesting terms and conditions as the corresponding Company Group Class B Units, as modified pursuant to the 2.0x Modification. As of the effective time, each such share of Legacy Vivint Smart Home restricted stock was automatically, without any action on the part of the holder thereof, cancelled and converted into a number of shares of our Class A Common Stock equal to the exchange ratio, rounded to the nearest whole share of our Class A common stock (after such conversion, “Rollover Restricted Stock” and together with the Rollover RSUs and the Rollover SARs, each as defined below, the “Rollover Equity Awards”). To the extent that the deemed unit price of an unvested Company Group Class B Unit was equal to or in excess of the fair market value of a Class A Unit as of the time of such redemptions, such unvested Company Group Class B Unit was redeemed for $0.00 (including certain unvested Company Group Class B Units held by our NEOs (other than Messrs. Pedersen and Dunn)).

Company Group RSUs. As of the effective time, each Company Group RSU (as defined in the Merger Agreement) held by our directors, to the extent then outstanding and unsettled, without any action on the part of the holder thereof, was automatically cancelled and converted into an RSU entitling the holder thereof to receive upon settlement a number of shares of our Class A common stock equal to the product of (x) the number of shares of Vivint Group Inc. common stock (“VGI common stock”) subject to such Company Group RSU as of immediately prior to the effective time, multiplied by (y) 0.0864152412 (the “VGI exchange ratio”), rounded down to the nearest whole number of shares of our Class A common stock (after such conversion, “Rollover RSUs”).

 

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Company Group SARs. As of the effective time, each Company Group SAR, including those held by Messrs. Gerard, Lindquist and Hwang and our directors, to the extent then outstanding and unexercised, without any action on the part of the holder thereof, was automatically cancelled and converted into a SAR with respect to a number of shares of our Class A common stock equal to the product of (x) the number of shares of VGI common stock subject to such Company Group SAR as of immediately prior to the effective time, multiplied by (y) the VGI exchange ratio, rounded down to the nearest whole number of shares of our Class A common stock, with a strike price per share of Class A common stock equal to the quotient obtained by dividing (i) the per share strike price of such Company Group SAR as of immediately prior to the effective time by (ii) the VGI exchange ratio, rounded up to the nearest whole cent (after such conversion, “Rollover SARs”).

Rollover Equity Awards. Any shares of our Class A common stock issuable under Rollover Equity Awards, other than the awards held by Messrs. Pedersen and Dunn, were subject to restrictions on transfer until the first anniversary of the closing date of the Merger, unless otherwise agreed to by the Company and the applicable holder. Each Rollover Equity Award is subject to the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan and to the same terms and conditions, including, without limitation, any vesting conditions (as modified by the 2.0x Modification), as had applied to the corresponding Company Group Equity Award as of immediately prior to the effective time, except for such terms rendered inoperative by reason of the merger, subject to such adjustments as reasonably determined by our Board to be necessary or appropriate to give effect to the conversion or the merger. Holders of outstanding Rollover Equity Awards had the contingent right to receive, and received, earnout shares, or had the terms and conditions of such Rollover Equity Awards adjusted, as a result of the volume-weighted average price of our Class A common stock exceeding certain thresholds prior to the fifth anniversary of the consummation of the merger.

Treatment of Equity Awards Held by Messrs. Pedersen, and Dunn. As of immediately prior to the effective time, the Company Group Class B Units, whether or not vested, held by Messrs. Pedersen and Dunn (the “Holdback Executives”) were converted into a number of Class A Units (the “Converted Class A Units”), in accordance with the terms and conditions of the Company Group Stock Plans and the 313 LLCA, with an equivalent value and subject to the same vesting terms and conditions as the corresponding Company Group Class B Units (as modified pursuant to the 2.0x Modification). As of immediately following the effective time, the Converted Class A Units held by the Holdback Executives (in addition to any other Class A Units held by the Holdback Executive) were automatically reclassified into a number of vested and unvested units designed to track 313 Acquisition’s interests in the VSLR common stock, our Class A common stock, and its other property, in each case held as of the effective time, subject to the same vesting terms and conditions as the corresponding Converted Class A Units, as applicable (the “tracking units”).

The number of each class of tracking unit to be issued to the Holdback Executives was determined on a pro rata basis using the relative value of the shares of VSLR common stock, our Class A common stock and other property held by 313 Acquisition as of immediately following the effective time. On October 8, 2020, the tracking units associated with the VSLR common stock were redeemed in connection with merger of a subsidiary of Sunrun Inc. (“Sunrun”) with and into VSLR, pursuant to which an affiliate of Mr. Dunn received shares of Sunrun and Mr. Pedersen and an affiliate of Mr. Pedersen received vested and unvested shares of Sunrun. In the event Mr. Pedersen forfeits his right to retain such Sunrun shares, Mr. Pedersen has agreed to enter into one or more agreements to distribute his forfeited Sunrun shares to other members of 313 Acquisition.

On the first anniversary of the closing date of the merger, 10% of any then-vested tracking units held by the Holdback Executives (other than other property tracking units), less any amounts previously sold by, or distributed to, Holdback Executives in connection with sales of shares of VSLR common stock and Class A common stock by 313 Acquisition, was eligible to be redeemed by 313 Acquisition for the shares of VSLR common stock and our Class A common stock underlying such tracking units in accordance with the terms and conditions of the 313 LLCA. On January 21, 2021 10% of any then-vested tracking units held by the Holdback Executives relating to shares of our Class A common stock were redeemed by Mr. Pedersen, an affiliate of Mr. Pedersen and an affiliate of Mr. Dunn. There were no tracking units related to VSLR common stock

 

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remaining at 313 Acquisition to be redeemed as of the first anniversary of the closing date of the merger. Pursuant to the terms of Mr. Dunn’s separation agreement (as described below), an affiliate of Mr. Dunn was eligible to redeem up to 50% of such affiliate’s tracking units on the first anniversary of the closing date of the merger. On January 20, 2021, an affiliate of Mr. Dunn requested a redemption of certain shares of Class A common stock underlying tracking units and on January 28, 2021 an affiliate of Mr. Dunn received 1,074,073 shares of Class A common stock.

Following the second anniversary of the closing date of the merger, upon written request to 313 Acquisition by a Holdback Executive, 313 Acquisition will promptly redeem all (or any portion) of the then-vested tracking units (other than other property tracking units) held by the Holdback Executives for the shares of VSLR common stock and our Class A common stock underlying such tracking units in accordance with the terms and conditions of the 313 LLCA. 313 Acquisition will have no obligation to redeem any other property or tracking units at any time and may redeem such tracking units, in its sole discretion, in accordance with the terms and conditions of the 313 LLCA. There are no longer any shares of VSLR common stock underlying any tracking units. No unvested tracking units held by the Holdback Executives will be redeemed until they become vested.

Post-Merger Modification. On February 29, 2020, our Board approved a further modification (the “Post-Merger Modification”) of the vesting terms of the Rollover Restricted Stock and Rollover SARs granted to certain officers and employees of the Company and its subsidiaries, including Messrs. Gerard, Santiago, Lindquist, Hwang and Eyring that was outstanding as of the Merger and as of February 29, 2020 (the “Outstanding Equity”). The Post-Merger Modification provides that in addition to the previous vesting terms and conditions, subject to the continued employment of the holder of the Outstanding Equity, on January 17, 2021, all then-outstanding and unvested Outstanding Equity shall become vested. There was no incremental compensation expense recognized with respect to the Post-Merger Modification.

Post-Merger Vesting. On November 16, 2020, Blackstone achieved a 2.0x return on Blackstone’s cumulative invested capital in respect of the Class A Units and all Outstanding Equity and tracking units subject to the 2.0x Modification vested.

Retention Awards

2018 Retention Awards. In 2018, we approved a retention program designed to motivate and retain our employees. Pursuant to this program the APX Group Compensation Committee approved the grant of retention awards to Messrs. Eyring, Gerard, Santiago, Lindquist and Hwang.

