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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

 

 

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

GOGO INC.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

GOGO INC.

111 N. Canal St., Suite 1400

Chicago, Illinois 60606

April 16, 2021

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Gogo Inc., to be held on May 27, 2021 at 10:00 a.m. Central Time. Due to ongoing public health concerns regarding the COVID-19 pandemic and to protect the health and safety of our employees and stockholders, the annual meeting will be a virtual meeting conducted solely online and can be attended by visiting www.virtualshareholdermeeting.com/GOGO2021. All holders of our outstanding common shares as of the close of business on April 5, 2021 are entitled to vote at the meeting. To participate in the annual meeting you will need the control number located on your proxy card or the instructions that accompanied your proxy materials.

Your vote is important. Whether you plan to virtually attend the annual meeting or not, you may access electronic voting via the Internet, which is described on your enclosed proxy card, or you may sign, date and return the proxy card in the envelope provided.

Details of the business to be conducted at the annual meeting are given in the notice of annual meeting of stockholders and the proxy statement.

We are pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our annual meeting. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send these stockholders a notice with instructions for accessing the proxy materials and voting via the Internet. The notice also provides information on how stockholders may obtain paper copies of our proxy materials, if they so choose.

On behalf of the board of directors, I want to thank you for your support of Gogo.

 

Sincerely,

 

LOGO

 

 

Oakleigh Thorne

Chief Executive Officer and President


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LOGO

GOGO INC.

111 N. Canal St., Suite 1400

Chicago, Illinois 60606

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 27, 2021

To the Stockholders of Gogo Inc.:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the “Annual Meeting”) of Gogo Inc., a Delaware corporation (“Gogo” or the “Company”), will be held virtually on May 27, 2021, at 10:00 a.m. Central Time, at www.virtualshareholdermeeting.com/GOGO2021 for the following purposes:

 

  1.

Election of three Class II directors to serve until the 2024 annual meeting of stockholders or until their successors are duly elected and qualified;

 

  2.

A non-binding advisory vote approving executive compensation;

 

  3.

A non-binding advisory vote on the frequency of future advisory votes approving executive compensation;

 

  4.

Approval of our Section 382 Rights Plan;

 

  5.

Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and

 

  6.

Transaction of any other business that may properly be brought before the Annual Meeting.

Due to ongoing public health concerns regarding the COVID-19 pandemic and to protect the health and safety of our employees and stockholders, the Annual Meeting will be a virtual meeting conducted solely on-line and can be attended by visiting www.virtualshareholdermeeting.com/GOGO2021.

Our board of directors has fixed the close of business on April 5, 2021 as the record date for determining holders of our common stock entitled to notice of, and to vote at, the Annual Meeting.

Our board of directors recommends that you vote FOR the election of each of the director nominees named in Proposal No. 1 of the proxy statement, FOR the approval of


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executive compensation as described in Proposal No. 2 of the proxy statement, EVERY 1 YEAR on the frequency of future advisory votes approving executive compensation as described in Proposal No. 3 of the proxy statement, FOR the approval of our Section 382 NOL Rights Plan as described in Proposal No. 4 of the proxy statement and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm as described in Proposal No. 5 of the proxy statement.

For our Annual Meeting, we have elected to use the Internet as our primary means of providing our proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send to these stockholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our proxy statement and annual report, and for voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information on how stockholders may obtain paper copies of our proxy materials free of charge, if they so choose. The electronic delivery of our proxy materials will significantly reduce our printing and mailing costs and the environmental impact of the circulation of our proxy materials.

The Notice of Internet Availability of Proxy Materials will also provide the date, time and location of the Annual Meeting; the matters to be acted upon at the meeting and the board of directors’ recommendation with regard to each matter; a toll-free number, an email address and a website where stockholders may request a paper or email copy of the Proxy Statement, our annual report to stockholders and a form of proxy relating to the Annual Meeting, and information on how to attend the meeting and vote in person.

You are cordially invited to virtually attend the Annual Meeting. You are urged to mark, date and sign your proxy card and return it by mail or follow the alternative voting procedures described in this proxy statement or the proxy card.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

 

 

LOGO

Marguerite M. Elias
Executive Vice President, General Counsel and Secretary

Chicago, Illinois

April 16, 2021

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 2021:

THIS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS, THE ACCOMPANYING PROXY STATEMENT AND OUR 2020 ANNUAL REPORT TO STOCKHOLDERS ARE ALL AVAILABLE AT WWW.PROXYVOTE.COM AND MAY BE ACCESSED USING THE CONTROL NUMBER LOCATED ON EACH PROXY CARD.


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Table of Contents to Proxy Statement

 

2021 PROXY STATEMENT SUMMARY

     1  

Gogo Inc.’s 2021 Annual Meeting Information

     1  

Items of Business

     1  

Board Structure

     2  

Election of Class II Directors

     2  

Advisory Vote on Executive Compensation

     3  

Advisory Vote on Frequency of Advisory Vote on Executive Compensation

     3  

Approval of the Section 382 Rights Plan

     3  

Ratification of the Appointment of the Independent Registered Public Accounting Firm

     3  

2022 Annual Meeting

     3  

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

     4  

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     12  

Class II Nominees

     13  

Continuing Directors

     14  

Selecting Nominees for Director

     16  

Director Independence

     17  

Executive Sessions of Our Non-Management Directors

     18  

Board Leadership Structure

     18  

Board’s Role in Risk Oversight

     18  

Corporate Governance Guidelines, Committee Charters and Code of Business Conduct

     19  

Committees of the Board

     20  

Meetings of the Board of Directors and Attendance at the Annual Meeting

     21  

Plurality Voting for Directors and Director Resignation Policy

     22  

Succession Planning and Management Development

     22  

Security Ownership Policies

     22  

Executive Officers

     23  

Policies and Procedures for Related Person Transactions

     25  

Related Person Transactions

     25  

Indemnification Agreements

     28  

Communications with the Board

     29  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     30  

DELINQUENT SECTION 16(A) REPORTS

     32  

EXECUTIVE COMPENSATION

     33  

AUDIT MATTERS

     66  

Audit Committee Report

     66  

Pre-approval of Independent Auditor Services

     67  

Independent Registered Public Accounting Firm Fees

     67  

 

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PROPOSAL 1: ELECTION OF DIRECTORS

     68  

Nominees for Director

     68  

PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

     69  

PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION

     71  

PROPOSAL 4: APPROVAL OF THE SECTION 382 RIGHTS PLAN

     72  

PROPOSAL 5: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS

     78  

OTHER INFORMATION FOR STOCKHOLDERS

     79  

Other Business

     79  

Proposals for 2022

     79  

Annual Report for 2020

     79  

Householding of Annual Disclosure Documents

     80  

Attendance at Annual Meeting

     80  

ANNEX A: GOGO INC. SECTION 382 RIGHTS PLAN

     A-1  

 

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LOGO

GOGO INC.

111 N. Canal St., Suite 1400

Chicago, Illinois 60606

2021 PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Please note that, due to concerns regarding the COVID-19 pandemic and to protect the health and safety of our employees and stockholders, the annual meeting will be a virtual meeting conducted solely on-line and can be attended by visiting www.virtualshareholdermeeting.com/GOGO2021.

Gogo Inc.’s 2021 Annual Meeting Information

 

Date and Time:

   May 27, 2021, at 10:00 a.m. Central Time.

Place:

   Virtually at www.virtualshareholdermeeting.com/GOGO2021.

Record Date:

   April 5, 2021.

Voting:

   Holders of common stock are entitled to one vote per share.

Admission

   To virtually attend the meeting you will need the control number located on your proxy card or the instructions that accompanied your proxy materials.

Date of Mailing:

   This proxy statement and accompanying form of proxy will be mailed to stockholders on or about April 16, 2021.

Items of Business

 

  Proposals   Board Vote
Recommendation
 

Page Reference

(for more information)

1.  Election of the three directors named in this proxy statement

  FOR   68

2.  Advisory vote approving executive compensation

  FOR   69

 

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  Proposals   Board Vote
Recommendation
 

Page Reference

(for more information)

3.  Advisory vote on the frequency of future advisory votes approving executive compensation

  EVERY 1 YEAR   71

4.  Approval of the Section 382 Rights Plan

  FOR   72

5.  Ratification of the appointment of our independent registered public accounting firm

  FOR   78

Board Structure

Gogo Inc. (“Gogo” or the “Company”) currently has nine directors divided into three classes: three in Class I, three in Class II and three in Class III. The terms of office of the three Class II directors expire at the Annual Meeting.

Election of Class II Directors

The three nominees for election as Class II directors are listed below. If elected, the nominees for election as Class II directors will serve for a term of three years or until their successors are duly elected and qualified. If you sign and return the accompanying proxy, your shares will be voted for the election of the two Class II nominees recommended by the board of directors unless you choose to withhold authority to vote for any of the nominees. If any nominee for any reason is unable to serve or will not serve, your proxy may be voted for a substitute nominee designated by the board of directors as the proxy holders may determine. The board is not aware of any nominee who will be unable to or will not serve as a director. There is no cumulative voting.

In order to be elected, a nominee must receive a plurality of the votes validly cast at the Annual Meeting. Therefore, the three nominees who receive the most “FOR” votes (among votes properly cast in person or by proxy) will be elected. Proxies cannot be voted for a greater number of persons than the number of nominees named. The Class II nominees are as follows:

 

Name

 

 

Age

 

 

Director
Since

 

 

Occupation

 

 

  Board Committees  

 

 

  Independent  

 

Michele Coleman Mayes

  71   2016  

VP and General Counsel of New York Public Library

 

  Audit   Yes

Robert H. Mundheim

  88   2012  

Of Counsel to Shearman & Sterling LLP

 

 

  Compensation   Yes

Harris N. Williams

  51   2010  

Senior Managing Director of WF Investment Management LLC

 

 

  Audit   Yes

 

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Additional information about the three director nominees, as well as the Class I and Class III directors who will continue to serve after the Annual Meeting, is provided on page 13.

Advisory Vote on Executive Compensation

The board is asking you to vote to approve the compensation of our named executive officers, often referred to as a “say-on-pay” advisory vote. While the advisory vote is not binding on our board of directors, the board and Compensation Committee will take into account the result of the vote when determining future executive compensation arrangements. For more information, see page 69.

Advisory Vote on Frequency of Advisory Vote on Executive Compensation

The board is asking you to vote for a frequency of every one year for the non-binding advisory vote on the frequency of holding future votes regarding compensation of the named executive officers. For more information, see page 71.

Approval of the Section 382 Rights Plan

The board is asking you to approve our Section 382 Rights Plan. For more information, see page 72.

Ratification of the Appointment of the Independent Registered Public Accounting Firm

The board is asking you to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the 2021 fiscal year. For more information, see page 78.

2022 Annual Meeting

Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, stockholder proposals submitted for inclusion in the proxy statement for our 2022 annual meeting of stockholders must be received by us by December 17, 2021. For more information, see page 79.

 

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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

This proxy statement and proxy card are furnished in connection with the solicitation of proxies to be voted at our annual meeting of stockholders, which will be held virtually at 10:00 a.m. Central Time, on May 27, 2021, at www.virtualshareholdermeeting.com/GOGO2021 (the “Annual Meeting”). On or about April 16, 2021, we began mailing to stockholders of record this proxy statement and proxy card.

Why am I receiving this proxy statement and proxy card?

You have received these proxy materials because our board of directors is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement describes issues on which we would like you to vote at our Annual Meeting. It also gives you information on these issues so that you can make an informed decision.

Because you own shares of our common stock, our board of directors has made this proxy statement and proxy card available to you on the Internet, in addition to delivering printed versions of this proxy statement and proxy card by mail to certain stockholders by mail.

When you vote by using the Internet or by signing and returning the proxy card you received by mail, you appoint Marguerite M. Elias and Linda McConnon (with full power of substitution) as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed or, if an issue that is not on the proxy card comes up for vote, in accordance with their best judgment. This way, your shares will be voted whether or not you virtually attend the Annual Meeting. Even if you plan to virtually attend the Annual Meeting, we encourage you to vote in advance by using the Internet or by signing and returning your proxy card. If you vote via the Internet, you do not need to return your proxy card.

Why is the Annual Meeting being held virtually?

We have been closely monitoring developments with the COVID-19 pandemic and the related recommendations and protocols issued by public health authorities and federal, state, and local governments. In light of these ongoing concerns and in order to protect the health and safety of our employees and stockholders, we will be conducting the Annual Meeting solely online.

Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials?

Pursuant to rules adopted by the SEC, we are permitted to furnish our proxy materials over the Internet to our stockholders by delivering a Notice in the mail. If you received a

 

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Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review the proxy statement and annual report over the Internet at www.proxyvote.com. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the Notice.

Stockholders who receive a printed set of proxy materials will not receive the Notice, but may still access our proxy materials and submit their proxies over the Internet at www.proxyvote.com.

Who is entitled to vote at the Annual Meeting?

Holders of our common stock at the close of business on April 5, 2021 are entitled to vote. April 5, 2021 is referred to as the record date. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available in electronic form on the day of the Annual Meeting and for ten days before the meeting, in each case at www.virtualshareholdermeeting.com/GOGO2021.

How many votes is each share of common stock entitled to?

Holders of common stock are entitled to one vote per share. On the record date, there were 92,083,425 shares of our common stock outstanding and entitled to vote.

How do I vote at the Annual Meeting?

Stockholders of record may vote by using the Internet or by mail as described below. Stockholders also may virtually attend the Annual Meeting on May 27, 2021 at www.virtualshareholdermeeting.com/GOGO2021 and vote online at that time. If you hold shares through a bank or broker, please refer to your proxy card or other information forwarded by your bank or broker to see which voting options are available to you.

 

   

You may vote by using the Internet. The address of the website for Internet voting is www.proxyvote.com which may be accessed using the control number located on each proxy card. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. Eastern Time on May 26, 2021. Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded.

 

   

You may vote by mail. If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope.

The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to virtually attend. Only our stockholders and persons holding proxies from our stockholders may attend the Annual Meeting. To vote at the Annual Meeting, you must access www.virtualshareholdermeeting.com/GOGO2021 and will need the control number located on

 

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your proxy card or to follow the instructions that accompanied your proxy materials. If you hold your shares in “street name,” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.

How do I change or revoke my proxy?

You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:

 

   

submitting a subsequent proxy by using the Internet prior to 11:59 p.m. Eastern Time on May 26, 2021;

   

sending written notice of revocation prior to the Annual Meeting to our Corporate Secretary c/o Gogo Business Aviation LLC, 105 Edgeview Drive, Broomfield, Colorado 80021; or

   

virtually attending the Annual Meeting and voting online.

If you hold shares through a bank or broker, please refer to your proxy card or other information forwarded by your bank or broker to see how you can revoke your proxy and change your vote.

Virtual attendance at the Annual Meeting will not by itself revoke a proxy.

How many votes do you need to hold the Annual Meeting?

The presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast at the Annual Meeting will constitute a quorum. Stockholders who attend the Annual Meeting online at www.virtualshareholdermeeting.com/GOGO2021 will be deemed to be in person attendees for purposes of determining if a quorum has been meet. If a quorum is present, we can hold the Annual Meeting and conduct business.

On what items am I voting?

You are being asked to vote on five items:

 

   

to elect three directors nominated by the board of directors and named in the proxy statement to serve until our 2024 annual meeting of stockholders or until their successors are elected and qualified;

   

to approve executive compensation in a non-binding advisory vote;

   

a non-binding advisory vote on the frequency of future advisory votes approving executive compensation;

   

to approve the Section 382 Rights Plan; and

   

to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

No cumulative voting rights are authorized, and dissenters’ rights are not applicable to these matters.

 

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How does the board of directors recommend that I vote?

The board recommends that you vote as follows:

 

   

FOR each of the director nominees;

   

FOR the approval of executive compensation;

   

EVERY 1 YEAR on the frequency of future advisory votes executive compensation;

   

FOR the approval of the Section 382 Rights Plan; and

   

FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

How may I vote in the election of directors, and how many votes must the nominees receive to be elected?

With respect to the election of directors, you may:

 

   

vote FOR all three nominees for director;

   

vote FOR only one or two of the nominees for director and WITHHOLD from voting on the remaining nominee(s) for director; or

   

WITHHOLD from voting on all three nominees for director.

The Company’s Amended and Restated Bylaws (the “Bylaws”) provide for the election of directors by a plurality of the votes cast. This means that the three individuals nominated for election to the board of directors who receive the most “FOR” votes (among votes properly cast in person or by proxy) will be elected.

What happens if a nominee is unable to stand for election?

If a nominee is unable to stand for election, the board may either:

 

   

reduce the number of directors that serve on the board; or

   

designate a substitute nominee.

If the board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.

How may I vote for the non-binding advisory vote approving executive compensation, and how many votes must this proposal receive to pass?

With respect to this proposal, you may:

 

   

vote FOR the approval of executive compensation;

   

vote AGAINST the approval of executive compensation; or

   

ABSTAIN from voting on the proposal.

 

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In order to pass, the proposal must receive the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by the holders of common stock who are present in person or by proxy. In accordance with applicable law, this vote is “advisory,” meaning it will serve as a recommendation to our board of directors, but will not be binding. However, our Compensation Committee will consider the outcome of the vote when making future compensation decisions for our executive officers. If you abstain from voting on the proposal, it will have the same effect as a vote against the proposal.

How may I vote for the non-binding advisory vote on the frequency of future advisory votes approving executive compensation, and how many votes must this proposal receive to pass?

With respect to this proposal, you may vote to indicate your preference as follow:

 

   

an advisory vote on executive compensation EVERY 3 YEARS;

   

an advisory vote on executive compensation EVERY 2 YEARS;

   

an advisory vote on executive compensation EVERY 1 YEAR; or

   

ABSTAIN from voting on the proposal.

The non-binding advisory vote on the frequency of future advisory votes approving executive compensation will be determined by a plurality of the votes cast of the outstanding shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote. This means that the option receiving the highest number of votes will be determined to be the preferred frequency. In addition, as an advisory vote, this proposal is not binding. In light of the foregoing, our board of directors and Compensation Committee will consider the choice that receives the most votes in making future decisions regarding the frequency of future advisory votes approving executive compensation.

How may I vote for the proposal to approve the Section 382 Rights Plan, and how many votes must this proposal receive to pass?

With respect to this proposal, you may:

 

   

vote FOR the approval of the Section 382 Rights Plan;

   

vote AGAINST the approval of the Section 382 Rights Plan; or

   

ABSTAIN from voting on the proposal.

In order to pass, the proposal must receive the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by the holders of common stock who are present in person or by proxy. If you abstain from voting on the proposal, it will have the same effect as a vote against the proposal.

 

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How may I vote for the proposal to ratify the appointment of our independent registered public accounting firm, and how many votes must this proposal receive to pass?

With respect to this proposal, you may:

 

   

vote FOR the ratification of the accounting firm;

   

vote AGAINST the ratification of the accounting firm; or

   

ABSTAIN from voting on the proposal.

In order to pass, the proposal must receive the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by the holders of common stock who are present in person or by proxy. If you abstain from voting on the proposal, it will have the same effect as a vote against the proposal.

What happens if I sign and return my proxy card but do not provide voting instructions?

If you return a signed card but do not provide voting instructions, your shares will be voted as follows:

 

   

FOR each of the three director nominees;

   

FOR the approval of executive compensation;

   

EVERY 1 YEAR on the frequency of future advisory votes approving executive compensation;

   

FOR the approval of the Section 382 Rights Plan;

   

FOR the ratification of the appointment of our independent registered public accounting firm; and

   

At the discretion of the proxy holders, either FOR or AGAINST any other matter or business that may properly come before the Annual Meeting.

Will my shares be voted if I do not vote by using the Internet or by signing and returning my proxy card?

If you do not vote by using the Internet or by signing and returning your proxy card, then your shares will not be voted and will not count in deciding the matters presented for stockholder consideration at the Annual Meeting.

If your shares are held in street name through a bank or broker, your bank or broker may vote your shares under certain limited circumstances if you do not provide voting instructions before the Annual Meeting, in accordance with the Nasdaq rules that govern the banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our independent registered public accountants described in this proxy statement. With respect to this proposal, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.

 

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The election of directors, the non-binding advisory vote approving executive compensation, the non-binding advisory vote on the frequency of advisory votes approving executive compensation and the approval of the Section 382 Rights Plan are not considered routine matters under the Nasdaq rules relating to voting by banks and brokers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum, but not for determining the number of shares voted for or against the non-routine matter.

We encourage you to provide instructions to your bank or brokerage firm by voting your proxy. This action ensures your shares will be voted at the Annual Meeting in accordance with your wishes.

What is the vote required for each proposal to pass, and what is the effect of abstentions or withheld votes and uninstructed shares on the proposals?

The following table summarizes the board’s recommendation on each proposal, the vote required for each proposal to pass and the effect of abstentions or withheld votes and uninstructed shares on each proposal.

 

Proposal

Number

  Item  

Board Voting

Recommendation

  Votes Required for Approval  

Abstentions/

Withheld Votes

 

Broker

Non-Votes

                           

 

1.

 

 

Election of Directors

 

 

FOR

 

 

The three nominees who receive the most FOR votes properly cast in person or by proxy and entitled to vote will be elected

 

 

 

No effect

 

 

No effect

2.  

Advisory vote approving executive compensation

  FOR  

Majority of the voting power of the shares present in person or by proxy and entitled to vote

 

  Counts as votes against   No effect
3.  

Advisory vote approving executive compensation

  EVERY 1 YEAR  

The option receiving the most FOR votes properly cast in person, electronically or by proxy, and entitled to vote

 

  No effect   No effect
4.  

Approval of the Section 382 Rights Plan

  FOR  

Majority of the voting power of the shares present in person or by proxy and entitled to vote

 

  Counts as votes against   No effect
5.  

Ratification of independent registered public accounting firm

  FOR  

Majority of the voting power of the shares present in person or by proxy and entitled to vote

 

  Counts as votes against   Discretionary voting by broker permitted
                     

 

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What do I need to do to virtually attend the Annual Meeting?

You will need to go to www.virtualshareholdermeeting.com/GOGO2021 and enter the control number located on your proxy card or to follow the instructions that accompanied your proxy materials. We recommend that you log-in at least 15 minutes before the meeting starts to ensure that you are logged in when the virtual annual meeting begins. Only our stockholders and persons holding proxies from our stockholders may attend the Annual Meeting.

Can I receive future proxy materials and annual reports electronically?

Yes. You may access this proxy statement and the annual report by accessing the website located at www.proxyvote.com using the control number located on each proxy card. Instead of receiving future proxy materials in the mail, you can elect to receive an email that provides a link to our future annual reports and proxy materials on the Internet. Opting to receive your proxy materials electronically will save us the cost of producing and mailing documents to your home or business, will reduce the environmental impact of our annual meetings, and will give you an automatic link to the proxy voting site.

If you are a stockholder of record and wish to enroll in the electronic proxy delivery service for future meetings, you may do so by going to www.proxyvote.com and following the prompts.

