Palladyne AI Corp DEF 14A, filed Apr 22, 2026
Palladyne AI Corp. (PDYN)
About this DEF 14A
Palladyne AI Corp filed this DEF 14A on April 22, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PALLADYNE AI CORP.
650 South 500 West, Suite 150, Salt Lake City, Utah 84101 Tel: 888-927-7296
April 22, 2026
Dear Fellow Stockholders:
We are pleased to invite you to attend the annual meeting of stockholders of Palladyne AI Corp., to be held on Monday, June 8, 2026 at 2:00 p.m., Mountain Time, at our offices located at 650 South 500 West, Suite 150, Salt Lake City, Utah 84101.
The attached formal meeting notice and proxy statement contain details of the business to be conducted at the annual meeting, as well as information about Palladyne AI Corp.
Your vote is important. Whether or not you attend the annual meeting, it is important that your shares be represented and voted at the annual meeting. Therefore, we urge you to vote and submit your proxy promptly via the Internet, telephone or mail.
On behalf of our Board of Directors, we would like to express our appreciation for your continued support of and interest in Palladyne AI Corp.
Sincerely,
Dennis Weibling
Chairman of the Board
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IMPORTANT
A proxy card is being provided along with the notice of the annual meeting and proxy statement. We urge you to complete and mail the card promptly. Alternatively, you may vote by calling the toll-free telephone number or by going online as described in the instructions included with your proxy card. Any stockholder attending the annual meeting may vote on all matters that are considered, in which case the signed and mailed proxy or prior vote by telephone or online will be revoked. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote in person at the annual meeting, you must obtain from the record holder a proxy issued in your name.
IT IS IMPORTANT THAT YOU VOTE YOUR STOCK |
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Palladyne AI Corp.
650 South 500 West, Suite 150, Salt Lake City, Utah 84101
April 22, 2026
Notice of 2026 Annual Meeting of Stockholders
Date and Time of Meeting
Monday, June 8, 2026 |
2:00 p.m. Mountain Time |
Place
The 2026 Annual Meeting of Stockholders will be held at our offices located at 650 South 500 West, Suite 150, Salt Lake City, Utah 84101.
Items of Business
Record Date
Only stockholders of record as of the close of business on April 14, 2026 are entitled to notice of and to vote at the annual meeting.
Availability of Proxy Materials
The Notice of Internet Availability of Proxy Materials, containing instructions on how to access our proxy statement, notice of annual meeting, form of proxy and our annual report, is first being sent or given on or about April 22, 2026 to all stockholders entitled to vote at the annual meeting.
The proxy materials and our annual report can be accessed on or about April 22, 2026 by visiting www.proxydocs.com/PDYN.
Voting
Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to submit your proxy or voting instructions via the Internet, telephone or mail as soon as possible.
By order of the Board of Directors,
Stephen Sonne
Corporate Secretary
TABLE OF CONTENTS
2026 PROXY STATEMENT | i |
Palladyne AI Corp.
PROXY STATEMENT
FOR 2026 Annual Meeting of Stockholders
To be held at 2:00 p.m., Mountain Time, on Monday, June 8, 2026
PROXY SUMMARY AND
COMPANY HIGHLIGHTS
About Palladyne AI Corp.
We are a U.S.-based technology company developing and offering embodied artificial intelligence ("AI") software and collaborative autonomy solutions, advanced avionics, unmanned aerial vehicles ("UAVs"), advanced UAV engineering services and precision-manufactured components for defense and commercial/industrial markets. Our core AI software offerings, Palladyne IQ, SwarmOS and Palladyne Pilot, consist of full-stack, closed-loop autonomy software that is intended to enhance the functionality and operational effectiveness of third-party robotic systems across a range of applications and our proprietary UAVs. These products are designed to be hardware agnostic, enabling integration across a wide range of robotic platforms, whether third-party or our own proprietary platforms, including industrial robots, collaborative robots ("cobots"), UAVs, unmanned ground vehicles ("UGVs"), and remotely operated vehicles ("ROVs") across multiple domains.
We have modeled our embodied AI architecture after nature to enable machines to filter out irrelevant data, interpret relevant data, quickly make decisions in real time and act in the real world, all at the edge and without centralized decision-making. We refer to this architectural class as Decentralized Embodied Collaborative Autonomy (DECA). DECA describes biologically inspired autonomy in which physically embodied agents perceive, decide and act locally while collaborating through decentralized interaction rather than centralized control. AI is the enabling mechanism, but autonomy and execution occur entirely at the edge. Intelligence that must act in the physical world operates under fundamentally different constraints. Machines that move, coordinate and make decisions in real time cannot rely solely on centralized reasoning, constant connectivity or energy intensive computation. They must operate locally, respond in milliseconds, collaborate with other machines and do so within tight limits on power, size and cost. Our AI technology is being built to act, not only think. It is edge-native and decentralized by necessity. It is designed for systems in which each machine operates autonomously while collaborating locally with others, without reliance on continuous centralized control or excessive
2026 PROXY STATEMENT | 1 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
compute. We have already implemented early versions of a DECA architecture through our Palladyne IQ and SwarmOS platforms, proving the approach in real systems today while remaining at the early edge of a much larger and inevitable opportunity: becoming the intelligence layer for autonomous machines operating beyond the reach of the cloud.
We are positioning our defense business as a mid-tier U.S. technology prime defense contractor aiming to combine innovative autonomy, practical engineering and American production to bring intelligent systems into active service faster, safer and more cost-effectively than legacy approaches. We seek to harness our advanced, ethical embodied AI to provide cost-effective lethality and precision harm mitigation through rapidly delivering scalable, low-cost, intelligent and collaborative attritable weapons, including by developing proprietary UAVs incorporating our avionics and AI technologies. We support these efforts and those of other defense contractors and commercial customers through our vertically integrated aircraft engineering design services, enhanced avionics compute hardware and machining and fabrication services. Palladyne SwarmOS is designed for unmanned platforms and includes advanced autonomy and coordination capabilities that enable multiple UAVs to swarm, collaborate and execute complex missions through distributed tasking and edge-native orchestration. Our embodied AI is designed to operate in complex, contested and high-risk environments, enabling distributed tasking, human-on-the-loop oversight, degraded-communications resilience, multi-domain coordination and real-time responsiveness. Our platform-agnostic autonomy stack combines real-time sensor fusion, adaptive AI models, and edge-native orchestration to support autonomous and collaborative systems across air, ground, maritime and industrial domains where performance, resilience, trust and mission assurance are critical to operational outcomes. These capabilities are intended to meet the performance and reliability requirements of military and defense customers, particularly in applications where it is essential to conduct coordinated multi-vehicle operations in contested environments with degraded communications.
For commercial and industrial customers in particular, Palladyne IQ is designed to enable poly-functional robots, including industrial robots and cobots, to become capable of performing multiple tasks across dynamic real-world industrial environments. Palladyne IQ enables industrial robots and cobots to adapt to variability in tasks, parts, and environments, thereby reducing the need for rigid automation, custom fixtures, and manual intervention. We believe Palladyne IQ has applications across manufacturing, logistics, warehousing, and other industrial settings where unstructured or semi-structured environments have historically limited the adoption of automation. We also offer Palladyne Pilot, a derivative version of SwarmOS tailored to meet the requirements of public safety and commercial customers by delivering core autonomy capabilities with reduced system complexity and cost.
Our History
Palladyne AI is the result of a decades-long effort in research and development of robotic systems and solutions. Our original predecessor was spun-out of the University of Utah in 1983. In 2007, our predecessor was acquired by Raytheon and was operated until 2014 as a division of Raytheon known as Raytheon Sarcos. During this period, Raytheon Sarcos was focused primarily on developing cutting-edge technologies for use by U.S. governmental agencies. In December 2014, the assets of Raytheon
2026 PROXY STATEMENT | 2 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
Sarcos were acquired by a consortium led by the former Raytheon Sarcos President and our Chief Innovation Officer, Dr. Fraser Smith, and technology and telecom entrepreneur Benjamin Wolff, our Chief Executive Officer, President and member of the Board of Directors. This acquisition was the basis for the establishment of Sarcos Corp. ("Old Sarcos"). On September 24, 2021, Old Sarcos merged with Rotor Acquisition Corp. ("Rotor"), a Delaware corporation (the "Business Combination") and Rotor changed its name to Sarcos Technology and Robotics Corporation ("Sarcos"). In April 2022, we acquired RE2, Inc., a Pittsburgh, Pennsylvania based robotics company. In November 2023, we announced a pivot in business strategy to prioritize the development and commercialization of our full-stack, closed-loop autonomy software ("AI/ML Foundational Technology") and suspend further commercialization efforts on hardware robotics products. As part of the business pivot and to reflect the new focus of the company, in March 2024, the Company changed its name to Palladyne AI Corp. In November 2025, we acquired GuideTech, LLC an engineering company, MKR Fabrication, LLC (also known as MKR Fabricators), a fabrication company, and Warnke Precision Machining, LLC, a precision machining company.
As a pioneer in the robotic systems industry, we benefit from lessons learned over 40-plus years and significant investment in research and development. Through our hardware product development efforts over many years, including our related software development efforts, we have developed a significant amount of advanced technology and understanding of robotic systems that we are leveraging to develop and commercialize our AI/ML Foundational Technology and related products. Our extensive robotics history gives us valuable perspective on how to use software to tackle the challenges associated with training and managing robotic systems to solve complex tasks in arbitrary human environments.
We believe that our historical innovations in the development of our legacy hardware products and our related early AI software development for our own hardware, including human like dexterity and immersive teleoperation technology for natural extended reality interactions between humans and robots, have enabled us to transition our previous software development into our hardware agnostic AI/ML Foundational Technology that has the potential for a wide range of use cases and that is compatible with a broad base of robots and unmanned platforms such as UAVs, ROVs and UGVs.
We have spent many years working with and listening to people with experience in the industries we expect to target, including advisors and potential customers. These early engagements have helped us form relationships with potential customers, helped fund our development efforts and provided critical customer insight and feedback into our development plans and software design. We believe our early efforts to get this feedback and build these relationships with potential customers situate us well to effectively commercialize our products.
Looking Forward
We think about our current and future stages of maturation through an analogy to the development steps of crawl, walk and run. In 2025, we built the path for our evolution. Our plan in 2026 is to crawl, which means to prove that our integrated model works at scale, convert backlog into revenue, monetize development programs, generate product revenue from acquired businesses, execute live demos and
2026 PROXY STATEMENT | 3 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
trials for SwarmOS, IntelliSwarm and Palladyne IQ 2.0 and advance Gremlin-X, SwarmStrike and BRAIN variants toward defined milestones.
Our goal in 2027 is to walk, meaning that proof becomes repeatability. We will aim to broaden SwarmOS and IntelliSwarm integrations, repeat Palladyne IQ 2.0 wins, increase BRAIN deployments, expand programs and benefit from multiple product-based revenue streams. Once this has been achieved, we expect growth to become more systematic and less episodic.
Finally, in 2028 we aim to run, meaning that we expect decentralized embodied collaborative autonomy to operate seamlessly across air, space and eventually land and sea, IntelliSwarm to enable larger and more complex distributed systems, autonomy and propulsion architectures to converge, and UAV, missile and avionics revenue to scale across multiple defense programs. At the run stage, we expect today's emerging and development-stage products to have become a scaled portfolio of core products driving meaningful revenue and bottom-line growth.
2026 PROXY STATEMENT | 4 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
Our Board
Committee Memberships |
||||||||
Current Directors |
Age (as of 3-31-26) |
Director Since |
Independent |
Audit |
Compensation |
Nominating and Corporate Governance |
Strategic Transaction |
Other Public Directorships |
Brian D. Finn |
65 |
2020 |
|
1 |
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Eric T. Olson |
74 |
2021 |
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2 |
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Stephen M. Twitty |
62 |
2025 |
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1 |
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Dennis Weibling |
74 |
2021 |
|
-- |
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Benjamin G. Wolff |
57 |
2021 |
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1 |
|
Michael T. Young |
65 |
2025 |
|
-- |
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= Member = Chair = Audit Committee Financial Expert
2026 PROXY STATEMENT | 5 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
The Annual Meeting
All stockholders are cordially invited to attend the 2026 annual meeting of the stockholders of Palladyne AI Corp. (the "Annual Meeting") to be held on June 8, 2026. Whether or not you expect to attend the Annual Meeting, please complete, date, sign and return the enclosed proxy card (or vote by telephone or the Internet) as promptly as possible to ensure your shares are voted at the Annual Meeting. Please note that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain from the record holder a proxy issued in your name. For more information about attending the Annual Meeting and voting procedures for you to vote your shares, please see "Questions and Answers about the Proxy Materials and Our Annual Meeting" beginning on page 84 of this proxy statement.
The following matters will be voted on at the Annual Meeting and are described in more detail in this proxy statement:
Proposal |
Board Vote Recommendation |
More Information |
Election of Class II Director (Proposal 1) |
The Board of Directors recommends that you vote FOR the nominee. |
Page 33 |
Ratification of the Independent Registered Public Accounting Firm (Proposal 2) |
The Board of Directors recommends that you vote FOR ratification of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026. |
Page 34 |
Approval of the Palladyne AI Corp. 2021 Equity Incentive Plan, as Amended and Restated (Proposal 3)
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The Board of Directors recommends that you vote FOR the approval of the 2021 Equity Incentive Plan, as amended and restated, to increase the number of shares authorized for issuance thereunder.