Mr. Gerard was granted a retention award in the amount of $1.0 million, payable as follows: (i) $333,333.33 payable in June 2018; (ii) $333,333.33 payable in June 2019; and (iii) $333,333.34 payable in June 2020, subject to continued employment and good standing with the Company or its subsidiaries through each payment date. Each of Messrs. Eyring and Santiago was granted a retention award in the amount of $2.5 million, payable as follows: (i) $833,333.33 payable in August 2018; (ii) $833,333.33 payable in August 2019; and (iii) $833,333.34 payable in August 2020, subject to continued employment and good standing with the Company or its subsidiaries through each payment date. Messrs. Lindquist and Hwang were each granted a retention award in the amount of $1.3 million, payable as follows: (i) $416,666.67 payable in June 2018, (ii) $416,666.67 payable in June 2019; and (iii) $416,666.67 payable in June 2020, subject to continued employment and good standing with the Company or its subsidiaries through each payment date.

2020 Retention Awards. In 2020, we approved the grant of a retention award in the amount of $2.1 million to Mr. Lindquist, payable as follows: (i) $416,667.67 payable in June 2020; (ii) $833,333.33 payable in June 2021; (ii) $833,333.34 payable in June 2022, subject to continued employment and good standing with the Company or its subsidiaries through each payment date.

If Messrs. Gerard’s, Santiago’s, Lindquist’s, or Hwang’s employment was terminated by the Company other than for Cause (as defined in his employment agreement or retention award agreement, as applicable), including due

 

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to death or disability, prior to any remaining payment date, he would have received the full remaining amount of the retention award, payable within two and one-half months following his termination date subject to his (or his estate’s, as applicable), execution and non-revocation of an effective release of claims in favor of the Company. He would not have been entitled to receive any remaining amount of his retention award if (i) he terminated his employment with the Company for any reason, or (ii) his employment was terminated by the Company for Cause, in either case at any time prior to the applicable eligibility date set forth above. Mr. Eyring received the unpaid portion of the retention bonus pursuant to his separation agreement.

Benefits and Perquisites

We provide to all of our employees, including our NEOs, employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. Broad-based employee benefits include:

 

•

a 401(k) savings plan;

 

•

paid vacation, sick leave and holidays;

 

•

medical, dental, vision and life insurance coverage; and

 

•

employee assistance program benefits.

Currently, all participants are eligible for company matching under our 401(k) savings plan. Under this matching program, prior to May 2, 2020, we matched an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 1% of such employee’s eligible earnings and $0.50 for every $1.00 for the next 5% of such employee’s eligible earnings. The maximum match available under the 401(k) plan was 3.5% of the employee’s eligible earnings. For employees who had been employed by us for less than two years, matching contributions vested on the second anniversary of their date of hire. Our matching contributions to our employees who had been employed by us for two years or more were always fully vested. Effective as of May 2, 2020, we suspended our 401(k) matching program. The matching program was reinstated effective January 1, 2021. Under the reinstated matching program, we match an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 3% of such employee’s eligible earnings and $0.50 for every $1.00 for the next 2% of such employee’s eligible earnings. The maximum match available under the 401(k) plan is 4% of the employee’s eligible earnings.

At no cost to the employee, we provide an amount of basic life insurance and basic accidental death and dismemberment insurance valued at 1x times their basic annual earnings up to a maximum of $250,000 ($50,000 minimum).

We also provide our NEOs with specified perquisites and personal benefits that are not generally available to all employees, such as personal use of our Company leased aircraft (subject to the terms and limits set forth in our corporate aircraft policy), use of a company vehicle, reimbursement of commuting expenses, reimbursement for health insurance premiums, enhanced employee cafeteria benefits, country club memberships, excess liability insurance premiums, alarm system fees, event tickets and use of our corporate suites at Vivint Smart Home Arena in Salt Lake City, Utah (“Vivint Smart Home Arena”), mountain resort annual passes, fuel expenses, relocation assistance and, in certain circumstances, reimbursement for personal travel. In addition, as to Messrs. Pedersen and Dunn, perquisites have included financial advisory services and use of Company personnel in connection with personal (non-Company) business; however, Messrs. Pedersen and Dunn reimburse the Company for the full costs of such use of Company personnel. We have paid for certain security services, including personal and related security services, received by Mr. Pedersen and his family and certain personal events hosted by Mr. Pedersen. Although Mr. Pedersen has repaid the Company for all expenses related to such security services and personal events, such expenses, to the extent that they relate to 2020, 2019 or 2018, are reflected in the “All Other Compensation” column of the Summary Compensation Table. We also reimburse our NEOs for taxes incurred in connection with certain of these perquisites.

 

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With respect to event tickets and use of our corporate suites at Vivint Smart Home Arena, such personal benefits include use by our NEOs and their guests of (i) tickets to games of the National Basketball Association team the Utah Jazz (“Jazz Games”), including in our corporate suites at Vivint Smart Home Arena, that we have acquired in connection with our corporate sponsorship of Vivint Smart Home Arena, (ii) other tickets to Jazz Games at Vivint Smart Home Arena that are acquired for business purposes and paid for seasonally rather than individually by event, and (iii) tickets to sporting events that we have acquired in connection with our sponsorship of Brigham Young University sports teams and the Major League Soccer team Real Salt Lake. Because these tickets and corporate suites have been acquired either as part of our sponsorship agreements or on a seasonal basis for business purposes, we believe there is no incremental cost to us other than the cost of food and beverage service associated with such personal use. Accordingly, no amounts other than the allocated costs of food and beverage service associated with the NEOs’ and their guests’ attendance at such sporting events and reimbursement for taxes incurred by the NEOs related to these items are included in the compensation of our NEOs in the “Summary Compensation Table” below. Although Mr. Pedersen has reimbursed the Company for the cost of mountain resort annual passes received by him and his family, such costs are reflected in the “All Other Compensation” column of the Summary Compensation Table to the extent that they relate to 2020, 2019 or 2018.

In addition, we entered into time-sharing agreements with Messrs. Pedersen and Dunn governing their personal use of the Company leased aircraft. Messrs. Pedersen and Dunn paid for personal flights an amount equal to the aggregate variable cost to the Company for such flights, up to the maximum authorized by Federal Aviation Regulations. The aggregate variable cost for this purpose includes fuel costs, in-flight food and beverage, out-of-town hangar costs, landing fees, airport taxes and fees, customs fees, travel expenses of the crew, any “deadhead” segments of flights to reposition corporate aircraft and other related rental fees. In addition, family members and friends of our NEOs have, in limited circumstances, accompanied the NEOs on business travel on the Company leased aircraft for which we have in most cases incurred de minimis incremental costs. We disposed of the Company leased aircraft and Mr. Pedersen’s time-sharing agreement terminated in accordance with its terms in December 2020.

The aggregate incremental cost to the Company of these benefits and perquisites are reflected in the “All Other Compensation” column of the “Summary Compensation Table” and the accompanying footnote in accordance with the SEC rules.

Severance Arrangements

Our Board believes that providing severance benefits to our NEOs is critical to our long-term success, because severance benefits act as a retention device that helps secure an executive’s continued employment and dedication to the Company. Each of our NEOs have or had severance arrangements, which are or were included in their employment agreements. Mr. Pedersen is and Mr. Dunn was eligible to receive severance benefits if his employment is/was terminated without “cause” or for “good reason” (each as defined below as defined below under See “—Potential Payments upon Termination or Change in Control”). The severance payments to our NEOs are contingent upon the affected executive’s execution and non-revocation of an effective release and waiver of claims, which contains an additional agreement to the non-compete, non-solicitation and confidentiality provisions in the employment agreements. See “—Potential Payments upon Termination or Change in Control” for descriptions of these arrangements.

Mr. Eyring was, and each of Messrs. Gerard, Santiago, Lindquist and Hwang is, eligible to receive severance benefit in the event of a termination of employment without “cause” (as defined below under “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Employment Agreements” and “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Retention Awards”) and other than by reason of death or while he was/is disabled. See “—Potential Payments upon Termination or Change in Control” for descriptions of these arrangements.

In connection with their departures from the Company in 2020, to induce each of them to enter into a release of claims in favor of the Company, we entered into separation agreements with Messrs. Dunn and Eyring. The

 

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terms of such separation agreements are described below under “—Potential Payments upon Termination or Change in Control” and such description is incorporated herein by reference.