 

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following sections provide an overview of our corporate governance structure and processes. Among other topics, we describe how we select directors, how we consider the independence of our directors and key aspects of our board operations.

The Company’s Bylaws provide that the board of directors shall consist of not fewer than three directors, with the exact number to be fixed by the board of directors. The board of directors has fixed the current number of directors at 10, and there is currently one vacancy.

The Company’s Third Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) divides the board into three classes, as nearly equal in number as possible, with the terms of office of the directors of each class ending in different years. Each of Class I, Class II and Class III currently has three directors. The terms of directors in Classes I, II and III end at the annual meetings in 2023, 2021 and 2022, respectively.

 

Director         Age    Position    Director Since  
 

Class II Directors for election at the 2021 Annual Meeting

  

Michele Coleman Mayes

     71    Director      2016  

Robert H. Mundheim

     88    Director      2012  

Harris N. Williams

     51    Director      2010  
 

Class III Directors for election at the 2022 Annual Meeting

  

Robert L. Crandall

     85    Director      2006  

Christopher D. Payne

     52    Director      2014  

Mark Anderson

     45    Director      2021  
 

Class I Directors for election at the 2023 Annual Meeting

  

Hugh W. Jones

     57    Lead Independent Director      2016  

Oakleigh Thorne

     63    Chairman of the Board, President and Chief Executive Officer      2006  

Charles C. Townsend

     71    Director      2010  

On March 30, 2021, Mark Anderson was appointed as a Class III director. Immediately prior to, and in order to accommodate, the appointment of Mr. Anderson as a Class III director, Charles Townsend resigned as a Class III director on March 30, 2021, and was thereafter appointed by the Board as a Class I director.

At each annual meeting of the stockholders, the successors of the directors whose term expires at that meeting are elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. The board of directors is therefore asking you to elect the three nominees for director whose terms expire at the Annual Meeting. Michele Coleman Mayes, Robert H. Mundheim and Harris N. Williams, our current Class II directors, have been nominated for reelection at the Annual Meeting. See “Proposal 1: Election of Directors” on page 68.

 

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Directors are elected by a plurality. Therefore, the three nominees who receive the most “FOR” votes will be elected. Proxies cannot be voted for a greater number of persons than the number of nominees named. There is no cumulative voting. If you sign and return the accompanying proxy card, your shares will be voted for the election of the three nominees recommended by the board of directors unless you choose to withhold your vote against any or all of the nominees. If any nominee for any reason is unable to serve or will not serve, proxies may be voted for such substitute nominee as the proxy holders may determine. The Company is not aware of any nominee who will be unable to or will not serve as a director.

Biographical information for each nominee and continuing director is set forth below. We have also identified for each individual the business experience, qualifications, attributes and skills that underlie the board of directors’ and Nominating and Corporate Governance Committee’s belief that each individual is a valuable member of the board of directors. The persons who have been nominated for election and are to be voted upon at the Annual Meeting are listed first, with continuing directors following thereafter.

Class II Nominees

Michele Coleman Mayes currently serves as Vice President, General Counsel and Secretary for the New York Public Library (NYPL). She joined NYPL in August 2012 after serving as Executive Vice President and General Counsel for Allstate Insurance Company since 2007. Prior to Allstate, she served as a Senior Vice President and the General Counsel of Pitney Bowes Inc. from 2003 to 2007 and in several legal capacities at Colgate-Palmolive from 1992 to 2003. In 1982, Ms. Mayes entered the corporate sector as managing attorney of Burroughs Corporation. After Burroughs and Sperry Corporation merged, creating Unisys Corporation, she was appointed Staff Vice President and Associate General Counsel for Worldwide Litigation. From 1976 through 1982, she served in the U.S. Department of Justice as an Assistant United States Attorney in Detroit and Brooklyn, eventually assuming the role of Chief of the Civil Division in Detroit. She chaired the American Bar Association Commission on Women in the Profession from 2014 to 2017 and is on the Board of Trustees of the American College of Corporate Governance Counsel. Ms. Mayes served as a director of Assurant, Inc. from 2004 to 2007, where she also served as a member of the Audit Committee and Chairman of the Nominating and Governance Committee.

Ms. Mayes’s specific qualifications, experience, skills and expertise include:

 

   

Legal, analytical and governance skills;

   

Core business skills and leadership experience; and

   

Expertise in civil litigation and governance matters.

Robert H. Mundheim has been Of Counsel to Shearman & Sterling LLP since 2000. Since 2012, Mr. Mundheim has also served as a Professor of Corporate Law and Finance at the University of Arizona James E. Rogers College of Law. From 1992 to 1999, Mr. Mundheim was Executive Vice President and General Counsel of Salomon Inc. and

 

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Senior Executive Vice President and General Counsel of Salomon Smith Barney Holdings Inc., and prior to that, he was Co-Chairman of the New York law firm of Fried, Frank, Harris, Shriver & Jacobson LLP and University Professor of Law and Finance at the University of Pennsylvania Law School, where he taught since 1965 and served as Dean from 1982 to 1989. Mr. Mundheim has also served as General Counsel to the U.S. Treasury Department, Special Counsel to the Securities and Exchange Commission and Vice Chairman, Governor-at-Large and a member of the Executive Committee of the National Association of Securities Dealers. He previously served as Chairman of the board of directors of Quadra Realty Trust, Inc. and as a director of Weeden & Co. LP, eCollege.com, Benjamin Moore & Co., Commerce Clearing House Inc., Arnhold & S. Bleichroeder Holdings, Inc., Hypo Real Estate Holding AG and First Pennsylvania Bank. Mr. Mundheim currently serves as a member of the Board of Trustees of the New School and the Board of Trustees of the Curtis Institute of Music, a Trustee of the American College of Corporate Governance Counsel and a director of the Salzburg Global Seminar.

Mr. Mundheim’s specific qualifications, experience, skills and expertise include:

 

   

Extensive experience and expertise on corporate governance matters;

   

Core business skills, including financial and strategic planning; and

   

Finance, compliance and controls expertise.

Harris N. Williams serves as Senior Managing Director of WF Investment Management LLC, a diversified asset management business. From 2005 to 2013, Mr. Williams was an executive with Ripplewood Holdings, LLC, a global private equity firm focused on control investments, serving as Managing Director since 2007. Prior to 2005, Mr. Williams was in the Investment Banking division of Credit Suisse, primarily focused on mergers and acquisitions and leveraged buyouts. Mr. Williams’s industry areas of focus have included Technology, Media, Financial Services, Healthcare, Industrials and Hospitality on a global basis. Mr. Williams served on the board of directors of 3W Power Holdings Ltd. from 2011 to 2013, where he also served as Chairman of the Audit Committee.

Mr. Williams’s specific qualifications, experience, skills and expertise include:

 

   

Core business skills, including financial and strategic planning; and

   

Expertise in financial management and financial reporting.

Continuing Directors

Class III Directors – Terms Expiring at the 2022 Annual Meeting:

Robert L. Crandall is the former chairman and CEO of AMR Corporation and American Airlines. Mr. Crandall served as a member of the board of directors of Aircell, our predecessor company, from 2003 until January 2007.

 

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Mr. Crandall’s specific qualifications, experience, skills and expertise include:

 

   

Operating and management experience;

   

Core business skills, including financial and strategic planning; and

   

A deep understanding of the airline industry.

Christopher D. Payne has served as the Chief Operating Officer of DoorDash Inc. since January 2016. Mr. Payne was formerly the CEO of Tinder, Inc. from March 2015 to September 2015, the Senior Vice President, North American Marketplaces of eBay Inc. from September 2010 to December 2014 and the founder and CEO of Positronic, Inc. from July 2007 until December 2008, when it was sold to eBay. Mr. Payne previously served as a Vice President at Amazon from 1998 to 2001 and a Vice President at Microsoft from 2001 to 2007. Mr. Payne also was on the board of directors of Rue La La from July 2011 to October 2013.

Mr. Payne’s specific qualifications, experience, skills and expertise include:

 

   

Operating and management experience;

   

Core business skills, including financial and strategic planning; and

   

A deep understanding of the technology and e-commerce industries.

Mark M. Anderson joined GTCR LLC in 2000 and is currently a Managing Director of the firm. He previously worked at Bowles Hollowell Conner & Co. from 1998 to 2000. Mr. Anderson has served as a director of CommerceHub since 2018, Jet Support Services Inc. since 2020, and Vivid Seats since 2017. In addition, Mr. Anderson previously served as a director on past GTCR portfolio companies, including Beeline, CAMP Systems, Cision, Global Traffic Network, Land Lease Group, Landmark Aviation, Lytx and XIFIN, and was instrumental in other GTCR investments including Skylight Financial, Solera and Transaction Network Services. Mr. Anderson is a member of the Chicago-area Jefferson Scholars Selection Committee for the University of Virginia.

Mr. Anderson’s specific qualifications, experience, skills and expertise include:

 

   

Core business skills, including financial and strategic planning; and

   

A deep understanding of the technology and e-commerce industries.

Class I Directors – Terms Expiring at the 2023 Annual Meeting:

Hugh W. Jones is a co-founder of Basalt Investments, LLC. Mr. Jones previously served as President of Sabre Airline Solutions from April 2011 to August 2017. From 1996 to 2011, Mr. Jones held a number of other executive positions at Sabre including COO of Sabre Travel Network and Airline Solutions. Before joining Sabre, Mr. Jones served as the president and CEO of Travelocity. Mr. Jones has served on the board of directors of the travel technology company Travelport (formally Toro Private OpCo, LTD) since May 2019. He

 

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began his career in the travel industry at American Airlines in 1988, serving in a variety of finance positions. Mr. Jones was appointed as our Lead Independent Director effective January 1, 2021.

Mr. Jones’s specific qualifications, experience, skills and expertise include:

 

   

Core business skills, including financial, operating and management;

   

Finance, financial reporting, compliance and controls expertise; and

   

A deep understanding of the airline technology and ecommerce industries.

Oakleigh Thorne has served as our President and Chief Executive Officer since March 4, 2018 and was appointed Chairman of the board of directors effective January 1, 2021. Mr. Thorne also serves as the CEO of Thorndale Farm, L.L.C., which oversees investment of Thorne family assets. From 1996 to 2009, Mr. Thorne served as the Co-President of Blumenstein/Thorne Information Partners, L.L.C., a private equity and venture capital firm. From 2000 to 2007, Mr. Thorne served as Chairman and CEO of eCollege.com, a then-publicly traded provider of outsourced eLearning solutions, and he previously served as CEO of Commerce Clearing House Inc. and as a director of ShopperTrak and MachineryLink. Mr. Thorne served as a member of the board of directors of Aircell, our predecessor company, from 2003 until January 2007.

Mr. Thorne’s specific qualifications, experience, skills and expertise include:

 

   

Core business skills, including financial and strategic planning;

   

Finance, financial reporting, compliance and controls expertise; and

   

A deep understanding of our Company and industry.

Charles C. Townsend currently serves as Managing General Partner of Bluewater Wireless II, L.P. Mr. Townsend founded Aloha Partners LP in 2001 and served as its Managing General Partner until 2008. Mr. Townsend has served on the Board of Directors of CTIA, a trade association representing the wireless telecommunications industry, from 2017 to the present. Since January 2004, Mr. Townsend has also served as President of Pac 3, LLC.

Mr. Townsend’s specific qualifications, experience, skills and expertise include:

 

   

Core business skills, including financial and strategic planning;

   

A deep understanding of the telecommunications industry; and

   

Extensive knowledge of wireless spectrum valuations and uses.

Selecting Nominees for Director

Our board has delegated to the Nominating and Corporate Governance Committee the responsibility for reviewing and recommending to the board nominees for director. In

 

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accordance with our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee, in evaluating director candidates, recommends to the board appropriate criteria for the selection of new directors based on the strategic needs of the Company and the board, periodically reviews the criteria adopted by the board and, if deemed desirable, recommends changes to such criteria.

The board values diversity, in its broadest sense, reflecting, but not limited to, profession, geography, gender, ethnicity, skills and experience, and when conducting a search endeavors to include individuals who would add diversity to the board, including women and minority candidates, in the qualified pool from which board candidates are chosen. From time to time stockholders, prospective candidates or other third parties may present an individual to the Nominating and Corporate Governance Committee for consideration, in which case the board may, if such individual meets the criteria for membership and is expected to make significant contributions to the Company, elect such individual to the board without conducting a search.

The Nominating and Corporate Governance Committee is responsible for recommending to the board nominees for election to the board at each annual meeting of stockholders and for identifying one or more candidates to fill any vacancies that may occur on the board. New candidates may be identified through recommendations from independent directors or members of management, search firms, discussions with other persons who may know of suitable candidates to serve on the board, and stockholder recommendations. Evaluations of prospective candidates typically include a review of the candidates’ background and qualifications by the Nominating and Corporate Governance Committee, interviews with the Committee as a whole, one or more members of the Committee, or one or more other board members, and discussions within the Committee and the full board. The Nominating and Corporate Governance Committee then recommends candidates to the full board, with the full board selecting the candidates to be nominated for election by the stockholders or to be elected by the board to fill a vacancy.

The Nominating and Corporate Governance Committee will consider director candidates proposed by stockholders as well as recommendations from other sources. Any stockholder who wishes to recommend a prospective candidate for the board of directors for consideration by the Nominating and Corporate Governance Committee may do so by submitting the name and qualifications of the prospective candidate in writing to the following address: Corporate Secretary, c/o Gogo Business Aviation LLC, 105 Edgeview Drive, Suite 300, Broomfield, Colorado 80021. Any such submission should also describe the experience, qualifications, attributes, and skills that make the prospective candidate a suitable nominee for the board of directors. Our Bylaws set forth the requirements for direct nomination of an individual by a stockholder for election to the board of directors.

Director Independence

Under the Nasdaq listing standards, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards of Nasdaq require that,

 

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subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. In order to consider a director independent, the board of directors must affirmatively determine that he or she has no material relationship with Gogo Inc. and is independent under the independence criteria for directors established by Nasdaq, Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the independence criteria adopted by the board of directors. The independence criteria adopted by the board are set forth in the Company’s Corporate Governance Guidelines.

The board undertook an annual review of director independence in March 2021. As part of this review, the board considered whether there were any relationships between each director or any member of his or her immediate family and the Company. The board also examined whether there were any relationships between an organization of which a director is a partner, stockholder or executive officer and the Company. The purpose of this review was to determine whether any such relationships were inconsistent with a determination that a director is independent. As a result of this review, the board affirmatively determined that the following directors are independent directors: Robert Crandall, Hugh Jones, Michele Coleman Mayes, Robert Mundheim, Christopher Payne, Charles Townsend and Harris Williams. Accordingly, seven of our nine directors have been affirmatively determined to be independent. The board also affirmatively determined that all directors serving on the Audit Committee satisfy the independence requirements of Nasdaq and the SEC relating to audit committee members and that all directors serving on the Compensation Committee satisfy the independence requirements of Nasdaq relating to compensation committee members.

Executive Sessions of Our Non-Management Directors

The Lead Independent Director and the full board each have authority to require the board to meet in executive sessions outside the presence of management. The independent directors meet at regularly scheduled executive sessions without management not less frequently than once per quarter.

Board Leadership Structure

As noted in our Corporate Governance Guidelines, the board has no policy with respect to the separation of the offices of Chairman and Chief Executive Officer. The board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any way that is in the best interests of the Company at a given point in time. Mr. Thorne currently serves as the Chairman of our board of directors. Because Mr. Thorne also serves as our President and CEO, the board of directors appointed Mr. Jones to serve as Lead Independent Director.

Board’s Role in Risk Oversight

Our board is responsible for overseeing our risk management. Under its charter, the Audit Committee is responsible for reviewing and discussing our risk management practices,

 

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including the effectiveness of the systems and policies for risk assessment and risk management, the major financial risk exposures and the steps management has taken to monitor and control such exposures, any unusual material transactions and management, internal auditor and independent auditor reviews regarding policies, procedures and monitoring related to the Foreign Corrupt Practices Act and other anti-corruption statutes. The Audit Committee also oversees our corporate compliance and ethics programs, as well as the internal audit function. The board’s other independent committees oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally. In addition to the committees’ work in overseeing risk management, our full board regularly engages in discussions of the most significant risks that the Company is facing and how these risks are being managed, and the board receives reports on risk management from senior officers of the Company and from the committee chairs. The board reviews periodic assessments obtained from the Company’s ongoing enterprise risk management process that are designed to identify potential events that may affect the achievement of the Company’s objectives.

The Company’s executive officers, including the General Counsel and Secretary, report directly to our Chief Executive Officer, providing him with visibility into the Company’s risk profile. The head of the Company’s internal audit function regularly reports to the Audit Committee, and each of the General Counsel and head of internal audit have private sessions with the Audit Committee on a regular basis. The board of directors believes that the work undertaken by the committees of the board, together with the work of the full board of directors and our management, enables the board of directors to effectively oversee the Company’s risk management function.

Corporate Governance Guidelines, Committee Charters and Code of Business Conduct

Our Corporate Governance Guidelines are available on the corporate governance section of our investor relations website at www.ir.gogoair.com. The written charters for each of the Audit, Compensation and Nominating and Corporate Governance Committees also are available on the corporate governance section of our investor relations website at www.ir.gogoair.com.

We have a long-standing commitment to conduct our business in accordance with high ethical principles. Our Code of Business Conduct and Ethics applies to our directors, chief executive officer, chief financial officer, chief accounting officer and all other officers and employees. Our Code of Financial Ethics applies to our chief executive officer, chief financial officer, chief accounting officer and any other key employees performing finance or accounting functions. Copies of the Code of Business Conduct and Ethics and the Code of Financial Ethics may also be accessed on the corporate governance section of our investor relations website at www.ir.gogoair.com.

 

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Committees of the Board

Our board of directors has three committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The following table shows the current members of each committee and the number of meetings held during fiscal year 2020.

 

  Director            Audit                Compensation                    N&CG             

Mark Anderson

              

Robert L. Crandall

          

Hugh W. Jones

          

Michele Coleman Mayes

           ✓*

Robert H. Mundheim

        ✓*   

Christopher D. Payne

              

Oakleigh Thorne

              

Charles C. Townsend

            

Harris N. Williams

   ✓*          

Number of meetings

   9    13    4

  ✓= current committee member; * = chair

Audit Committee. Our Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications and independence of our independent registered public accounting firm, the effectiveness of our internal control over financial reporting and the performance of our internal audit function and independent registered public accounting firm. Our Audit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes for managing business and financial risks, and our compliance with legal, ethical and regulatory requirements. Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm.

During fiscal year 2020, the Audit Committee held nine meetings. The Audit Committee is currently composed of Messrs. Williams (chair), Crandall and Jones and Ms. Mayes. Each member of our Audit Committee meets the Nasdaq independence requirements, is financially literate, and is an independent director under Rule 10A-3 under the Exchange Act. Our board has determined that Mr. Crandall is an audit committee financial expert as defined by the SEC.

Compensation Committee. Our Compensation Committee is responsible, among its other duties and responsibilities, for reviewing and approving all forms of compensation to be provided to, and employment agreements with, the executive officers and directors of the Company and its subsidiaries (including the Chief Executive Officer), establishing the general

 

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compensation policies of the Company and its subsidiaries and reviewing, approving and overseeing the administration of the employee benefits plans of the Company and its subsidiaries.

During fiscal year 2020, the Compensation Committee held 13 meetings. The Compensation Committee is currently composed of Messrs. Mundheim (chair), Townsend, Crandall and Jones. Each member of our Compensation Committee meets the Nasdaq independence requirements and is an outside director under Section 162(m) of the Internal Revenue Code. If all directors serving on the Compensation Committee do not meet the “non-employee director” requirements of Rule 16b-3 under the Exchange Act, the Compensation Committee will delegate to a special Section 16b-3 subcommittee consisting of those Compensation Committee members who meet such requirements the authority to approve grants of equity- based compensation subject to Section 16(b) of the Exchange Act. The Compensation Committee also from time-to-time delegates authority to our Chief Executive Officer to approve equity grants to non-executive officers and other employees.

The Compensation Committee retained Compensation Strategies, Inc. during 2020 to provide executive compensation consulting services. Compensation Strategies, Inc. reports directly to the Compensation Committee, and does not provide any other services to the Company. After a review of the applicable factors prescribed by the SEC and Nasdaq, the Compensation Committee determined that Compensation Strategies, Inc. is independent.

For additional information about the Compensation Committee’s processes and the role of executive officers and compensation consultants in determining compensation, see “Executive Compensation—Compensation Discussion and Analysis.”

Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee is responsible, among its other duties and responsibilities, for identifying and recommending candidates for election to our board (including candidates proposed by stockholders), reviewing the composition of the board and its committees, developing corporate governance guidelines and recommending them to the board for approval, managing the board’s annual self-evaluation process and developing and periodically reviewing succession plans for our Chief Executive Officer and such other officers as the Nominating and Corporate Governance Committee deems appropriate.

During fiscal year 2020, the Nominating and Corporate Governance Committee held four meetings. The Nominating and Corporate Governance Committee is currently composed of Ms. Mayes (chair) and Mr. Mundheim. Each member of the Nominating and Corporate Governance Committee meets the Nasdaq independence requirements.

Meetings of the Board of Directors and Attendance at the Annual Meeting

Our board of directors held 19 meetings during fiscal year 2020. Each of our directors attended at least 75% of the total number of meetings of the board and any committees of

 

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which he/she was a member during the time in which such director served on the board or any committee. It is the board’s policy that our directors attend our annual meetings. All members of the board serving as directors at the time of the 2020 annual meeting attended the 2020 annual meeting.

Plurality Voting for Directors and Director Resignation Policy

The Company’s Bylaws provide for the election of directors by a plurality of the votes cast. This means that the three individuals nominated for election to the board of directors at the Annual Meeting who receive the most “FOR” votes (among votes properly cast in person or by proxy) will be elected. In addition, it is the Company’s policy that if (i) a director ceases to be employed by his or her principal employer, commences employment with a new employer or, while remaining employed by the same employer, undergoes a significant change in his or her position or employment responsibilities, (ii) an independent director ceases to qualify as such, or (iii) a nominee for director, in an uncontested election of directors, receives a greater number of votes “withheld” from his or her election than votes “for” his or her election, the affected director will be required to promptly tender to the board his or her resignation as director. The Nominating and Corporate Governance Committee will consider the tendered resignation and recommend to the board whether to accept or reject the resignation, and the board will make such determination, based on a review of whether the individual continues to satisfy the board’s membership criteria and any other matters that the board may consider relevant to its determination.

Succession Planning and Management Development

We are focused on talent development at all levels within our organization. Among the key responsibilities of the Nominating and Corporate Governance Committee is to ensure that management establishes and such committee oversees an effective executive succession plan. The board regularly reviews the succession plans that support our overall business strategy, with a focus on key positions at the senior officer level. The board recognizes that succession planning and talent management are closely connected to risk management. Potential leaders are given exposure and visibility to board members through formal presentations and informal events. More broadly, the board is regularly updated on key talent indicators for the overall workforce, including through diversity, recruiting and development programs.