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Page 39 |
Approval of Restricted Stock Unit Awards to our Senior Executives (Proposal 4)
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The Board of Directors recommends that you vote FOR the approval of the executive RSUs.
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Page 56
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As of the date of this proxy statement, the Board of Directors knows of no other matters that will be brought before the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the proxy holders will vote any shares for which they have been granted a proxy as they determine.
2026 PROXY STATEMENT | 6 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
Special Note Regarding Forward-Looking Statements
Certain statements in this proxy statement constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements relate to expectations for future financial performance, business strategies, products and product features or expectations for our business. Specifically, forward-looking statements may include statements relating to:
These forward-looking statements are based on information available as of the date of this proxy statement and our management's current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and, in any event, you should not place undue reliance on these forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include those factors described in Part I Item 1A Risk Factors of our Annual Report on
2026 PROXY STATEMENT | 7 |
PROXY SUMMARY AND COMPANY HIGHLIGHTS
Form 10-K for the year ended December 31, 2025 and in our subsequent reports filed with the Securities and Exchange Commission, or the SEC. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Risk Factors discussed in our Annual Report on Form 10-K filed with the SEC on March 5, 2026 are not guarantees that no such conditions exist as of the date of this proxy statement and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information in our possession as of the date of this proxy statement, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
2026 PROXY STATEMENT | 8 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Composition of the Board
Our Board of Directors currently consists of six directors, five of whom are independent under the listing standards of The Nasdaq Stock Market LLC, or Nasdaq. Our Board of Directors is divided into three classes with staggered three-year terms. Thus, at each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring.
The following table sets forth the names, ages as of March 31, 2026 and certain other information for each of our directors and director nominees:
Name |
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Current Class |
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Age |
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Position(s) |
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Director Since |
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Current Term |
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Expiration of |
Nominees for Director |
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Dennis Weibling |
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II |
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74 |
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Director, Chairman |
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2021 |
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2026 |
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2029 |
Continuing Directors |
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Brian D. Finn |
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III |
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65 |
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Director |
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2020 |
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2027 |
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— |
Michael T. Young |
|
III |
|
65 |
|
Director |
|
2025 |
|
2027 |
|
— |
Eric T. Olson |
|
I |
|
74 |
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Director |
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2021 |
|
2028 |
|
— |
Stephen M. Twitty |
|
I |
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62 |
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Director |
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2025 |
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2028 |
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— |
Benjamin G. Wolff |
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I |
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57 |
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Director, President and Chief Executive Officer |
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2021 |
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2028 |
|
— |
2026 PROXY STATEMENT | 9 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Qualifications
We believe that our directors should possess high personal and professional ethics and integrity and be committed to representing the long-term interests of our stockholders. We endeavor to have a Board representing a range of experiences at policy-making levels in business and areas that are relevant to our business and long-term strategy. We believe that, in light of the current stage of our business, the following are key areas of experience, qualifications and skills that should be represented on the Board:
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Leadership. We believe that directors with experience in significant leadership positions over an extended period provide us and the Board with important insights. Among other things, we believe that these individuals generally possess extraordinary leadership qualities and the ability to identify and develop those qualities in others and that they demonstrate a practical understanding of organizations, processes, strategy and growth management. |
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Technology. Our AI/ML Foundational Technology involves highly sophisticated and complex technology, and reflects our efforts at solving very difficult technological problems. As a result, we believe it is important to have directors who have technology industry experience and an understanding of the difficulties in developing and commercializing technologically advanced products. |
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Operations. As we transition from primarily a research and development organization to a commercial enterprise, we believe it is important to have directors with significant operations experience. |
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Finance. We benefit from directors with a strong finance background, including an understanding of finance, financial statements and financial reporting. Further, we believe it is important to have directors with significant financial market experience. |
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Customers. As we roll-out commercial products, and develop new products, we believe it is important to have directors with experience or relationships with customers in our target industries so that we can better understand the perspectives, needs and decision-making processes of potential customers. |
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Global Business. We believe that our business will involve sales outside of the United States. As a result, we believe it is important to have directors with significant international business or similar experience.
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2026 PROXY STATEMENT | 10 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The following skills matrix sets forth the primary areas of experience, qualifications and skills that we have specifically identified as pertaining to each director, including our director nominees. This matrix should not be read as suggesting that directors not specifically identified with any particular area of experience, qualification or skill do not have experience, qualifications or skills in that area. Our Nominating and Corporate Governance Committee reviews at least annually the composition of the Board and considers whether additional or different skills are needed. We expect this process to continue as our business evolves and, as a result, our skills matrix may change over time.
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Leadership |
Technology |
Operations |
Finance |
Customers |
Global Business |
Brian D. Finn |
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Eric T. Olson |
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Stephen M. Twitty |
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Dennis Weibling |
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Benjamin G. Wolff |
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Michael T. Young |
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We also believe that the significant stock ownership of (or of entities affiliated with) Mr. Wolff, Mr. Finn and Mr. Weibling provide a strong alignment of interests between the Board and our stockholders and help ensure that the Board is properly focused on the long-term interests of our stockholders.
Board Diversity
We believe that we and our Board benefit from diversity with respect to professional background, education, race, ethnicity, gender, age and geography as well as other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on our Board. Although our Board of Directors does not maintain a specific policy with respect to Board diversity, our Board of Directors believes that the Board should be a diverse body, and the Nominating and Corporate Governance Committee considers a broad range of perspectives, backgrounds and experiences when considering whether to recommend the nomination of any particular director candidate.
2026 PROXY STATEMENT | 11 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Nominee for Director
|
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Dennis Weibling |
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Qualifications, Skills and Experience |
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Dennis Weibling has served as a member of the Board of Directors since September 2021 and as Chairman of the Board since February 2023. Mr. Weibling joined the board of directors of Old Sarcos in September 2016 and served as chairman of its audit committee until the Business Combination when he joined our Board and became Chairman of the Audit Committee. Mr. Weibling has served as the Managing Director of Rally Capital LLC, a private equity firm, since 2004. He served as a director of Holicity Inc. (Nasdaq: HOL), a SPAC, from August 2020 to June 2021 and as a director of Colicity Inc. (Nasdaq: COLI), a SPAC, from February 2021 to December 2022. Mr. Weibling served on Sotheby's board from 2006 until October 2019, and during that time he served as chairman of its audit and finance committee. Mr. Weibling also served as Sotheby's interim Chief Financial Officer from January 2016 until March 2016. Mr. Weibling served as President of Eagle River, Inc., from October 1993 through December 2001, and as Vice Chairman of Eagle River Investments from January 2002 through November 2004. He served as Chief Executive Officer of Nextel Communications Inc. from October 1995 to March 1996, and as a director of Nextel from July 1995 until April 1, 2004. At Nextel, Mr. Weibling was a member and chairman of the operations, audit, finance and compensation committees at various times during that period. Mr. Weibling served as a board member of Nextel Partners from 1998 to 2006 and chaired the audit committee. He also served on the board of XO Communications, Inc., where he served from 1996 to 2003. Mr. Weibling has served on the boards of private companies, including Telesphere Communications Networks, a telecommunications company, Rise Communities LLC, a real estate development company, Telecom Transport Management, a telecommunications company, Wireless Services Corporation, a telecommunications company, Worldwide Packets, Inc., a telecommunications company, Teledesic Corporation, a telecommunications company, Geopass, Inc. d/b/a Pirq, a software company, and SeaMobile, Inc., a telecommunications company. Mr. Weibling holds a Bachelor of Arts Degree from Wittenberg University, a Master of Arts Degree in Psychology from the University of Nebraska, and a J.D. from the University of Nebraska. We believe Mr. Weibling's financial expertise and experience as an investor in technology companies, in addition to his experience as a senior executive and director of various companies, qualify him to serve on our Board of Directors. |
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Independent Committee Memberships: Audit Nominating and Corporate Governance Strategic Transaction Other Current Public Directorships: None |
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Leadership |
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Technology |
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Operations |
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Finance |
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Customers |
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Global Business |
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2026 PROXY STATEMENT | 12 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Continuing Directors
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Brian D. Finn |
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Qualifications, Skills and Experience |
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Brian D. Finn has served as a member of the Board of Directors since August 2020. Mr. Finn has over 40 years of experience in the financial services industry as well as a variety of corporate and philanthropic board roles. From 2008 until he retired in 2013, Mr. Finn served as Chairman and Chief Executive Officer of Asset Management Finance Corp (AMF) and as a Senior Advisor to Credit Suisse. From 2004 to 2008, Mr. Finn was Chairman and Head of Alternative Investments at Credit Suisse. From 2002 to 2005, Mr. Finn held senior managements positions within Credit Suisse, including President of Credit Suisse First Boston (CSFB), President of Investment Banking, Co-President of Institutional Securities, Chief Executive Officer of Credit Suisse USA and a member of the Office of the Chairman of CSFB. He was also a member of the Executive Board of Credit Suisse Group. Mr. Finn began his career in 1982 as a member of the Mergers & Acquisitions Group (M&A) at The First Boston Corporation, ultimately becoming Co-Head of M&A in 1993. He has advised on dozens of transactions worth well over $100 billion. In 1997, he joined the private equity firm Clayton, Dubilier & Rice as a partner and then later rejoined Credit Suisse in 2002. Mr. Finn was a member of the board of The Scotts Miracle-Gro Company (NYSE:SMG) from December 2014 to January 2023 and Owl Rock Capital Corp (NYSE:ORCC), a specialty finance company, from 2016 to February 2022. He is currently Chairman of Star Mountain Capital, an asset management firm, Siddhi Capital, LP, a venture capital fund, and Siddhi Acquisition Corp. (NYSE: SDHI.U), a blank check company. He has previously been a Strategic Advisor to KKR, a global investment firm, member of the boards of Baxter International (NYSE: BAX), a healthcare company, Telemundo, MGM Pictures, and a number of other public and private companies. Mr. Finn is a past Chairman of the Undergraduate Executive Board of The Wharton School of the University of Pennsylvania, Vice Chairman of the Board of the City Kids Foundation and a member of the boards of the Gordon A. Rich Memorial Foundation and the Starmar Foundation. Mr. Finn received a Bachelor of Science Degree in Economics from The Wharton School of the University of Pennsylvania. We believe Mr. Finn is well-qualified to serve as a member of our Board due to, among other things, his extensive experience in finance, leadership positions and strategic transactions. |
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Independent Committee Memberships: Audit Nominating and Corporate Governance Strategic Transaction Other Current Public Directorships: Siddhi Acquisition Corp. |
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Leadership |
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Technology |
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Operations |
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Finance |
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Customers |
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Global Business |
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2026 PROXY STATEMENT | 13 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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Admiral Eric T. Olson (Ret.) |
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Qualifications, Skills and Experience |
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Retired Admiral Eric T. Olson has served as a member of the Board of Directors since September 2021. He has been President and Managing Member of ETO Group, LLC since September 2011, where he acts as an independent national security consultant supporting a wide range of private and public sector organizations. From June 2019 to May 2020, Mr. Olson served as Chief Executive Officer of Hans Premium Water, a privately held company. Mr. Olson retired from the United States Navy in 2011 as a full Admiral after 38 years of military service. He served in special operations units throughout his career, during which he was awarded several decorations for leadership and valor, including the Defense Distinguished Service Medal and the Silver Star. Mr. Olson was the first Navy SEAL officer to be promoted to three- and four-star ranks. Mr. Olson's career culminated as the head of the United States Special Operations Command from July 2007 to August 2011, where he was responsible for the mission readiness of all Army, Navy, Air Force and Marine Corps special operations forces. Mr. Olson has served on the board of directors of Under Armour, Inc. (NYSE: UAA) since 2012 and is a member of its nominating and corporate governance committee. Mr. Olson has served on the board of directors of Iridium Communications Inc. (Nasdaq: IRDM), a satellite communications company, since 2011 and is a member of its nominating and corporate governance committee. In addition, he serves on the board of directors of various private companies, including, Cyber Reliant Corporation, Newlight Technologies, Ocean Aero, Inc. and IP3. Mr. Olson has served as a director of the non-profit Special Operations Warrior Foundation. Mr. Olson also served on the Old Sarcos Advisory Board from December 2016 until joining the Board. Mr. Olson graduated from the United States Naval Academy in 1973 and earned a Master of Arts degree in National Security Affairs at the Naval Postgraduate School. He is an Adjunct Professor in the School of International and Public Affairs at Columbia University. We believe Mr. Olson's leadership experience as an Admiral in the U.S. Navy, including his leadership and management of a large and complex organization as head of the U.S. Special Operations Command, in addition to his experience as a director of various companies and his expertise with respect to the needs of the U.S. military, qualifies him to serve on our Board of Directors. |