Anti-Hedging and Pledging Policies

The Company’s insider trading policy prohibits directors, officers, employees and agents (such as consultants and independent contractors) of the Company from pledging Company securities as collateral for loans and from engaging in transactions in publicly traded options, such as puts and calls, and other derivative securities with respect to the Company’s securities. This prohibition extends to any hedging or similar transactions designed to decrease the risks associated with holding Company securities.

 

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Summary Compensation Table

The following table provides summary information concerning compensation paid or accrued by us to or on behalf of our NEOs for the years indicated.

 

Name and Principal Position		Year				Salary ($) (1)				Bonus ($) (2)				Stock Awards ($) (3)				Option Awards ($) (3)				Non-Equity Incentive Plan Compensation ($) (4)				All Other Compensation ($) (5)				Total ($)
Todd R. Pedersen,			2020				1,021,200				322,737				32,639,924				—				968,209				996,379				35,948,449
Chief Executive Officer			2019				959,468				180,300				—				—				548,111				1,024,963				2,712,842
			2018				695,096				105,030				2,670,732				—				770,213				1,262,714				5,503,785
Dale R. Gerard,			2020				635,706				509,371				12,322,043				42,054				528,115				177,543				14,214,832
Chief Financial Officer			2019				422,511				488,583				—				—				167,960				114,165				1,193,219
Todd M. Santiago,			2020				655,636				1,009,371				15,144,538				—				528,115				156,965				17,494,625
Executive Vice President, General Manager of Retail			2019				650,495				1,112,634				—				—				114,081				202,887				2,080,097
			2018				631,905				1,310,738				596,000				—				—				149,546				2,688,189
Shawn J. Lindquist			2020				592,250				992,352				15,054,156				142,987				477,058				192,579				17,451,382
Chief Legal Officer and Secretary
JT Hwang			2020				546,434				563,385				11,987,510				142,987				440,152				111,241				13,791,709
Chief Technology Officer
Alex J. Dunn,			2020				210,412				—				14,360,222				—				—				3,977,824				18,548,458
Former President			2019				959,468				180,300				—				—				548,111				667,886				2,355,765
			2018				695,096				105,030				2,670,732				—				770,213				889,305				5,130,376
Matthew J. Eyring,			2020				135,090				—				2,933,425				—				—				2,591,777				5,660,292
Former Executive Vice President, General Manager of Inside Sales			2019				650,495				931,678				—				—				255,698				102,116				1,939,987
			2018				631,905				1,310,738				596,000				—				—				107,724				2,646,367

 

(1)	Effective March 2, 2020, in connection with his appointment as our Chief Financial Officer, Mr. Gerard’s base salary was increased from $532,000 to $655,636.

(2)

The amounts reported in this column for 2020 represent retention bonuses paid for Messrs. Gerard, Santiago, Lindquist and Hwang as described in “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Retention Awards”. The amounts reported also include the payouts with respect to the discretionary component of the 2020 annual cash incentive awards described above under “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Fiscal 2020 Management Bonus” earned by Messrs. Pedersen, Gerard, Santiago, Lindquist and Hwang, which were as follows: Mr. Pedersen—$322,737; Mr. Gerard—$176,038; Mr. Santiago—$176,038; Mr. Lindquist—$159,019; and Mr. Hwang—$146,718.

(3)

The amounts reported in the “Stock Awards” column for 2020 include the aggregate grant date fair value, computed in accordance with Topic 718, of the equity awards granted to the NEOs in fiscal 2020. For a discussion of the assumptions and methodologies used to calculate the amounts reported, please see the discussion of stock option awards contained in Note 13 “Stock-Based Compensation and Equity” to our audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, 2020. The fiscal 2020 equity awards consist of the time-vesting RSUs and the PSUs issued under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan. The terms of the fiscal 2020 stock awards are summarized under “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2020 Equity Awards”. The grant date fair value of the PSUs was computed in accordance with Topic 718 based upon the probable outcome of the performance conditions as of the grant date. Assuming the highest level of performance achieved, the aggregate grant date fair value of the PSUs would have been: Mr. Pedersen—$13,381,467; Mr. Gerard—$4,215,155; Mr. Santiago—$4,878,667; Mr. Lindquist—$5,268,956; Mr. Hwang—$4,098,066. In addition, as described in “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—Treatment of Equity Incentive Awards Granted in Previous Years in

 

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Connection with the Merger”, in connection with the Merger, the Company modified the terms of the outstanding Company Group Class B Units, Company Group SARs, Rollover Restricted Stock and Rollover SARs. There was incremental fair value associated with the 2.0x Modification (the modification of the Company Group Class B Units and the Company Group SARs). In accordance with SEC requirements, the amounts reported in the “Stock Awards” and “Option Awards” columns for 2020 include the incremental fair values, computed in accordance with Topic 718, with respect to each of the awards modified in connection with the Merger. Amounts for Messrs. Dunn and Eyring also include the incremental fair values, computed in accordance with Topic 718, with respect to each of the awards modified in connection with their separations from the Company. See “—Potential Payments upon Termination or Change in Control—Separation Agreements with Former Executive Officers”. There was no incremental fair value associated with the Post-Merger Modification (the modification of the Rollover Restricted Stock and Rollover SARs).

(4)	The amounts reported in this column for 2020 represent the payouts to our NEOs with respect to the financial component of the 2020 annual cash incentive awards described above under “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Fiscal 2020 Management Bonus”.

(5)	Amounts reported under All Other Compensation for fiscal 2020 reflect the following:

(a)

as to Mr. Pedersen, reimbursement for health insurance premiums, excess liability insurance premiums, country club membership fees, $58,939 in actual Company expenditures for use, including business use, of a Company car, alarm system fees, use of event tickets and corporate suites and the incremental cost to the Company of food and beverage services associated with such use, actual Company expenditures for annual mountain resort passes for Mr. Pedersen and his family, fuel expenses, $125,000 in reimbursements for financial advisory services provided to Mr. Pedersen, $101,777 in actual Company expenditures for personal and related security services received by Mr. Pedersen and his family, although Mr. Pedersen has repaid the Company for the expenses related to such security services, other miscellaneous personal benefits and $425,972 reimbursed for taxes with respect to perquisites. In addition, Mr. Pedersen reimburses the Company for the aggregate variable costs associated with his personal use of the Company leased aircraft in accordance with the time-sharing agreement described under “Compensation Discussion and Analysis—Compensation Elements—Benefits and Perquisites.” While maintenance costs are not included in the reimbursement amount under the time-sharing agreement, the Company has determined it is appropriate to allocate a portion of the maintenance costs when calculating the aggregate incremental cost associated with personal use of the Company aircraft for purposes of SEC disclosure. Therefore, amounts reported also reflect $173,484 in maintenance costs allocated on the basis of the proportion of personal use. In addition, family members and friends of Mr. Pedersen have, in limited circumstances, accompanied him on business travel on the Company leased aircraft for which we incurred $49,028 of incremental costs. The “All Other Compensation” and “Total” amounts previously reported for 2019 and 2018 for Mr. Pedersen have been amended to include $88,270 and $142,822 in actual Company expenditures for personal and related security services received by Mr. Pedersen and his family that were not previously reported. In addition, the “All Other Compensation” and “Total” amounts previously reported for 2019 and 2018 for Mr. Pedersen have been amended to include (i) $15,471 in incremental food and beverage service costs paid by the Company associated with the personal use by Mr. Pedersen and his guests of event tickets in 2019 (ii) actual Company expenditures for annual mountain resort passes for Mr. Pedersen and his family of $10,720 in 2019 and $9,920 in 2018 and (iii) $74,520 in 2018 for personal events hosted by Mr. Pedersen that were paid for by the Company. Mr. Pedersen has repaid the Company for each of the amounts in this paragraph, other than the food and beverage service costs, and for the amounts relating to such perquisites he received in 2020, other than food and beverage service costs;