Security Ownership Policies

The Company’s policies prohibit directors, officers and employees, their immediate family members living in their households and other persons living in their households (“Company Associated Persons”) from engaging in short sales and transactions in puts, calls or other derivative transactions with respect to the equity of the Company or its affiliates. The Company’s policies also discourage Company Associated Persons from engaging in hedging or monetization transactions involving securities of the Company or its affiliates (such as zero-cost collars and forward sale transactions) that allow a person to lock in much of the

 

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value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. Any Company Associated Person wishing to enter into such hedging arrangement must first pre-clear the proposed transaction with the office of the General Counsel of the Company. Any request for pre-clearance of a hedging or similar arrangement must be submitted to the General Counsel of the Company at least two weeks before the proposed execution of documents evidencing the proposed transaction. The office of the General Counsel will then determine whether the transaction may proceed. The Company further requires that pledges by directors and executive officers of securities of the Company or its affiliates be approved in advance by the board of directors or a committee designated by the board of directors.

Executive Officers

Our executive officers are designated by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers. Our executive officers are as follows:

 

 Executive

 Officer      

  

   Age   

  

Position

 

Oakleigh Thorne

 

  

 

63

 

  

 

Chairman of the Board of Directors, President and Chief Executive Officer

 

 

Sergio Aguirre

 

  

 

57

 

  

 

President, Business Aviation

 

 

Marguerite M. Elias

 

  

 

66

 

  

 

Executive Vice President, General Counsel and Secretary

 

 

Karen Jackson

 

  

 

51

 

  

 

Executive Vice President, Chief People Experience Officer

 

 

Barry Rowan

 

  

 

64

 

  

 

Executive Vice President and Chief Financial Officer

 

 

Michael Bayer

 

  

 

52

 

  

 

Senior Vice President, Controller and Chief Accounting Officer

 

Mr. Thorne’s biography and related information may be found above in the section titled “Directors, Executive Officers and Corporate Governance—Continuing Directors.” The following is biographical information for our other executive officers:

Sergio Aguirre joined us in February 2007. In December 2017, Mr. Aguirre became our Senior Vice President and General Manager of Business Aviation, and in May 2018, he became our President, Business Aviation division. From 2001 to 2007, Mr. Aguirre was employed as the director of sales for Securaplane Technologies Inc. Mr. Aguirre has more than 30 years’ experience in the aviation industry and has served in a variety of positions, including mechanics, sales, product development and management. Mr. Aguirre attended Orange Coast College and completed Harvard Business School’s Advanced Management Program.

 

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Marguerite M. Elias joined us in September 2007. From June 2004 until July 2007, Ms. Elias served as Senior Vice President and General Counsel of eCollege.com, a publicly traded provider of outsourced eLearning solutions, where she was responsible for all legal and compliance issues, managed the human resources function and was a member of senior management. Ms. Elias was in private practice for 15 years at Skadden, Arps, Slate, Meagher & Flom and Katten Muchin Rosenman, where she specialized in federal securities law, corporate finance, and mergers and acquisitions for clients across a broad spectrum of industries. She is a member of the American Law Institute. Ms. Elias received a Bachelor of Arts degree in Economics from Northwestern University and a Juris Doctor from Loyola University of Chicago School of Law.

Karen Jackson joined us in February 2015 as Senior Vice President, Human Resources. Ms. Jackson became our Executive Vice President, Chief People Experience Officer in February 2020. From November 2011 to January 2015, Ms. Jackson served as SVP, Human Resources of Acquity Group, a digital and marketing services firm acquired by Accenture, where she was responsible for the HR function and talent strategy across the business. From November 2009 to November 2011, Ms. Jackson held the position of VP, Corporate Strategy at Acquity Group, where she was responsible for driving Acquity Group’s growth initiatives. She received her Master’s degree in Business Administration from the Fuqua School of Business, Duke University and a Bachelor’s degree in Accounting from the University of Illinois, Urbana-Champaign.

Barry Rowan joined us as Executive Vice President, Finance in April 2017 and in May 2017 he became our Executive Vice President and Chief Financial Officer. Mr. Rowan previously served as Executive Vice President and Chief Financial Officer of Cool Planet Energy Systems from March 2013 to April 2017, as Executive Vice President, Chief Financial Officer and Chief Administrative Officer for Vonage Corporation from 2010 to 2013, and as Executive Vice President, Chief Financial Officer and Treasurer for Nextel Partners from 2003 to 2006. Mr. Rowan earned his Master’s degree in Business Administration from the Harvard Business School and his Bachelor’s degree in Business Administration and Chemical Biology summa cum laude from The College of Idaho.

Michael Bayer joined us in June 2015. From February 2013 to March 2015, Mr. Bayer served as Vice President and Corporate Controller at JMC Steel Group, Inc., an independent steel pipe and tube manufacturer. Prior to that, he worked in various accounting and financial reporting roles, including as Assistant Controller and Controller of Motorola Mobility, Inc. from 2010 to 2013 and as Director of Accounting at Exelon Corporation from 2004 to 2009. On February 24, 2021, Mr. Bayer notified the Company that he intends to step down from his position as Senior Vice President, Controller and Chief Accounting Officer effective September 30, 2021. Mr. Bayer is a Certified Public Accountant and received his Bachelor’s degree in Accounting from Miami University.

 

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Policies and Procedures for Related Person Transactions

We have adopted a written related person transactions policy pursuant to which our executive officers, directors and principal stockholders, including their immediate family members, will not be permitted to enter into a related person transaction with us without the consent of our Audit Committee. Any proposed transaction between the Company and an executive officer, director, principal stockholder or any of such persons’ immediate family members, in which the amount involved exceeds $120,000, must be presented to our Audit Committee for review, consideration and approval. Our directors, executive officers and employees are required to report any proposed related person transaction to our Audit Committee. In approving or rejecting the proposed transaction, our Audit Committee will take into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, if applicable, the impact on a director’s independence. Under the policy, if we discover any related person transaction that has not been properly approved, our Audit Committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction.

Related Person Transactions

Exchange Transaction

On April 1, 2021, we entered into an exchange agreement (the “Exchange Agreement”) with Silver (Equity Holdings), LP (“GTCR”), an entity affiliated with Mark Anderson, pursuant to which GTCR agreed to exchange $105,726,000 aggregate principal amount of the Company’s 6.00% Convertible Senior Notes due 2022 (the “2022 Convertible Notes”) beneficially owned by GTCR for 19,064,529 shares of the Company’s common stock (the “Exchange Shares” and such transaction, the “Exchange”). Pursuant to the terms of the Exchange Agreement, GTCR has the right to designate one director for election to the board and to have one board observer, until GTCR ceases to own at least 40% of the shares of common stock held by GTCR immediately following consummation of the transactions contemplated by the Exchange Agreement (the “Board Fall-Away Date”). In the event the director designated by GTCR is not elected at any meeting of our stockholders to approve such designee, the board will fill a vacancy, or increase the number of directorships of the board to create a vacancy that the board will fill, with GTCR’s designated nominee, provided that we have no obligation to appoint a particular designee if such individual has previously been nominated for election, but was not elected as a director at any meeting of our stockholders. Upon the Board Fall-Away Date, GTCR’s director designee would be required to tender his resignation from the Board, which resignation would be contingent upon the Board’s acceptance. At any time that GTCR does not have a director designee serving on the Board, it would no longer be entitled to an observer on the board. The Exchange is expected to close in mid-April 2021.

 

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Upon closing of the Exchange, GTCR and the Company will enter into a registration rights agreement, pursuant to which GTCR and its permitted transferees will be afforded customary demand and piggyback registration rights with respect to the shares of common stock held by GTCR as of the closing of the Exchange (including the Exchange Shares).

Convertible Notes Transactions

As of December 31, 2020, Thorndale Farm Private Equity Fund 2, LLC (“Thorndale”), an entity affiliated with Oakleigh Thorne, held $8 million in aggregate principal amount of our outstanding 2022 Convertible Notes. In 2020, we paid $480,000 in interest to Thorndale with respect to its 2022 Convertible Notes.

On March 1, 2020, our 3.75% Convertible Senior Notes due 2020 (the “2020 Convertible Notes”) matured in accordance with their terms. As of March 1, 2020, Millbrook Tribute Garden, Inc. (“Millbrook”), an entity affiliated with Oakleigh Thorne, held $250,000 in aggregate principal amount of the 2020 Convertible Notes, and we paid $254,688 in aggregate amount of principal and accrued and unpaid interest on the 2020 Convertible Notes upon maturity to Millbrook.

Secured Notes Transaction

On April 25, 2019, Thorndale purchased $13,375,000 in aggregate principal amount of 9.875% Senior Secured Notes due 2024 (the “2024 Secured Notes”) issued by Gogo Intermediate Holdings LLC, a wholly owned subsidiary of the Company (“GIH”), and Gogo Finance Co. Inc., a wholly owned subsidiary of GIH (together, the “Issuers”) at a price equal to 99.512% of the principal amount thereof, in an unregistered offering of securities pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2024 Secured Notes mature on May 1, 2024, unless earlier redeemed or repurchased. The Issuers pay interest on the 2024 Secured Notes semi-annually in arrears on November 1 and May 1 of each year, beginning on November 1, 2019. In 2020, the Issuers paid $1,320,781 in interest to Thorndale with respect to its 2024 Secured Notes.

Registration Rights Agreement

On December 31, 2009, we entered into a registration rights agreement with certain of our stockholders, including certain entities affiliated with Oakleigh Thorne, Charlie Townsend and Robert Mundheim (the “Registration Rights Agreement”). Upon closing of the Exchange, the Registration Rights Agreement will be amended. The following description of the terms of the Registration Rights Agreement is intended as a summary only and is qualified in its entirety by reference to the Registration Rights Agreement filed as an exhibit to our Annual Report on Form 10-K.The registration of shares of our common stock pursuant to the exercise of registration rights described below would enable the holders to trade these shares without restriction under the Securities Act, when the applicable registration statement is declared effective. We will pay the registration expenses, other than underwriting discounts and

 

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commissions and certain counsel or advisor fees as described therein, of the shares registered pursuant to the demand and piggyback registrations described below.

The demand and piggyback registration rights described below commenced 180 days after the closing of our initial public offering on June 26, 2013 and continue perpetually. We are not required to effect more than two demand registrations in any twelve-month period or any demand registration within 180 days following the date of effectiveness of any other registration statement. If the board of directors (or an authorized committee thereof), in its reasonable good faith judgment determines that the filing of a registration statement will materially affect a significant transaction or would force the Company to disclose confidential information which is adverse to the Company’s interest, then the board of directors may delay a required registration filing for periods of up to 90 days, so long as the periods do not aggregate to more than 120 days in a twelve-month period. Generally, in an underwritten offering, the managing underwriter has the right, subject to specified conditions, to limit the number of shares such holders may include.

Demand Registration Rights. Under the terms of the Registration Rights Agreement, stockholders that are a party to the agreement may, under certain circumstances and provided they meet certain thresholds described in the Registration Rights Agreement, make a written request to us for the registration of the offer and sale of all or part of the shares subject to such registration rights (“Registrable Securities”). If we are eligible to file a registration statement on Form S-3 or any successor form with similar “short-form” disclosure requirements, the holders of Registrable Securities may make a written request to us for the registration of the offer and sale of all or part of the Registrable Securities provided that the Registrable Securities to be registered under such short-form registration have an aggregate market value, based upon the offering price to the public, equal to at least $15.0 million.

Piggyback Registration Rights. If we register the offer and sale of any of our securities (other than a registration statement relating to an initial public offering or on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively) either on our behalf or on the behalf of other security holders, the holders of the Registrable Securities under the Registration Rights Agreement are entitled to include their Registrable Securities in the registration subject to certain exceptions relating to employee benefit plans and mergers and acquisitions. The managing underwriters of any underwritten offering may limit the number of Registrable Securities included in the underwritten offering if the underwriters believe that including these shares would have a materially adverse effect on the offering. If the number of Registrable Securities is limited by the managing underwriter, the securities to be included first in the registration will depend on whether we or certain holders of our securities initiate the piggyback registration. If we initiate the piggyback registration, we are required to include in the offering (i) first, the securities we propose to sell and (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder. If the holder of Registrable

 

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Securities initiates the piggyback registration, it is required to include in the offering (i) first, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder and (ii) second, the securities we propose to sell.

Indemnification Agreements

Our Certificate of Incorporation contains provisions permitted under the Delaware General Corporation Law relating to the liability of directors. These provisions eliminate a director’s personal liability to the fullest extent permitted by the Delaware General Corporation Law for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving any breach of the director’s duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, under Section 174 of the Delaware General Corporation Law (unlawful dividends), or any transaction from which the director derives an improper personal benefit. The principal effect of the limitation on liability provision is that a stockholder will be unable to prosecute an action for monetary damages against a director unless the stockholder can demonstrate a basis for liability for which indemnification is not available under the Delaware General Corporation Law. These provisions, however, should not limit or eliminate our rights or any stockholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws. The inclusion of this provision in our Certificate of Incorporation may discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our stockholders.

Our Bylaws require us to indemnify and advance expenses to our directors and officers to the fullest extent permitted by the Delaware General Corporation Law and other applicable law, except in certain cases of a proceeding instituted by the director or officer without the approval of our board. Our Bylaws provide that we are required to indemnify our directors and executive officers, to the fullest extent permitted by law, for all judgments, fines, settlements, legal fees and other expenses incurred in connection with pending or threatened legal proceedings because of the director’s or officer’s positions with us or another entity that the director or officer serves at our request, subject to various conditions, and to advance funds to our directors and officers to enable them to defend against such proceedings.

We have also entered into an indemnification agreement with each of our directors and executive officers. The indemnification agreements provide our directors and executive officers with contractual rights to the indemnification and expense advancement rights provided under our Bylaws, as well as contractual rights to additional indemnification as provided in the indemnification agreements.

 

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Communications with the Board

Stockholders who wish to contact our board may send written correspondence, in care of the Corporate Secretary, c/o Gogo Business Aviation LLC, 105 Edgeview Drive, Suite 300, Broomfield, Colorado 80021. Communications may be addressed to an individual director, to the non-management directors as a group, or to the board as a whole. Communications not submitted confidentially that discuss business or other matters relevant to the activities of our board will be preliminarily reviewed by the office of the Secretary and then distributed either in summary form or by delivering a copy of the communication. Communications marked as confidential will be distributed, without review by the office of the Secretary, to the director, or group of directors, to whom they are addressed. With respect to other correspondence received by the Company that is addressed to one or more directors, the board has requested that the following items not be distributed to directors, because they generally fall into the purview of management, rather than the board: junk mail and mass mailings, product and services complaints, product and services inquiries, résumés and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations and advertisements.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates information as of April 1, 2021 regarding the beneficial ownership of our common stock by:

 

   

each person, or group of persons, who is known to beneficially own more than 5% of any class of our common stock;

   

each of our directors;

   

each of the named executive officers; and

   

all of our directors and executive officers as a group.

In accordance with SEC rules, beneficial ownership includes sole or shared voting or investment power with respect to securities and includes the shares issuable pursuant to stock options that are exercisable within 60 days of the determination date, which in the case of the following table is January 31, 2021. Shares issuable pursuant to those stock options are deemed outstanding for computing the percentage of the person holding such options but are not deemed outstanding for computing the percentage of any other person. Under these rules, more than one person may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities in which such person has no economic interest. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

The percentage of beneficial ownership is based on 92,083,425 shares of our common stock outstanding as of April 1, 2021.

Except as otherwise noted below, the address for each person listed on the table is c/o Gogo Inc., 111 N. Canal St., Suite 1400, Chicago, Illinois 60606.

 

 Name of Beneficial Owner

    Number of Shares        Percent   

 5% Stockholders

         

 Oakleigh Thorne and affiliated entities(1)(4)(5)

       26,290,151        28.55 %

 Silver (Equity) Holdings, LP(2)

       12,674,482        13.76 %

 Mudrick Capital Management, LP(3)

       7,326,848        7.96 %

 Directors and Named Executive Officers

         

 Marguerite Elias(4)

       73,291        *

 Barry Rowan(4)

       203,535        *

 Sergio Aguirre

       63,445        *

 Robert L. Crandall(4)(5)

       197,394        *

 Hugh W. Jones(4)(5)

       148,916        *

 Michele Coleman Mayes(4)(5)

       99,816        *

 Robert H. Mundheim(4)(5)

       294,204        *

 Christopher D. Payne(4)(5)

       132,369        *

 Oakleigh Thorne and affiliated entities(2)(4)(5)

       26,290,151        28.55 %

 Charles C. Townsend(4)(5)

       3,679,981        4.00 %

 

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 Name of Beneficial Owner

    Number of Shares        Percent   

 Harris N. Williams(4)(5)

       146,550        *

 Karen Jackson

       65,919        *

 Mark Anderson

       0        0 %

 All directors and executive officers as a group (14 persons)(1)(4)(5)

       31,395,571        32.55 %

 

*

Represents beneficial ownership of less than one percent (1%).

 

 

(1)

Includes 100 shares held directly by Mr. Thorne’s spouse, 25,924,803 shares held directly by Thorndale Farm Gogo, LLC (“Thorndale Farm”) and 271,573 shares held directly by OAP, LLC (“OAP”). Information concerning beneficial ownership by Thorndale Farm and OAP is based on a Form 4 fled with the SEC on March 17, 2021 by Thorndale Farm, OAP and Mr. Thorne. The address of each of the foregoing persons or entities is c/o Thorndale Farm, L.L.C., P.O. Box 258, Millbrook, NY 12545.

 

(2)

Based on a Schedule 13D/A jointly filed with the SEC on April 1, 2021 by Silver (Equity Holdings), LP, GTCR Partners XII/A&C LP and GTCR Investment XII LLC. These entities have shared voting and dispositive power with regard to 12,674,482 shares of our common stock. This does not take into account the shares that will be issued pursuant to the Exchange Agreement discussed in “Directors, Executive Officers and Corporate Governance – Related Person Transactions”. The address of GTCR is 300 North LaSalle Street, Suite 5600, Chicago, IL 60654.

 

(3)

Based on a Schedule 13G/A jointly filed with the SEC on February 12, 2021 by Mudrick Distressed Opportunity Specialty Fund, LP, Mudrick Distressed Opportunity Drawdown Fund II, LP, Mudrick Distressed Opportunity Fund Global, LP, Mudrick GP, LLC, Mudrick Distressed Opportunity Drawdown Fund II GP, LLC, Mudrick Capital Management, LP, Mudrick Capital Management, LLC and Jason Mudrick (collectively, “Mudrick”). Mudrick has shared voting and dispositive power with regard to 7,326,848 shares of our common stock. The address of Mudrick is 527 Madison Avenue, 6th Floor, New York, NY 10022.

 

(4)

Includes shares of our common stock issuable upon the exercise of options granted pursuant to our equity compensation plans, which were unexercised as of April 1, 2021 but were exercisable within a period of 60 days from such date. These amounts include the following number of shares of our common stock for the following individuals: Mr. Crandall 168,460; Mr. Jones 98,916; Ms. Mayes 98,916; Mr. Mundheim 168,460; Mr. Payne 130,869; Mr. Thorne 93,675; Mr. Townsend 137,560; Mr. Williams 137,560; Mr. Rowan 68,526; Ms. Elias 13,250; Mr. Aguirre 48,608; Ms. Jackson 22,750; other executive officers 4,750; and all executive officers and directors as a group 1,192,300.

 

(5)

Excludes the following shares of our common stock issuable upon settlement of outstanding deferred stock units: Mr. Crandall 103,869; Mr. Jones 60,877; Ms. Mayes 88,746; Mr. Mundheim 98,823; Mr. Payne 86,668; Mr. Thorne 40,611; Mr. Townsend 101,125; Mr. Williams 72,358; and all directors and executive officers as a group 653,077. Deferred stock units are settled 90 days after the director ceases to serve as such.

 

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DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports and reports of change in ownership in the Company’s common stock and other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports filed electronically with the SEC and written representations from the Company’s officers and directors, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with during 2020.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

In this Compensation Discussion and Analysis, we provide an overview of the Company’s executive compensation program, including a discussion of our compensation philosophy. We also review the material elements of compensation earned by or paid to our named executive officers (each, an “NEO”) in 2020, and discuss and analyze the compensation decisions made by the Compensation Committee in 2020.

On December 1, 2020, we completed the previously announced sale of our commercial aviation (“CA”) business to a subsidiary of Intelsat Jackson Holdings S.A. (“Intelsat”) for a purchase price of $400 million in cash, subject to certain adjustments (the “Transaction”). Upon the closing of the Transaction, Jon Cobin and John Wade ceased to be our employees and became employees of Intelsat. Pursuant to Item 402 of Regulation S-K promulgated under the Securities Act of 1933, as amended, we have included Messrs. Cobin and Wade as NEOs for 2020.

The NEOs discussed in this Compensation Discussion and Analysis and the related compensation tables are the officers listed in the table below.

 

Name

  

Title

 

 Oakleigh Thorne

  

 

President and Chief Executive Officer

 Barry Rowan

  

Executive Vice President and Chief Financial Officer

 Marguerite M. Elias

  

Executive Vice President, General Counsel and Secretary

 Sergio Aguirre

  

President, Business Aviation

 Karen Jackson

  

Executive Vice President and Chief People Experience Officer

 John Wade

  

Former President, Commercial Aviation

 Jonathan B. Cobin

  

Former Executive Vice President and Chief Strategy Officer

The Compensation Committee has overall responsibility for approving the compensation program for our NEOs and makes all final compensation decisions regarding our NEOs. The Compensation Committee strives to implement compensation policies and practices that are consistent with our values and support the successful recruitment, development and retention of NEO talent so we can achieve our business objectives and optimize our long-term financial returns.

 

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Executive Summary

Our compensation programs are intended to align our NEOs’ interests with those of our stockholders by rewarding performance that meets or exceeds the goals the Compensation Committee establishes with the objective of increasing long-term stockholder value and supporting the shorter-term business goals we believe are necessary to effect such an increase. In line with our pay-for-performance philosophy, the total compensation received by our NEOs will vary based on the financial results of the Company as well as progress made against identified strategic and/or operational goals. Our NEOs’ total compensation is comprised of a mix of base salary, annual cash bonuses based on achievement of financial or strategic performance goals, and long-term equity awards. While our annual cash incentive plans generally include multiple performance objectives, the 2020 annual bonus plan was based on only one objective, the Company’s cash balance as of December 31, 2020, due to the importance of that objective to the Company. See below under “Elements of Compensation—Annual Incentive Plan—2020 Cash Balance Bonus Plan.” In 2020, our NEOs also received cash completion bonuses upon the closing of the Transaction.