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Independent Committee Memberships: Compensation Nominating and Corporate Governance Other Current Public Directorships: Under Armour Iridium Communications
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2026 PROXY STATEMENT | 14 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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Lieutenant General Stephen M. Twitty (Ret.) |
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Retired Lieutenant General Stephen “Steph” M. Twitty has served as a member of the Board of Directors since September 2025. Mr. Twitty has served as President of Twitty and Associates LLC, a consultancy firm specializing in strategic and operational planning that supports a wide range of clients in the government, corporate, academic, and non-profit sectors, since June 2020. Mr. Twitty retired from the United States Army as a Lieutenant General after 40 years of distinguished service. He had a decorated military career as an infantry officer in the Army, commanding units in nearly every echelon and serving in five combat tours. In his final military assignment, Mr. Twitty served as the Deputy Commander of the United States European Command in Stuttgart, Germany. He has received numerous awards, including the Silver Star Medal, our nation’s 3rd highest award for valor. Since his military retirement, Mr. Twitty has served in multiple senior executive roles, most recently as the senior executive lead for U.S. training operations at Valiant Integrated Services since 2020 and has served as a board member for Karman Space and Defense (NYSE: KRMN) since February 2025, Weibel Scientific since February 2025, and Meroxa, Inc. since January 2025. Prior to that, he served as chairman of the board at Nusura, Inc. He is also a board advisor for Accelint, Dataminr, HDT-Global, and Raft Inc., and serves as a senior advisor to the Chertoff Group and Ernst and Young. Mr. Twitty served as our advisor from 2022 until his appointment as director. Mr. Twitty holds a master’s degree in administration from Central Michigan University, a master’s degree in national security strategy from the National Defense University, and a bachelor’s degree in criminal justice from South Carolina State University. He has continued further studies at the Center for Creative Leadership, Executive Leadership program in Greensboro, North Carolina, and the University of North Carolina, Kenan Flagler Business School, Executive Leadership program in Chapel Hill North Carolina. He is a Distinguished Fellow at the Center for European Policy Analysis (CEPA), and is a member of the Council on Foreign Relations. We believe Mr. Twitty’s leadership experience as a Lieutenant General in the U.S. Army, including his leadership and management of a large and complex organizations within the Army, in addition to his experience as a director of various companies and his expertise with respect to the needs of the U.S. military, qualifies him to serve on our Board of Directors. |
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Independent Committee Memberships: Compensation Nominating and Corporate Governance Other Current Public Directorships: Karman Space and Defense |
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2026 PROXY STATEMENT | 15 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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Benjamin G. Wolff |
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Qualifications, Skills and Experience |
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Benjamin G. Wolff has served as a member of the Board of Directors since September 2021. Mr. Wolff served as Old Sarcos' Chief Executive Officer and Chairman of the Board of Directors from September 2015, its President from December 2020 and as a member of its Board of Directors from February 2015, in each case until the Business Combination, at which time he became our President, Chief Executive Officer and Chairman of our Board of Directors until December 13, 2021, when he became our Executive Chairman. He served as Executive Chairman from December 2021 until February 2023 and as Executive Vice Chairman from October 2023 until his appointment as our Chief Executive Officer and President in February 2024. Prior to joining Old Sarcos in 2009, Mr. Wolff joined satellite communications company, ICO Global Communications, as its President and Chief Executive Officer. ICO Global Communications was later re-named Pendrell Corporation when it pivoted to focus on the creation, acquisition and monetization of intellectual property. Mr. Wolff serviced as Pendrell’s President, Chief Executive Officer and Chairman until November 2014. In April 2004, Mr. Wolff co-founded Clearwire Corporation, a telecommunications company, where he served as President and Chief Executive Officer until March 2009 and Co-Chairman until October 2011. Mr. Wolff previously served on the board of the Cellular Telecommunications Industry Association (CTIA). Mr. Wolff also serves on the board of directors of Globalstar, Inc. (NYSE: GSAT), a telecommunications company, which he joined in December 2018 and is a member of its audit committee and compensation committee, and serves as the chairman of its strategic review committee. Mr. Wolff earned his law degree from Northwestern School of Law, Lewis & Clark College in Portland, Oregon, and his Bachelor of Science degree from California Polytechnic State University. Mr. Wolff is an inactive member of the Washington State Bar. We believe Mr. Wolff's leadership roles as a founder of and investor in technology companies, his experience as chief executive officer and director of multiple public companies, his relationships and experience with potential customers and his perspective, experience and leadership in his various roles at Palladyne AI Corp. since its inception qualify him to serve on our Board of Directors. |
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Committee Memberships: Strategic Transaction Other Current Public Directorships: Globalstar |
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2026 PROXY STATEMENT | 16 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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Michael T. Young |
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Qualifications, Skills and Experience |
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Michael T. Young joined our Board of Directors in February 2025. Mr. Young held various roles at Caterpillar Inc. (NYSE: CAT) from August 2005 to March 2023, including serving as Director M&A Asia Pacific for over 6 years in China leading M&A transactions from 2006 to 2012. Mr. Young also played a key role in Caterpillar’s corporate strategy and led Caterpillar Ventures, a subsidiary of Caterpillar, as Director of Caterpillar Ventures from inception in 2015 until his retirement in 2023. During his tenure at Caterpillar, Mr. Young was involved in over 30 of Caterpillar Ventures’ investments and served as a director for two companies and as a board observer for multiple other companies on behalf of Caterpillar. Prior to Caterpillar, Mr. Young worked at Dell Technologies Inc. (NYSE: DELL) from 1995 to 2001, where he became the first chief financial officer for Dell China, a wholly owned subsidiary of Dell. He was instrumental in establishing financial protocols and standards while also being heavily involved in daily operations. Before Dell, Mr. Young spent nearly 10 years at Ethyl Corporation, a wholly-owned subsidiary of NewMarket Corporation (NYSE: NEU), a specialty chemicals and materials company, where he served as Accounting Manager. Mr. Young received an Associate Degree in Business from St. Louis Community College, Meramec and a Bachelor of Science Degree in Finance from Southern Illinois University at Edwardsville. He was previously a Certified Public Accountant in Illinois. We believe Mr. Young's extensive experience in corporate strategy, investments, finance, accounting and leadership, particularly at Caterpillar and Dell, qualifies him to contribute valuable insights to our Board of Directors. |
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Independent Committee Memberships: Compensation Strategic Transaction Other Current Public Directorships: None |
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2026 PROXY STATEMENT | 17 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Director Independence
Our common stock is listed on Nasdaq. We are required under Nasdaq listing standards and our Corporate Governance Guidelines to maintain a Board comprised of a majority of independent directors. Under Nasdaq listing standards, a director will only qualify as an independent director if, in the opinion of that listed company's board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition, Nasdaq listing standards require that, subject to specified exceptions, each member of our Audit, Compensation and Nominating and Corporate Governance Committees be independent.
Audit Committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Nasdaq listing standards applicable to audit committee members. Compensation Committee members must also satisfy the additional independence criteria set forth in Rule 10C-1 under the Exchange Act and Nasdaq listing standards applicable to compensation committee members.
Our Nominating and Corporate Governance Committee and our Board of Directors have undertaken a review of the independence of each of our directors. Based on information provided by each director concerning his or her background, employment and affiliations, our Nominating and Corporate Governance Committee and our Board of Directors have determined that each of Mr. Finn, Mr. Olson, Mr. Twitty, Mr. Weibling and Mr. Young representing five of our six directors, is an "independent director" as defined under the listing standards of Nasdaq and the Exchange Act, as applicable to each director's committee membership. Mr. Wolff is not an independent director because of his position as our President and Chief Executive Officer.
In making these determinations, our Board of Directors considered the current and prior relationships that we have with each director and all other facts and circumstances that our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director and the transactions involving them described in the section titled "Related Person Transactions."
Family Relationships
There are no family relationships among any of our executive officers, directors or persons nominated or chosen to be a director or officer.
Board Leadership Structure
Our Corporate Governance Guidelines provide our Board flexibility to determine the appropriate leadership structure for the Company, including whether the roles of chairperson and chief executive officer should be separated or combined. In making this determination, our Board considers many factors, including the needs of the business, our Board's assessment of its leadership needs from time to time and the best interests of our stockholders. If the role of chairperson is filled by a director who does not qualify as an independent director, then our Corporate Governance Guidelines provide that one of our independent directors will serve as our Lead Independent Director.
2026 PROXY STATEMENT | 18 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Currently, Mr. Wolff serves as our President and Chief Executive Officer and is not an independent director. Our Board believes that it is currently appropriate to separate the roles of chairperson and chief executive officer. As our chairperson, Mr. Weibling, is an independent director, we do not have a separate Lead Independent Director. Our Chief Executive Officer is responsible for day-to-day leadership. Our Chairman ensures that our Board's time and attention is focused on providing independent oversight of management and matters critical to our Company.
The Chairman works with the CEO to set the agenda for Board meetings, serves as the Chairman of meetings of our Board and of executive sessions of our independent directors, confers separately with management from time to time and facilitates discussion among other board members as appropriate. The Board believes that Mr. Weibling's extensive experience serving on public company boards of directors makes him ideally suited to serve as Chairman of the Board.
Role of the Board in Risk Oversight Process
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, cybersecurity and reputational risks. We have designed and implemented processes to manage risk in our operations and continually look for opportunities to further embed risk management processes into our business and organization. Management is responsible for the day-to-day management of the risks the Company faces, while our Board of Directors, as a whole and assisted by its committees, has responsibility for the oversight of risk management. Our Board reviews strategic and operational risk in the context of discussions, question and answer sessions and reports from the management team at each regular Board meeting, receives reports on all significant Board committee activities at each regular Board meeting and evaluates the risks inherent in significant transactions. In addition, management regularly reports to and receives input from the Board or individual members of the Board on business operations between formal Board meetings.
Further, our Board has tasked designated standing Board committees with oversight of certain categories of risk management. Our Audit Committee assists our Board in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance and related party transactions, cybersecurity, artificial intelligence and conflicts of interest. Our Compensation Committee assesses risks relating to our human capital management and our executive compensation plans and arrangements, including whether our compensation policies and programs have the potential to encourage excessive or inappropriate risk taking. Our Nominating and Corporate Governance Committee assesses risks relating to our corporate governance practices and the independence of the Board.
Our Board of Directors believes its current leadership structure, as well as having fully independent Audit, Compensation and Nominating and Corporate Governance Committees, supports the risk oversight function of the Board.
2026 PROXY STATEMENT | 19 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Committees
Our Board of Directors has established the following standing committees of the Board: Audit Committee; Compensation Committee; Nominating and Corporate Governance Committee; and Strategic Transaction Committee. The composition and responsibilities of each of the committees of our Board of Directors is as follows:
Committee Memberships |
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Current Directors |
Audit |
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Strategic Transaction |
Brian D. Finn |
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Eric T. Olson |
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Stephen M. Twitty |
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Dennis Weibling |
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Benjamin G. Wolff |
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Michael T. Young |
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= Member = Chair
Audit Committee
The members of our Audit Committee are Brian D. Finn, Dennis Weibling and Michael T. Young, with Dennis Weibling serving as chairperson. Our Nominating and Corporate Governance Committee and Board of Directors have determined that each member of the Audit Committee meets the requirements for independence and financial literacy under the rules and regulations of the SEC, and the listing standards of Nasdaq applicable to audit committee members. In addition, our Board of Directors has determined that Dennis Weibling is an "audit committee financial expert" within the meaning of Item 407(d) of Regulation S-K under the Securities Act. Our Audit Committee, among other things:
2026 PROXY STATEMENT | 20 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Audit Committee operates under a written charter that satisfies the applicable listing standards of Nasdaq. A copy of the Audit Committee's charter is available on our website at https://investor.palladyneai.com/governance/documents-charters. Under its charter, the Audit Committee may delegate its authority to subcommittees or the chairperson when it deems it appropriate and in our best interests and when such delegation would not violate applicable law, regulation or Nasdaq or SEC requirements.
Compensation Committee
The members of our Compensation Committee are Eric T. Olson, Stephen Twitty and Michael T. Young, with Eric T. Olson serving as chairperson. Our Nominating and Corporate Governance Committee and Board of Directors have determined that each member of the Compensation Committee meets the requirements for independence under the rules and regulations of the SEC and the listing standards of Nasdaq applicable to Compensation Committee members, and that each member of the Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. Our Compensation Committee, among other things:
2026 PROXY STATEMENT | 21 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Compensation Committee operates under a written charter that satisfies the applicable listing standards of Nasdaq. A copy of the Compensation Committee's charter is available on our website at https://investor.palladyneai.com/governance/documents-charters. Under its charter, the Compensation Committee may delegate its authority when it deems it appropriate and in our best interests and when such delegation would not violate applicable law, regulation or Nasdaq or SEC requirements.
The Compensation Committee has engaged Mercer, a compensation consultant, to advise it, provide market compensation data with respect to the compensation of our executive officers and help us address other compensation matters as desired. Mercer works with management, as needed, in providing these services.
After reviewing information provided by Mercer regarding its independence and considering the independence factors prescribed by SEC and Nasdaq rules, the Compensation Committee determined that Mercer was independent and that there were no conflicts of interest arising from the services Mercer performed for us.