(b)

as to Mr. Gerard $32,938 in actual Company expenditures for use, including business use, of a Company car, alarm system fees, use of event tickets and corporate suites and food and beverage services associated with such use (for which we incurred de minimis incremental costs), $20,072 in reimbursement of expenses he incurred commuting from his home in Indiana to the Company’s corporate headquarters in Provo, Utah, reimbursement for health insurance premiums, $37,731 in country club membership fees, excess liability insurance premiums, fuel expenses and $66,851 reimbursed for taxes owed with respect to perquisites. The “All Other Compensation” and “Total” amounts previously reported for 2019 for Mr. Gerard have been amended to include $30,055 in commuting expenses reimbursed by the Company;

(c)

as to Mr. Santiago, $42,215 in actual Company expenditures for use, including business use, of a Company car, alarm system fees, reimbursement for health insurance premiums, country club membership fees, use of event tickets and corporate suites and the incremental cost to the Company of food and beverage services associated with such use, excess liability insurance premiums, other miscellaneous personal benefits, fuel expenses, and $82,412 reimbursed for taxes owed with respect to perquisites. In addition, family members and friends of Mr. Santiago have, in limited circumstances, accompanied him on business travel on the Company leased aircraft for which we incurred de minimis incremental costs. The “All Other Compensation” and “Total” amounts previously reported for 2019 and 2018 for Mr. Santiago have been amended to include (i) $2,101 in incremental food and beverage service costs paid by the Company associated with Mr. Santiago’s use of event tickets and corporate suites in 2019 and (ii) actual Company expenditures for annual mountain resort passes for Mr. Santiago and his family of $5,360 in 2019 and $4,960 in 2018;

(d)

as to Mr. Lindquist, $44,076 in actual Company expenditures for use, including business use, of a Company car, reimbursement for health insurance premiums, $47,108 in country club membership fees, alarm system fees, use of

 

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event tickets and corporate suites and food and beverage services associated with such use (for which we incurred de minimis incremental costs), excess liability insurance premiums, other miscellaneous personal benefits, fuel expenses, and $79,725 reimbursed for taxes owed with respect to perquisites;

(e)

as to Mr. Hwang, $36,098 in actual Company expenditures for use, including business use, of a Company car, alarm system fees, reimbursement for health insurance premiums, use of event tickets and corporate suites and food and beverage services associated with such use (for which we incurred de minimis incremental costs), excess liability insurance premiums, other miscellaneous personal benefits, fuel expenses, and $31,798 reimbursed for taxes owed with respect to perquisites. In addition, the amounts above include $29,690 reimbursed to Mr. Hwang for expenses he incurred commuting from his home in Massachusetts to the Company’s corporate headquarters in Provo, Utah;

(f)

as to Mr. Dunn, reimbursement for health insurance premiums, country club membership fees, actual Company expenditures for use, including business use, of a Company car, $166,850 in benefits for purchase of a Company car, alarm system fees, use of event tickets and corporate suites and the incremental cost to the Company of food and beverage services associated with such use, $31,250 in reimbursements for financial advisory services provided to Mr. Dunn, $3,674,906 in severance payments as described under “—Potential Payments upon Termination and Change in Control—Separation Agreements with Former Executive Officers—Mr. Dunn” and $69,098 reimbursed for taxes with respect to perquisites. In addition, Mr. Dunn reimbursed the Company for the aggregate variable costs associated with his personal use of the Company leased aircraft in accordance with the time-sharing agreement described under “Compensation Discussion and Analysis—Compensation Elements—Benefits and Perquisites.” As discussed in footnote 6(a) above, amounts reported reflect a similar allocation of a de minimis amount in maintenance costs associated with Mr. Dunn’s personal use of the Company leased aircraft. In addition, family members and friends of Mr. Dunn have, in limited circumstances, accompanied him on business travel on the Company leased aircraft for which we incurred de minimis incremental costs. The “All Other Compensation” and “Total” amounts previously reported for 2019 for Mr. Dunn have been amended to include $6,207 in incremental food and beverage service costs paid by the Company associated with Mr. Dunn’s use of event tickets and corporate suites; and

(g)

as to Mr. Eyring, actual Company expenditures for use, including business use, of a Company car, reimbursement for health insurance premiums, $89,889 in benefits for purchase of a Company car, country club membership fees, use of event tickets and the incremental cost to the Company of food and beverage services associated with such use, fuel expenses, alarm system fees, $2,452,765 in severance payments as described under “—Potential Payments upon Termination and Change in Control—Separation Agreements with Former Executive Officers—Mr. Eyring”, and $26,410 reimbursed for taxes owed with respect to perquisites. The “All Other Compensation” and “Total” amounts previously reported for 2019 for Mr. Eyring have been amended to include $191 in incremental food and beverage service costs paid by the Company associated with Mr. Eyring’s use of event tickets and corporate suites.

 

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Grants of Plan-Based Awards in 2020

The following table provides supplemental information relating to grants of plan-based awards made to our NEOs during 2020.

 

										Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)												Estimated Future Payouts under Equity Incentive Plan Awards (2)												All Other Stock Awards: Number of Shares of Stock or Units (#) (3)				All Other Option Awards: Number of securities underlying options				Grant Date Fair Value of Stock and Option Awards ($) (4)
Name		Approval Date				Grant Date		Award Type		Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)
Todd R. Pedersen								Cash Bonus Plan			90,150				540,900				1,081,800
			2/29/2020			3/24/2020		RSU																											585,366								13,381,467
			2/29/2020			3/24/2020		PSU															156,098				585,366				585,366												13,381,467
						1/17/2020(5)		2.0x Modification																											3,505,255								5,876,990
Dale R. Gerard								Cash Bonus Plan			49,173				295,036				590,072
			2/29/2020			3/24/2020		RSU																											342,439								7,828,156
			2/29/2020			3/24/2020		PSU															49,171				184,390				184,390												4,215,155
						1/17/2020(5)		2.0x Modification																															7,201				42,055
						1/17/2020(5)		2.0x Modification																											27,193								278,732
Todd M. Santiago								Cash Bonus Plan			49,173				295,036				590,072
			2/29/2020			3/24/2020		RSU																											396,341								9,060,355
			2/29/2020			3/24/2020		PSU															56,911				213,415				213,415												4,878,667
						1/17/2020(5)		2.0x Modification																											117,611								1,205,516
Shawn J. Lindquist								Cash Bonus Plan			44,419				266,513				533,025
			2/29/2020			3/24/2020		RSU																											428,049								9,785,200
			2/29/2020			3/24/2020		PSU															61,463				230,488				230,488												5,268,956
						1/17/2020(5)																																	24,484				142,988
JT Hwang								Cash Bonus Plan			40,983				245,895				491,791
			2/29/2020			3/24/2020		RSU																											332,927								7,610,711
			2/29/2020			3/24/2020		PSU															47,805				179,268				179,268												4,098,066
						1/17/2020(5)		2.0x Modification																											27,193				24,484				421,719
Alex J. Dunn						1/17/2020(5)		2.0x Modification																											3,505,255								5,876,990
						3/13/2020(6)		Accelerated Modification																											6,309,459								8,483,232
Matthew J. Eyring						1/17/2020(5)		2.0x Modification																											117,611								1,205,516
						3/13/2020(6)		Accelerated Modification																											329,311								1,727,909

 

(1)

Reflects the possible payouts of cash incentive compensation to our NEOs under the Cash Bonus Plan. The actual amounts paid are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table and described in “Compensation Discussion and Analysis—Compensation Elements—Bonuses—Fiscal 2020 Management Bonuses”.

(2)	Reflects PSU grants, the terms of which are summarized under “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2020 Equity Awards”.

(3)	Except as otherwise noted in footnote 5, reflects time-vesting RSU grants, the terms of which are summarized under “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2020 Equity Awards”.

(4)	Represents the grant date fair value or the incremental fair value, as applicable, of the equity awards computed in accordance with Topic 718 and, with respect to the PSU grants, based upon the probable outcome of the performance conditions as of the grant date.

(5)

Reflects the number of modified Company Group Class B Units or Company Group SARs, as applicable, as described under “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—Treatment of Equity Incentive Awards Granted in Previous Years in Connection with the Merger”.

