Form 4: Mitek Systems Interim CEO Scott R. Carter Receives Stock and Performance-Based Restricted Stock Units

Interim CEO of Mitek Systems, Scott R. Carter, was granted 40,355 shares of common stock and 40,355 performance-based restricted stock units on June 4, 2024.

Summary

• On June 4, 2024, Scott R. Carter, the Interim CEO of Mitek Systems, Inc., received 40,355 shares of common stock.
• He also received 40,355 performance-based restricted stock units (Performance RSUs) under the company's Amended and Restated 2020 Incentive Plan.
• The common stock was granted at a price of $12.39 per share.
• The shares subject to the award will vest in full on the one year anniversary of the grant date, subject to Mr. Carter's service through such date.
• The Performance RSUs will vest on the one-year anniversary of the Grant Date if the annual performance criteria based on the performance of the Company's common stock have been met, subject to Mr. Carter's Continuous Service.
• The performance criteria for the Performance RSUs is based on the percentage increase in value of Mitek Systems' common stock compared to the percentage increase in value of the Russell 2000 Index over the annual performance period.
• If the company's stock performance equals or exceeds the Russell 2000 Index, the Performance RSUs will vest in full.
• If the company's stock performance is between 85% and 99.9% of the Russell 2000 Index, a pro-rata portion of the Performance RSUs (ranging from 50% to 99.9%) will vest.
• If the company's stock performance is below 85% of the Russell 2000 Index, the Performance RSUs will not vest.
• Mr. Carter directly owns 161,392 shares of Mitek Systems common stock.

Sentiment

Score: 7

Explanation: The document indicates a standard executive compensation practice, aligning management interests with shareholders through stock and performance-based incentives. This is generally viewed positively, hence the score of 7.

Positives

• The granting of stock and performance-based restricted stock units aligns the Interim CEO's interests with those of the shareholders.
• The performance-based vesting criteria for the RSUs incentivize the Interim CEO to improve the company's stock performance relative to the Russell 2000 Index.
• The vesting of the common stock is subject to Mr. Carter's service through such date, which incentivizes him to remain with the company.

Risks

• The Performance RSUs may not vest if the company's stock performance does not meet or exceed the performance of the Russell 2000 Index.
• The value of the stock and Performance RSUs is subject to market fluctuations and could decrease.
• If Mr. Carter is removed by the Company as Interim CEO for cause, the Performance RSUs will not vest.

Future Outlook

The vesting of the Performance RSUs is contingent on the company's stock performance relative to the Russell 2000 Index over the annual performance period.

Industry Context

Granting stock and performance-based restricted stock units to executives is a common practice in the technology industry to align management's interests with those of shareholders and incentivize performance.

Comparison to Industry Standards

• Many technology companies use similar performance-based equity compensation plans to incentivize executives.
• Companies like Adobe, Salesforce, and Intuit often use a mix of stock options, restricted stock units, and performance-based awards to align executive compensation with company performance.
• The specific performance metrics used vary by company, but common metrics include revenue growth, profitability, and stock price appreciation.
• The vesting schedules for these awards also vary, but typically range from one to four years.

Stakeholder Impact

• Shareholders: The granting of performance-based equity aligns management's interests with shareholder value.
• Employees: The performance-based metrics may indirectly impact employee performance and motivation.
• Management: The equity grants provide an incentive for the Interim CEO to improve company performance.

Key Dates