Nominating and Corporate Governance Committee
The members of our Nominating and Corporate Governance Committee are Brian D. Finn, Eric Olson, Stephen Twitty and Dennis Weibling, with Brian D. Finn serving as chairperson. Our Nominating and Corporate Governance Committee and Board of Directors has determined that each member of the Nominating and Corporate Governance Committee meets the requirements for independence under the listing standards of Nasdaq. Our Nominating and Corporate Governance Committee, among other things:
2026 PROXY STATEMENT | 22 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable listing standards of Nasdaq. A copy of the Nominating and Corporate Governance Committee's charter is available on our website at https://investor.palladyneai.com/governance/documents-charters. Under its charter, the Nominating and Corporate Governance Committee may delegate its authority to subcommittees or the chairperson when it deems it appropriate and in our best interests and when such delegation would not violate applicable law, regulation or Nasdaq or SEC requirements.
Strategic Transaction Committee
Our Board of Directors has created a Strategic Transaction Committee. The members of the Strategic Transaction Committee are Brian D. Finn, Dennis Weibling, Benjamin G. Wolff and Michael T. Young, with Benjamin G. Wolff serving as chairperson. The Strategic Transaction Committee assists in the assessment and, when appropriate, negotiation of strategic acquisition opportunities, potential capital market transactions and other strategic opportunities or potential transactions and reports to the Board of Directors.
Attendance at Board, Board Committee and Stockholder Meetings
During 2025, the Board held 7 meetings, the Audit Committee held 6 meetings, the Compensation Committee held 8 meetings, the Nominating and Corporate Governance Committee held 4 meetings and the Strategic Transaction Committee held 3 meetings. Each current director attended at least 75% of the total number of meetings of the Board and committees on which such director served during the periods that such director served.
Although we do not have a formal policy requiring attendance by members of our Board of Directors at our annual meetings of stockholders, we strongly encourage directors to attend. Five of our then six directors attended the 2025 annual meeting of stockholders.
2026 PROXY STATEMENT | 23 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Executive Sessions of Non-Employee and Independent Directors
To encourage and enhance communication among non-employee directors, our Corporate Governance Guidelines provide that the non-employee directors will meet in executive sessions without management directors or management present on a periodic basis, but no less than two times per year. In addition, if any of our non-employee directors are not independent directors, then our independent directors will also meet in executive session on a periodic basis, but no less than two times per year. Currently, all of our non-employee directors are independent directors. These executive sessions are chaired by Dennis Weibling, our Chairman of the Board.
Compensation Committee Interlocks and Insider Participation
During 2025, Matthew Shigenobu Muta, a former member of our Board, Eric T. Olson, Stephen Twitty and Michael T. Young were members of our Compensation Committee. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee. In connection with Mr. Muta becoming employed by us as President, Commercial and Industrial in March 2026, he ceased to serve on the Board and the Compensation Committee. At the time of their service on the Compensation Committee, none of the directors serving on the Compensation Committee during 2025 were while serving, or previously had been, an officer or an employee of our Company.
2026 PROXY STATEMENT | 24 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Considerations in Evaluating Director Nominees
Our Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating potential director nominees. In its evaluation of director candidates, including the current directors eligible for re-election, our Nominating and Corporate Governance Committee will consider the current size and composition of our Board of Directors and the needs of our Board of Directors and the respective committees of our Board of Directors and other director qualifications. While our Board has not established minimum qualifications for Board members, some of the factors that our Nominating and Corporate Governance Committee considers in assessing director nominee qualifications include issues of character, professional ethics and integrity, judgment, business acumen, proven achievement and competence in one's field, the ability to exercise sound business judgment, tenure on the Board and skills that are complementary to the Board, an understanding of our business, an understanding of the responsibilities that are required of a member of the Board, other time commitments, diversity with respect to professional background, education, race, ethnicity, gender, age and geography, as well as other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on our Board. The Nominating and Corporate Governance Committee and the Board evaluate each director in the context of the membership of the Board as a group, with the objective of maintaining a Board that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of backgrounds and experience in various areas. Although our Board of Directors does not maintain a specific policy with respect to Board diversity, our Board of Directors believes that the Board should be a diverse body, and the Nominating and Corporate Governance Committee considers a broad range of perspectives, backgrounds and experiences when considering whether to recommend the nomination of any particular director candidate.
If our Nominating and Corporate Governance Committee determines that an additional or replacement director is required, then the committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information or reliance on the knowledge of the members of the committee, the Board or management.
After completing its review and evaluation of director candidates, our Nominating and Corporate Governance Committee recommends to our full Board of Directors the director candidates for nomination. Our Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend for nomination as directors and our Board of Directors has the final authority in determining the selection of director candidates for nomination to our Board.
Stockholder Recommendations and Nominations to our Board of Directors
Our Nominating and Corporate Governance Committee will consider recommendations and nominations for candidates to our Board of Directors from stockholders in the same manner as candidates recommended to the committee from other sources, so long as such recommendations
2026 PROXY STATEMENT | 25 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
and nominations comply with our Amended and Restated Certificate of Incorporation ("Charter"), Amended and Restated Bylaws ("Bylaws"), all applicable Company policies and all applicable laws, rules and regulations, including those promulgated by the SEC. Our Nominating and Corporate Governance Committee will evaluate such recommendations in accordance with its charter, our Bylaws and our Corporate Governance Guidelines and the director nominee criteria described above.
A stockholder that wants to recommend a candidate to our Board of Directors should direct the recommendation in writing by letter to our Corporate Secretary at Palladyne AI Corp., 650 South 500 West, Suite 150, Salt Lake City, Utah 84101, Attention: Corporate Secretary. Such recommendation must include the candidate's name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and us and evidence of the recommending stockholder's ownership of our capital stock. Such recommendation must also include a statement from the recommending stockholder in support of the candidate. Stockholder recommendations must be received by December 31st of the year prior to the year in which the recommended candidate(s) will be considered for nomination. Our Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend as nominees for election as directors, and our Board has discretion to decide which individuals to nominate for election as directors.
Under our Bylaws, stockholders may also directly nominate persons for election to our Board of Directors. Any nomination must comply with the requirements set forth in our Bylaws and the rules and regulations of the SEC and should be sent in writing to our Corporate Secretary at the address above. To be timely for our 2027 annual meeting of stockholders, nominations must be received by our Corporate Secretary observing the deadlines discussed below under "Other Matters—Stockholder Proposals or Director Nominations for 2027 Annual Meeting."
Communications with the Board of Directors
Stockholders and other interested parties wishing to communicate directly with our non-management directors, may do so by writing and sending the correspondence to our Chief Legal Officer, Chief Financial Officer or Legal Department by mail to our principal executive offices at Palladyne AI Corp., 650 South, 500 West, Suite 150, Salt Lake City, Utah 84101. Our Chief Legal Officer, Chief Financial Officer or Legal Department, in consultation with appropriate directors as necessary, will review all incoming communications and screen for communications that (1) are solicitations for products and services, (2) relate to matters of a personal nature not relevant for our stockholders to act on or for our Board to consider and (3) matters that are of a type that are improper or irrelevant to the functioning of our Board or our business, for example, mass mailings, job inquiries and business solicitations. If appropriate, our Chief Legal Officer, Chief Financial Officer or Legal Department will route such communications to the appropriate director(s) or, if none is specified, then to the chairperson of the Board or the lead independent director (if one is appointed) if the chairperson of the Board is not independent. These policies and procedures do not apply to communications to non-management directors from our officers or directors who are stockholders or stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act.
2026 PROXY STATEMENT | 26 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Insider Trading Policy and Policy Prohibiting Hedging or Pledging of Securities
We have established an
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Our Board of Directors has adopted our Corporate Governance Guidelines. These guidelines address, among other items, the qualifications and responsibilities of our directors and director candidates, the structure and composition of our Board of Directors and corporate governance policies and standards applicable to us in general. In addition, our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. Copies of our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at https://investor.palladyneai.com/governance/documents-charters. We will post any amendments to or waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website.
2026 PROXY STATEMENT | 27 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Other Corporate Governance Policies and Practices
Changes in Employment or Circumstances
Upon a change in employment with his or her principal employer, any non-employee director shall promptly inform our Chief Legal Officer, Chief Financial Officer or Legal Department or the Lead Independent Director (if one is appointed), who will discuss the issue with the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will assess the appropriateness of such director remaining on the Board and shall recommend to the Board whether to request that such director tender his or her resignation. Similarly, if a director becomes aware of circumstances that may adversely reflect upon the director, any other director or our company, the director should notify the Nominating and Corporate Governance Committee of such circumstances. The Nominating and Corporate Governance Committee will consider the circumstances and may request the director to cease the related activity or, in more severe cases, request that the director submit his or her resignation.
Limitations on Other Board Service / Overboarding
Directors are expected to advise the Nominating and Corporate Governance Committee of any invitations to join the board of directors of any other public company or changes to their committee membership prior to joining such other board or committee assignment. No director should serve on more than four additional public company boards without the approval of our Board, and our Chief Executive Officer should not serve on more than two additional public company boards.
Director Orientation and Continuing Education
We are committed to ensuring that all directors receive orientation and continuing education as appropriate. The Nominating and Corporate Governance Committee oversees director orientation and director continuing education.
Self-Evaluation
The Nominating and Corporate Governance Committee oversees a periodic self-evaluation by the Board, each committee of the Board and each director.
Access and Resources
Our Corporate Governance Guidelines provide that our directors at all times shall have direct, independent and confidential access to our executive officers, management and personnel in order to fulfill their duties. The Board is expressly authorized to obtain, at the Company's expense, such data, advice, consultation and documentation as the Board deems appropriate and to retain consultants, independent counsel or other advisers to advise or assist the Board in the performance of any of its responsibilities or for any other matter related to the Board's purposes.
2026 PROXY STATEMENT | 28 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Human Resources
Our employees are the key to our success and one of our most crucial areas of investment. Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. Overall, we consider our relations with our employees to be good and believe our culture to be central to the success of the Company. We strive to create an inclusive work environment for all of our employees, and we believe that creating an atmosphere where employees feel welcome and accepted, regardless of background, race and ethnicity, gender and gender identity, sexual orientation and other characteristics, is critical to our success.
As of March 31, 2026, we had approximately 162 employees. Approximately 48% of our employees are involved in engineering functions, including research and development. To date, we have not experienced any organized work stoppages. None of our employees are subject to a collective bargaining agreement or represented by a labor union.
Director Compensation
Our outside director compensation policy is designed to attract, retain and reward non-employee directors. Our outside director compensation policy was most recently amended in April 2025, and we are currently reviewing the policy and may make changes to it as a result of the review. Under the outside director compensation policy, each non-employee director will receive the cash and equity compensation for Board services described below. We also will reimburse our non-employee directors for reasonable, customary and documented travel expenses to meetings of our Board of Directors or its committees and other expenses.
2026 PROXY STATEMENT | 29 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Cash Compensation
Non-employee directors are entitled to receive the following annual cash fees for their service under our director compensation policy:
Service |
Cash Compensation |
Board Member |
$50,000 |
Chairperson of the Board |
$25,000 |
Chair of the Audit Committee |
$5,000 |
Audit Committee Member |
$2,500 |
Chair of the Compensation Committee |
$3,000 |
Compensation Committee Member |
$1,500 |
Chair of the Nominating and Corporate Governance Committee |
$1,500 |
Nominating and Corporate Governance Committee Member |
$750 |
All cash payments to non-employee directors are paid quarterly in arrears on a pro-rated basis.
Equity Compensation
New Director Award
Under our current non-employee director compensation policy, each individual who becomes a non-employee director after April 2025 will automatically be granted on the date of the director's appointment an award of restricted stock units equal to $100,000 divided by the simple average of the closing prices per share of our common stock over the prior 60-trading days ending on the trading day immediately prior to the grant date, prorated on a monthly basis for any partial year of service and rounded to the nearest whole share (the "New Director Award"). Prior to the adoption of the current non-employee director compensation policy in April 2025, new non-employee directors received 50,000 common stock options with a strike price equal to fair market value at the time of the grant, also prorated on a monthly basis for any partial year of service. Each New Director Award vests on the earlier of (i) the one-year anniversary of the date the New Director Award is granted or (ii) the day of the annual meeting next following the date the New Director Award is granted, in each case, subject to the non-employee director continuing to be a service provider through the applicable vesting date.
Annual Award
Under our current non-employee director compensation policy, each non-employee director automatically receives, on the date of each annual meeting of stockholders an award of restricted stock units equal to $100,000 divided by the simple average of the closing prices per share of our
2026 PROXY STATEMENT | 30 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
common stock over the prior 60-trading days ending on the trading day immediately prior to the grant date, rounded to the nearest whole share, rounded to the nearest whole share (the "Annual Award"). Prior to the adoption of our current non-employee director compensation policy in April 2025, each non-employee director automatically received, on the date of each annual meeting of stockholders, 50,000 common stock options with a strike price of fair market value at the time of the grant. Annual Awards vest on the earlier of (i) the one-year anniversary of the date the Annual Award is granted or (ii) the day prior to the date of the annual meeting next following the date the Annual Award is granted, in each case, subject to the non-employee director continuing to be a service provider through the applicable vesting date.