(6)

Reflects the number of Company Units for Mr. Dunn and the number of shares of Rollover Restricted Stock for Mr. Eyring that were modified to accelerate vesting upon separating from the Company. See “—Potential Payments upon Termination or Change in Control—Separation Agreements with Former Executive Officers”

 

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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards

Employment Agreements

Employment Agreement with Mr. Pedersen

The principal terms of the employment agreement, dated March 2, 2020, by and among Vivint Smart Home, Inc., APX Group, Inc. and Todd Pedersen (the “Pedersen Employment Agreement”) are summarized below, except with respect to potential payments and other benefits upon specified terminations, which are summarized below under “—Potential Payments upon Termination or Change in Control.”

The Pedersen Employment Agreement provides for a term ending on March 4, 2022 and extends automatically for additional one-year periods unless either party elects not to extend the term. Under the Pedersen Employment Agreement, Mr. Pedersen is eligible to receive a minimum base salary, specified below, and an annual bonus based on the achievement of specified financial goals as determined by us. If these goals are achieved, he may receive an annual incentive cash bonus as provided below.

Mr. Pedersen’s amended and restated employment agreement provides that he is to serve as CEO and is eligible to receive a base salary originally set at $1,021,200, subject to periodic review and increase, but not decrease. Mr. Pedersen is also eligible to receive a target bonus equal to the sum of (x) 100% of his annual base salary at the end of the fiscal year minus (y) $300,000, if targets established by us are achieved.

In addition, the Pedersen Employment Agreement provides Mr. Pedersen with annual reimbursements of up to $125,000 in respect of expenses incurred by him related to the engagement of a financial advisor by the executive to provide him with customary financial advice. Any such reimbursements to him will be considered taxable income to him and he will be entitled to tax “gross up” payments in respect thereof.

Mr. Pedersen is also entitled to participate in all employee benefit plans, programs and arrangements made available to other executive officers generally.

The Pedersen Employment Agreement also contains restrictive covenants, including an indefinite covenant on confidentiality of information, and covenants related to non-competition and non-solicitation of our employees and customers and affiliates at all times during employment, and for two years after any termination of employment.

Employment Agreements with Messrs. Gerard, Santiago, Lindquist and Hwang

On March 2, 2020, we entered into employment agreements with certain of our officers, including Messrs. Gerard, Santiago, Lindquist and Hwang, containing substantially similar terms. The principal terms of each of these agreements, are summarized below, except with respect to potential payments and other benefits upon specified terminations, which are summarized below under “—Potential Payments Upon Termination or Change in Control.”.

The employment agreement with each of these NEOs provides or provided for a term ending on March 2, 2021, which extends automatically for additional one-year periods unless either party elects not to extend the term. Under the employment agreements, each executive is or was eligible to receive a minimum base salary, and an annual bonus award with a target amount equal to a percentage of his base salary. Pursuant to the employment agreements, the annual base salary of each of Messrs. Gerard, Santiago, Lindquist and Hwang is $655,636, $655,636, $592,250 and $546,434, respectively, and each of them is or was eligible to earn an annual bonus award with a target amount equal to 60% of their base salary at the end of the performance period.

In addition, Mr. Lindquist’s employment agreement provides that he is entitled to receive a transaction bonus in the amount of $1,205,526 on the earliest to occur of (x) a Change in Control (as defined in the Second Amended and Restated Limited Liability Company Agreement of 313 Acquisition LLC, as amended from time to time) and (y) January 17, 2021.

 

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Each executive officer is also entitled to participate in all employee benefit plans, programs and arrangements made available to other executive officers generally.

Each of the employment agreements also contains restrictive covenants, including an indefinite covenant on confidentiality of information, and covenants related to non-competition and non-solicitation of the Company’s employees and customers and affiliates at all times during employment, and for 18 months after any termination of employment.

Outstanding Equity Awards at 2020 Fiscal Year-End

The following table provides information regarding outstanding equity awards for our NEOs as of December 31, 2020.

 

								Stock Awards								Option Awards
Name		Grant Date				Award Type		Number of Shares or Units of Stock That Have Not Vested (#) (1)				Market Value of Shares or Units of Stock That Have Not Vested($) (2)				Number of Securities Underlying Unexercised Options – Exercisable (#) (3)				Number of Securities Underlying Unexercised Options – Unexercisable (#) (4)				Option Exercise Price ($)				Option Expiration Date
Todd R. Pedersen			1/17/2020			Company Units			1,682,522				4,649,630				—				—				—				—
			3/24/2020			RSUs			585,366				12,146,345				—				—				—				—
			3/24/2020			PSUs			585,366				12,146,345				—				—				—				—
Dale R. Gerard			1/17/2020			Rollover Restricted Stock			22,270				462,103				—				—				—				—
			1/17/2020			Rollover SARs			—				—				212				3,297				20.41				6/8/2028
			3/24/2020			RSUs			342,439				7,105,609				—				—				—				—
			3/24/2020			PSUs			184,390				3,826,093				—				—				—				—
Todd M. Santiago			1/17/2020			Rollover Restricted Stock			96,322				1,998,682				—				—				—				—
			3/24/2020			RSUs			396,341				8,224,076				—				—				—				—
			3/24/2020			PSUs			213,415				4,428,361				—				—				—				—
Shawn J. Lindquist			1/17/2020			Rollover SARs			—				—				722				11,207				20.41				6/8/2028
			3/24/2020			RSUs			428,049				8,882,017				—				—				—				—
			3/24/2020			PSUs			230,488				4,782,626				—				—				—				—
JT Hwang			1/17/2020			Rollover Restricted Stock			22,270				462,103				—				—				—				—
			1/17/2020			Rollover SARs											722				11,207				20.41				6/8/2028
			3/24/2020			RSUs			332,927				6,908,235				—				—				—				—
			3/24/2020			PSUs			179,268				3,719,811				—				—				—				—
Alex J. Dunn			—			—			—				—				—				—				—				—
Matthew J. Eyring			—			—			—				—				—				—				—				—

 

(1)	The Company Units shown in this column vest in three equal annual installments beginning on June 12, 2021, in each case, subject to acceleration upon a change in control of 313 Acquisition or in the case of (b) upon achievement of certain performance thresholds.

The RSUs shown in this column vest subject to continued employment on each applicable vesting date, with respect to 25% of the restricted stock units on each of the first four anniversaries of January 17, 2020.

Of the PSUs shown in this column, 50% vested on March 1, 2021, and the remaining 50% will vest on March 1, 2022, subject to continued employment on the vesting date. The shares of Rollover Restricted Stock shown in this column vested on January 17, 2021.

(2)	The market value is based on the closing price on the NYSE of our common stock on December 31, 2020, the last trading day of 2020 ($20.75), multiplied by the number of outstanding Company Units, RSUs, PSUs or shares of Rollover Restricted Stock, as applicable.

(3)	Reflects vested and exercisable Rollover SARs.

(4)	Reflects unvested Rollover SARs and associated earnout shares that vested on January 17, 2021.

 

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Option Exercises and Stock Vested in 2020

The following table provides information regarding the equity held by our NEOs that vested during 2020. None of our NEOs exercised options or similar instruments in 2020.

 

		Stock Awards
Name		Number of Shares or Units Acquired on Vesting (#)				Value Realized on Vesting ($) (1)
Company Units Vested
Todd R. Pedersen			4,066,096				10,622,818
Alex J. Dunn			6,309,459				19,209,133
Stock Vested
Dale R. Gerard			49,276				965,126
Todd M. Santiago			192,667				3,771,041
Shawn J. Lindquist			16,088				317,129
JT Hwang			60,635				1,189,037
Matthew J. Eyring			131,529				2,922,574

 

(1)	The value realized on vesting is based on the closing price of our common stock on the NYSE on the vesting date. If vesting occurs on a day on which the NYSE is closed, the value realized on vesting is based on the closing price on the last trading day prior to the vesting date.

Pension Benefits

We have no pension benefits for our executive officers.

Nonqualified Deferred Compensation

We have no nonqualified defined contribution or other nonqualified deferred compensation plans for our executive officers.