We employ several practices that reflect the Company’s compensation philosophy:

 

   

We do not maintain any tax gross-up arrangements;

   

We do not provide special retirement benefits designed solely for executive officers;

   

Our performance-based compensation arrangements for executive officers generally use a variety of performance measures;

   

We do not provide “perquisites” or other executive benefits based solely on rank; and

   

We have a “clawback” policy under which we may recover certain incentive compensation paid to executives or other employees in circumstances involving fraud, other misconduct or an accidental error resulting in overpayment.

Establishing and Evaluating Executive Compensation

Executive Compensation Philosophy and Objectives. The executive compensation program has been designed to provide a total compensation package that will accomplish the following objectives:

 

   

Attract, retain and motivate high-performing executive talent;

   

Emphasize incentive pay with a focus on equity compensation, thus aligning the interests of our executives with those of our stockholders; and

   

Align executive compensation elements with both short-term and long-term Company performance.

From the beginning of 2016 through much of 2020, we experienced a significant decline in our stock price. Although management continued to aggressively manage our

 

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business to maximize our financial and operating performance, our stock price remained at a low level compared to its historical trading prices. As a result, our directors, executive officers and other valued employees held “underwater” stock options with exercise prices above (in many cases far above) the recent trading prices of our common stock. In early 2020, the Compensation Committee reviewed our executive compensation program, with particular focus on whether our executives’ then-outstanding equity awards continued to serve our objective of retaining and motivating key talent. As a result of the Committee’s review and in alignment with our compensation philosophy, the Committee took certain actions in early 2020 with respect to our equity compensation to retain and motivate our executives and align their interests with those of our stockholders. See below under the heading “Equity-Based Compensation—Actions Taken in 2020 with Respect to Equity-Based Compensation” for a discussion of the actions taken.

Role of Compensation Consultants. The Compensation Committee retained Compensation Strategies, Inc. (“CSI”), to provide executive compensation consulting services to the Committee during 2020. CSI provides compensation data, analysis and guidance to the Compensation Committee, which the Committee uses when making decisions regarding our executive compensation programs and establishing the compensation of our executive officers. Decisions on which CSI advised the Committee during 2020 included approval of the 2020 annual bonus program, approval of the Option Exchange (as hereinafter defined), approval of the completion bonuses and certain changes to equity compensation related to the Transaction, the form and level of equity awards to executive officers, base salary increases, the level of target bonuses for executive officers and the assessment of our directors’ compensation. CSI also updated the market data that the Committee uses as a factor in its compensation determinations. See “Market Comparisons” below. CSI did not perform any other services for the Company in 2020.

Role of Executive Officers. Our Chief Executive Officer participates in Compensation Committee meetings and makes recommendations to our Compensation Committee with respect to the determination of components of compensation (including equity), compensation levels and performance targets for our executives (other than the CEO). When considering compensation for retention purposes, the Compensation Committee looks to the CEO and Chief People Experience Officer for their input regarding the importance of retaining a particular employee or group of employees. The Compensation Committee also meets formally and informally without executive management to discuss its compensation philosophy and approach and makes its decisions regarding NEO compensation in executive session with only its independent consultant and/or outside counsel present.

Market Comparisons. Our Compensation Committee has from time to time used market data as one factor in assessing how our base salary, target short-term incentives, target total cash compensation, actual total cash compensation, target long-term incentives and target total direct compensation compare to those of other companies in our peer group. The Compensation Committee has not targeted compensation to any peer group percentile data, but instead has used peer group data with a goal of providing total compensation opportunities

 

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for the NEOs at levels that are competitive with executives in similar positions with similar responsibilities at companies included in our peer group and that fairly compensate our executives. The Compensation Committee, with assistance from CSI, approved an updated peer group of companies in 2018 for use in assessing compensation elements and making compensation decisions for our executive officers. The Compensation Committee used the same peer group in 2020. The peer group is comprised primarily of companies from the Internet software and services industry with a communication focus where possible. Using that peer group (after applying a regression analysis to size-adjust compensation levels to a company with annual revenues equal to the Company’s revenues), CSI provided the Compensation Committee with comparative assessments for our executives’ base salaries, target bonuses, total cash compensation, long-term equity compensation and total compensation.

The peer group for 2020 is composed of the following 19 companies:

 

Bottomline Technologies Inc.    Ciena Corp.
Cogent Communications Group, Inc.    CoStar Group, Inc.
Global Eagle Entertainment, Inc.    Iridium Communications, Inc.
j2 Global, Inc.    NIC, Inc.
Pandora Media, Inc.    RealPage, Inc.
Synchronoss Technologies, Inc.    Syntel, Inc.
TiVo Corp.    TripAdvisor, Inc.
VeriSign, Inc.    ViaSat, Inc.
Vonage Holdings Corp.    Web.com Group, Inc.
Zillow Group, Inc.   

Say on Pay. The Compensation Committee considers the outcome of stockholder advisory votes on executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation programs. At our 2020 annual meeting of stockholders, our stockholders approved the compensation paid to our named executive officers in a nonbinding advisory vote. Approximately 82% of the stockholders who voted on the proposal voted in favor of the proposal. Although this percentage approval is lower than in recent years, the Compensation Committee believes that the voting results conveyed continued support for the philosophy, strategy and objectives of our executive compensation program and the difficult decisions that the Compensation Committee made in 2020.

Elements of Compensation

Base Salary

We provide a base salary to our NEOs to compensate them in cash at a fixed amount for services rendered on a day-to-day basis during the year. We strive to set base salaries at levels that are competitive with companies included in our peer group for NEOs in similar

 

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positions with similar responsibilities. The base salaries of NEOs are reviewed annually and adjusted when appropriate to reflect individual roles and performance as well as market conditions.

2020 Base Salaries. Each of our NEOs received the base salary set forth in the Summary Compensation Table under “Salary.” Each of our NEOs is party to an employment agreement, and pursuant to the terms of each employment agreement, the base salaries are reviewed at least annually. In February 2020, based on a recommendation from Mr. Thorne, the Compensation Committee determined to increase the salaries of Mr. Aguirre and Ms. Elias to more closely align their total compensation to market pay practices. Mr. Aguirre’s annual base salary was increased from $325,000 to $350,000 and Ms. Elias’ annual base salary was increased from $330,000 to $340,000. In February 2020, the Compensation Committee also approved the promotion of Ms. Jackson from Senior Vice President to Executive Vice President and her annual base salary was increased from $295,000 to $305,000. At the same meeting, based on a recommendation from Mr. Thorne, the Compensation Committee determined to leave the base salaries of Messrs. Thorne, Rowan, Wade and Cobin unchanged at $700,000, $450,000, $400,000 and $360,000, respectively. In May 2020, as part of management’s response to the impact of the COVID-19 pandemic on the Company’s business, Mr. Thorne agreed to a 30% reduction in base salary and each of our other NEOs agreed to a 20% reduction in base salary. Such reductions went into effect on May 4, 2020 and remained in effect until the closing of the Transaction for Messrs. Cobin and Wade and through December 31, 2020 for our other NEOs. On January 1, 2021, the base salaries of Messrs. Thorne, Rowen and Aguirre and Mss. Elias and Jackson were restored to their pre-COVID levels. The non-employee members of our board of directors also agreed to reduce their compensation by 30% as part of our response to the pandemic. See “Director Compensation.”

2021 Base Salaries. In February 2021, the Compensation Committee determined to make no increases to the base salaries of our NEOs except for Mr. Aguirre, whose annual base salary was increased from $350,000 to $375,000 to further align his total compensation to market pay practices.

Annual Incentive Plan

We use annual cash incentive bonuses to reward our NEOs for the achievement of Company performance goals. These performance-based bonuses are intended to motivate our NEOs to focus on particular performance measures chosen by the Compensation Committee. The Compensation Committee chooses performance measures that are aligned with our financial and strategic goals in order to provide incentives to accomplish objectives that the Compensation Committee believes will improve both short-term and long-term stockholder value.

Our NEOs’ employment agreements provide for a minimum target bonus equal to a specified percentage of base salary. In February 2020, the Compensation Committee determined to leave the percentage levels of salary to be paid for performance at target levels

 

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for our NEOs other than Ms. Jackson unchanged from 2019, with Mr. Thorne at 100%, Mr. Rowan at 90% and Ms. Elias and Messrs. Aguirre, Cobin and Wade at 75%. In consideration of Ms. Jackson’s promotion to Executive Vice President, the Compensation Committee determined to increase her target level from 55% to 75%.

2020 Cash Balance Bonus Plan. In July 2020, the Compensation Committee approved the Company’s 2020 bonus plan with bonuses to be determined based on one financial target – the Company’s cash balance on December 31, 2020. Due to the significant adverse impact of the COVID-19 pandemic on the Company’s revenue, the Committee believed that maintaining liquidity and a minimum cash balance was paramount and that it was appropriate to tie the bonus plan solely to the year-end cash balance. The bonus plan established a sliding scale based on the Company’s cash forecast at the time of approval that determined the bonus funding and associated payouts, with the plan paying out at 50% of target if the year-end balance was $40 million, 100% of target if the year-end balance was $50 million and 150% of target if the year-end balance was $100 million or more. While annual bonuses had historically been paid in cash, the Compensation Committee determined that 2020 bonuses would be paid in shares of the Company’s common stock. The Compensation Committee retained the discretion to pay the bonuses in cash.

On September 1, 2020, the Company entered into a purchase and sale agreement with Intelsat pursuant to which the Company agreed to sell the CA business to Intelsat for $400 million in cash, subject to certain adjustments. In November 2020, in anticipation of and contingent on a December 1 closing of the Transaction, the Compensation Committee approved the payment of the 2020 annual bonus to Messrs. Cobin and Wade and other employees transferring to Intelsat in connection with the Transaction. Based on a forecast showing a year-end cash balance of $460 million, the Compensation Committee determined to pay the bonuses to these employees at 150% of target in accordance with the approved sliding scale. The Compensation Committee further determined that the payment would be in cash, rather than the common stock previously contemplated, after considering various factors that included: (i) the proceeds from the Transaction; (ii) management’s cash forecasts for the balance of 2020 and beyond; and (iii) the furloughs and reductions in cash compensation that employees had experienced in 2020 as a result of COVID-19. In January 2021, the Compensation Committee approved the payment of the 2020 annual bonus to Messrs. Thorne, Rowan and Aguirre, Mss. Elias and Jackson and the other employees who remained with the Company following the Transaction. Based on a year-end cash balance of $436 million, the Compensation Committee confirmed that the plan would pay out at 150% of target. The Compensation Committee determined that the bonuses would be paid to our employees in cash rather than stock for the reasons described above.

The 2020 annual bonus amounts paid to our NEOs are set forth in the “Non-Equity Incentive Plan Compensation” columns of our Summary Compensation Table.

 

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Special Incentive Plans

In 2020, the Compensation Committee established two special components of 2020 annual incentive compensation specifically tied to the achievement of critical short-term business objectives. The Compensation Committee approved these special bonus opportunities after concluding that these incentives were in the best interests of the Company and its stockholders, would better retain and motivate our key talent in support of these critical business objectives and would better align employees’ interests with the Company’s short- and long-term strategic goals.

The CA Bonus Plan

In August 2020, the Compensation Committee established a bonus plan tied to and contingent on the consummation of the sale of the CA business and determined that any bonuses under such plan would be paid in cash. Participants in such plan included our NEOs and other employees identified as being significant contributors to the sale process. The Compensation Committee established a target payout for each NEO based upon his or her level of involvement in, and overall contribution to, the sale process. The targets, expressed as a percentage of salary, were 50% for Mr. Thorne, 45% for Mr. Rowan and Ms. Elias, 37.5% for Ms. Jackson, 22.5% for Mr. Aguirre and 100% for Messrs. Cobin and Wade. The targets for Messrs. Cobin and Wade were intended to both acknowledge their significant contributions and align their interests with those of the Company as they worked on a transaction that would likely result in them being employed by the purchaser of the CA business. The payout under the plan was based on a sliding scale of two metrics – the calendar quarter in which the transaction closed and the amount and type of consideration paid by the purchaser. These metrics were intended to motivate closing a transaction as early as possible and maximize the total purchase price while ensuring a minimum cash component. On December 1, 2020, the Transaction closed, resulting in a payout of 200% of target under the approved sliding scale.

The amounts paid to our NEOs under the CA Bonus Plan are set forth in the “Non-Equity Incentive Plan Compensation” column of our Summary Compensation Table.

The Reorganization Bonus Plan

In August 2020, the Compensation Committee established a bonus plan tied to successful completion of an initiative in which we legally separated the assets and liabilities of our business aviation and CA divisions (the “Reorganization Bonus Plan”). The Compensation Committee determined that bonuses under such plan would be paid in shares of common stock but retained the discretion to pay in cash. Participants in such plan included our NEOs and other employees identified by NEOs as being significant contributors to the project; provided, however, that if any employee participating in both the CA Bonus Plan and the Reorganization Plan received a bonus under the CA Bonus Plan, he or she would not be eligible to receive a bonus under the Reorganization Bonus Plan. The Compensation

 

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Committee established a target payout for each NEO, except for Mr. Cobin, based upon his or her level of involvement in, and overall contribution to, the reorganization process. The targets, expressed as a percentage of salary, were 25% for Mr. Thorne, 22.5% for Mr. Rowan and 30% for Mr. Aguirre and Mss. Elias and Jacksons. Payment of the bonus was contingent upon the reorganization being completed on or before August 31, 2020 and the Compensation Committee determining that all material post-reorganization items had been completed. In November 2020, the Compensation Committee determined that the conditions to payment of bonuses under the Reorganization Plan had been met and also determined, based on the factors described above under the heading “2020 Cash Balance Bonus Plan,” that the bonus would be paid in cash. Because our NEOs received bonuses under the CA Bonus Plan, they were not eligible to receive bonuses under the Reorganization Bonus Plan.

Equity-Based Compensation

We believe that equity compensation is a key component of our overall compensation structure and critically important to our ability to attract and retain top talent, and that equity-based awards align the interests of our NEOs with the interests of our equity holders and encourage our NEOs to focus on the long-term performance of our business. Additionally, we believe equity awards provide an important retention tool for our NEOs, as they are subject to multiyear vesting and have in some cases been subject to performance-based vesting requirements. Equity awards are granted under the Gogo Inc. 2013 Omnibus Incentive Plan (the “2013 Omnibus Plan”), adopted at the time of our 2013 initial public offering, or the Amended and Restated Gogo Inc. 2016 Omnibus Incentive Plan (the “2016 Omnibus Plan”).

Actions Taken in 2020 with Respect to Equity-Based Compensation. In early 2020, in connection with its review of 2019 performance, our Compensation Committee undertook a detailed review of the equity compensation previously granted to our employees, including our named executive officers. In particular, the Compensation Committee focused on the gap in retention and motivation under our equity compensation program arising from (1) a very high percentage of outstanding stock options being “underwater,” i.e., options having strike prices well in excess of the current trading value of our common stock, and (2) the use of performance-vesting metrics which require our common stock to trade well above its current levels in order for the performance vesting to be met. The Compensation Committee concluded that the performance conditions of the equity grants were so far from being met that they did not provide an incentive to employees. In addition, a very high percentage of options were far underwater and also did not provide an incentive to employees. Senior management concurred in this conclusion. We face robust hiring markets and significant competition for our employees (including competition from other providers of in-flight connectivity since our industry requires specific qualifications and experience) and this, combined with the declining price of our common stock that occurred over several years and the relatively low market value of the equity compensation we can provide as compared to equity packages offered by other companies seeking to hire our employees, caused the Compensation Committee to be very concerned about retention. This concern was exacerbated by the precipitous decline in our stock that occurred in early 2020, which we believe was attributable to a significant extent

 

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to uncertainties about the effect of the coronavirus on business and the economy generally and the travel industry in particular. The Compensation Committee believes that keeping our executives and other key employees and the knowledge and experience they bring to our business is critical as we focus on unlocking the value of our Company. Accordingly, after considering a number of alternatives, in March 2020 the Compensation Committee approved the following:

—Subject to stockholder approval, an option exchange program whereby our employees (including our executive officers, but not our non-employee directors) had the right to exchange eligible vested and unvested underwater stock options for a lesser number of new replacement options. The option exchange was approved by our stockholders at the 2020 annual meeting, with more than 82% of the stockholders who voted on the proposal voting in favor of the proposal. On June 12, 2020, we closed the exchange offer, and eligible options to purchase 6,064,773 shares of common stock were surrendered and forfeited in exchange for replacement options to purchase 2,896,383 shares of common stock at an exercise price of $2.61 per share. The replacement options vest on December 1, 2022 assuming continued service with the Company.

—For 2020 annual equity grants (both options and RSUs), the use of only time-based vesting, rather than a combination of time- and performance-based vesting. See “2020 Annual Equity Grants” below.

—The modification of performance-vesting RSUs and performance-vesting stock options granted on or after March 14, 2017 to remove any applicable performance-vesting conditions. In 2016, 2017 and 2018, the Company granted RSUs and stock options that were subject to both four-year service-based vesting and performance-based vesting based on achieving common stock prices ranging from $21 per share to $28 per share or above for a period of 30 consecutive trading days within four years of the grant date. In June 2018, due to declines in the trading price of the common stock, the Compensation Committee approved reducing the target share price for such awards to $12 per share. In 2019, the Company granted RSUs and stock options that were subject to both four-year service-based vesting and performance-based vesting with a target stock price of $6.50 per share. As discussed above, continuing declines in our stock trading price caused the Compensation Committee to question the efficacy of our outstanding performance awards in terms of motivating and retaining our executives, and in March 2020 the Compensation Committee approved the elimination of the performance-based vesting requirement from all performance-based RSUs and options granted in 2017, 2018 and 2019.

2020 Annual Equity Grants. Equity incentives to our NEOs are provided on an annual basis in the form of a combination of restricted stock units and stock options. In March 2020, the Compensation Committee determined the annual grants for the NEOs. As noted above, the Compensation Committee determined to grant options and restricted stock units subject to only time-based vesting and did not, as had been the practice in 2016 through 2019, grant options and restricted stock units subject to both time-based vesting and performance-based vesting tied to sustained increases in our share price to targeted levels.

 

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In determining the size of the equity grants to our NEOs, the Compensation Committee took into account past performance, anticipated contribution to our long-term goals, market data for NEOs in similar roles at peer companies and total compensation of our NEOs as compared to peer companies. The Compensation Committee also considered share usage over time (i.e., “burn rate”), as it generally does when approving equity grants, in order to employ maximum efficiency in share usage under the equity compensation program while maximizing the retention and incentive elements of the awards. To further support the retention of our NEOs, the Compensation Committee approved (i) standard grants equal to the amounts awarded in 2018, split equally between options and RSUs (based on estimated grant date accounting values), and (ii) special recognition grants for NEOs and other employees deemed high performers in the form of RSUs with underlying shares in an amount equal to 65% of the shares underlying the standard grants. The standard grants vest in four equal installments over a four-year period from the grant date and the special recognition grants vest in a single installment on December 31, 2022, in each case subject to continued service with the Company.

Additional information regarding these and previous grants is found in the Summary Compensation Table, Grants of Plan-Based Awards Table and Outstanding Equity Awards at Fiscal Year End Table.

Action Taken in 2021 With Respect to Our Equity-Based Compensation Program. Following the closing of the Transaction and the reorganization of our operations with the separation and disposition of the CA business, the Compensation Committee reviewed our equity-based compensation program in light of the Company’s current circumstances and needs. The Compensation Committee recognized that prior experiences with “underwater” stock options had adversely impacted the effectiveness of options as an incentive device for the Company. Further, because of the extreme volatility in our recent stock price, the Compensation Committee concluded that the Black-Scholes value of our stock options – which we use to convert intended dollar amounts of incentive compensation into numbers of stock options – would significantly exceed the value attributed to the options by our employees and directors. After consulting with our CEO and Chief People Experience Officer, the Compensation Committee also concluded that, because of the additional organizational and operational changes and uncertainties in this transitional period for the Company, employee retention was of paramount importance. Accordingly, the Compensation Committee determined that in 2021 equity-based compensation for employees would be granted exclusively in the form of time-based restricted stock units vesting in four equal annual installments. The Compensation Committee also recommended, subject to board approval, the issuance of 2021 equity compensation to non-employee directors solely in the form of deferred share units vesting on the first anniversary of the grant date. The Compensation Committee will revisit the topic of the appropriate mix of equity awards again in early 2022.

Modifications of Awards Held by Jon Cobin and John Wade. Upon the signing of the purchase and sale agreement between the Company and Intelsat, the Compensation Committee approved certain modifications to outstanding equity awards held by Messrs.

 

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Cobin and Wade. Such modifications were conditioned on the closing of the Transaction. Pursuant to these modifications, the vesting period for any options and RSUs that remained unvested at the closing date (other than RSUs granted in March 2020 as special recognition grants) was adjusted to the earlier of the first anniversary of the closing date and the original vesting date. This modified vesting period will only apply if Messrs. Cobin and Wade are not terminated by Intelsat for Cause (as defined in the applicable plan or award agreement) and do not voluntarily resign from Intelsat other than for Good Reason (as defined in the applicable plan or award agreement) within the one-year period following the closing. If Mr. Cobin or Mr. Wade ceases employment with Intelsat by reason of termination other than for Cause, resignation for Good Reason, death or disability, any awards then held by such individual will become immediately vested. In addition, the exercise period of any stock options held by Messrs. Cobin and Wade that were outstanding as of the closing was adjusted from 90 days or one year from the termination by the Company resulting from the closing to the earlier of the expiration date of such option and the fifth anniversary of the closing.

Employment and Other Agreements with NEOs

We entered into employment agreements with each of our NEOs that include the specific terms set forth below. The employment agreements of Messrs. Cobin and Wade were assigned by us to Intelsat in the Transaction. We believe that having employment agreements with our NEOs is beneficial to us because it provides retentive value and subjects the NEOs to restrictive covenants. See “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements” for details regarding these agreements.

We also entered into change in control agreements with each of our NEOs (other than Mr. Thorne) to assure the NEOs that they will be protected in the event of a change in control of the Company. The change in control agreements between the Company and each of Messrs. Cobin and Wade terminated upon the closing of the Transaction. Under the remaining agreements, each of Messrs. Rowan and Aguirre and Mses. Elias and Jackson is entitled to receive severance benefits of 18 months of base salary and target bonus, as well as reimbursement of COBRA premiums payable to maintain substantially equivalent health insurance coverage during the severance period, in each case if the NEO is terminated by the Company without cause or the NEO resigns with good reason within two years following a change in control. Additionally, any unvested time vesting awards would immediately become vested upon such termination. The change in control agreements also provide that any unvested performance awards (of which there currently are none) will remain outstanding until the applicable normal performance vesting date (or 90 days after such date if the award is a stock option) and will vest or be forfeited based on the satisfaction of the applicable performance goals to the extent that the NEO’s employment would have continued through the applicable normal performance vesting date (with service-based vesting accelerated in full as of the date of termination).