In the event of a "change in control" (as defined in our 2021 Equity Incentive Plan), each non-employee director's outstanding awards will become fully vested.
Director Compensation for 2025
The following table sets forth information regarding the total compensation awarded to, earned by or paid to our non-employee directors for their service on our Board of Directors, for the fiscal year ended December 31, 2025. Directors who are also our employees receive no additional compensation for their service as directors during the time periods when they are also our employees. See “Executive Compensation” for information regarding compensation for Mr. Wolff.
Name |
Fees |
|
Stock |
|
Options |
|
Non-Equity |
|
Change in |
|
All Other |
|
Total ($) |
|
|||||||
Brian D. Finn |
$ |
53,621 |
|
$ |
130,111 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
183,732 |
|
Matthew Shigenobu Muta(2) |
$ |
54,000 |
|
$ |
130,111 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
184,111 |
|
Eric T. Olson |
$ |
54,016 |
|
$ |
130,111 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
184,127 |
|
Stephen Twitty(3) |
$ |
13,750 |
|
$ |
79,614 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
93,364 |
|
Dennis Weibling |
$ |
80,750 |
|
$ |
130,111 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
$ |
210,861 |
|
Michael Young(4) |
$ |
43,683 |
|
$ |
130,111 |
|
$ |
86,403 |
|
|
— |
|
|
— |
|
|
— |
|
$ |
260,197 |
|
2026 PROXY STATEMENT | 31 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The following table lists all outstanding equity awards held by non-employee directors as of December 31, 2025:
Name |
|
Number of Shares |
|
|
Number of Shares |
|
||
Brian D. Finn |
|
|
14,819 |
|
|
|
50,000 |
|
Matthew Shigenobu Muta |
|
|
14,819 |
|
|
|
50,000 |
|
Eric T. Olson |
|
|
14,819 |
|
|
|
67,098 |
|
Stephen Twitty |
|
|
9,078 |
|
|
|
4,465 |
|
Dennis Weibling |
|
|
14,819 |
|
|
|
51,959 |
|
Michael Young |
|
|
14,819 |
|
|
|
16,667 |
|
2026 PROXY STATEMENT | 32 |
PROPOSAL NO. 1
ELECTION OF CLASS II DIRECTOR
Our Board of Directors currently consists of six directors and is divided into three classes with staggered three-year terms. At the Annual Meeting, one current director is up for election as a Class II director for a three-year term to succeed the same class whose term is then expiring. The director's term continues until the expiration of the term for which the director was elected and until the director's successor is elected and qualified or until the director's earlier death, resignation or removal.
Nominees
Following the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated Dennis Weibling for election as a Class II director at the Annual Meeting. Mr. Weibling is a current Class II director whose term is expiring upon the Annual Meeting. If elected, the nominee will serve as a Class II director until the 2029 annual meeting of stockholders and until his respective successor is elected and qualified or until his earlier death, resignation or removal. For more information concerning the nominee, please see the section titled "Board of Directors and Corporate Governance."
The nominee has agreed to serve as a director if elected, and the Company has no reason to believe that he will be unavailable to serve. In the event the nominee is unable or declines to serve as a director at the time of the Annual Meeting, proxies will be voted for any nominee designated by the present Board of Directors to fill the vacancy.
Vote Required
Directors are elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Because the outcome of this proposal will be determined by a plurality vote, any shares not voted FOR the nominee, whether as a result of choosing to WITHHOLD authority to vote or a broker non-vote, will have no effect on the outcome of the election.
Board Recommendation
|
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTOR NOMINEE NAMED ABOVE.
|
|
2026 PROXY STATEMENT | 33 |
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has appointed KPMG LLP ("KPMG") as our independent registered public accounting firm to audit our consolidated financial statements for our fiscal year ending December 31, 2026. KPMG has served as our independent registered public accounting firm since April 2024.
At the Annual Meeting, we are asking our stockholders to ratify the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31, 2026. Our Board of Directors is submitting the appointment of KPMG for stockholder ratification because we value our stockholders' views on our independent registered public accounting firm and as a matter of good corporate governance. Notwithstanding the appointment of KPMG, and even if our stockholders ratify the appointment, our Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year. If our stockholders do not ratify the appointment of KPMG, our Audit Committee will reconsider the appointment and may decide either to continue with KPMG as our independent registered public accounting firm for our fiscal year ending December 31, 2026 or to appoint another independent registered public accounting firm. Representatives of KPMG are expected to be present at the Annual Meeting, and they will have an opportunity to make a statement and are expected to be available to respond to appropriate questions from our stockholders.
Change of the Independent Registered Public Accounting Firm
As disclosed in our Current Report on Form 8-K, filed on April 9, 2024 with the SEC, on April 3, 2024, our Audit Committee dismissed Ernst & Young LLP ("EY") as our independent registered public accounting firm. The Audit Committee oversaw a competitive process to determine the Company's independent registered public accounting firm for the 2024 fiscal year. Several independent registered public accounting firms were invited to participate in the process. EY was invited to participate, but declined. EY served as our independent public accounting firm from September 2021 until April 1, 2024, including for the fiscal years ended December 31, 2023, 2022, and 2021 respectively, and served as Old Sarcos' independent registered public accounting firm since December 2020.
Information about Ernst & Young LLP
EY's reports on our consolidated financial statements as of and for the years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through the date of the Audit Committee's action dismissing EY, there were no (a) "disagreements" (within the meaning of Item 304(a)(1)(iv) of Regulation S-K promulgated under the Exchange Act and the related
2026 PROXY STATEMENT | 34 |
PROPOSAL NO. 2
instructions thereto) with EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to EY's satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its reports on the Company's financial statements, or (b) "reportable events" requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto.
We provided EY with a copy of our Current Report on Form 8-K (the "Form 8-K"), which was filed with the SEC on April 9, 2024, and requested EY furnish us with a letter addressed to the SEC stating whether EY agreed with the disclosures in the Form 8-K and, if not, stating the respects in which it did not agree. We received the requested letter from EY and a copy of the letter, dated April 9, 2024, was filed as Exhibit 16.1 of the Form 8-K and such letter is incorporated by reference herein.
Information about KPMG
In connection with the dismissal of EY and on the same date, the Audit Committee approved the engagement of KPMG as our new independent registered public accounting firm for the year ending December 31, 2024, effective April 3, 2024. During the fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through the date of the Audit Committee's action engaging KPMG, neither we, nor anyone acting on our behalf, consulted with KPMG regarding any of the matters described in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Fees Paid to Independent Registered Public Accounting Firm
As disclosed in our Current Report on Form 8-K, filed on April 9, 2024 with the SEC, on April 3, 2024, our Audit Committee dismissed Ernst & Young LLP ("EY") as our independent registered public accounting firm and appointed KPMG LLP ("KPMG") as our independent registered public accounting firm. The following table presents fees for professional audit services and other services rendered to us by KPMG, our current auditor.
|
|
2025 |
|
|
2024 |
|
||
|
|
(in thousands) |
|
|||||
Audit Fees(1) |
|
$ |
651 |
|
|
$ |
604 |
|
Audit-Related Fees(2) |
|
|
— |
|
|
|
— |
|
Tax Fees(3) |
|
|
— |
|
|
|
— |
|
All Other Fees(4) |
|
|
— |
|
|
|
— |
|
Total Fees |
|
$ |
651 |
|
|
$ |
604 |
|
2026 PROXY STATEMENT | 35 |
PROPOSAL NO. 2
In 2025 and 2024, there were no other professional services provided by KPMG, other than those listed above, that would have required our Audit Committee to consider their compatibility with maintaining the independence of KPMG.
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our Audit Committee is required to pre-approve all audits and audit fees, and pre-approve (or, where permitted under the rules and regulations of the SEC, subsequently approve) all non-audit and tax services to be performed by our independent registered public accounting firm. All services provided by KPMG for our fiscal years ended December 31, 2025 and 2024 were pre-approved by our Audit Committee.
Vote Required
The ratification of the appointment of KPMG as our independent registered public accounting firm for our fiscal year ending December 31, 2026 requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the same effect as a vote AGAINST this proposal. As this proposal is considered a routine proposal, we do not expect any broker non-votes with respect to this proposal.
Board Recommendation
|
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2026 |
|
2026 PROXY STATEMENT | 36 |
REPORT OF THE AUDIT COMMITTEE
We, the Audit Committee of the Board of Directors of Palladyne AI Corp. (the "Company"), have the responsibility to, among other things, oversee the preparation of the Company's consolidated financial statements, the Company's system of internal controls and the qualifications, independence, compensation and performance of the Company's independent registered public accounting firm (the "independent auditor"). We have the sole authority and responsibility to select, evaluate and, when appropriate, replace the Company's independent auditor. Our specific duties and responsibilities are described in our charter, which is available on the Company's website (www.palladyneai.com) under the tab "Investor – Investor Relations – Governance." We review the charter annually and work with the Board of Directors and the Nominating and Corporate Governance Committee of the Board of Directors to amend it as appropriate. The Board of Directors has determined that each of us is an independent director based on the Nasdaq Stock Market's listing standards and that each of us also satisfies the Securities and Exchange Commission's ("SEC") additional independence requirements for members of audit committees. In addition, the Board of Directors has determined that Dennis Weibling is an "audit committee financial expert" as defined by SEC rules.
Management is responsible for the financial reporting process, including the Company's system of internal controls, and for the preparation of the Company's consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The Company's independent auditor is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) ("PCAOB") and to issue reports thereon. Because the Company is an Emerging Growth Company as defined by SEC rules, the Company's independent auditor is not required to, nor has it been engaged to, perform an audit of the Company's internal control over financial reporting. Our responsibility is to oversee these processes, and we rely on the expertise and knowledge of management and the independent auditor in carrying out that role. We are not professionally engaged in the practice of accounting or auditing and do not provide any expert or other special assurance or professional opinion as to the sufficiency of external audits, whether the Company's consolidated financial statements are complete and accurate and are in accordance with GAAP or on the effectiveness of the Company's system of internal control over financial reporting.
We reviewed and discussed with management and KPMG LLP ("KPMG"), the Company's independent auditor for the years ended December 31, 2025 and 2024, the Company's periodic reports for the years ended December 31, 2025 and 2024 and related annual report on Form 10-K, filed with the SEC. In connection with such discussions, KPMG addressed the matters required to be discussed with us by applicable PCAOB standards and SEC rules and regulations. In addition, we discussed with KPMG the overall scope and plans for its audit. We met periodically with KPMG, as appropriate, to discuss its work and the results of its audit. Our meetings included, whenever we deemed appropriate, executive sessions with the Company's current independent auditor without the presence of management.
2026 PROXY STATEMENT | 37 |
REPORT OF THE AUDIT COMMITTEE
We have also received the written disclosures and the letter from KPMG required by PCAOB Rule 3526 ("Communication With Audit Committees Concerning Independence") and have discussed with KPMG its independence with respect to the Company.
Based on the review and discussions referred to above, we recommended to the Board of Directors that the Company's audited financial statements be included in the Company's annual report on Form 10-K for the year ended December 31, 2025.
Respectfully submitted by the members of the Audit Committee of the Board of Directors:
Dennis Weibling, Chair
Brian D. Finn
Michael T. Young
This Audit Committee report shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A promulgated by the SEC or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and shall not be deemed incorporated by reference into any prior or subsequent filing by Palladyne AI Corp. under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent Palladyne AI Corp. specifically requests that the information be treated as "soliciting material" or specifically incorporates it by reference.
2026 PROXY STATEMENT | 38 |
PROPOSAL NO. 3
APPROVAL OF THE PALLADYNE AI CORP. 2021 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED, TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
We are asking you to approve the Palladyne AI Corp. 2021 Equity Incentive Plan (the “2021 Plan”), as amended and restated, which increases the number of shares of our common stock (“Shares”) that may be issued under the 2021 Plan by 4,500,000 shares (the “Share Increase” or the “Amendment”). Upon recommendation of the Compensation Committee, the Board approved the amended and restated 2021 Plan on April 8, 2026, subject to the approval of our stockholders at the Annual Meeting (the date of such approval, the “2026 Amendment Date”).
The amended and restated 2021 Plan, if approved by stockholders, will allow us to continue to provide equity awards as part of our compensation program, which is a critical tool for attracting, retaining, and motivating talented employees and for providing incentives that promote the success of the Company’s business and increased stockholder value. The Board and Compensation Committee believe that equity awards motivate high levels of performance, more closely align the interests of employees with those of stockholders by giving employees an opportunity to hold an ownership stake in the Company and provide an effective means of recognizing employee contributions toward the Company’s success.
Background
The 2021 Plan initially was approved by the Board on April 5, 2021, and was approved by our stockholders on September 15, 2021. The 2021 Plan became effective as of September 24, 2021, upon the completion of our business combination that caused us to become a publicly traded company.