Potential Payments upon Termination or Change in Control

The following section describes the potential payments and benefits that would have been payable to our NEOs under existing plans and contractual arrangements assuming (1) a termination of employment or (2) a change of control occurred, in each case, on December 31, 2020, the last business day of fiscal 2020. The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs. These include distributions of plan balances under our 401(k) savings plan and similar items.

Severance Provisions in our Employment Agreements

Mr. Pedersen

Pursuant the Pedersen Employment Agreement, if Mr. Pedersen’s employment terminates for any reason, he is entitled to receive: (1) any base salary accrued through the date of termination; (2) any annual bonus earned, but unpaid, as of the date of termination from the immediately preceding prior fiscal year; (3) reimbursement of any unreimbursed business expenses properly incurred by the executive; and (4) such employee benefits, if any, as to which the executive may be entitled under our employee benefit plans (the payments and benefits described in (1) through (4) “accrued rights”).

If the employment of Mr. Pedersen is terminated by us without “cause” (as defined below) (other than by reason of death or while he is disabled) or if he resigns with “good reason” (as defined below) (any such termination, a

 

48

“qualifying termination”), he is entitled to the accrued rights and, conditioned upon execution and non-revocation of an effective release and waiver of claims in favor of us and our affiliates, and continued compliance with the non-compete, non-solicitation, non-disparagement, and confidentiality provisions set forth in the Pedersen Employment Agreement and described above under “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards”:

 

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which he was employed (the “pro rata bonus”);

 

•

a lump-sum cash payment equal to 200% of his then-current base salary plus 200% of the actual bonus he received in respect of the immediately preceding fiscal year (or, if a termination of employment occurs prior to any annual bonus becoming payable under the Pedersen Employment Agreement, the target bonus for the immediately preceding fiscal year); and

 

•

a lump-sum cash payment equal to the cost of the health and welfare benefits for Mr. Pedersen and his dependents, at the levels at which he received benefits on the date of termination, for 24 months (the “COBRA payment”).

For purposes of the Pedersen Employment Agreement, the term “cause” means Mr. Pedersen’s continued failure to substantially perform his employment duties for a period of ten (10) days; any dishonesty in the performance of his employment duties that is materially injurious to us; act(s) on his part constituting either a felony or a misdemeanor involving moral turpitude; his willful malfeasance or misconduct in connection with his employment duties that causes substantial injury to us; or his material breach of any covenants set forth in the employment agreement, including the restrictive covenants set forth therein. A termination for “good reason” is deemed to occur upon specified events, including: a material reduction in Mr. Pedersen’s base salary; a material reduction in his authority or responsibilities; specified relocation events; our breach of any of the provisions of the employment agreement; or a removal from our board of directors. Each of the foregoing events is subject to specified notice and cure periods.

In the event of Mr. Pedersen’s termination of employment due to death or disability, he will only be entitled to the accrued rights, the pro rata bonus payment, and the COBRA payment.

Messrs. Gerard, Santiago, Lindquist and Hwang

Pursuant to their respective employment agreements, if the employment of Messrs. Gerard, Santiago, Lindquist or Hwang terminates for any reason, the executive is entitled to receive: (1) any base salary accrued through the date of termination; (2) reimbursement of any unreimbursed business expenses properly incurred by the executive; and (3) such employee benefits, if any, as to which the executive may be entitled under the Company’s employee benefit plans (the payments and benefits described in (1) through (3) being “accrued rights”).

If the employment of Messrs. Gerard, Santiago, Lindquist or Hwang is terminated by us without “cause” (as defined below) and other than by reason of death or while he is disabled (any such termination, a “qualifying termination”), such executive is entitled to the accrued rights and, conditioned upon execution and non-revocation of an effective release and waiver of claims in favor of the Company and its affiliates, and continued compliance with the non-compete, non-solicitation, non-disparagement, and confidentiality provisions set forth in the employment agreements:

 

•

a pro rata portion of his target annual bonus based upon the portion of the fiscal year during which the executive was employed (the “pro rata bonus”);

 

•

a lump-sum cash payment equal to 150% of the executive’s then-current base salary plus 150% of the actual bonus the executive received in respect of the immediately preceding fiscal year (or, if a termination of employment occurs prior to any annual bonus becoming payable under his employment agreement, the target bonus for the immediately preceding fiscal year); and

 

49

•

a lump-sum cash payment equal to the cost of the health and welfare benefits for the executive and his dependents, at the levels at which the executive received benefits on the date of termination, for 18 months (the “COBRA payment”).

Under the employment agreements for Messrs. Gerard, Santiago, Lindquist and Hwang, “cause” means the executive’s continued failure to substantially perform his employment duties for a period of ten (10) days following written notice from the Company; any dishonesty in the performance of the executive’s employment duties that is materially injurious to the Company; act(s) on the executive’s part constituting either a felony or a misdemeanor involving moral turpitude; the executive’s willful malfeasance or misconduct in connection with his employment duties that causes substantial injury to us; or the executive’s material breach of the restrictive covenants set forth in the employment agreements. Each of the foregoing events is subject to specified notice and cure periods.

In the event of the executive’s termination of employment due to death or disability, he will only be entitled to the accrued rights, the pro rata bonus payment, and the COBRA payment.

Treatment of Equity Awards upon a Qualifying Termination or Change in Control

Upon a termination of employment by us without “cause” (as defined in the Company’s 2020 Omnibus Incentive Plan) in the twelve (12) months following a “change in control” (as defined in the Company’s 2020 Omnibus Incentive Plan) each of the NEO’s unvested RSUs and PSUs would vest upon such termination of employment. Upon a termination of employment, not in connection with a change in control, all unvested RSUs and PSUs will be forfeited upon such termination of employment.

Upon a change of control (as defined in the applicable Company Group Stock Plan (as defined in the Merger Agreement)) each of Messrs. Gerard’s, Hwang’s and Santiago’s shares of Rollover Restricted Stock and Messrs. Gerard’s, Lindquist’s and Hwang’s Rollover SARs will accelerate and vest upon the change of control. Upon a termination of employment, all unvested shares of Rollover Restricted Stock will be forfeited for no consideration; provided, that if such termination was without “cause”, such shares of Rollover Restricted Stock will remain outstanding and eligible to vest for six months following such termination of employment subject to the achievement of the performance conditions applicable to the original Class B units to which such shares of Rollover Restricted Stock relates. Upon a termination of employment all unvested Rollover SARs shall immediately be forfeited and any vested Rollover SARs will remain outstanding and exercisable for the period of time set forth in the applicable award agreement.

Mr. Pedersen’s unvested tracking units and unvested shares of Sunrun will accelerate and vest upon a change of control (as defined in the applicable Company Group Stock Plan (as defined in the Merger Agreement)). Upon a termination of employment, Mr. Pedersen will forfeit all his unvested tracking units and unvested shares of Sunrun, provided that such unvested tracking units and unvested shares of Sunrun will remain outstanding and eligible to vest for one year following a termination of employment subject to the achievement of the performance conditions applicable to the original Class B units to which such unvested tracking units and unvested shares of Sunrun relate. To the extent the performance hurdles are not achieved during that one-year period such tracking units and shares of Sunrun shall immediately be forfeited for no consideration.

The unvested Outstanding Equity vested in full on January 17, 2021.

 

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Separation Agreements with Former Executive Officers

Mr. Dunn

The Company and Mr. Dunn entered into a Separation Agreement (the “Dunn Separation Agreement”), effective March 2, 2020, and on March 13, 2020, Mr. Dunn entered into a Release and Waiver of Claims in favor of the Company (the “Dunn Release”). Pursuant to the Dunn Separation Agreement, Mr. Dunn was entitled to:

 

•

subject to non-revocation of the Dunn Release and, in respect of items (ii)-(iv) listed below, continued compliance with the Dunn Restrictive Covenants (as defined below), the following payments and benefits to which Mr. Dunn had been entitled pursuant to his employment agreement (the “Dunn Employment Agreement”), in connection with a termination without “cause”:

 

•

(i) a lump sum cash severance payment equal to $143,845.86, in respect of a pro rata portion of Mr. Dunn’s annual target bonus in respect of 2020, payable within 10 days of Mr. Dunn’s departure date;

 

•

(ii) a lump sum cash payment equal to $2,042,399.64, which is equal to 200% of Mr. Dunn’s base salary, payable within 55 days after Mr. Dunn’s departure date;

 

•

(iii) a lump sum cash payment equal to $1,456,822, which is equal to 200% of Mr. Dunn’s annual bonus for 2019, payable within 55 days after Mr. Dunn’s departure date; and

 

•

(iv) a lump sum cash payment equal to $31,838.00, which is equal to the monthly COBRA costs for providing health and welfare benefits for Mr. Dunn and his dependents for 24 months, payable within 55 days after Mr. Dunn’s departure date.