Perquisites

We do not generally provide perquisites or personal benefits to our NEOs.

 

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Other Benefits

Our NEOs are eligible to participate in our 401(k) retirement benefit plan and our health and welfare plans on the same basis as our other employees.

Non-Qualified Deferred Compensation

None of our NEOs participate in or have account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us (although Mr. Thorne holds deferred share units received in respect of his service as a nonemployee director prior to his appointment as Chief Executive Officer on March 4, 2018). See “Director Compensation” for a discussion of the grants to nonemployee directors of deferred share units.

ESPP

To encourage employee investment in the Company, the Company maintains an employee stock purchase plan (“ESPP”) that is intended to qualify for favorable tax treatment under Sections 421 and 423 of the Code. Under the ESPP, our employees, including our NEOs (other than Mr. Thorne who is ineligible to participate because he beneficially owns more than 5% of our common stock), can purchase a limited number of shares at a discount to our market price (currently 10% and capped at 15% under the ESPP).

Other Compensation Practices and Policies

Stock Ownership Guidelines. Under our stock ownership guidelines, each of our NEOs is required to maintain a minimum equity stake in the Company, determined as a multiple of the NEO’s base salary (three times salary for our CEO and two times salary for each of our other NEOs) and converted to a fixed number of shares. Until the NEO reaches the minimum required level of stock ownership, the NEO is required to retain 50% of the net shares received through exercise of stock options, vesting of restricted stock or other stock-based compensation, granted on or after December 12, 2011. Currently, only Mr. Thorne has attained the minimum equity stake. “Net shares” are those shares that remain after shares are sold or netted to pay withholding taxes and, in the case of stock options, the exercise price.

Policy Regarding the Timing of Equity Awards. We do not have a formal policy regarding the timing of equity awards.

Policy Regarding Clawbacks. In June 2019, the Compensation Committee adopted a formal clawback of compensation policy. Under the policy, the Company may recover incentive compensation (bonus payments and/or equity awards) paid or granted on or after June 10, 2019 to covered employees (including our NEOs) in certain circumstances. Such recoveries may occur: (1) in the event of a later restatement of financial results due to fraud, misconduct, or gross negligence of an individual with respect to the individual who engages in

 

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such conduct, (2) with respect to individuals who commit specified acts of misconduct and (3) irrespective of whether any individual has committed misconduct, to the extent that, based on inaccurate financial or other information, an award or payment is in excess of what would have been paid absent such inaccurate information.

Tax Deductibility. Our board of directors has considered the potential future effects of Section 162(m) of the Internal Revenue Code on the deductibility of executive compensation paid to our NEOs. Section 162(m) places a limit of $1 million on the amount of compensation that a publicly held corporation may deduct in any one year with respect to its chief executive officer, chief financial officer and each of the next three most highly compensated executive officers. Prior to 2017, where appropriate, we sought to qualify certain of the compensation paid to the covered named executive officers for an exemption from the deductibility limitations of Section 162(m) under the qualified performance-based compensation exemption. The Tax Cuts and Jobs Act of 2017 made certain changes to Section 162(m), including repealing the exemption for qualified performance-based compensation for taxable years beginning after December 31, 2017. Accordingly, compensation paid after 2017 to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. In light of these changes, the Compensation Committee has authorized compensation payments that do not comply with exemptions under Section 162(m) in order to attract, retain and motivate talented executives. The Company did not generate taxable income prior to closing the Transaction and our income tax expense was insignificant in 2020. We expect to our income tax expense to increase in future periods to the extent we become profitable, and we also expect to be able to use net operating losses and other deferred tax attributes to offset a significant portion of our future income taxes.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with members of management, and based on such review and discussions, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

The Compensation Committee

          Robert H. Mundheim (Chair)

          Robert L. Crandall

          Hugh W. Jones

          Charles C. Townsend

 

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2020 Summary Compensation Table

The following table sets forth information regarding compensation earned by our NEOs during the fiscal year ended December 31, 2020, 2019, and 2018.

 

    Name and Principal Position

   Year      Salary  
($)(1)
  Stock
 Awards 
($)(2)
    Option
  Awards  
($)(2)
    Non-Equity
Incentive Plan
 Compensation 
($)(3)
    All Other
 Compensation 
($)(4)
      Total ($)       

 

Oakleigh Thorne

  2020   562,685     498,822       327,840       1,750,000             3,139,347  

President and Chief

  2019   700,000     480,425       491,473       1,003,993             2,675,891  

Executive Officer

  2018   591,429     204,971       3,866,624       225,289       175,000       5,063,313  

 

Barry Rowan

  2020   391,562     252,693       238,981       1,012,500       12,400       1,908,135  

Executive Vice President

  2019   450,000     730,171       495,028       579,920       12,200       2,267,319  

and Chief Financial Officer

  2018   450,000     191,744       351,431       142,922       12,000       1,148,096  

 

Marguerite Elias

  2020   294,751     218,743       160,466       686,286       11,400       1,371,646  

Executive Vice President,

  2019   330,000     204,171       208,873       340,400       11,200       1,094,644  

General Counsel and Secretary

  2018   320,000     155,597       334,989       110,633       11,000       932,219  

 

Sergio Aguirre

  2020   301,808     209,031       115,756       546,946       12,400       1,185,942  

President, Business Aviation

  2019   322,468     204,171       208,873       253,279       12,200       1,000,991  
    2018   293,107     105,236       166,209       159,236       12,000       735,789  

 

Karen Jackson

  2020   264,296     190,430       93,524       569,825       12,400       1,130,475  

Executive Vice President

  2019   293,849     118,820       50,361       227,582       12,200       702,813  

and Chief People Experience Officer

  2018   285,000     91,775       127,375       47,876       12,000       564,026  

 

John Wade(5)

  2020   348,055     218,743       167,763       1,250,000       11,400       1,995,961  

Former President,

  2019   400,000     204,171       208,873       402,053       11,200       1,226,297  

Commercial Aviation

  2018   400,000     171,242       336,857       199,608       11,000       1,118,737  

 

Jonathan Cobin(6)

  2020   313,249     218,743       160,466       1,125,000       12,400       1,829,858  

Former Executive Vice President

  2019   360,000     204,171       208,873       352,604       12,200       1,137,848  

and Chief Strategy Officer

  2018   360,000     163,255       334,989       143,227       12,000       1,013,471  

 

  (1)

The amounts reported in this column reflect salary reductions implemented in response to the COVID-19 pandemic and effective from May 4, 2020 through December 31, 2020.

 

  (2)

The amounts reported in this column reflect (i) the aggregate grant date fair value of shares of time-based vesting restricted common stock or options, as applicable; (ii) the incremental compensation expense related to performance hurdle removal in 2020; and (iii) the incremental compensation related to the Option Exchange in 2020. The amounts are based on the aggregate grant date fair value and incremental fair value computed in accordance with FASB Accounting Standards Codification Topic 718 “Compensation-Stock Compensation” (“ASC Topic 718”), except that the amounts in this column are modified to exclude any forfeiture assumptions related to service-based vesting conditions. See Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated by reference herein, for a discussion of the relevant assumptions used in calculating these amounts. The amounts do not reflect the value actually realized or that ultimately may be realized by the NEOs. Incremental fair value in the following amounts was recognized as an expense in accordance with ASC Topic 718 and is reflected in the stock awards column for 2020: Mr. Thorne, $233,262; Mr. Rowan, $239,365; Ms. Elias, $126,901; Mr. Aguirre, $72,479; Ms. Jackson, $31,646; Mr. Wade, $134,198; and Mr. Cobin, $126,901.

 

  (3)

This column represents for 2020 the amounts earned for performance-based bonuses under our Annual Incentive Plan. See “—Elements of Compensation—Annual Incentive Plan” for a discussion of how 2020 performance-based bonuses were determined. This column also represents for 2020 the amounts earned under the CA Bonus Plan. See “Elements of Compensation—Annual Incentive Plan—The CA Bonus Plan” for a discussion of how such bonuses were determined.

 

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  (4)

Amounts reported in the “All Other Compensation” column for 2020 include the items set forth in the table below, as applicable to each NEO:

 

    Name              401(k)
Contributions
($)
   HSA
Contributions
($)
   Total ($)

 

Oakleigh Thorne

        

 

Barry Rowan

   11,400    1,000    12,400

 

Marguerite Elias

   11,400       11,400

 

Sergio Aguirre

   11,400    1,000    12,400

 

Karen Jackson

   11,400    1,000    12,400

 

John Wade

   11,400       11,400

 

Jonathan Cobin

   11,400    1,000    12,400

 

  (5)

Mr. Wade’s employment by Gogo was terminated on December 1, 2020 upon the closing of the Transaction.

 

  (6)

Mr. Cobin’s employment by Gogo was terminated on December 1, 2020 upon the closing of the Transaction.

2020 Grants of Plan-Based Awards

Set forth below is information regarding plan-based awards granted to our NEOs during 2020.

 

    Name          

      Grant    
Date
   

 

    Estimated Future Potential

Payouts under Non-Equity
Incentive Plan Awards(1)

        Estimated Future Payouts
under Equity Incentive Plan
Awards
    All Other
Stock Awards:
Number of
Shares of
 Stock or Units 
(#)
    All Other
Option
Awards:
Number of
Securities
    Underlying    
Options
(#)
    Exercise
or Base
Price of
Option
Awards
($/share)(2)
    Grant Date
Fair Value of
Stock and
Option
Awards
        ($)        
 
    Threshold  
($)
      Target  
($)
      Maximum  
($)
      Threshold  
($)
      Target  
($)
      Maximum  
($)
 

Oakleigh Thorne

                     

RSUs(2)

    3/17/2020                   75,000           160,500  

RSUs(2)

    3/17/2020                   130,000           278,200  

RSUs(3)

    3/17/2020                   13,250           27,118  

RSUs(3)

    3/17/2020                   27,500           33,004  

Option(4)

    3/17/2020                     125,000       2.14       154,700  

Option(5)

    3/17/2020                     86,750       9.39       50,042  

Option(5)

    3/17/2020                     47,500       4.57       20,485  

Option(6)

    6/12/2020                     625,591       2.61       102,613  
    N/A       350,000       700,000       1,050,000                
      N/A               350,000       700,000                                                          

Barry Rowan

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   20,000           42,063  

RSUs(3)

    3/17/2020                   5,500           9,873  

RSUs(3)

    3/17/2020                   11,700           14,042  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     100,000       12.50       42,264  

Option(5)

    3/17/2020                     37,000       10.23       18,176  

Option(5)

    3/17/2020                     20,200       4.57       8,712  

Option(6)

    6/12/2020                     249,414       2.61       104,236  
    N/A       202,500       405,000       607,500                
      N/A               202,500       405,000                                                          

 

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Table of Contents

[Preliminary Copy - Subject to Completion]

 

    Name          

      Grant    
Date
   

 

    Estimated Future Potential

Payouts under Non-Equity
Incentive Plan Awards(1)

        Estimated Future Payouts
under Equity Incentive Plan
Awards
    All Other
Stock Awards:
Number of
Shares of
 Stock or Units 
(#)
    All Other
Option
Awards:
Number of
Securities
    Underlying    
Options
(#)
    Exercise
or Base
Price of
Option
Awards
($/share)(2)
    Grant Date
Fair Value of
Stock and
Option
Awards
        ($)        
 
    Threshold  
($)
      Target  
($)
      Maximum  
($)
      Threshold  
($)
      Target  
($)
      Maximum  
($)
 

Marguerite Elias

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   3,840           8,113  

RSUs(3)

    3/17/2020                   5,500           9,873  

RSUs(3)

    3/17/2020                   11,700           14,042  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     29,840       11.96       12,867  

Option(5)

    3/17/2020                     37,000       10.23       18,176  

Option(5)

    3/17/2020                     20,200       4.57       8,712  

Option(6)

    6/12/2020                     204,045       2.61       55,118  
    N/A       127,090       254,180       381,270                
      N/A               152,508       305,016                                                          

Sergio Aguirre

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   930           1,965  

RSUs(3)

    3/17/2020                   975           1,750  

RSUs(3)

    3/17/2020                   2,640           4,560  

RSUs(3)

    3/17/2020                   11,700           14,042  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     7,710       11.96       3,324  

Option(5)

    3/17/2020                     6,525       10.23       3,205  

Option(5)

    3/17/2020                     17,780       3.58       14,264  

Option(5)

    3/17/2020                     20,200       4.57       8,712  

Option(6)

    6/12/2020                     52,946       2.61       20,657  
    N/A       130,225       260,451       390,676                
      N/A               78,135       156,270                                                          

Karen Jackson

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   930           1,965  

RSUs(3)

    3/17/2020                   975           1,750  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     7,710       11.96       3,324  

Option(5)

    3/17/2020                     6,525       10.23       3,205  

Option(6)

    6/12/2020                     56,951       2.61       21,401  
    N/A       113,965       227,930       341,895                
      N/A               113,965       227,930                                                          

John Wade

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   3,840           8,113  

RSUs(3)

    3/17/2020                   5,500           9,873  

RSUs(3)

    3/17/2020                   11,700           14,042  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     29,840       11.96       12,867  

Option(5)

    3/17/2020                     37,000       10.23       18,176  

Option(5)

    3/17/2020                     20,200       4.57       8,712  

Option(6)

    6/12/2020                     219,171       2.61       62,416  
    N/A       150,000       300,000       450,000                
      N/A               400,000       800,000                                                          

 

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Table of Contents

[Preliminary Copy - Subject to Completion]

 

    Name          

      Grant    
Date
   

 

    Estimated Future Potential

Payouts under Non-Equity
Incentive Plan Awards(1)

        Estimated Future Payouts
under Equity Incentive Plan
Awards
    All Other
Stock Awards:
Number of
Shares of
 Stock or Units 
(#)
    All Other
Option
Awards:
Number of
Securities
    Underlying    
Options
(#)
    Exercise
or Base
Price of
Option
Awards
($/share)(2)
    Grant Date
Fair Value of
Stock and
Option
Awards
        ($)        
 
    Threshold  
($)
      Target  
($)
      Maximum  
($)
      Threshold  
($)
      Target  
($)
      Maximum  
($)
 

Jonathan Cobin

                     

RSUs(2)

    3/17/2020                   32,000           68,480  

RSUs(2)

    3/17/2020                   55,250           118,235  

RSUs(3)

    3/17/2020                   3,840           8,113  

RSUs(3)

    3/17/2020                   5,500           9,873  

RSUs(3)

    3/17/2020                   11,700           14,042  

Option(4)

    3/17/2020                     53,000       2.14       65,593  

Option(5)

    3/17/2020                     29,840       11.96       12,867  

Option(5)

    3/17/2020                     37,000       10.23       18,176  

Option(5)

    3/17/2020                     20,200       4.57       8,712  

Option(6)

    6/12/2020                     203,598       2.61       55,118  
    N/A       135,000       270,000       405,000                
      N/A               360,000       720,000                                                          

 

  (1)

Represents threshold, target and maximum payout levels for bonuses approved in March 2020 for performance for the year ended December 31, 2020. See “—Elements of Compensation—Annual Incentive Plan—2020 Bonus Program” for a description of the plan. The threshold numbers set forth above are based on achieving the minimum level of performance for which payment would be made with respect to financial performance measures, and assumes no payout is made for the strategic/operational objectives. Also represents the target and maximum payout levels for CA bonuses approved in August 2020 for performance for the year ended December 31, 2020.

 

  (2)

Represents shares of time-based vesting RSUs granted under our 2016 Omnibus Plan.

 

  (3)

Represents the performance-based RSUs granted on or after March 14, 2017 that were modified in 2020 to remove any applicable performance-vesting conditions as discussed in more detail in Actions Taken in 2020 with Respect to Equity-Based Compensationin our “Compensation Discussion and Analysisabove.

 

  (4)

Represents time-based vesting stock options granted under our 2016 Omnibus Plan.

 

  (5)

Represents the performance options granted on or after March 14, 2017 that were modified in 2020 to remove any applicable performance-vesting conditions

 

  (6)

Represents time-based vesting stock options granted under our 2016 Omnibus Plan pursuant to the Option Exchange.

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

Options

All options granted to our NEOs in 2020 under the 2016 Omnibus Plan have a ten-year term and are subject to time-based vesting. The options granted in March 2020 vest in 25% increments on the first four anniversaries of the grant date, generally subject to continued employment with the Company through the applicable vesting date.

In March 2020, the Compensation Committee approved the removal of performance vesting conditions with respect to performance-vesting stock options granted on or after March 14, 2017. See “—Elements of Compensation—Actions Taken in 2020 with Respect to Equity-Based Compensation” for more detail.

 

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In March 2020, the Compensation Committee also approved the Option Exchange, as discussed in further detail in “—Elements of Compensation—Actions Taken in 2020 with Respect to Equity-Based Compensation” above. The replacement options granted under the Option Exchange vest in a single installment on December 31, 2022, generally subject to continued employment with the Company through such date. See “—Potential Payments upon Termination or Change of Control” including the discussion under “—Potential Payments upon Termination or Change of Control—Effect of Termination or Change in Control on Equity Compensation” for a discussion of the effect of termination and change in control on option vesting. See “—Elements of Compensation—Modification of Awards Held by Jon Cobin and John Wade” for a description of modifications to the vesting of options held by such individuals that took effect upon the closing of the Transaction.

RSUs

RSUs granted in 2020 that are not special recognition awards vest in 25% increments on the first four anniversaries of the grant date, generally subject to continued employment with the Company through the applicable vesting date. RSUs granted as special recognition awards vest in a single installment on December 31, 2022, generally subject to continued employment by the Company through such date. See “—Potential Payments upon Termination or Change of Control” including the discussion under “—Potential Payments upon Termination or Change of Control—Effect of Termination or Change in Control on Equity Compensation” for a discussion of the effect of termination and change in control on RSUs vesting.

In March 2020, the Compensation Committee approved the removal of performance vesting conditions with respect to performance-vesting RSUs granted on or after March 14, 2017. See “—Elements of Compensation—Actions Taken in 2020 with Respect to Equity-Based Compensation” for more detail.

See “—Elements of Compensation—Modification of Awards Held by Jon Cobin and John Wade” for a description of modifications to the vesting schedule of RSUs held by such individuals that took effect upon the closing of the Transaction.

Employment Agreements

We have entered into employment agreements with each of our NEOs. The employment agreements between the Company and Messrs. Cobin and Wade were assigned by us to Intelsat upon the closing of the Transaction. Information regarding the remaining agreements is set forth below. From time to time, the Compensation Committee has approved changes to an NEO’s title, base salary or bonus target, but the respective employment agreement is not amended to reflect such changes. See “Compensation Discussion and Analysis—Introduction” for the current titles of our NEOs and “—Elements of Compensation” for information about the base salary and bonus targets for each NEO during 2020.

 

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Oakleigh Thorne. In March 2018, we entered into an employment agreement with Mr. Thorne, pursuant to which he agreed to serve as our President and Chief Executive Officer. The employment agreement set Mr. Thorne’s base salary at $700,000, and provides that the salary will be reviewed at least annually and not reduced by more than 10% of his then-current base salary unless as part of an overall compensation reduction at the Company that impacts the salaries of all executives. The employment agreement specifies that Mr. Thorne is eligible for an annual bonus with a target of 100% of base salary, with the amount of such bonus to be determined by the Compensation Committee. Mr. Thorne’s employment agreement also provides that he is eligible to participate in all normal Company benefits, including the Company’s 401(k), retirement, medical, dental and life and disability insurance plans and programs, in accordance with the terms of such arrangements.

In connection with his commencement of employment, Mr. Thorne received a $150,000 cash payment to cover his relocation-related expenses and was reimbursed for $25,000 of his legal expenses in connection with the negotiation of the terms of his employment.

Mr. Thorne’s employment is for no specific term and either the Company or Mr. Thorne may terminate Mr. Thorne’s employment at any time, with or without cause. If Mr. Thorne’s employment is terminated by the Company without cause or if Mr. Thorne resigns for good reason, Mr. Thorne will not be entitled to severance but, subject to Mr. Thorne executing a general release of all claims against the Company and to his continued compliance with the restrictive covenants in the employment agreement, he will be entitled to (i) a pro rata portion of his annual bonus for the fiscal year in which his termination occurs based on actual results for such year, (ii) continued vesting of the options and any other equity awards then held by Mr. Thorne on the schedule set forth in the applicable option or other equity award agreement for 12 months following his termination, and (iii) continued exercisability of any vested options then held by Mr. Thorne for 12 months following his termination. He would also be entitled to payment of any earned but unpaid salary and any business expenses incurred but not reimbursed. Mr. Thorne is subject to noncompetition and non-solicitation covenants for one year after leaving the employment of the Company.

Barry Rowan. In April 2017, we entered into an employment agreement with Mr. Rowan, pursuant to which he agreed to serve as Executive Vice President, Finance and, on May 4, 2017, as Executive Vice President and Chief Financial Officer. The employment agreement set Mr. Rowan’s annual base salary at $450,000, and provides that the salary will be reviewed at least annually and not reduced by more than 10% of his then-current base salary unless as part of an overall compensation reduction at the Company that impacts the salaries of all executives. The employment agreement specifies that Mr. Rowan is eligible for an annual bonus with a target of 75% of base salary, with the amount of such bonus to be determined by the Compensation Committee. The bonus is based upon the achievement of objectives established by the Compensation Committee. Mr. Rowan’s employment agreement

 

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also provides that he is eligible to participate in all normal Company benefits, including the Company’s 401(k), retirement, medical, dental and life and disability insurance plans and programs in accordance with the terms of such arrangements.

In connection with his commencement of employment and relocation, Mr. Rowan received a starting bonus of $100,000, which was subject to repayment if his employment terminated prior to April 24, 2018. Mr. Rowan was also entitled to receive reimbursement of temporary housing expenses for 60 days, as well as reimbursement of other reasonable and customary moving and relocation expenses if he purchased a home in Chicago within 14 months of his start date. Additionally, in accordance with Company practice for senior executives, Mr. Rowan received reimbursement of taxes associated with the payment of certain housing and relocation expenses. Mr. Rowan also received reimbursement of his attorney’s fees in connection with the negotiation of his employment agreement.

Mr. Rowan’s employment is for no specific term and either the Company or Mr. Rowan may terminate Mr. Rowan’s employment at any time, with or without cause. If Mr. Rowan’s employment is terminated by the Company without cause or if he resigns for good reason, Mr. Rowan will be entitled to (i) continuation of his base salary for 12 months following his termination, (ii) reimbursement for COBRA premiums due to maintain substantially equivalent health insurance coverage for 12 months following his termination, (iii) payment of any earned but unpaid salary, (iv) payment of any business expenses incurred but not reimbursed and (v) payment of any approved but unpaid bonus award. The payment of (i) and (ii) above will be contingent on Mr. Rowan executing a general release of all claims against the Company. Mr. Rowan is subject to noncompetition and non-solicitation covenants for one year after leaving the employment of the Company.