As of March 31, 2026, there were 1,422,970 Shares available for issuance under the 2021 Plan. This reflects 5,000,000 Shares that were initially authorized for issuance under the plan, 1,061,301 Shares added to the plan’s authorization on the termination of awards under our 2015 Plan (as defined below) (with these additions subject to a cap of 2,126,767 Shares), and 9,481,533 Shares made subject to awards under the 2021 Plan, of which 4,843,202 Shares have been added back to the plan’s authorization on the termination of such awards (all figures adjusted as applicable for the reverse stock split effective as of July 5, 2023).
If the proposed amendment and restatement of the Plan is not approved by our stockholders, the 2021 Plan will remain in effect without being amended by the Share Increase amendment and awards will continue to be made under the 2021 Plan to the extent Shares remain available. However, in that case, we may not be able to continue our equity incentive program in the future or it may be severely limited. This could preclude us from successfully attracting and retaining highly skilled employees. The Board and Compensation Committee believe that the Amendment will enable us to continue to use the 2021 Plan to achieve our recruiting, retention, and incentive objectives and will be essential to our future success.
2026 PROXY STATEMENT | 39 |
PROPOSAL NO. 3
The Company’s executive officers and directors have an interest in this proposal as they are eligible to receive equity awards under the 2021 Plan.
Description of the Amendment and Significant Historical Award Information
If our stockholders approve the amended and restated 2021 Plan, we currently anticipate that the Shares will be sufficient to meet our expected needs for at least the next 3 annual grant cycles.
Subject to adjustment upon changes in capitalization of the Company as provided under the 2021 Plan, the maximum number of Shares that will be reserved for issuance under the 2021 Plan, as amended and restated, will be equal to 8,669,084 Shares. In considering the number of Shares to be reserved for issuance under the amended and restated Plan, the Company took into account various factors, including the following:
2026 PROXY STATEMENT | 40 |
PROPOSAL NO. 3
Equity Plan(1) |
|
Number of Shares |
|
Weighted Average |
|
Weighted Average |
|
Number of |
|
2021 Equity Incentive Plan |
|
888,855 |
|
$2.26 |
|
7.4 |
|
1,610,186 |
|
2015 Equity Incentive Plan |
|
247,073 |
|
$2.14 |
|
2.4 |
|
— |
|
2024 Inducement Equity Incentive Plan |
|
25,000 |
|
$6.39 |
|
8.9 |
|
367,563 |
|
2025 CEO Restricted Stock Award |
|
— |
|
— |
|
— |
|
1,500,000 |
|
All Equity Plans |
|
1,160,928 |
|
$2.32 |
|
6.4 |
|
3,477,749 |
|
The Company is cognizant that its equity compensation programs have a dilutive effect on our stockholders, and therefore continuously strives to balance this concern with our need to recruit, retain, and incentivize highly skilled personnel, who are critical in driving our business success and creating stockholder value.
2026 PROXY STATEMENT | 41 |
PROPOSAL NO. 3
Key Features of the 2021 Plan
Key features of the 2021 Plan include:
The Board of Directors UNANIMOUSLY recommends that stockholders vote for the approval of the AMENDED AND RESTATED 2025 Equity Incentive Plan.
Summary of the 2021 Equity Incentive Plan, as Amended and Restated
The following is a summary of the principal features of the 2021 Plan, as amended and restated, and its operation, as approved by the Board of Directors on April 8, 2026, subject to stockholder approval. This summary does not contain all of the terms and conditions of the amended and restated 2021 Plan and is qualified in its entirety by reference to the 2021 Plan as set forth in Appendix A.
2026 PROXY STATEMENT | 42 |
PROPOSAL NO. 3
Purposes
The purposes of the 2021 Plan are to provide a means to attract and retain highly qualified personnel for positions of responsibility with the Company or any parent or subsidiary of the Company; to provide additional incentive to eligible employees, directors, and consultants; and to promote the success of our business. Under the 2021 Plan, these incentives may be provided through the grant of stock options, stock appreciation rights, restricted stock, RSUs or performance awards.
Eligibility and Types of Awards
The 2021 Plan permits grants of incentive stock options, within the meaning of Section 422 of the Code, to our employees (including our executive officers) and any of our parents and subsidiaries’ employees. The 2021 Plan also permits grants of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights and performance awards to our employees (including our executive officers) and consultants of the Company and any of its parents or subsidiaries and members of our Board (each such equity award, an “award”).
As of March 31, 2026, we had six members of our Board of Directors (of whom one is an employee), 162 employees (including 4 executive officers) and approximately 20 natural‑person consultants, who were eligible for grants under the 2021 Plan. The basis for participation in the 2021 Plan is being eligible and being selected by the administrator of the 2021 Plan, in its discretion, to receive a grant thereunder.
Authorized Shares; Adjustments
Subject to the adjustment provisions in the 2021 Plan, the maximum aggregate number of Shares that was made available to be issued under the 2021 Plan as amended and restated is the sum of the following: (a) 9,500,000 Shares, plus (b) any Shares subject to awards granted under our 2015 Plan that, on or after the initial effective date of the 2021 Plan, are cancelled, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest; provided however that the maximum number of Shares to be added to the 2021 Plan as described in (b) above shall not exceed 2,126,767 Shares (all figures adjusted as applicable for the reverse stock split effective as of July 5, 2023). As described in the section titled “Background” above, as of March 31, 2026, there were 1,422,970 Shares available for issuance under the 2021 Plan.
Shares issuable under the 2021 Plan may be authorized but unissued, or reacquired shares of Company Common Stock.
If an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program (as described below), or, with respect to restricted stock, RSUs, or performance awards granted under the 2021 Plan, is forfeited to or repurchased due to failure to vest, the unpurchased Shares (or for awards other than stock options or stock appreciation rights, the forfeited or repurchased Shares) will become available for future grant or sale under the 2021 Plan. With respect to stock appreciation rights granted under the 2021 Plan, only the net shares actually
2026 PROXY STATEMENT | 43 |
PROPOSAL NO. 3
issued will cease to be available under the 2021 Plan and all remaining Shares under stock appreciation rights will remain available for future grant or sale under the 2021 Plan. Shares that actually have been issued under the 2021 Plan under any award will not be returned to the 2021 Plan; except if Shares issued pursuant to awards of restricted stock, RSUs, or performance awards are repurchased or forfeited due to failure to vest, such Shares will become available for future grant under the 2021 Plan. Shares withheld to pay the exercise price of an award or satisfy the tax liabilities or withholding obligations related to an award will become available for future grant under the 2021 Plan. To the extent an award is paid out in cash rather than Shares, such cash payment will not result in a reduction in the number of Shares available for issuance under the 2021 Plan. However, subject to the adjustment provisions in the 2021 Plan, the maximum number of Shares that may be issued upon exercise of any incentive stock options granted under the 2021 Plan will equal to the maximum number of Shares described in the immediately preceding paragraph plus any Shares that become available as described above in this paragraph to the extent permitted by Section 422 of the Code.
If any dividend or other distribution (whether in cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, reclassification, repurchase, or exchange of Shares or other Company securities, or other change in our corporate structure affecting the Shares, occurs (other than any ordinary dividends or other ordinary distributions), the administrator of the 2021 Plan, to prevent diminution or enlargement of the benefits or potential benefits intended to be provided under the 2021 Plan, will adjust the number and class of shares that may be delivered under the 2021 Plan; the number, class, and price of shares covered by each outstanding award; and the numerical share limits contained in the 2021 Plan.
Administration
The Board of Directors or one or more committees appointed by the Board of Directors or by a duly authorized committee of the Board of Directors will have authority to administer the 2021 Plan (referred to in this Summary of the 2025 Equity Incentive Plan as the “administrator”). While the Board of Directors retains authority to administer and make awards under the 2021 Plan, it has also designated the Compensation Committee as an administrator.
In addition, to the extent it is desirable to qualify transactions under the 2021 Plan as exempt under Rule 16b‑3 of the Exchange Act, such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of the 2021 Plan, the administrator has the power to administer the 2021 Plan and make all determinations deemed necessary or advisable for administering the 2021 Plan, including but not limited to, the power to determine the fair market value of a Share, select the service providers to whom awards may be granted, determine the number of Shares or dollar amounts covered by each award, approve forms of award agreements for use under the 2021 Plan, determine the terms and conditions of awards, construe and interpret the terms of the 2021 Plan and awards, prescribe, amend and rescind rules and regulations relating to the 2021 Plan, including creating sub-plans, modify or amend each award, temporarily suspend exercisability of an award if necessary and appropriate for administrative purposes, and allow a participant to defer the receipt of payment of cash or the delivery of Shares that otherwise would be due to such participant under an award. The administrator may permit participants to satisfy tax liabilities or withholding obligations by such methods that the administrator determines, which may include cash, having the
2026 PROXY STATEMENT | 44 |
PROPOSAL NO. 3
Company withhold otherwise deliverable cash or Shares, delivering to the Company already-owned Shares, selling Shares otherwise deliverable to the participant, and/or such other consideration and method the administrator determines to the extent permitted by applicable laws. The amount of the withholding obligations may not exceed applicable maximum federal, state or local rates or such greater amount the administrator determines (provided that such amount will not have adverse accounting consequences, as the administrator determines in its sole discretion).
The administrator will be permitted to implement and determine the terms and conditions of an exchange program whereby participants have the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator, outstanding awards are surrendered or cancelled in exchange for awards of the same type, which may have a higher or lower exercise price and/or different terms, awards of a different type and/or cash, or the exercise price of an outstanding award is reduced.
The administrator’s decisions, determinations and interpretations will be final and binding on all participants and will be given the maximum deference permitted by applicable law.
Certain Limitations
Non-Employee Directors Limits
Non-employee members of the Board of Directors will be eligible to receive all types of awards (except for incentive stock options) under the 2021 Plan. The 2021 Plan provides that in any fiscal year of the Company, no such non-employee director may be granted equity awards (including awards under the 2021 Plan) (the value of which will be based on their grant date fair value determined in accordance with GAAP) and be provided any cash retainers or fees that, in the aggregate, exceed $500,000, provided that in the Company’s fiscal year of the individual’s initial service as a non-employee director, such amount is increased to $750,000. Any equity awards or other compensation provided to an individual for his or her services as an employee or a consultant (other than as a non-employee director) will not count toward this limit. This maximum limit provision does not reflect the intended size of any potential grants or a commitment to make grants to the outside directors under the 2021 Plan in the future.
Dividends
With respect to any options and stock appreciation rights granted under the 2021 Plan, until the Shares are issued, participants will have no rights to receive dividends or any other rights as a stockholder with respect to the underlying Shares subject to such award. Further, no adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued under an option or stock appreciation right award, except as otherwise provided in the 2021 Plan.
During any applicable period of restriction, participants holding Shares of restricted stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the administrator provides otherwise; provided, however, that any such dividends or distributions payable
2026 PROXY STATEMENT | 45 |
PROPOSAL NO. 3
with respect to such Shares will be subject to the same vesting criteria and forfeitability provisions as the Shares of restricted stock with respect to which they were paid.
With respect to awards of RSUs and performance awards, until the Shares are issued, participants will have no rights to receive dividends or any other rights as a stockholder with respect to the Shares subject to such award, unless determined otherwise by the administrator; provided, however, that any such dividends or distributions that the administrator determines will be payable with respect to such Shares will be subject to the same vesting criteria and forfeitability provisions as the Shares subject to such award with respect to which they were paid.
Award Terms and Conditions
The 2021 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock, RSUs and performance awards. A brief summary of certain terms of the 2021 Plan based on award type follows.
Stock Options
Each award of options will be evidenced by an award agreement that sets forth various terms of the award that the administrator determines in accordance with the 2021 Plan provisions. The exercise price per share of options granted under the 2021 Plan generally must be equal to at least 100% of the fair market value of a Share on the date of grant. Under the 2021 Plan, unless the administrator determines otherwise, the fair market value of a Share generally refers to the closing sales price of a Share on The Nasdaq Stock Market as of the date of determination. As of March 31, 2026, the closing price of a Share on The Nasdaq Stock Market was $6.07.
The term of an option award may not exceed 10 years. With respect to any participant who owns more than 10% of the voting power of all classes of the stock of the Company (or any of its parent’s or subsidiary’s outstanding stock), the term of an incentive stock option granted to such participant must not exceed five years and the exercise price per share of an incentive stock option must equal at least 110% of the fair market value of a Share on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, check, promissory note (to the extent permitted by applicable laws), certain shares of our Common Stock, cashless exercise, net exercise or sell-to-cover transaction, as well as other types of consideration permitted by applicable law.
After the cessation of service of an employee, director or consultant, such participant may exercise his or her option for the period of time stated in his or her award agreement. In the absence of a specified time in an award agreement, if such cessation is due to death or disability, the vested portion of the option generally will remain exercisable for 6 months, and in all other cases, the vested portion of the option generally will remain exercisable for three months following the cessation of such service. An option, however, may not be exercised later than the expiration of its term.
2026 PROXY STATEMENT | 46 |
PROPOSAL NO. 3
Stock Appreciation Rights
An award of stock appreciation rights allows the recipient to receive the appreciation in the fair market value of the underlying Shares between the exercise date and the date of grant. Each award of stock appreciation rights will be evidenced by an award agreement that sets forth various terms of the award that the administrator determines in accordance with the 2021 Plan provisions. The exercise price per share of stock appreciation rights granted under the 2021 Plan generally must be equal to at least 100% of the fair market value of a Share on the date of grant. The term of a stock appreciation right award may not exceed 10 years. Any payment upon exercise of a stock appreciation right award, at the administrator’s discretion, may be in cash, Shares or a combination of both.