In addition, subject to (i) Mr. Dunn’s continued compliance with the Dunn Restrictive Covenants and (ii) non-revocation of the Dunn Release, (A) the Company was required to pay an amount equal to $168,265.00, on behalf of Mr. Dunn, in respect of the amount required to buy out Mr. Dunn’s Company-leased automobile; Mr. Dunn was permitted to retain such automobile and (B) 313 Acquisition was required to cause each of the unvested tracking units in 313 Acquisition held by an affiliate of Mr. Dunn to become vested as of the effective date of the Dunn Release (such tracking units, the “Accelerated Units”) ($19,209,133); provided, however that if (x) Mr. Dunn voluntarily terminates the advisory arrangement described below or the Company terminates such advisory arrangement for “cause” or Mr. Dunn fails to perform the advisory services as requested by the Company or (y) Mr. Dunn breaches the Dunn Restrictive Covenants, the affiliate of Mr. Dunn will forfeit all rights with respect to the Accelerated Units (including any property distributed in respect of such Accelerated Units). The incremental compensation expense recognized in connection with the acceleration of the vesting of Mr. Dunn’s Company tracking units is included in the “Stock Awards” column of the Summary Compensation Table and in the Grants of Plan-Based Awards in 2020 table. The Dunn Separation Agreement provides that, notwithstanding anything to the contrary set forth in the 313 LLCA, (i) on or following January 17, 2021, the affiliate of Mr. Dunn will be able to request, in writing, a redemption of a number of tracking units in respect of 313 Acquisition’s interests in the Class A common stock of the Company (the “Company Units”) and a number of tracking units in respect of 313 Acquisition’s interests in the common stock of Vivint Solar, Inc. (the “VSLR Units”) equal to (x) up to 50% of the total number of Company Units and VSLR Units held by the affiliate of Mr. Dunn as of the date of his departure minus (y) the number of Company Units and VSLR Units previously redeemed by 313 Acquisition and (ii) on or following January 17, 2022, the affiliate of Mr. Dunn may request, in writing, a redemption of any Company Units or VSLR Units then held by such affiliate, in each case in accordance with the terms set forth in the 313 LLCA and upon such request, 313 Acquisition shall promptly redeem such Company Units and/or VSLR Units in accordance with the terms of the 313 LLCA. On October 8, 2020 the VSLR Units were redeemed and an affiliate of Mr. Dunn received shares of Sunrun. On January 20, 2021, an affiliate of Mr. Dunn requested a redemption of certain shares of Class A common stock underlying tracking units and on January 28, 2021 an affiliate of Mr. Dunn received 1,074,073 shares of Class A common stock.

 

51

The Dunn Separation Agreement also contains an agreement by Mr. Dunn that he will remain subject to any restrictive covenants between Mr. Dunn and the Company or any of its subsidiaries or affiliates including those set forth in the Dunn Employment Agreement and the Management Subscription Agreement (Incentive Units), dated as of November 16, 2012 between Mr. Dunn and 313 Acquisition (collectively, the “Dunn Restrictive Covenants”). The Dunn Restrictive Covenants consists of 24-month post-departure (the “restricted period”) non-compete, non-solicitation and non-disparagement provisions and an indefinite confidentiality provision. Mr. Dunn has agreed that the restricted period shall continue for length of the advisory period discussed below and for 24 months thereafter.

Pursuant to the Dunn Separation Agreement, Mr. Dunn also agreed to become an independent advisor to us and our subsidiaries and affiliates for a period of 12 months following his departure date, unless terminated earlier, for no additional consideration.

Mr. Eyring

The Company and Mr. Eyring entered into a Separation Agreement (the “Eyring Separation Agreement”), effective March 13, 2020, and Mr. Eyring executed a Release and Waiver of Claims in favor of the Company (the “Eyring Release”) in connection therewith. Pursuant to the Eyring Separation Agreement, Mr. Eyring is entitled to:

 

•

subject to non-revocation of the Eyring Release and, in respect of items (ii)-(iv) listed below, continued compliance with the Eyring Restrictive Covenants (as defined below), the following payments and benefits to which Mr. Eyring had been entitled pursuant to his employment agreement (the “Eyring Employment Agreement”), in connection with a termination without “cause”:

 

•

(i) a lump sum cash severance payment equal to $78,461.36, in respect of a pro rata portion of Mr. Eyring’s annual target bonus in respect of 2020, payable within 10 days of Mr. Eyring’s departure date;

 

•

(ii) a lump sum cash payment equal to $983,454.00, which is equal to 150% of Mr. Eyring’s base salary, payable within 55 days after Mr. Eyring’s departure date;

 

•

(iii) a lump sum cash payment equal to $590,072.40, which is equal to 150% of Mr. Eyring’s annual target bonus for 2019, payable within 55 days after Mr. Eyring’s departure date; and

 

•

(iv) a lump sum cash payment equal to $26,452.00, which is equal to the monthly COBRA costs for providing health and welfare benefits for Mr. Eyring and his dependents for 18 months, payable within 55 days after Mr. Eyring’s departure date.

In addition, subject to (i) Mr. Eyring’s continued compliance with the Eyring Restrictive Covenants and (ii) non-revocation of the Eyring Release, (A) the Company was required to pay an amount equal to $118.998.30, in respect of the amount required to buy out Mr. Eyring’s Company-leased automobiles; Mr. Eyring was permitted to retain such automobiles and (B) fifty percent (50%) of the 263,059 shares of restricted Class A common stock of the Company Mr. Eyring then held (including the 51,359 shares restricted Class A common stock of the Company Mr. Eyring received in respect of the Company’s achievement of a portion of the earnout related to the Merger), rounded down to the nearest share, vested as of the effective date of the Eyring Release, subject to forfeiture if Mr. Eyring breaches any of the Eyring Restrictive Covenants (and all other unvested equity held by Mr. Eyring was forfeited for no consideration as of the departure date) ($2,922,574). The incremental compensation expense recognized in connection with the acceleration of the vesting of Mr. Eyring’s restricted Class A common stock is included in the “Stock Awards” column of the Summary Compensation Table and in the Grants of Plan-Based Awards in 2020 table.

The Eyring Separation Agreement also contains an agreement by Mr. Eyring that he will remain subject to any restrictive covenants between Mr. Eyring and the Company or any of its subsidiaries or affiliates including those

 

52

set forth in the Eyring Employment Agreement and the Management Subscription Agreement (Incentive Units), dated as of July 12, 2013 between Mr. Eyring and 313 Acquisition (the “Eyring Restrictive Covenants”). The Eyring Restrictive Covenants consists of 18-month post-departure non-compete, non-solicitation and non-disparagement provisions and an indefinite confidentiality provision.

The following table lists the payments and benefits that would have been triggered for Messrs. Pedersen, Gerard, Santiago, Lindquist and Hwang under the circumstances described below assuming that the applicable triggering event occurred on December 31, 2020.