Marguerite M. Elias. We entered into an employment agreement with Ms. Elias in January 2008 pursuant to which Ms. Elias agreed to serve as Senior Vice President and General Counsel. We amended the agreement effective December 31, 2008 and November 30, 2017. The employment agreement set Ms. Elias’ annual base salary at $220,000 and required that the salary will be reviewed at least annually and not reduced by more than 10% of her then-current base salary unless as part of an overall compensation reduction at the Company that impacts the salaries of all executives. The employment agreement specifies that Ms. Elias is eligible for an annual bonus with a target of 30% of base salary, with the amount of such bonus to be determined by the Chief Executive Officer and subject to the approval of the Company’s board of directors. Ms. Elias’ employment agreement provides that she is eligible to participate in all normal Company benefits, including the Company’s 401(k), retirement, medical, dental and life and disability insurance plans and programs in accordance with the terms of such arrangements.

Ms. Elias’ employment is for no specific term and either the Company or Ms. Elias may terminate Ms. Elias’ employment at any time, with or without cause. If Ms. Elias’

 

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employment is terminated by the Company without cause or she resigns for good reason, Ms. Elias will be entitled to (i) continuation of her base salary for one year following her termination, (ii) reimbursement for COBRA premiums due to maintain substantially equivalent health insurance coverage for one year following her termination, (iii) payment of any earned but unpaid salary and accrued but unused paid time off, (iv) payment of any business expenses incurred but not reimbursed, and (v) payment of any approved but unpaid bonus award. The payment of (i) and (ii) above will be contingent on Ms. Elias executing a separation agreement containing a general release of all claims against the Company. Ms. Elias is subject to noncompetition and non-solicitation covenants for one year after leaving the employment of the Company.

Sergio Aguirre. We entered into an employment agreement with Mr. Aguirre in August 2018 pursuant to which Mr. Aguirre agreed to serve as Executive Vice President and President Business Aviation. The employment agreement set Mr. Aguirre’s annual base salary at $303,000 and required that the salary will be reviewed at least annually. The employment agreement specifies that Ms. Elias is eligible for an annual bonus with a target of 75% of base salary, with the amount of such bonus to be determined by the Compensation Committee. Mr. Aguirre’s employment agreement provides that he is eligible to participate in all normal Company benefits, including the Company’s 401(k), retirement, medical and life and disability insurance plans and programs in accordance with the terms of such arrangements.

Mr. Aguirre’s employment is for no specific term and either the Company or Mr. Aguirre may terminate Mr. Aguirre’s employment at any time, with or without cause. If Mr. Aguirre’s employment is terminated by the Company without cause or he resigns for good reason, Mr. Aguirre will be entitled to (i) continuation of his base salary for one year following his termination, (ii) reimbursement for COBRA premiums due to maintain substantially equivalent health insurance coverage for one year following his termination, (iii) payment of any earned but unpaid salary and accrued but unused paid time off, (iv) payment of any business expenses incurred but not reimbursed, and (v) payment of any approved but unpaid bonus award. The payment of (i) and (ii) above will be contingent on Mr. Aguirre executing a separation agreement containing a general release of all claims against the Company. Mr. Aguirre is subject to noncompetition and non-solicitation covenants for one year after leaving the employment of the Company.

Karen Jackson. We entered into an amended and restated employment agreement with Ms. Jackson in February 2020 pursuant to which Ms. Jackson agreed to serve as Executive Vice President and Chief People Experience Officer. The employment agreement set Ms. Jackson’s annual base salary at $305,000 and required that the salary will be reviewed at least annually. The employment agreement specifies that Ms. Jackson is eligible for an annual bonus with a target of 75% of base salary, with the amount of such bonus to be determined by the Compensation Committee. Ms. Jackson’s employment agreement provides that she is eligible to participate in all normal Company benefits, including the Company’s 401(k),

 

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retirement, medical, dental and life and disability insurance plans and programs in accordance with the terms of such arrangements.

Ms. Jackson’s employment is for no specific term and either the Company or Ms. Jackson may terminate Ms. Jackson’s employment at any time, with or without cause. If Jackson’s employment is terminated by the Company without cause or she resigns for good reason, Ms. Jackson will be entitled to (i) continuation of her base salary for one year following her termination, (ii) reimbursement for COBRA premiums due to maintain substantially equivalent health insurance coverage for one year following her termination, (iii) payment of any earned but unpaid salary and accrued but unused paid time off, (iv) payment of any business expenses incurred but not reimbursed, and (v) payment of any approved but unpaid bonus award. The payment of (i) and (ii) above will be contingent on Ms. Jackson executing a separation agreement containing a general release of all claims against the Company. Ms. Jackson is subject to noncompetition and non-solicitation covenants for one year after leaving the employment of the Company.

Each of the employment agreements (as amended) define cause as the NEO’s (i) willful gross misconduct or gross or persistent negligence in the discharge of his duties, (ii) act of dishonesty or concealment, (iii) breach of the NEO’s fiduciary duty or duty of loyalty to the Company, (iv) material breach of the confidentiality restrictions or covenants not to compete contained in the employment agreement, (v) any other material breach of the employment agreement that is not cured within 30 days, (vi) commission of one or more acts of substance abuse which are materially injurious to the Company, (vii) commission of a criminal offense involving money or other property of the Company (excluding traffic or other similar violations) or (viii) commission of a criminal offense that would constitute a felony under the laws of the state of Illinois (for Mr. Thorne, Mr. Rowan, Ms. Elias and Ms. Jackson) and Colorado (for Mr. Aguirre) or the United States. Our NEOs’ employment agreements (as amended) define good reason as (i) a reduction by the Company in the NEO’s base salary beyond that permitted under the terms of the employment agreement or a reduction in his or her target bonus, (ii) a material diminution in the NEO’s duties or responsibilities, (iii) the NEO ceasing to report to the board of directors, in the case of Mr. Thorne only, (iv) the relocation of the NEO’s principal place of employment to a geographic location greater than 30 miles from the Company’s headquarters in the case of Mr. Thorne, 50 miles from the Company’s headquarters in the case of Mr. Rowan, Ms. Elias and Ms. Jackson, and 50 miles from the Company’s headquarters or its Broomfield, CO location in the case of Mr. Aguirre, or (v) any material, uncured breach by the Company of its obligations to the NEO under the employment agreement.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards held by each of our NEOs as of December 31, 2020:

 

    Option Awards

 

    Stock Awards

 

             

Name

  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
    Option
Exercise
Price ($)
    Option
Expiration
Date
    Number of
Shares or
Units of
Stock That
Have Not
Vested (#)(1)
    Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)(2)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
    Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
other
Rights
That Have
Not
Vested
($)
 

   Oakleigh Thorne

    1,330 (3)              24.91       11/12/2023                  
    1,530 (3)              24.82       12/31/2023                  
    2,008 (3)              20.54       03/31/2024                  
    1,998 (3)              19.56       06/30/2024                  
    2,453 (3)              16.86       09/30/2024                  
    2,531 (3)              16.53       12/31/2024                  
    2,261 (3)              19.06       03/31/2025                  
    2,037 (3)              21.43       06/30/2025                  
    4,092 (3)              15.28       09/30/2025                  
    3,414 (3)              17.80       12/31/2025                  
    5,682 (3)              11.01       03/31/2026                  
    7,616 (3)              8.39       06/30/2026                  
    3,892 (3)              11.04       09/30/2026                  
    4,517 (3)              9.22       12/30/2026                  
    3,687 (3)              11.00       03/31/2027                  
    3,497 (3)              11.53       06/30/2027                  
    3,390 (3)              11.81       09/29/2027                  
    3,477 (3)              11.28       12/29/2027                  
    3,013 (3)              8.63       03/30/2028                  
          125,000 (4)        2.14       03/17/2030                  
          625,591 (5)        2.61       06/12/2030                  
                                      300,748       2,896,203                  

 

   Barry Rowan

 

 

 

 

20,188

 

(4) 

 

 

 

 

60,562

 

(4) 

   

 

 

 

4.57

 

 

 

 

 

 

3/10/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
    25,000 (6)      25,000 (6)        4.57       3/10/2029                  
          53,000 (4)        2.14       3/17/2030                  
          249,414 (5)        2.61       6/12/2030                  
                                      196,091       1,888,357                  

 

   Marguerite Elias

 

 

 

 

 

 

 

 

 

 

53,000

 

(4) 

   

 

 

 

2.14

 

 

 

 

 

 

3/17/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
          204,045 (5)        2.61       6/12/2030                  
                                      129,272       1,264,150                  

 

   Sergio Aguirre

 

 

 

 

13,972

 

(4) 

 

 

 

 

13,972

 

(4) 

   

 

 

 

3.58

 

 

 

 

 

 

7/31/2028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
    20,188 (4)      60,562 (4)        4.57       3/10/2029                  
      53,000 (4)        2.14       3/17/2030                  
      52,946 (5)        2.61       6/12/2030          
                                                      127,290       1,225,803          

 

   Karen Jackson

 

 

 

 

4,750

 

(4) 

 

 

 

 

14,250

 

(4) 

   

 

 

 

4.57

 

 

 

 

 

 

3/10/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
          53,000 (4)        2.14       3/17/2030                  
          56,951 (5)        2.61       6/12/2030                  
                                    109,658       1,056,007                  

 

   John Wade

 

 

 

 

 

 

 

 

 

 

53,000

 

(4) 

   

 

 

 

2.14

 

 

 

 

 

 

3/17/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
          219,171 (5)        2.61       6/12/2030                  
                                      76,022       732,092                  

 

   Jonathan Cobin

 

 

 

 

 

 

 

 

 

 

53,000

 

(4) 

   

 

 

 

2.14

 

 

 

 

 

 

3/17/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
          203,598 (5)        2.61       6/12/2030                  
                                      76,022       732,092                  

 

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(1)

The amounts in this column represent shares of restricted stock and RSUs.

 

(2)

Amounts in this column are based on the price of $9.63 per share, the closing market price for our common stock on December 31, 2020.

 

(3)

These options were granted for Mr. Thorne’s services as a non-employee director and were fully vested on the grant date.

 

(4)

The options vest 25% on the first anniversary of the grant date and an additional 25% on each of the three following anniversaries of such date.

 

(5)

The options vest 100% on December 31, 2022.

 

(6)

The options vest in equal 50% installments on December 31, 2020 and December 31, 2021.

Option Exercises and Stock Vested Table

The table below provides information on the stock options that were exercised by and stock awards that vested for our NEOs in 2020.

 

    Option Awards   Stock Awards

Name

  Number of
 Shares Acquired 
on Exercise
(#)
  Value
  Realized on  
Exercise
(#)
  Number of
 Shares Acquired 
on Vesting
(#)
  Value
  Realized on  
Vesting
($)(1)

Oakleigh Thorne

      37,439   98,194

Barry Rowan

      118,157   671,295

Marguerite Elias

      40,355   110,123

Sergio Aguirre

      33,106   92,488

Karen Jackson

      25,360   72,830

John Wade

      100,508   706,357

Jonathan Cobin

      97,744   698,682

 

(1)

The value realized on vesting represents the number of shares multiplied by the market value of our Common Stock at the time the applicable share vested.

 

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Nonqualified Deferred Compensation Table

The table below provides information on the nonqualified deferred compensation benefits of each of our NEOs in 2020.

 

Name

  Executive
Contributions
in Last FY ($)
  Registrant
Contributions
in Last FY
($)
  Aggregate
Earnings
in

Last
FY ($)
  Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance
at

Last FYE
($)(2)

Oakleigh Thorne(1)

      131,174     391,084

Barry Rowan

         

Marguerite Elias

         

Sergio Aguirre

         

Karen Jackson

         

John Wade

         

Jonathan Cobin

         

 

(1)

Deferred amounts represent the value of deferred share units granted under our 2013 Omnibus Plan and our 2016 Omnibus Plan for the period of time Mr. Thorne served as a nonemployee director prior to his appointment as President and Chief Executive Officer in March 2018. See “Director Compensation” for a discussion on the compensation our directors receive for their service on the board.

 

(2)

The deferred share units included in this amount were received in fiscal years 2013, 2014, 2015, 2016, 2017 and 2018. The amount in respect of deferred share units received prior to 2018 were not reported as compensation in the “Summary Compensation Table” to Mr. Thorne in previous years because he was not a NEO at the time. However, such compensation was reported in the “Director Compensation” section when Mr. Thorne served as a nonemployee director.

Potential Payments upon Termination or Change of Control

The following table describes the payments and benefits that each NEO other than Messrs. Cobin and Wade would have been entitled to receive upon a hypothetical termination of employment or change in control as of December 31, 2020. Messrs. Cobin and Wade are not included in the table or the following narrative due to the termination of their employment by Gogo that occurred upon the closing of the Transaction.

For a description of the potential payments upon a termination pursuant to the employment agreements with our NEOs other than within two years following a change in control, see “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements.” For a description of the potential payments upon a termination by the Company without cause or if the NEO resigns with good reason within two years following a change in control, see “—Elements of Compensation—Employment and

 

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Other Agreements with NEOs.” For a description of the consequences of a termination of employment or a change in control for the stock options granted to NEOs under our Stock Option Plan, our 2013 Omnibus Plan and our 2016 Omnibus Plan, please see the disclosure that follows the table.

 

Severance(1)                               

   Death or
Disability

($)
     Voluntary
Resignation
($)
   Involuntary
Termination
without
Cause ($)
     Termination
for Good
Reason ($)
     Involuntary
Termination
without
Cause or
Termination
for Good
Reason
within 2
Years
Following
Change in
Control ($)
    Change in
Control ($)(6)
 

Oakleigh Thorne

     58,333           758,333        700,000        758,333 (7)       

Barry Rowan

     37,500           487,500        450,000        1,283,000        

Marguerite Elias

     28,333           368,333        340,000        892,500        

Sergio Aguirre

     29,167           379,167        350,000        918,750        

Karen Jackson

     25,417           330,417        305,000        800,625        

Benefits(2)

                

Oakleigh Thorne

                                    

Barry Rowan

               15,221        15,221        22,832        

Marguerite Elias

               15,221        15,221        22,832        

Sergio Aguirre

               9,989        9,989        14,984        

Karen Jackson

               23,010        23,010        34,515        

Value of Accelerated Restricted Stock(3)

                

Oakleigh Thorne

                                    

Barry Rowan

     96,300                         96,300       96,300  

Marguerite Elias

     24,075                         24,075       24,075  

Sergio Aguirre

                                    

Karen Jackson

     7,001                         7,001       7,001  

Value of Accelerated RSUs(4)

                

Oakleigh Thorne

     509,177           1,251,900               2,896,203       2,896,203  

Barry Rowan

     777,305           532,058               1,792,056       1,792,056  

Marguerite Elias

     225,323           532,058               1,240,074       1,240,074  

Sergio Aguirre

     218,187           532,058               1,225,803       1,225,803  

Karen Jackson

     151,258           532,058               1,049,006       1,049,006  

Value of Stock Options(5)

                

Oakleigh Thorne

     234,063           4,391,649               5,327,899       5,327,899  

Barry Rowan

     327,894           1,750,886               2,580,800       2,580,800  

Marguerite Elias

     99,243           1,432,396               1,829,366       1,829,366  

Sergio Aguirre

     243,659           371,681               1,159,625       1,159,625  

Karen Jackson

     123,278           399,796               868,871       868,871  

Total

                

Oakleigh Thorne

     801,573           6,401,882        700,000        8,982,435       8,224,102  

Barry Rowan

     1,238,999           2,785,665        465,221        5,774,988       4,469,156  

Marguerite Elias

     376,974           2,348,008        355,221        4,008,847       3,093,515  

Sergio Aguirre

     491,013           1,292,895        359,989        3,319,162       2,385,428  

Karen Jackson

     306,954           1,285,281        328,010        2,760,018       1,924,878  

 

(1)

Includes 30 days’ pay in lieu of notice and continuation of NEO’s salary pursuant to each NEO’s employment agreement (except for Mr. Thorne). All NEOs are entitled to 30 days’ pay in lieu of

 

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notice on a termination for disability. On a termination without cause or resignation for good reason, Mr. Thorne is entitled to 30 days’ pay in lieu of notice and a pro rata bonus for the year of termination. See “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table —Employment Agreements” and “—Elements of Compensation—Change in Control Protection” for a discussion of the terms of the agreements.

 

(2)

For each NEO, the amounts include the cost of COBRA premiums to maintain health insurance coverage that is substantially equivalent to that which the NEO received immediately prior to termination and assumes that the NEO elects COBRA coverage for the full period for which he or she is entitled to payment or reimbursement. See “—Elements of Compensation—Change in Control Protection” above for a discussion of the terms of those agreements.

 

(3)

The value of vesting of time-based vesting restricted stock is calculated by multiplying the number of unvested shares of restricted stock that would accelerate by $9.63, which was the closing price of our common stock on the NASDAQ market on December 31, 2020. In case of a change in control, the table assumes that all shares of restricted stock were accelerated as a result of the transaction. See “—Effect of Termination or Change in Control on Equity Compensation” below for a description of the circumstances that would trigger accelerated vesting upon a change in control.

 

(4)

The value of vesting of time-based vesting RSUs is calculated by multiplying the number of unvested RSUs that would accelerate by $9.63, which was the closing price of our common stock on the NASDAQ market on December 31, 2020. In the case of the recognition RSUs granted in 2020, all such recognition RSUs will accelerate on any termination by the Company other than for cause. In case of a change in control, the table assumes that all shares of RSUs were accelerated as a result of the transaction. See “—Effect of Termination or Change in Control on Equity Compensation” below for a description of the circumstances that would trigger accelerated vesting upon a change in control.

 

(5)

The value of vesting of time-based vesting stock options is calculated by multiplying the number of unvested options that would accelerate by the difference between the exercise price and $9.63, which was the closing price of our common stock on the NASDAQ market on December 31, 2020, over the applicable exercise price per share. In the case of the replacement options granted in the Option Exchange in 2020, all such options will accelerate on any termination by the Company other than for cause. See “—Effect of Termination or Change in Control on Equity Compensation” below for a description of the circumstances that would trigger accelerated vesting upon a change in control. The table reflects unvested options that were in the money (i.e., had an exercise price lower than our stock price) as of December 31, 2020.

 

(6)

Assumes acquiror will not grant replacement awards. If replacement awards are granted, vesting of options and restricted stock will not accelerate in the absence of an involuntary termination.

 

(7)

Mr. Thorne is not party to a change in control agreement. This amount assumes that his employment agreement would continue in the event of a change in control. Under Mr. Thorne’s employment agreement, he would receive the pro rata portion of his annual bonus for the fiscal year in which his termination occurs based on the actual results for such year. In addition, Mr. Thorne would receive 30 days’ pay in lieu of notice (equal to $58,333) for an involuntary termination without cause but he would not receive such amount for a termination for good reason. See “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table —Employment Agreements” for a discussion of the terms of Mr. Thorne’s employment agreement.

 

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Effect of Termination or Change in Control on Equity Compensation. Time-based Vesting Stock Options, Restricted Stock and RSUs

If an NEO’s service relationship with us ceases for any reason other than disability, death, retirement or cause, except as provided below, the NEO may exercise the vested portion of any option for three months after the date of termination (except with respect to Mr. Thorne as noted above under “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements”). If an NEO’s service relationship with us terminates by reason of disability, death or retirement, the NEO or the NEO’s representative generally may exercise the vested portion of any option for 12 months after the date of such termination. In no event, however, may an option be exercised beyond the expiration of its term. If an NEO’s service relationship with us terminates for cause, the option (whether or not vested) will terminate immediately. In the event of death, disability or retirement, (i) the replacement options issued to the NEOs in the Option Exchange will become fully vested and (ii) the options previously granted to the NEOs under the 2013 Omnibus Plan or under our 2016 Omnibus Plan are deemed vested to the extent of the number of options that would have vested had the NEO’s employment continued until the next vesting date immediately following the date of death or the effective date of termination of employment due to disability or retirement. Of our NEOs, only Ms. Elias was eligible for retirement as of December 31, 2020. Upon a termination of an NEO’s employment by the Company for any reason other than for cause, the vesting of any unvested replacement options granted in the 2020 Option Exchange will be accelerated.

If an NEO’s service relationship with us terminates for any reason other than death or disability, except as provided below, all unvested shares of restricted stock and unvested RSUs granted to the NEOs under the 2013 Omnibus Plan or the 2016 Omnibus Plan will immediately be forfeited (except with respect to Mr. Thorne as noted above under “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements”). In the event of death or disability, the shares of restricted stock previously granted to the NEOs under the 2013 Omnibus Plan or the 2016 Omnibus Plan are deemed vested to the extent of the number of shares that would have vested had the NEO’s employment continued until the next vesting date immediately following the date of death or the effective date of termination of employment due to disability. In the event of death, disability or retirement, the RSUs granted to the NEOs under the 2016 Omnibus Plan are deemed vested to the extent of the number of awards that would have vested had the NEO’s employment continued until the next vesting date immediately following the date of death or the effective date of termination of employment due to disability or retirement. Upon a termination of an NEO’s employment by the Company for any reason other than for cause, the vesting of any unvested recognition RSUs granted in 2020 will be accelerated.

In the event that a change in control occurs, the acquiring or surviving entity in the transaction may assume or substitute similar awards for the outstanding options, restricted stock and RSUs, in which case the vesting of the options, restricted stock and RSUs is not accelerated. In such case, all of the options, restricted stock and RSUs will become

 

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immediately vested and exercisable if an NEO’s service relationship with us terminates without cause or due to death or disability after the change in control. If the acquiring or surviving entity does not assume or substitute similar awards for outstanding awards or our common stock is exchanged solely for cash in such change in control transaction, the vesting of options, restricted stock and RSUs will generally accelerate in full in connection with the change in control and the NEO will generally receive a cash payment equal to the number of shares of common stock then subject to such awards, whether or not vested and/or exercisable, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to holders of common stock in any transaction whereby the change in control takes place or (B) the fair market value of a share of common stock on the date of occurrence of the change in control, over the exercise price per share of common stock subject to the award (if applicable).

Compensation Risk Assessment

Management and the Compensation Committee assessed the risks associated with the Company’s compensation practices and policies for employees, including a consideration of risk-mitigating factors in the Company’s compensation practices and policies. Following this assessment, the Compensation Committee concluded that the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.

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, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer:

We determined that, as of the last payroll date in December 2020, our total employee population consisted of approximately 349 individuals, including our CEO. This population included full- and part-time employees, of which approximately 345 were located in the United States and four were located in four countries outsides of the United States. We excluded all non-U.S. employees because together this population represents less than 5% of Gogo’s total employee workforce. The excluded population included one in each of Canada, India, the Netherlands and the United Kingdom. We also excluded one employee who was hired in December 2020 and did not receive any wages in 2020. After excluding this population and our CEO, the resulting adjusted employee population to be used for identifying our “median employee” was 343.

The median employee was identified using total cash compensation, which we determined reasonably reflects the annual compensation of our employees and consistently applies to all our employees. The calculation of total compensation of the CEO and the median employee was determined in the same manner as the “Total Compensation” shown for our CEO in the “Summary Compensation Table” on page 46.