After the cessation of service of an employee, director or consultant, such participant may exercise his or her stock appreciation right award for the period of time stated in his or her award agreement. In the absence of a specified time in an award agreement, if such cessation is due to death or disability, the vested portion of the award generally will remain exercisable for 6 months, and in all other cases, the vested portion of the award generally will remain exercisable for three months following the cessation of such service. An award of stock appreciation rights, however, may not be exercised later than the expiration of its term.
Restricted Stock
Awards of restricted stock are grants of Shares that may have vesting requirements or other terms and conditions established by the administrator. Restricted stock also may be issued upon early exercise of an option award. Each award of restricted stock will be evidenced by an award agreement that sets forth various terms of the award that the administrator determines in accordance with the 2021 Plan provisions. The administrator may impose whatever restrictions on transferability, forfeiture provisions or other restrictions or vesting conditions (if any) it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting rights with respect to such Shares upon grant, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to forfeiture.
Restricted Stock Units
Each RSU is a bookkeeping entry representing a right with respect to a share of Common Stock following satisfaction of all applicable requirements by delivery of one Share, or cash equal to the fair market value of one Share on the settlement date, in the administrator’s discretion. Each award of RSUs will be evidenced by an award agreement that sets forth various terms of the award that the administrator determines in accordance with the 2021 Plan provisions. The administrator may set the vesting criteria of an RSU award based upon the achievement of company-wide, divisional, business unit, or individual goals or requirement (including continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion. Notwithstanding the foregoing, the administrator, in its sole discretion, may reduce or waive any vesting
2026 PROXY STATEMENT | 47 |
PROPOSAL NO. 3
criteria under the RSUs. All RSUs that are unearned or unvested as of the date set forth in the applicable award agreement will be forfeited.
Performance Awards
Performance awards are awards that may be earned in whole or in part on the attainment of performance goals or other vesting criteria that the administrator may determine, and that may be denominated in cash or stock and settled in cash, securities, or a combination thereof. Each performance award granted under the 2021 Plan will be evidenced by an award agreement that sets forth various terms of the award that the administrator determines in accordance with the 2021 Plan provisions. Each performance award will have an initial value that is determined by the administrator. The administrator may set the vesting criteria of a performance award based upon the achievement of company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the administrator in its discretion, and may set any time period during which any applicable performance objectives or other vesting criteria will be measured. Notwithstanding the foregoing, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions under the performance award. The administrator, in its sole discretion, may pay earned performance awards in the form of cash, Shares, or a combination of both. All performance awards that are unearned or unvested as of the date set forth in the applicable award agreement will be forfeited.
Non-Transferability of Awards
Unless the administrator provides otherwise, the 2021 Plan generally will not allow for the transfer of awards other than by will or the laws of descent and distribution, and only the participant holding an award may exercise the award during such participant’s lifetime. If the administrator makes an award transferable, such award will contain such additional terms and conditions as the administrator deems appropriate.
Dissolution or Liquidation
If there is a proposed liquidation or dissolution of the Company, the administrator will notify participants as soon as practicable before the effective date of such event. Each award, to the extent that it has not been previously exercised will terminate immediately before the consummation of such event.
Merger or Change in Control
The 2021 Plan provides that in the event of the Company’s merger with or into another corporation or a change in control, as defined in the 2021 Plan, each outstanding award will be treated as the administrator determines (subject to the provisions of the following paragraph), without a participant’s consent. The administrator may, without limitation, provide that awards granted under the 2021 Plan may be (i) assumed, or substantially equivalent awards substituted, (ii) terminated upon or immediately prior to the merger or change in control, (iii) vest and become exercisable or payable and, to the extent the administrator determines, terminated upon or immediately prior to the merger or change in control, (v) terminated in exchange for cash, other property or other consideration, or (vi) treated in any
2026 PROXY STATEMENT | 48 |
PROPOSAL NO. 3
combination of the foregoing. The administrator is not required to treat all awards, all awards held by a participant, all portions of awards, or all awards of the same type, similarly.
If a successor (or an affiliate thereof) does not assume or substitute for an award (or portion thereof), then such award (or its applicable portion) will fully vest, all restrictions on such award (or its applicable portion) will lapse, all performance goals or other vesting criteria applicable to such award (or its applicable portion) will be deemed achieved at 100% of target levels and such award (or its applicable portion) will become fully exercisable, if applicable, for a specified period before the transaction, in each case unless specifically provided otherwise under the applicable award agreement or other written agreement with the participant authorized by the administrator. In addition, unless specifically provided otherwise under the applicable award agreement or other written agreement with the participant authorized by the administrator, if an option or stock appreciation right (or a portion of such award) is not assumed, substituted or continued, the administrator will notify the participant that such option or stock appreciation right (or its applicable portion) will be exercisable for a period of time determined by the administrator in its sole discretion and the option or stock appreciation right (or its applicable portion) will terminate upon the expiration of such period.
Awards granted to a non-employee member of our Board of Directors while such individual was a non-employee director will fully vest upon a merger of the Company with or into another corporation or other entity or a change in control, provided that the participant’s status as a director is terminated other than upon a voluntary resignation by the participant (unless that resignation is at the request of the acquirer) following the assumption or substitutions of the award in such merger or change in control, and such participant will have the right to exercise options and stock appreciation rights as to all Shares underlying such awards, all restrictions on such awards will lapse, and all performance goals or other vesting criteria applicable to such awards will be deemed achieved at 100% of target levels, unless specifically provided otherwise under the applicable award agreement or other written agreement with the non-employee director authorized by the administrator. Awards granted to our non-employee directors under our outside director compensation policy provide for single-trigger accelerated vesting on continued service through closing of a change in control, which effectively supersedes this plan provision.
Forfeiture and Clawback
All awards will be subject to any clawback policy that the Company is required to adopt to comply with the listing standards of the exchange on which the Company’s securities are issued. The administrator also may specify in an award agreement that the participant’s rights, payments and benefits with respect to an award will be subject to clawback upon the occurrence of certain specified events. The administrator may require a participant to forfeit or return to the Company or reimburse the Company for all or a portion of the award and any amounts paid under the award in order to comply with any clawback policy of the Company as described in the first sentence of this paragraph or with applicable laws.
2026 PROXY STATEMENT | 49 |
PROPOSAL NO. 3
Amendment or Termination
The 2021 Plan became effective upon September 24, 2021, and will continue in effect until terminated by the administrator. However, no incentive stock options may be granted after the 10-year anniversary of the adoption of the 2021 Plan by the Board of Directors. In addition, the administrator will have the authority to amend, alter, suspend, or terminate the 2021 Plan or any part of the 2021 Plan, at any time and for any reason, but such action generally may not materially impair the rights of any participant without his or her written consent. The 2021 Plan requires the Company to obtain stockholder approval of any amendment to the 2021 Plan to the extent necessary and desirable to comply with applicable laws.
New Plan Benefits
Our executive officers and non‑employee directors have an interest in this proposal because they are eligible to receive awards under the 2021 Plan. Awards that an employee, member of the Board of Directors, or consultant may receive under the 2021 Plan is in the discretion of the administrator and therefore cannot be determined in advance. The following table sets forth the grant date fair value and number of shares of our stock subject (at grant) to equity awards granted during 2025 under the 2021 Plan to the individuals and groups set forth in the table below. The Company did not grant any other types of equity awards under the 2021 Plan during 2025. Information on equity awards granted or approved by the Company in 2025 outside of the 2021 Plan (other than those described in Proposal 4) follows immediately below.
2026 PROXY STATEMENT | 50 |
PROPOSAL NO. 3
|
|
Options |
|
Time-Based RSUs or |
|
Performance-Based |
|
Total |
|
||||||||||||
Name and Position |
|
Number |
|
Grant Date |
|
Number of |
|
Grant Date |
|
Number of |
|
Grant Date |
|
Number of |
|
|
Grant Date |
|
|||
Benjamin G. Wolff President, Chief Executive Officer and Director |
|
— |
|
$ |
— |
|
— |
|
$ |
— |
|
— |
|
$ |
— |
|
— |
|
$ |
— |
|
Denis Garagić Chief Technology Officer |
|
— |
|
$ |
— |
|
120,000 |
|
$ |
766,800 |
|
— |
|
$ |
— |
|
120,000 |
|
$ |
766,800 |
|
Stephen Sonne Chief Legal Officer and Secretary |
|
— |
|
$ |
— |
|
70,000 |
|
$ |
447,300 |
|
— |
|
$ |
— |
|
70,000 |
|
$ |
447,300 |
|
Brian D. Finn |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
Eric T. Olson |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
Stephen M. Twitty |
|
— |
|
$ |
— |
|
9,078 |
|
$ |
79,614 |
|
— |
|
$ |
— |
|
9,078 |
|
$ |
79,614 |
|
Dennis Weibling |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
— |
|
$ |
— |
|
14,819 |
|
$ |
130,111 |
|
Michael T. Young |
|
16,667 |
|
$ |
86,403 |
|
14,819 |
|
$ |
130,111 |
|
— |
|
$ |
— |
|
31,486 |
|
$ |
216,514 |
|
All current executive officers, as a group (4 persons) |
|
— |
|
$ |
— |
|
260,000 |
|
$ |
1,661,400 |
|
— |
|
$ |
— |
|
260,000 |
|
$ |
1,661,400 |
|
All current directors, who are not executive officers, as a group (5 people) |
|
16,667 |
|
$ |
86,403 |
|
68,354 |
|
$ |
600,057 |
|
— |
|
$ |
— |
|
85,021 |
|
$ |
686,460 |
|
All employees, including all current officers who are not executive officers, as a group (157 people) |
|
— |
|
$ |
— |
|
407,188 |
|
$ |
2,706,579 |
|
5,000 |
|
$ |
36,100 |
|
412,188 |
|
$ |
2,742,679 |
|
All consultants who are not employees, as a group (3 people) |
|
40,000 |
|
$ |
258,760 |
|
12,577 |
|
$ |
65,903 |
|
12,488 |
|
$ |
41,897 |
|
65,065 |
|
$ |
366,560 |
|
2026 PROXY STATEMENT | 51 |
PROPOSAL NO. 3
The following table sets forth the grant date fair value and number of shares of our stock subject (at grant) to equity awards granted by the Company during 2025 outside of the 2021 Plan (other than those described in Proposal 4) to the individuals and groups set forth in the table below. Information on the Executive RSUs, as defined and described in Proposal No. 4, which were approved in November 2025, but which will terminate and not vest unless approved pursuant to Proposal No. 4, is provided under Proposal No. 4 below.
|
|
Options |
|
Time-Based RSUs or |
|
Performance-Based |
|
Total |
||||||||||||
Name and Position |
|
Number |
|
Grant Date |
|
Number of |
|
Grant Date |
|
Number of |
|
Grant Date |
|
Number of |
|
|
Grant Date |
|||
Benjamin G. Wolff (3) President, Chief Executive Officer and Director |
|
— |
|
$ |
— |
|
1,500,000 |
|
$ |
3,345,000 |
|
— |
|
$ |
— |
|
1,500,000 |
|
$ |
3,345,000 |
All employees, including all current officers who are not executive officers, as a group (157 people) (4) |
|
25,000 |
|
$ |
133,035 |
|
286,295 |
|
|
1,516,386 |
|
— |
|
$ |
— |
|
311,295 |
|
|
1,649,421 |
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the 2021 Plan. The summary is based on existing U.S. federal income tax laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the tax laws of any municipality, state or non-U.S. jurisdiction to which the participant may be subject. As a result, tax consequences for any particular participant may vary based on individual circumstances.
Options
Options granted under the 2021 Plan may be either “incentive stock options,” within the meaning of Section 422 of the Code, or nonstatutory stock options.
No taxable income is reportable when an incentive stock option is granted or exercised, although the exercise may subject the participant to the alternative minimum tax or may affect the determination of the participant’s alternative minimum tax (unless the shares are sold or otherwise disposed of in the same year). If the participant exercises an incentive stock option and then later sells or otherwise
2026 PROXY STATEMENT | 52 |
PROPOSAL NO. 3
disposes of the shares acquired more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price generally will be taxed as capital gain or loss. If the participant exercises the incentive stock option and then later sells or otherwise disposes of the shares before the end of the two- or one‑year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the shares on the exercise date generally is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise. In addition, special alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the shares or provide certain basis adjustments or tax credits for alternative minimum tax purposes.
Any options that do not qualify as incentive stock options are referred to as nonstatutory stock options. No taxable income is reportable when a nonstatutory stock option with a per share exercise price at least equal to the fair market value of a share of the underlying share on the date of grant is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the exercised shares subject to the option. Any taxable income recognized in connection with the exercise of a nonstatutory stock option by an employee is subject to tax withholding by us. Any additional gain or loss recognized upon any later disposition of the shares generally would be capital gain or loss to the participant.