 

Name		Cash Severance ($) (1)				Other Bonus ($) (2)				Prorated Bonus ($) (3)				Continuation of Health Benefits ($) (4)				Accrued But Unused Vacation ($)				Value of Accelerated Equity ($) (5)				Total ($)
Todd R. Pedersen
Termination Without Cause or for Good Reason			3,499,222				—				721,200				35,269				—				—				4,255,691
Change of Control (single trigger)			—				—				—				—				—				4,649,630				4,649,630
Change of Control (double trigger)			3,499,222				—				721,200				35,269				—				28,942,319				33,198,010
Death or Disability			—				—				721,200				35,269				—				—				756,469
Dale R. Gerard
Termination Without Cause or for Good Reason			1,468,269				—				393,382				26,452				—				—				1,888,103
Change of Control (single trigger)			—				—				—				—				—				530,508				530,508
Change of Control (double trigger)			1,468,269				—				393,382				26,452				—				11,462,209				13,350,312
Death or Disability			—				—				393,382				—				—				—				393,382
Todd M. Santiago
Termination Without Cause or for Good Reason			1,573,527				—				393,382				26,452				—				—				1,993,361
Change of Control (single trigger)			—				—				—				—				—				1,998,681				1,998,681
Change of Control (double trigger)			1,573,527				—				393,382				26,452				—				14,651,118				16,644,479
Death or Disability			—				—				393,382				—				—				—				393,382
Shawn J. Lindquist
Termination Without Cause or for Good Reason			1,576,731				2,872,191				355,350				26,452				—				—				4,830,724
Change of Control (single trigger)			—				1,205,526				—				—				—				232,555				1,438,081
Change of Control (double trigger)			1,576,731				2,872,191				355,350				26,452				—				13,897,198				18,727,922
Death or Disability			—				2,872,191				355,350				—				—				—				3,227,541
JT Hwang
Termination Without Cause or for Good Reason			1,316,297				—				327,860				26,452				—				—				1,670,609
Change of Control (single trigger)			—				—				—				—				—				694,657				694,657
Change of Control (double trigger)			1,316,297				—				327,860				26,452				—				11,322,703				12,993,312
Death or Disability			—				—				327,860				—				—				—				327,860

 

(1)

Mr. Pedersen’s cash severance reflects a lump sum cash payment equal to the sum of (x) 200% of his base salary of $1,021,200 and (y) 200% of his actual annual bonus paid for the preceding fiscal year. For fiscal 2019, Mr. Pedersen received an annual bonus of $728,411. Messrs. Gerard, Santiago, Lindquist and Hwang’s cash severance reflects a lump sum cash payment equal to the sum of (x) 150% of the executive’s base salary of $655,636, $655,636, $592,250 and $546,434, respectively and (y) 150% of the executive’s respective actual annual bonus paid for the preceding fiscal year. For fiscal 2019, Messrs. Gerard, Santiago, Lindquist and Hwang received an annual bonus of $323,210, $393,382, $458,904 and $331,097, respectively.

 

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(2)

For Mr. Lindquist amounts reflect his retention bonus as described in “—Compensation Discussion and Analysis—Compensation Elements—Bonuses—Retention Awards” and his transaction bonus as described in “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Employment Agreements”.

(3)	For Messrs. Pedersen, Gerard, Santiago, Lindquist and Hwang the amounts reflect the executive’s target bonus for the 12 completed months of employment for the 2020 fiscal year.

(4)

For Mr. Pedersen the amount reflects the cost of providing the executive officer with continued health and welfare benefits for the executive and his dependents under COBRA for 24 months and assuming 2020 rates. For Messrs. Gerard, Santiago, Lindquist and Hwang, the amount reflects the cost of providing the executive officer with continued health and welfare benefits for the executive and his dependents under COBRA for 18 months and assuming 2020 rates.

(5)

Upon a qualifying termination of employment in the twelve (12) months following a change in control each of Messrs. Pedersen’s, Gerard’s, Lindquist’s, Hwang’s and Santiago’s unvested RSUs and PSUs would vest upon such termination. In addition, upon a change of control each of Messrs. Gerard’s, Hwang’s and Santiago’s shares of Rollover Restricted Stock and related earnout shares and Messrs. Gerard’s, Lindquist’s and Hwang’s Rollover SARs and related earnout shares would accelerate and vest upon the change of control. Mr. Pedersen’s unvested Company tracking units would accelerate and vest upon a change of control.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following reasonable estimate of the ratio of the median of the annual total compensation of all of our employees except Todd R. Pedersen, our CEO, to the annual total compensation of Mr. Pedersen, calculated in a manner consistent with Item 402(u). For 2020, our last completed fiscal year:

 

•

The median of the annual total compensation of all of our employees, excluding our CEO, was $38,907.

 

•

The annual total compensation of our CEO was $35,948,449.

Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO was 924 to 1.

We determined that, as of December 31, 2020, our employee population consisted of approximately 12,104 employees, of which approximately 143 were non-U.S. employees all of whom were located in Canada. As permitted by Item 402(u), we excluded this non-U.S. group from our employee population for purposes of identifying our “median employee” as they comprised, in the aggregate, less than 5% of our total employees as of December 31, 2020. Also included in our total population is 5,032 of statutory non-employees, which we have excluded for purposes of identifying our “median employee” as these individuals are compensated on a 1099 basis.

To identify our “median employee” from this employee population, we obtained from our payroll system of record, the total income paid in 2020 to each employee in the employee population, as reported in the 2020 pay records applicable to such employee. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. We annualized the total income amounts paid to any permanent employees in the employee population who were employed by us for less than the full fiscal year. We then calculated the median resulting income paid to all of the employees in the employee population other than our CEO to determine our median employee. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K for the Summary Compensation Table. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table set forth above.

 

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Equity Compensation Plan Information

The following table sets forth information as of December 31, 2020 regarding our equity compensation plans under which shares of our common stock may be issued.

 

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance under equity compensation plans (c)
Equity compensation plans approved by security holders(1)			16,771,832	(2)		$	12.57 per share	(3)			20,732,305	(4)

 

(1)	Includes the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan.

(2)

Total includes 1,942,251 shares of our Class A common stock issuable upon the exercise and/or settlement of stock appreciation rights, 4,877,277 shares of our Class A common stock issuable upon the settlement of performance-vesting restricted stock units (assuming issuance of 100% of performance stock units granted), 8,692,347 shares of our Class A common stock issuable upon the settlement of time-vesting restricted stock units and 1,259,957 earnout shares accrued on unvested stock appreciation rights, restricted stock units and shares of restricted stock. The number of shares of our Class A common stock issuable upon the exercise and/or settlement of stock appreciation rights included in the table above is based on the closing market price of our Class A common stock on December 31, 2020 of $20.75 per share.

(3)	The weighted average exercise price relates only to stock appreciation rights. The calculation of the weighted average exercise price does not include outstanding equity awards that are received or exercised for no consideration.

(4)

These shares are available for grant as of December 31, 2020 under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan pursuant to which the Compensation Committee of the Board of Directors may make various stock-based awards including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based or stock-denominated awards with respect to the Company’s common stock.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information known to the Company regarding the beneficial ownership of the Company’s common stock as of April 5, 2021:

 

•

each person who is known by the Company to be the beneficial owner of more than five percent (5%) of the outstanding shares of any class of the Company’s common stock;

 

•

each named executive officer of the Company;

 

•

each current executive officer and director of the Company; and

 

•

all current executive officers and directors of the Company, as a group.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power”, which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days.

The beneficial ownership percentages set forth in the table below are based on 208,809,513 shares of common stock issued and outstanding as of April 5, 2021.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned common stock and preferred stock.

 

Name of Beneficial Owners		Number of Shares of Common Stock Beneficially Owned				Percentage of Outstanding Common Stock
5% Stockholders:
Blackstone(1)			114,689,842				54.9	%
Fortress Mosaic Sponsor LLC and affiliates(2)			28,127,227				13.1	%
Fayerweather Fund Eiger, L.P.(3)			14,241,776				6.6	%
Solamere V Investment, LLC(4)			11,703,534				5.6	%
Executive Officers and Directors:
Todd R. Pedersen(5)			1,863,352				*
Dale R. Gerard			218,964				*
Todd Santiago(6)			740,348				*
Shawn Lindquist			139,020				*
JT Hwang			316,794				*
Alex Dunn			1,074,073				*
Matthew Eyring			250,310				*
David F. D’Alessandro(7)			48,275				*
Paul S. Galant(8)			3,385				*
Bruce McEvoy(9)			—				—
Jay D. Pauley			—				—
Joseph S. Tibbetts, Jr.(8)			3,385				*
Peter F. Wallace(9)			—				—
All directors and executive officers as a group (11 individuals)			3,333,524				1.6	%

 

*	Indicates less than one percent (1%).

 

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