 

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For the year ended December 31, 2020, the median of the annual total compensation of all employees of the Company other than the CEO was $124,628. For the same year, the total compensation for our CEO, Mr. Thorne, was $3,144,977 as reported in the “Total” column of the Summary Compensation Table on page 46. Based on this information, for 2020, the reasonable estimated ratio of annual total compensation of our CEO to the median of the annual total compensation of all employees was 25.23:1.

The pay ratio disclosed is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The applicable rules provide issuers with a great degree of flexibility in determining the methodology and related assumptions in identifying their median employee and calculating the ratio. As a result, the pay ratio we have disclosed in this proxy statement may not be comparable to pay ratios disclosure by other companies.

Director Compensation

Our nonemployee directors, other than the Chairman, receive an annual board retainer of $240,000 (formerly $190,000), consisting of $50,000 in cash, $95,000 (formerly $70,000) in stock options (based on the fair market value of the option computed in accordance with FASB ASC Topic 718) and $95,000 (formerly $70,000) in deferred share units granted under our 2013 or 2016 Omnibus Plan. Our former nonemployee Chairman of the board was paid annual compensation of $315,000 (formerly $265,000), consisting of $75,000 in cash (unchanged), $120,000 (formerly $95,000) in stock options and $120,000 (formerly $95,000) in deferred share units granted under our 2013 or 2016 Omnibus Plan. The chairs of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee each receive additional annual cash compensation of $20,000, $15,000 and $10,000, respectively. Cash payments are paid on or shortly after the end of the quarter and equity grants are made on the last business day of the quarter. Directors may elect to receive all or a portion of the cash portion of their annual retainer and any additional payments for service as a chair in the form of deferred share units granted under our 2016 Omnibus Plan. The directors are required to retain shares received upon exercise of stock options or settlement of deferred share units (on an after-tax net basis) until the earlier of one year following termination of board service or a change in control of the Company. This retention policy applies only to stock options and deferred share units granted on and after September 30, 2015. Our directors do not receive additional fees for attending board or committee meetings.

As described and explained above in “Compensation Discussion and Analysis – Action Taken in 2021 with Respect to our Equity-Based Compensation Program,” the Compensation Committee has recommended, subject to board approval, the issuance to non-employee directors of deferred share units instead of stock options. This change is expected to take effect in the second quarter of 2021 and will remain in effect until the board may determine otherwise.

In April 2020, due to the COVID-19 pandemic and its impact on our business, each of our non-employee directors agreed to reduce his or her compensation by 30% for the second, third and fourth quarters of the year.

 

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The following table provides summary information concerning compensation paid or accrued by us to or on behalf of nonemployee directors for services rendered to us during 2020.

 

 

   Fees
  Earned or  
Paid in
Cash ($)
     Stock
  Awards
  ($)(1)(2)
     Option
     Awards     
($)(2)
     Total ($)    

 Ronald T. LeMay(3)

         58,125            92,983          92,996      244,103  

 Robert L. Crandall

     50,000            40,997          94,990      185,987  

 Hugh Jones

     38,750            73,617          73,618      185,985  

 Michele Coleman Mayes

     60,000            38,736          94,990      193,727  

 Robert H. Mundheim

     65,000            66,303          66,307      197,610  

 Christopher D. Payne

     50,000            40,997          94,990      185,987  

 Charles C. Townsend

     50,000            40,997          94,990      185,987  

 Harris N. Williams

     54,250            73,617          73,618      201,485  
(1)

Ms. Mayes and Messrs. Crandall, Mundheim, Payne, and Townsend elected to defer the cash portion of their annual retainer. The number of deferred share units they receive and the grant date fair value of the deferred share units are included in the table below together with the regular equity portion of their annual retainers.

 

(2)

The amounts reported in this column are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated by reference herein, for a discussion of the relevant assumptions used in calculating these amounts.

 

(3)

Mr. LeMay resigned from the board effective as of December 31, 2020.

The following table sets forth, by grant date, the grant date fair value of each award with respect to service as a director in 2020.

 

Name

       Grant Date        Number of
Deferred
Share Units
(#)
   Grant Date
Fair Value of
Deferred
Share Units
($)
   All Other
Option Awards:
Number of
Securities
Underlying
Options (#)
   Exercise or
Base Price of
Option
Awards

    ($/Share)    
   Grant Date
Fair Value of
Option
    Awards ($)    

Ronald T. LeMay

   3/31/2020    14,150    29,998    25,552    2.12    29,998
   6/30/2020    6,645    20,998    11,344    3.16    21,001
   9/30/2020    2,272    20,993    3,686    9.24    21,000
   12/31/2020    2,180    20,993    3,474    9.63    20,996

 

Robert L. Crandall

   3/31/2020    17,099    36,250    20,228    2.12    23,748
   6/30/2020    5,775    18,249    12,829    3.16    23,750
   9/30/2020    1,975    18,249    4,168    9.24    23,746
   12/31/2020    1,895    18,249    3,929    9.63    23,746

 

Hugh W. Jones

   3/31/2020    11,202    23,748    20,228    2.12    23,748
   6/30/2020    5,261    16,625    8,980    3.16    16,625
   9/30/2020    1,799    16,623    2,918    9.24    16,625
   12/31/2020    1,726    16,621    2,750    9.63    16,620

 

 

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Name

       Grant Date        Number of
Deferred
Share Units
(#)
   Grant Date
Fair Value of
Deferred
Share Units
($)
   All Other
Option Awards:
Number of
Securities
Underlying
Options (#)
   Exercise or
Base Price of
Option
Awards

    ($/Share)    
   Grant Date
Fair Value of
Option
    Awards ($)    

Michele Coleman Mayes

   3/31/2020    18,278    38,749    20,228    2.12    23,748
   6/30/2020    6,329    20,000    12,829    3.16    23,750
   9/30/2020    2,164    19,995    4,168    9.24    23,746
   12/31/2020    2,076    19,992    3,929    9.63    23,746

 

Robert H. Mundheim

   3/31/2020    18,867    39,998    20,228    2.12    23,748
   6/30/2020    9,632    30,437    7,664    3.16    14,188
   9/30/2020    3,294    30,437    2,490    9.24    14,186
   12/31/2020    3,160    30,431    2,347    9.63    14,185

 

Christopher D. Payne

   3/31/2020    17,099    36,250    20,228    2.12    23,748
   6/30/2020    5,775    18,249    12,829    3.16    23,750
   9/30/2020    1,975    18,249    4,168    9.24    23,746
   12/31/2020    1,895    18,249    3,929    9.63    23,746

 

Charles C. Townsend

   3/31/2020    17,099    36,250    20,228    2.12    23,748
   6/30/2020    5,775    18,249    12,829    3.16    23,750
   9/30/2020    1,975    18,249    4,168    9.24    23,746
   12/31/2020    1,895    18,249    3,929    9.63    23,746

 

Harris N. Williams

   3/31/2020    11,202    23,748    20,228    2.12    23,748
   6/30/2020    5,261    16,625    8,980    3.16    16,625
   9/30/2020    1,799    16,623    2,918    9.24    16,625
   12/31/2020    1,726    16,621    2,750    9.63    16,620

 

 

(a)

The following table shows the aggregate number of DSUs and options held by our directors as of December 31, 2020.

 

  Name                                     

   Number of DSUs (#)    Number of Options (#)

Ronald T. LeMay

     94,739    634,598

Robert L. Crandall

   113,514    220,286

Hugh W. Jones

     69,663    113,564

Michele Coleman Mayes

     99,315    119,842

Robert H. Mundheim

   114,909    180,961

Christopher D. Payne

     96,313    151,795

Charles C. Townsend

   110,770    158,486

Harris N. Williams

     81,144    152,208

Compensation Committee Interlocks and Insider Participation

Robert L. Crandall, Robert H. Mundheim, Hugh W. Jones and Charles C. Townsend served as the members of our Compensation Committee in 2020. During 2020, none of our executive officers served as a member of the board of directors or compensation committee of any entity that had one or more executive officers serving on the Company’s board of directors or Compensation Committee. During 2020, no member of the Compensation Committee served as an officer or employee of the Company while also serving on the Compensation Committee or was formerly an officer of the Company.

Certain members of our Compensation are parties to the registration rights agreement described under “Directors, Executive Officers and Corporate Governance—Related Person Transactions—Registration Rights Agreement.”

 

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EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth the number of shares of our common stock reserved for issuance under our equity compensation plans as of the end of 2020:

 

Plan Category                                                                     

   Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights
(#)
    Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
($)
  Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column

(a)(#)
 
     (a)     (b)   (c)  

Equity compensation plans approved by security holders

     9,546,735 (1)       4.19(2)     7,739,128 (3) 

Equity compensation plans not approved by security holders

     N/A     N/A     N/A  

Total

     9,546,735     4.19     7,739,128  

 

 

 

(1)

Represents the number of shares associated with options, RSUs and Deferred Share Units outstanding as of December 31, 2020.

 

(2)

Represents the weighted average exercise price of the 5,446,668 options disclosed in column (a).

 

(3)

Represents the number of shares remaining available for future issuance under our 2016 Omnibus Incentive Plan (6,921,973 shares), 2013 Omnibus Incentive Plan (2,015 shares) and the Gogo Inc. Employee Stock Purchase Plan (815,140 shares). Of this number, only 4,774,864 shares are available for issuance with respect to RSUs, deferred share units and other awards based on the full value of stock (rather than an increase in value) under our 2016 Omnibus Incentive Plan and 2013 Omnibus Incentive Plan, as of December 31, 2020.

 

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AUDIT MATTERS

Audit Committee Report

The Audit Committee of our board of directors is responsible for, among other things, reviewing with Deloitte & Touche LLP, our independent registered public accounting firm, the scope and results of their audit engagement. In connection with the 2020 audit, the Audit Committee has:

 

   

Reviewed and discussed with management the Company’s audited financial statements;

   

Discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and

   

Received from and discussed with Deloitte & Touche LLP the communications from Deloitte & Touche LLP required by the Public Company Accounting Oversight Board regarding their independence.

Based on the review and the discussions described in the preceding bullet points, the Audit Committee recommended to the board of directors that the audited financial statements and management’s report on internal controls over financial reporting be included in our Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the Securities and Exchange Commission.

The Audit Committee has adopted a charter and a process for pre-approving services to be provided by Deloitte & Touche LLP.

The members of the Audit Committee have been determined to be independent in accordance with the requirements of Section 5605(c) of the Nasdaq Stock Market listing standards and the requirements of Section 10A(m)(3) of the Exchange Act.

 

The Audit Committee:

Harris N. Williams (Chair)

Robert L. Crandall

Hugh W. Jones

Michele Coleman Mayes

 

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Pre-approval of Independent Auditor Services

The Audit Committee pre-approves all audit, audit-related, tax, and other services performed by the independent auditors. The Audit Committee pre-approves specific categories of services up to pre-established fee thresholds. Unless the type of service had previously been pre-approved, the Audit Committee must approve that specific service before the independent auditors may perform it. In addition, separate approval is required if the fees for any pre-approved category of service exceed the fee thresholds established by the Audit Committee. The Audit Committee may delegate to Mr. Harris Williams or any other independent chair of the Audit Committee pre-approval authority with respect to permitted services, provided that the chair must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. All fees described below were pre-approved by the Audit Committee.

Independent Registered Public Accounting Firm Fees

The following table presents the Company’s fees for services performed by its independent registered public accounting firm, Deloitte & Touche LLP, and its affiliates, for the years ended December 31, 2020 and 2019.

 

     2020      2019  

Audit fees(1)

   $ 2,417,640        $ 2,075,899    

Audit-related fees(2)

     390,500          426,450    

Fees for tax services(3)

     158,762          46,956    

All other fees(4)

     17,025          22,441    
  

 

 

      

 

 

   

Total

   $   2,983,927        $   2,571,746    
  

 

 

      

 

 

   

 

 

 

(1)

Audit fees principally include fees for services related to the audit of the Company’s financial statements and review of the Company’s quarterly financial information.

 

(2)

Audit-related fees principally include fees for comfort letters related to debt offerings, registration statements and sell-side diligence related to the sale of the Commercial Aviation business.

 

(3)

Fees for tax services principally include fees for tax advice related to domestic tax compliance, international tax structuring and advisory services.

 

(4)

All other fees include fees for advice related to executive compensation programs and subscription fees to an online accounting research tool.

 

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PROPOSAL 1: ELECTION OF DIRECTORS

The board has nominated the three persons named below for election as directors at the Annual Meeting to serve until the 2024 annual meeting or until their respective successors are duly elected and qualified. Each of the nominees for director is currently serving on the board. If any nominee is unable to serve as a director, which we do not anticipate, the board by resolution may reduce the number of directors or choose a substitute nominee.

Nominees for Director

 

   

Michele Coleman Mayes

   

Robert H. Mundheim

   

Harris N. Williams

For biographical information about the nominees for director, including information about their qualifications to serve as a director, see “Directors, Executive Officers and Corporate Governance—Class II Nominees” beginning on page 13.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT

STOCKHOLDERS VOTE “FOR” THE ELECTION TO THE BOARD

OF EACH OF THE THREE NOMINEES FOR CLASS II DIRECTOR.

 

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PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

In accordance with Section 14A of the Exchange Act, the Company’s stockholders are entitled to approve, on an advisory basis, the compensation of our named executive officers. This non-binding advisory vote, commonly known as a “Say on Pay” vote, gives our stockholders the opportunity to express their views on our named executive officers’ compensation.

As described in the “Compensation Discussion and Analysis” section of this proxy statement (the “CD&A”), the goal of our executive compensation programs has been and continues to be to support the successful recruitment, development and retention of executive talent through a pay-for-performance culture, so that we can achieve our business objectives and optimize our long-term financial returns. In furtherance of those goals, our Compensation Committee has developed compensation programs intended to provide competitive base compensation and reward performance that meet or exceed the targets established by the Compensation Committee, with the objective of increasing long-term stockholder value and supporting the shorter-term business goals it believes are necessary to effect that increase.

To do so, the Compensation Committee uses a combination of short-term incentive cash compensation and long-term equity incentive compensation to motivate and reward executives who have the ability to significantly influence our long-term financial success in a way that maximizes stockholder value and supports our shorter-term business goals. Our Compensation Committee recognizes the developing nature of our growing business and uses a measure of flexibility in recognizing and rewarding performance and endeavors to compensate our executive officers in a manner that is market-competitive and consistent with our business strategy, sound corporate governance principles and stockholder interests. We believe that our compensation programs are effective, appropriate and strongly aligned with the long-term interests of our stockholders.

For these reasons, our Board is asking stockholders to vote “For” the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby APPROVED.”

As you consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on our executive compensation principles and programs, and to review the tabular disclosures regarding executive compensation together with the accompanying narrative disclosures in the “Executive Compensation” section of this proxy statement.

 

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As an advisory vote, this Proposal 2 is not binding on our board of directors or the Compensation Committee. However, our board of directors and the Compensation Committee value the opinions of our stockholders, and will carefully consider the outcome of the vote when making future compensation decisions for our named executive officers.

The proposal to approve, on an advisory basis, the compensation of our named executive officers requires for its approval the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by holders of common stock who are present in person or by proxy. Any abstention will have the effect of a vote against the proposal.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT.

 

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PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION

In addition to the advisory “Say on Pay” vote set forth in Proposal 2, pursuant to Section 14A of the Exchange Act, stockholders are also entitled, at least once every six years, to indicate on an advisory basis their preference regarding how frequently we should solicit the “Say on Pay” advisory vote. This non-binding advisory vote is commonly referred to as a “Say on Frequency” vote. By voting on this Proposal 3, stockholders may indicate whether the advisory “Say on Pay” vote should occur every year, every two years or every three years or they may abstain from voting. Although the vote is advisory and is not binding on the board of directors, the board will take into account the outcome of the vote when considering the frequency of future “Say on Pay” proposals.

After careful consideration, our board of directors has determined that an annual advisory vote on executive compensation is the most appropriate alternative for our Company because it will provide stockholders the opportunity to react promptly to emerging trends in compensation and will provide the board and the Compensation Committee the opportunity to evaluate compensation decisions in light of annual feedback from stockholders.

Please note that this Proposal 3 does not provide stockholders with the opportunity to vote for or against any particular resolution; rather, it permits stockholders to choose how often they would like us to include a stockholder advisory vote on the compensation of our executives on the agenda for the annual meeting of stockholders.

Notwithstanding the board’s recommendation and the outcome of the stockholder vote, the board may in the future decide that it is in the best interest of our stockholders and the Company to conduct “Say on Frequency” votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

When voting on this Proposal 3, you should mark your proxy for “Every 1 Year,” “Every 2 Years” or “Every 3 Years” based on your preference as to the frequency with which an advisory vote on executive compensation should be held. If you have no preference, you may abstain.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A FREQUENCY OF “EVERY 1 YEAR” FOR HOLDING FUTURE “SAY ON PAY” ADVISORY VOTES ON EXECUTIVE COMPENSATION.

 

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PROPOSAL 4: APPROVAL OF THE SECTION 382 RIGHTS PLAN

We are asking our stockholders to approve the Company’s Section 382 Rights Agreement, dated as of September 23, 2020, between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Agent”), which we refer to as the “Rights Agreement.” The board believes it is in the best interests of the Company and its stockholders that the Company have the ability to protect the Tax Attributes (as defined in the Rights Agreement). As discussed below, the Rights Agreement gives the board flexibility by preventing parties from becoming the Beneficial Owner (as defined in the Rights Agreement) of more than 4.9% of the Company’s outstanding common shares, while also providing procedures for the board to consider requests to exempt from the Rights Agreement certain acquisitions of the Company’s securities from the Rights Agreement, or even to terminate the Rights Agreement, if the board determines that doing so would be the best interests of the Company.

Summary of the Rights Agreement

The statements made in this Proposal 4 concerning terms and provisions of the Rights Agreement are summaries and do not purport to be a complete recitation of the Rights Agreement provisions. Such statements are qualified in their entirety by express reference to the full text of the Rights Agreement. A copy of the Rights Agreement is attached hereto as Annex 8 and is incorporated by reference herein.

The purpose of the Rights Agreement is to facilitate the Company’s ability to preserve its net operating loss carryforwards (“NOLs”) and certain other Tax Attributes in order to be able to offset potential future income taxes for federal income tax purposes. In that connection, the board declared a dividend of one preferred share purchase right (a “Right”), payable on September 23, 2020 for each outstanding share of common stock, par value $0.0001 per share, of the Company outstanding on October 2, 2020 (the “Record Date”) to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Shares”) at a price of $38.40 per one one-thousandth of a Preferred Share (the “Purchase Price”), subject to adjustment. Each Right is governed by the terms of the Rights Agreement.

The Company’s ability to use its NOLs and other Tax Attributes may be substantially limited if it experiences an “ownership change,” as such term is defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). A company generally experiences an ownership change if the percentage of the value of its stock owned by certain “5-percent shareholders,” as such term is defined in Section 382 of the Code, increases by more than 50 percentage points over a rolling three-year period. The Rights Agreement is intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterring any Person (as such term is defined in the Rights Agreement) or group of affiliated or associated Persons from acquiring Beneficial Ownership (as defined below) of 4.9% or more of the shares of common stock then outstanding without board consent.

 

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Distribution Date; Exercisability; Expiration. Initially, the Rights are attached to all common stock certificates (or other evidence of book-entry or other uncertificated ownership) and no separate certificates evidencing the Rights (“Right Certificates”) will be issued. Until the Distribution Date (as defined below), the Rights are transferred with and only with the common stock. As long as the Rights are attached to the common stock, the Company will issue one Right with each new share of common stock so that all such common stock will have Rights attached (subject to certain limited exceptions).

The Rights will separate and begin trading separately from the common stock, and Right Certificates will be caused to evidence the Rights, on the earlier to occur of (i) the Close of Business (as such term is defined in the Rights Agreement) on the tenth day following a public announcement, or the public disclosure of facts indicating, that a Person or group of affiliated or associated Persons has acquired Beneficial Ownership of 4.9% or more of the outstanding common stock (an “Acquiring Person”) (or, in the event the board determines to effect an exchange in accordance with Section 24 of the Rights Agreement and the board determines that a later date is advisable, then such later date) and (ii) the Close of Business on the tenth Business Day (as such term is defined in the Rights Agreement) (or such later date as may be determined by action of the board prior to such time as any Person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer the consummation of which would result in the Beneficial Ownership by a Person or group of 4.9% or more of the outstanding common stock (the earlier of such dates, the “Distribution Date”). As soon as practicable after the Distribution Date, unless the Rights are recorded in book-entry or other uncertificated form, the Company will prepare and cause the Right Certificates to be sent to each record holder of common stock as of the Distribution Date.

An “Acquiring Person” will not include (i) the Company, (ii) any Subsidiary (as such term is defined in the Rights Agreement) of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity holding shares of common stock for or pursuant to the terms of any such employee benefit plan or (v) officer, director or employee of the Company or any of its Subsidiaries solely in respect of such Person’s status or authority as such or (vi) any “Grandfathered Stockholder” – i.e., a 4.9% or greater stockholder at the time the Rights Agreement was entered into. However, if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner of any additional shares of common stock (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of shares of common stock then outstanding Beneficially Owned (as such term is defined in the Rights Agreement) by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional shares of common stock, such person is not the Beneficial Owner of 4.9% or more of the shares of common stock then outstanding. In addition, upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 4.9%, such Grandfathered Stockholder will no longer be deemed to be a Grandfathered Stockholder. In the event that after the time of the first public announcement of the Rights Agreement, any agreement, arrangement or understanding pursuant to which any

 

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Grandfathered Stockholder is deemed to be the Beneficial Owner of shares of common stock expires, is settled in whole or in part, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different shares of common stock that confers Beneficial Ownership of shares of common stock shall be considered the acquisition of Beneficial Ownership of additional shares of common stock by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of the Rights Agreement unless, upon such acquisition of Beneficial Ownership of additional shares of common stock, such person is not the Beneficial Owner of 4.9% or more of the shares of common stock then outstanding.

“Beneficial Ownership” is defined in the Rights Agreement to include any securities (i) which a Person or any of such Person’s Affiliates or Associates (a) actually owns (directly or indirectly) or would be deemed to actually or constructively own for purposes of Section 382 of the Code or the Treasury Regulations (as such terms are defined in the Rights Agreement) promulgated thereunder, including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent ownership of such securities would be attributed to such Persons under Section 382 of the Code and the Treasury Regulations promulgated thereunder), (b) beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or 13d-5 promulgated under the Exchange Act or (c) has the right or obligation to acquire, pursuant to any agreement, arrangement or understanding (except under limited circumstances), (ii) which are the subject of, or reference securities for, or that underlie, certain derivative positions of any Person or any of such Person’s Affiliates or Associates; provided, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act until such tendered securities are accepted for purchase or exchange.

The Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest to occur of (i) the Close of Business on the day following the certification of the voting results of the Company’s 2021 annual meeting of stockholders, if at such stockholder meeting or any other meeting of stockholders of the Company duly held prior to such meeting, a proposal to ratify the Rights Agreement has not been passed by the requisite vote of the Company’s stockholders, (ii) the date on which the board determines in its sole discretion that (x) the Rights Agreement is no longer necessary for the preservation of material valuable NOLs or Tax Attributes or (y) the NOLs and Tax Attributes have been fully utilized and may no longer be carried forward and (iii) the Close of Business on September 23, 2023 (the “Final Expiration Date”).

Exempt Persons and Transactions. The board may, in its sole and absolute discretion, determine that a Person is exempt from the Rights Agreement (an “Exempt Person”), so long

 

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as such determination is made prior to such time as such Person becomes an Acquiring Person. Any Person will cease to be an Exempt Person if the board makes a contrary determination with respect to such Person regardless of the reason therefor. In addition, the board may, in its sole and absolute discretion, exempt any transaction from triggering the Rights Agreement, so long as the determination in respect of such exemption is made prior to such time as any Person becomes an Acquiring Person. Any Person, together with all Affiliates and Associates of such Person, who proposes to acquire 4.9% or more of the outstanding common stock may apply to the board in advance for an exemption in accordance with and pursuant to the terms of the Rights Agreement.

Flip-in Event. If a Person or group becomes an Acquiring Person at any time after the date of the Rights Agreement (with certain limited exceptions), the Rights will become exercisable for common stock having a value equal to two times the exercise price of the Right. From and after the announcement that any Person has become an Acquiring Person, if the Rights evidenced by a Right Certificate are or were acquired or Beneficially Owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person, such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights. If the board so elects, the Company may deliver upon payment of the exercise price of a Right an amount of cash, securities or other property equivalent in value to the common stock issuable upon exercise of a Right.

Exchange. At any time after any Person becomes an Acquiring Person, the board may exchange the Rights (other than Rights owned by any Person which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment). The Company may issue, transfer or deposit such common stock (or other property as permitted under the Rights Agreement) to or into a trust or other entity created upon such terms as the board may determine and may direct that all holders of Rights receive such common stock or other property only from the trust or other entity. In the event that the board determines, before the Distribution Date, to effect an exchange, the board may delay the occurrence of the Distribution Date to such time as it deems advisable.

Flip-over Event. If, at any time after a Person becomes an Acquiring Person, (i) the Company consolidates with, or merges with, any other Person (or any Person consolidates with, or merges with, the Company) and, in connection with such consolidation or merger, all or part of the shares of common stock are or will be changed into or exchanged for stock or other securities of any other Person or cash or any other property or (ii) 50% or more of the Company’s consolidated assets or Earning Power (as defined in the Rights Agreement) is sold, then proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right.

Redemption. At any time prior to the earlier to occur of (i) the Stock Acquisition Date (as defined in the Rights Agreement) and (ii) the Final Expiration Date, the board may redeem

 

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the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

Amendment. The terms of the Rights may be amended by the board without the consent of the holders of the Rights, except that at any time after the Close of Business on the tenth day following the Stock Acquisition Date (or, if the tenth day following the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), no such amendment may adversely affect the interests of the holders of the Rights (other than the Acquiring Person and its Affiliates and Associates).

Preferred Shares. Each one-thousandth of a Preferred Share will entitle the holder thereof to the same dividends and liquidation rights as if the holder held one share of common stock and will be treated the same as a share of common stock in the event of a merger, consolidation or other share exchange.

Rights of Holders. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

Certain Considerations Relating to the Rights Agreement

The board believes that having the ability to protect the Tax Attributes described above is in the Company’s and the stockholders’ best interests. Nonetheless, we cannot eliminate the possibility that an “ownership change” will occur even if the Rights Agreement is approved. You should consider the factors below when making your decision.

Future Use and Amount of the Tax Attributes is Uncertain. Our use of the Tax Attributes depends on our ability to generate taxable income in the future. We cannot assure you whether we will have taxable income in any applicable period or, if we do, whether such income or the Tax Attributes at such time will exceed any potential limitation of Section 382 of the Code.

Potential Challenge to the Tax Attributes. The amount of the Tax Attributes has not been audited or otherwise validated by the Internal Revenue Service (the “IRS”). The IRS could challenge the amount of the Tax Attributes, which could result in an increase in our liability in the future for income taxes. In addition, determining whether an “ownership change” has occurred is subject to uncertainty, both because of the complexity and ambiguity of the provisions of Section 382 of the Code and because of limitations on the knowledge that any publicly traded company can have about the ownership of, and transactions in, its

 

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securities on a timely basis. Therefore, we cannot assure you that the IRS or other taxing authority will not claim that we experienced an “ownership change” and attempt to reduce the benefit of the Tax Attributes even if the Rights Agreement is in place.

Continued Risk of Ownership Change. Although the Rights Agreement is intended to diminish the likelihood of an “ownership change” without board consent, we cannot assure you that it will be effective. The amount by which an ownership interest may change in the future could, for example, be affected by purchases and sales of shares by stockholders holding 5% or more of our outstanding common stock, over which we have no control, and new issuances of shares by us, should we choose to do so.

Potential Effects on Liquidity. The Rights Agreement is intended to deter persons or groups of persons from acquiring beneficial ownership of our common shares in excess of the specified limitations without board consent. A stockholder’s ability to dispose of our common shares may be limited if the Rights Agreement reduces the number of persons willing to acquire our common shares or the amount they are willing to acquire. A stockholder may become an Acquiring Person upon actions taken by persons related to, or affiliated with, them. Stockholders are advised to carefully monitor their ownership of our common shares and consult their own legal advisors and/or us to determine whether their ownership of the shares approaches the proscribed level.

Potential Impact on Value. The Rights Agreement could negatively impact the value of our common shares by deterring persons or groups of persons from acquiring our common shares, including in acquisitions for which some stockholders might receive a premium above market value.

Anti-Takeover Effect. The board adopted the Rights Agreement to diminish the risk that our ability to use the Tax Attributes to reduce potential federal income tax obligations becomes limited as a result of transactions not approved by the board. Nonetheless, the Rights Agreement may have an “anti-takeover effect” because it may deter a person or group of persons from acquiring beneficial ownership of 4.9% or more of our common shares or, in the case of a person or group of persons that already own 4.9% or more of our common shares, from acquiring any additional common shares. The Rights Agreement could discourage or prevent a merger, tender offer, proxy contest or accumulations of substantial blocks of shares.

Unanimous Recommendation of the Board of Directors; Vote Required

This proposal to approve the Section 382 Rights Agreement requires for its approval the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by holders of common stock who are present in person or by proxy. Any abstention will have the effect of a vote against the proposal. If stockholders do not approve the Section 382 Rights Agreement, the Rights will expire in accordance with the terms of the Rights Agreement.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

APPROVAL OF THE SECTION 382 RIGHTS AGREEMENT.

 

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PROPOSAL 5: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS

The Audit Committee has appointed Deloitte & Touche LLP, an independent registered public accounting firm, as the independent auditor to perform an integrated audit of the Company for the fiscal year ending December 31, 2021. Deloitte & Touche has served as our independent auditor since 2007.

Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm. However, the board believes that obtaining stockholder ratification of the appointment is a sound corporate governance practice. If the stockholders do not vote on an advisory basis in favor of Deloitte & Touche LLP, the Audit Committee will reconsider whether to hire the firm and may retain Deloitte & Touche LLP or hire another firm without resubmitting the matter to stockholders for approval. The Audit Committee retains the discretion at any time to appoint a different independent auditor.

Representatives of Deloitte & Touche LLP are expected to be present at the annual meeting and available to respond to appropriate questions, and will have the opportunity to make a statement if they desire.

The proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for fiscal year 2021 requires for its approval the affirmative vote of a majority of the votes entitled to be cast at the Annual Meeting by holders of common stock who are present in person or by proxy. Any abstention will have the effect of a vote against the proposal.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR

THE COMPANY FOR FISCAL YEAR 2021.

 

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OTHER INFORMATION FOR STOCKHOLDERS

Other Business

The board of directors is not aware of any other matters to be presented at the annual meeting. If any other matter was properly submitted for action and presented at the meeting, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.

Proposals for 2022

The Company will review for inclusion in next year’s proxy statement stockholder proposals received by December 17, 2021 pursuant to Rule 14a-8 under the Exchange Act. Proposals must be sent to Marguerite M. Elias, Executive Vice President, General Counsel and Secretary of the Company, at 105 Edgeview Drive, Broomfield, Colorado 80021.

Stockholder proposals not included in next year’s proxy statement may be brought before the 2022 annual meeting of stockholders by a stockholder of the Company who is entitled to vote at the meeting, has given a written notice to the Executive Vice President, General Counsel and Secretary of the Company containing certain information specified in the Bylaws, and was a stockholder of record at the time such notice was given. Such notice must be delivered to or mailed to and received at the address in the preceding paragraph no earlier than January 27, 2022 and no later than February 26, 2022, except that if the date of the 2022 annual meeting of stockholders is changed, and the meeting is held before April 27, 2022 or after August 5, 2022, such notice must be delivered at the address in the preceding paragraph no earlier than 120 days prior to the new date of such annual meeting and no later than the close of business on the later of (i) the ninetieth day prior to the new date of such annual meeting and (ii) the tenth day following the day on which a public announcement of the new date of such annual meeting is first made.

Annual Report for 2020

The fiscal year 2020 Annual Report to Stockholders, including our 2020 Annual Report on Form 10-K (which is not a part of our proxy soliciting materials and is discussed further below), is being mailed with this proxy statement. Stockholders can also access this proxy statement and our fiscal year 2020 Annual Report on our investor relations website at www.ir.gogoair.com or at www.proxyvote.com, using the control number located on each proxy card.

We have filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 with the SEC. It is available free of charge at the SEC’s web site at

 

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www.sec.gov. Upon written request by a stockholder, we will mail without charge a copy of our Annual Report on Form 10-K, including the financial statements, but excluding exhibits to the Annual Report on Form 10-K. Exhibits to the Annual Report on Form 10-K are available upon payment of a reasonable fee, which is limited to our expenses in furnishing the requested exhibits. All requests should be directed to Investor Relations, Gogo Inc., 111 N. Canal St., Suite 1400, Chicago, Illinois 60606.

Householding of Annual Disclosure Documents

In some cases, stockholders holding their shares in a brokerage or bank account who share the same surname and address and have not given contrary instructions are receiving only one copy of our annual report and this proxy statement. This reduces the volume of duplicate information received at your household and helps to reduce costs. If you would like to have additional copies of these documents mailed to you, please call (312) 517-6069 or write to Investor Relations at 111 N. Canal St., Suite 1400, Chicago, Illinois 60606. If you would like to receive separate copies of the proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder.

Attendance at Annual Meeting

If a stockholder would like to virtually attend the Annual Meeting in person, he or she must access www.virtualshareholdermeeting.com/GOGO2020 using the control number located on each proxy card or by following the instructions that accompanied his or her proxy materials.

 

  BY ORDER OF THE BOARD OF DIRECTORS
 

LOGO

 

 

Marguerite M. Elias

 

Executive Vice President, General Counsel and

Secretary

Chicago, Illinois

April 16, 2021

 

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ANNEX A: GOGO INC. SECTION 382 RIGHTS PLAN

SECTION 382 RIGHTS AGREEMENT

Dated as of September 23, 2020

between

GOGO INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

 


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         Page  

Section 1.

  Definitions      1  

Section 2.

  Appointment of Rights Agent      8  

Section 3.

  Issue of Right Certificates      8  

Section 4.

  Form of Right Certificates      10  

Section 5.

  Countersignature and Registration      10  

Section 6.

  Transfer, Split-up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates      11  

Section 7.

  Exercise of Rights; Purchase Price; Expiration Date of Rights      12  

Section 8.

  Cancellation and Destruction of Right Certificates      13  

Section 9.

  Status and Availability of Preferred Shares      14  

Section 10.

  Preferred Shares Record Date      14  

Section 11.

  Adjustment of Purchase Price, Number of Shares or Number of Rights      15  

Section 12.

  Certificate of Adjustment      21  

Section 13.

  Consolidation, Merger, Sale or Transfer of Assets or Earning Power      21  

Section 14.

  Fractional Rights and Fractional Shares      22  

Section 15.

  Rights of Action      24  

Section 16.

  Agreement of Right Holders      24  

Section 17.

  Right Certificate Holder Not Deemed a Stockholder      25  

Section 18.

  Concerning the Rights Agent      25  

Section 19.

  Merger or Consolidation or Change of Name of Rights Agent      26  

Section 20.

  Rights and Duties of Rights Agent      26  

Section 21.

  Change of Rights Agent      29  

Section 22.

  Issuance of New Right Certificates      30  

Section 23.

  Redemption      31  

Section 24.

  Exchange      31  

Section 25.

  Notice of Certain Events      33  

Section 26.

  Notices      34  

Section 27.

  Supplements and Amendments      34  

Section 28.

  Successors      35  

Section 29.

  Benefits of this Agreement      35  

Section 30.

  Severability      35  

Section 31.

  Governing Law      36  

Section 32.

  Counterparts      36  

Section 33.

  Descriptive Headings and Construction      36  

Section 34.

  Administration      36  

Section 35.

  Force Majeure      36  

Section 36.

  Process to Seek Exemption      37  

 

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SECTION 382 RIGHTS AGREEMENT

This Section 382 Rights Agreement (this “Agreement”), dated as of September 23, 2020, is between Gogo Inc. a Delaware corporation (the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent (the “Rights Agent”).

RECITALS

WHEREAS, the Company and certain of its Subsidiaries (as defined below) have generated certain Tax Attributes (as defined below) for United States federal income tax purposes and the Company therefore desires to avoid an “ownership change” within the meaning of Section 382 of the Code (as defined below), including for purposes of Section 383 of the Code, and to preserve the Company’s ability to utilize such Tax Attributes; and

WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has authorized and declared a dividend of one preferred share purchase right (a “Right”) for each share of Common Stock (as defined below) outstanding at the Close of Business on October 2, 2020 (the “Record Date”) and has authorized the issuance of one Right with respect to each additional share of Common Stock issued by the Company between the Record Date and the earliest of (i) the Distribution Date, (ii) the Redemption Date, and (iii) the Final Expiration Date, and additional shares of Common Stock that shall become outstanding after the Distribution Date as provided in Section 22 of this Agreement, each Right initially representing the right to purchase one one-thousandth of a Preferred Share, subject to adjustment, upon the terms and subject to the conditions hereof;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties agree as follows:

Section 1. Definitions.

For purposes of this Agreement, the following terms have the meanings indicated:

1.1 “Acquiring Person” means any Person (other than an Exempt Person) who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity holding shares of Common Stock for or pursuant to the terms of any such employee benefit plan, (v) any officer, director or employee of the Company or any of its Subsidiaries solely in respect of such Person’s status or authority as such or (vi) any Grandfathered Stockholder; provided, that if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner (other than pursuant to the vesting or exercise of any equity awards issued to a member of the Board of Directors or pursuant to additional grants of any such equity awards to a member of the Board of Directors) of any additional shares of Common Stock (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of shares of Common Stock then outstanding Beneficially Owned by such Grandfathered Stockholder) then such Grandfathered Stockholder

 

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shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such Person is not the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding; provided, further, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 4.9%, such Grandfathered Stockholder shall no longer be deemed to be a Grandfathered Stockholder and this clause (v) shall have no further force or effect with respect to such Person. For the avoidance of doubt, in the event that after the time of the first public announcement of this Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of shares of Common Stock expires, is settled in whole or in part, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different shares of Common Stock that confers Beneficial Ownership of shares of Common Stock shall be considered the acquisition of Beneficial Ownership of additional shares of Common Stock by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of this Agreement unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such person is not the Beneficial Owner of 4.9% or more of the shares of Common Stock then outstanding.

Notwithstanding the foregoing, no Person shall become an Acquiring Person as the result of an acquisition or redemption of shares of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares Beneficially Owned by such Person to 4.9% (or such other percentage as would otherwise result in such Person becoming an Acquiring Person) or more of the shares of Common Stock then outstanding; provided, that if a Person would, but for the provisions of this paragraph, become an Acquiring Person by reason of an acquisition or redemption of shares of Common Stock by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares of Common Stock at any time such that the Person is or thereby becomes the Beneficial Owner of 4.9% (or such other percentage as would otherwise result in such Person becoming an Acquiring Person) or more of the shares of Common Stock then outstanding (other than shares of Common Stock acquired solely as a result of corporate action of the Company not caused, directly or indirectly, by such Person), then such Person shall be deemed to be an Acquiring Person.

Notwithstanding the foregoing, if the Board of Directors, with the concurrence of a majority of the members of the Board of Directors who are not, and are not representatives, nominees, Affiliates or Associates of, such Person or an Acquiring Person, determines in good faith that a Person that would otherwise be an Acquiring Person has become such inadvertently (including because (i) such Person was unaware that it beneficially owned a percentage of shares of Common Stock that would otherwise cause such Person to be an Acquiring Person or (ii) such Person was aware of the extent of its Beneficial Ownership of shares of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without any intention of changing, obtaining or influencing control of the Company, and such Person divests as promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an Acquiring Person, then such Person shall not be deemed to have become an Acquiring Person. Notwithstanding the foregoing, if a bona fide swaps dealer who would otherwise be an Acquiring Person has become so as a result of its actions in the ordinary course of its business that the Board of Directors determines, in its sole discretion, were taken without the intent or effect of evading or assisting any other Person to evade the purposes and intent of this Agreement, or otherwise seeking to control or influence the management or policies of the Company, then, and unless and until the Board of Directors shall otherwise determine, such Person shall not be deemed to be an Acquiring Person.

 

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Notwithstanding the foregoing, no Person shall become an Acquiring Person solely as a result of an Exempt Transaction.

Notwithstanding the foregoing, no regulated investment company under Section 851 of the Code shall be deemed to be an Acquiring Person, unless the Board of Directors determines, in its reasonable discretion, that such regulated investment company is deemed to Beneficially Own more than 4.9% or more of the shares of Common Stock then outstanding under the applicable standards of Treasury Regulation 1.382-3(a). In determining whether any regulated investment company is an Acquiring Person, the filing of a statement under Section 13 of the Exchange Act with respect to such regulated investment company shall not be deemed to establish that such regulated investment company has acquired Beneficial Ownership of 4.9% or more of the shares of Common Stock then outstanding; provided, that the Board of Directors shall be entitled to rely upon any such filing unless such regulated investment company provides information and diligence that permits the Board of Directors to conclude, in its reasonable discretion, that such regulated investment company has not acquired Beneficial Ownership of 4.9% or more of the shares of Common Stock then outstanding pursuant to the standards of Treasury Regulation 1.382-3.

Notwithstanding the definition of Acquiring Person under this Agreement, the Board of Directors may also determine that any Person is an Acquiring Person under this Agreement if such Person becomes the Beneficial Owner of 4.9% (by value) or more of the shares of Common Stock then outstanding (as the term “stock” is defined in Treasury Regulations Sections 1.382-2(a)(3) and 1.382-2T(f)(18)).

1.2 “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date of this Agreement.

1.3 A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “Beneficially Own,” or have “Beneficial Ownership” of, any securities:

1.3.1 which such Person actually owns (directly or indirectly) or would be deemed to actually or constructively own pursuant to Section 382 of the Code and the Treasury Regulations promulgated thereunder (including any coordinated acquisition of securities by any Persons who have a formal or informal understanding with respect to such acquisition (to the extent that ownership of such securities would be attributed to such Persons under Section 382 of the Code and the Treasury Regulations promulgated thereunder));

 

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1.3.2 which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or 13d-5 promulgated under the Exchange Act, as in effect on the date of this Agreement;

1.3.3 which such Person or any of such Person’s Affiliates or Associates has the right or the obligation to acquire (whether such right is exercisable or such obligation is required to be performed immediately or only after the passage of time, the occurrence of conditions, the satisfaction of regulatory requirements or otherwise) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act until such tendered securities are accepted for purchase or exchange;

1.3.4 which are the subject of, or the reference securities for, or that underlie, any Derivative Position of such Person or any of such Person’s Affiliates or Associates, with the number of Common Shares deemed Beneficially Owned in respect of a Derivative Position being the notional or other number of Common Shares in respect of such Derivative Position (without regard to any short or similar position) that is specified in (i) one or more filings with the Securities and Exchange Commission by such Person or any of such Person’s Affiliates or Associates or (ii) the documentation evidencing such Derivative Position as the basis upon which the value or settlement amount of such Derivative Position, or the opportunity of the holder of such Derivative Position to profit or share in any profit, is to be calculated in whole or in part (whichever of (i) or (ii) is greater), or if no such number of Common Shares is specified in such filings or documentation (or such documentation is not available to the Board of Directors), as determined by the Board of Directors in its reasonable discretion.

Notwithstanding anything in this definition of Beneficial Owner to the contrary, the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, means the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to Beneficially Own hereunder.

1.4 “Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in the state of New York are authorized or obligated by law or executive order to close.

1.5 “Close of Business” on any given date means 5:00 p.m., New York time, on such date; provided, that if such date is not a Business Day, it means 5:00 p.m., New York time, on the next succeeding Business Day.

1.6 “Code” means the Internal Revenue Code of 1986, as amended.

 

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[Preliminary Copy - Subject to Completion]

 

1.7 “Common Stock” means the shares of common stock, par value $0.0001 per share, of the Company. “Common Stock,” when used with reference to any Person other than the Company, means the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person.

1.8 “Common Stock Equivalents” has the meaning set forth in Section 11.1.3(ii)(C).

1.9 “Current Per Share Market Price” has the meaning set forth in Section 11.4.1.

1.10 “Current Value” has the meaning set forth in Section 11.1.3(i)(A).

1.11 “Derivative” has the meaning set forth in Section 1.12.

1.12 “Derivative Position” shall mean any option, warrant, convertible security, stock appreciation right, or other security, contract right or derivative position or similar right (including any “swap” transaction with respect to any security, other than a broad based market basket or index) (any of the foregoing, a “Derivative”), whether or not presently exercisable, that (i) has an exercise or conversion privilege or a settlement payment or mechanism at a price related to the value of the Common Shares or a value determined in whole or in part with reference to, or derived in whole or in part from, the value of the Common Shares and that increases in value as the market price or value of the Common Shares increases or that provides an opportunity, directly or indirectly, to profit or share in any profit derived from any increase in the value of the Common Shares and (ii) is capable of being settled, in whole or in part, through delivery of cash or Common Shares (whether on a required or optional basis, and whether such settlement may occur immediately or only after the passage of time, the occurrence of conditions, the satisfaction of regulatory requirements or otherwise), in each case regardless of whether (A) it conveys any voting rights in such Common Shares to any Person or (B) any Person (including the holder of such Derivative Position) may have entered into other transactions that hedge its economic effect.

1.13 “Distribution