Stock Appreciation Rights
No taxable income is reportable when a stock appreciation right with a per share exercise price equal to at least the fair market value of a share of the underlying share on the date of grant is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any taxable income recognized in connection with the exercise of a stock appreciation right by an employee is subject to tax withholding by us. Any additional gain or loss recognized upon any later disposition of the shares generally would be capital gain or loss to the participant.
Restricted Stock
No taxable income is reportable when an award of restricted stock is granted to a participant. Instead, the participant will recognize ordinary income in the first taxable year in which the shares underlying the award becomes transferable or no longer subject to a substantial risk of forfeiture at the then fair market value of the shares. However, a participant who is granted a restricted stock award may elect to recognize ordinary income at the time the participant receives shares under the award in an amount equal to the then fair market value of the shares less any amount paid for the shares. If the participant is an employee, such ordinary income generally is subject to tax withholding by us. Any gain or loss recognized upon any later disposition of shares acquired under the restricted stock generally will be treated as capital gain or loss.
Restricted Stock Units, and Performance Awards
2026 PROXY STATEMENT | 53 |
PROPOSAL NO. 3
A participant generally will not have taxable income at the time an award of RSUs or performance awards are granted. Instead, the participant will recognize ordinary income in an amount equal to the fair market value of shares issued to the participant at the end of the applicable vesting period or, if later, the settlement date of the award. If the participant is an employee, such ordinary income generally is subject to tax withholding by us. Any gain or loss recognized upon any later disposition of shares acquired under the restricted stock units or performance awards generally will be treated as capital gain or loss.
Medicare Surtax
A participant’s annual “net investment income,” as defined in Section 1411 of the Code may be subject to a 3.8% federal surtax (generally referred to as the “Medicare Surtax”). Net investment income may include capital gain and/or loss arising from the disposition of shares subject to a participant’s awards under the 2021 Plan. Whether a participant’s net investment income willbe subject to the Medicare Surtax will depend on the participant’s level of annual income and other factors.
Section 409A
Section 409A of the Code provides certain requirements for nonqualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the 2021 Plan with a deferral feature will be subject to the requirements of Section 409A of the Code. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). For certain individuals who are key employees, subject to certain exceptions, Section 409A requires that distributions in connection with his or her separation from service commence no earlier than six months after such separation from service.
If an award granted under the 2021 Plan is subject to and fails to satisfy the requirements of Section 409A of the Code, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as potential penalties and interest, on such deferred compensation. Certain states such as California have enacted laws similar to Section 409A which impose additional taxes, and potential penalties and interest, on nonqualified deferred compensation arrangements that fail to comply with such state laws. We will also have withholding and reporting requirements with respect to such amounts. The 2021 Plan provides that neither we nor any of our parents or subsidiaries will have any obligation to reimburse, indemnify, or hold harmless a participant in respect of awards granted under the 2021 Plan for any taxes, interest or penalties imposed, or other costs incurred, as a result of Section 409A.
Tax Effect for the Company
We generally will be entitled to a tax deduction in connection with an award under the 2021 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the
2026 PROXY STATEMENT | 54 |
PROPOSAL NO. 3
deductibility of compensation paid to our chief executive officer and other “covered employees” within the meaning of Code Section 162(m). Under Code Section 162(m), the annual compensation paid to any of these specified employees will be deductible only to the extent that it does not exceed $1,000,000.
Required Vote
Approval of the 2021 Plan, as amended and restated, requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote AGAINST the proposal. Broker non-votes will have no effect on the proposal.
Board Recommendation
|
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2021 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED, TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER. |
|
2026 PROXY STATEMENT | 55 |
PROPOSAL NO. 4
APPROVAL OF RESTRICTED STOCK UNIT AWARDS TO OUR SENIOR EXECUTIVES
We are asking you to approve certain restricted stock unit awards covering an aggregate of 5,360,659 shares of our common stock, that we granted to our senior executives on November 15, 2025 (the “Executive RSUs”).
On the terms of the Executive RSUs as granted, if stockholder approval is not attained by the Annual Meeting or the last adjournment thereof, the Executive RSUs will become null and void and terminate without vesting.
Background
On November 15, 2025, based on the recommendation of the Compensation Committee, our Board of Directors approved the Executive RSUs. Due to a desire to incentivize our executive officers to remain with us, further align their interests with those of our stockholders and to reward them should their efforts result in the creation of substantial stockholder value, the Compensation Committee recommended, and our Board of Directors desired to approve, awards of restricted stock units to our then serving executive officers with vesting subject to our attainment of certain stock price goals.
Before recommending the Executive RSUs to the Board of Directors, the Compensation Committee discussed the desirability of senior executive awards at multiple meetings and outside discussions, and consulted with its independent advisors. Among other things, the Compensation Committee discussed various potential terms and structures for the awards, including the amounts of the Executive RSUs, the target stock prices for vesting of the awards, the performance period over which the RSUs could be earned, whether to include time-based vesting requirements, whether to use performance metrics other than or in addition to stock price and whether to adjust the shares to be received based on the stock price at the time of grant (sometimes referred to as “premium pricing”).
While the Compensation Committee and the Board of Directors felt that the awards as ultimately structured were appropriate and would provide proper retention and performance incentives to our executive officers, because of the potential dilution to our stockholders and the desire not to use shares from the 2021 Plan, the Executive RSUs were conditioned upon stockholder approval. As a result, the Executive RSUs were granted outside the 2021 Plan and will become null and void and terminate without vesting if not approved at the Annual Meeting.
Significant Historical Award Information
Information on our historical awards is provided under the heading Proposal No. 3, Approval of the Palladyne AI Corp. 2021 Equity Incentive Plan, as Amended and Restated – Significant Historical Award Information, above.
2026 PROXY STATEMENT | 56 |
PROPOSAL NO. 4
Number of Shares Requested
The Compensation Committee and our Board of Directors considered several factors in determining the size of the Executive RSUs. The Compensation Committee and the Board of Directors felt it was appropriate that these awards be substantial in amount so that the recipients would be rewarded for significant increases in stockholder value. The Compensation Committee and the Board of Directors felt that this incentive would provide strong retention incentives and additional focus on managing the business with a focus on stockholder value creation. The Compensation Committee, in making its recommendation to the Board of Directors, also considered the substantial risk of forfeiture inherent in the stock price goals that must be met in order for the award to vest, as well as the sizes and approaches by other companies making awards of a similar nature. It also considered that, with respect to Mr. Wolff in particular, the amount of the awards needed to be sufficient in size relative to current stockholdings and awards held by the recipients to provide the desired additional retention and performance incentives.
The Compensation Committee and the Board of Directors considered the relative potential impact each recipient was likely to have on our performance and the resulting achievement of the stock price targets and each such person’s responsibility within the organization when determining the amount of each individual’s award.
Effect of Approval of the Executive RSUs
If stockholders approve the Executive RSUs, the Executive RSUs will continue and become eligible for vesting on their terms.
If stockholders do not approve the Executive RSUs, the Executive RSUs will terminate without vesting. In this case, our Compensation Committee may consider what alternatives might be available to achieve the compensation goals the Executive RSUs were intended to address.
Limitations on Individual Awards
The maximum aggregate number of shares of our common stock subject to Executive RSUs is 5,360,659, representing the total number of shares of our common stock subject to the Executive RSUs granted on November 15, 2025. No other awards will be granted pursuant to this authorization. The number of shares available for settlement on vesting of the Executive RSUs is subject to proportionate adjustment for any stock splits, dividends, combinations and the like, under the terms of the Executive RSU agreements.
Eligibility
The Executive RSUs were granted to our senior executives who were executive officers as of November 15, 2025. These executive officers consisted of Benjamin Wolff, our Chief Executive Officer; Denis Garagić, our Chief Technology Officer and co-founder; Trevor Thatcher, our Chief Financial Officer, Kristi Martindale, our Chief Commercial Officer, and Stephen Sonne, our Chief Legal Officer and Secretary.
2026 PROXY STATEMENT | 57 |
PROPOSAL NO. 4
All of the recipients of Executive RSUs were employees and executive officers of the Company at the time of grant. Mr. Wolff was also a member of our Board of Directors at the time of grant. No other service provider of the Company received an Executive RSU.
The basis for participation in the Executive RSUs was being an executive officer on the date of grant and being selected for such an award by our Board of Directors, in its discretion, upon the recommendation of the Compensation Committee.
Terms and Conditions of the Executive RSUs
Although the Executive RSUs were made by standalone grants outside the 2021 Plan, the awards were made pursuant to an award agreement that adopts the terms and conditions of the 2021 Plan applicable to restricted stock unit awards. The form of restricted stock unit award agreement is provided with this proxy statement as Appendix B.
The only awards covered by the approval requested under this Proposal No. 4 are the Executive RSUs, which are awards of restricted stock units. Each restricted stock unit subject to an Executive RSU is a bookkeeping entry representing the right to receive one Share following satisfaction of all applicable requirements. All Executive RSUs for which the stock price goal for a particular tranche has not been met by November 15, 2030 will be forfeited.
Each Executive RSU award is divided into 10 equally-sized tranches. The stock price goal for each tranche will be met only when the closing price per share of our common stock meets or exceeds the stock price goal on a sustained basis for a period of 60 consecutive trading days. A tranche for which the stock price is met will vest only if the associated service-based vesting condition, set forth in the following table, is satisfied or deemed satisfied as further described below.
Vesting |
|
Stock Price |
|
Vesting Condition |
1 |
|
$ 20.00 |
|
25% on attainment of the stock price goal, and an additional 25% on the six-, twelve- and eighteen-month anniversaries of this attainment, subject to the executive’s continued service through each vesting date |
2 |
|
$ 25.00 |
|
|
3 |
|
$ 30.00 |
|
|
4 |
|
$ 35.00 |
|
|
5 |
|
$ 40.00 |
|
25% on attainment of the stock price goal, and an additional 25% on the three-, six-, and twelve-month anniversaries of this attainment, subject to the executive’s continued service through each vesting date |
6 |
|
$ 45.00 |
|
|
7 |
|
$ 50.00 |
|
|
8 |
|
$ 55.00 |
|
|
9 |
|
$ 60.00 |
|
33.3% on attainment of the stock price goal, an additional 33.3% on the three-month anniversary of this attainment, and an additional 33.4% on the six-month anniversary of this attainment, subject to the executive’s continued service through each vesting date |
10 |
|
$ 65.00 |
|
If the stock price goal for a tranche is achieved, the number of restricted stock units that will be eligible for vesting for that tranche on a vesting date will be based on the increase in value of the Company’s stock from the time of grant to the time of vesting. The increase in value will be determined by multiplying (a) the number of units subject to the tranche scheduled to vest on that vesting date by (b)
2026 PROXY STATEMENT | 58 |
PROPOSAL NO. 4
(i) the excess, if any, of the volume-weighted average closing price of the Company’s common shares for the 20-trading day period prior to and including the vesting date over the volume-weighted average closing price of the Company’s common shares for the 20-trading day period ending on and including November 15, 2025 divided by (ii) by the volume-weighted average closing price of the Company’s common shares for the 20-trading day period prior to and including the vesting date.
On termination of the executive’s service due to a termination by the Company without cause or by the executive for good reason (in each case within the meaning of the executive’s employment agreement), if executive otherwise satisfies the conditions for payment of severance under the executive’s employment agreement, including executive’s release of claims against the Company, then executive will become vested in all tranches for which the stock price goal has been achieved prior to the date of such termination.
On termination of the executive’s service due to the executive’s death or by the Company for disability (within the meaning of the executive’s employment agreement), or, for Mr. Wolff only, if he continues to be a member of our board of directors after he ceases to be an employee and subsequently ceases to be a director because he is not nominated for reelection or he is not reelected, if the executive satisfies the condition of receipt of severance under the executive’s employment agreement applicable to termination by the Company without cause, including the executive’s release of claims against the Company, then the executive will become vested in all tranches for which the stock price goal has been achieved prior to the date of such termination.
In the event of a change in control (which has the same definition used in the 2021 Plan) that occurs before achievement of the stock price goal for any tranche, achievement will be measured based on the closing price of our common stock on the last trading day prior to closing of the change in control, any tranche for which the stock price goal is met as so measured will vest in full on the executive’s continued service through the closing date and any tranche for which the stock price goal is not met as so measured will be forfeited.
Subject to the terms of the Executive RSUs relating to withholding obligations (described below in this section) any restricted stock units that become vested under an Executive RSU will be settled in shares of our common stock as soon as practicable after vesting, but in any case within 60 days following the vesting date.
Any offers or sales of shares approved by stockholders under this Proposal No. 4 would apply only to the Executive RSUs. Approval of the Executive RSUs by stockholders will not constitute approval to use shares subject to the Executive RSUs for any other equity awards, even if any portion of an Executive RSU is forfeited.
The form of Executive RSU agreement provides that each award will be administered by our Board of Directors or its designated committee (the “Committee”). As the administrator of the Executive RSUs, the Committee will have the authority to adopt, revise or rescind any rules and regulations as it may deem necessary or advisable to administer the Executive RSUs, and make all other decisions and determinations that may be required under the Executive RSUs or that the Committee deems necessary or advisable for administration of the Executive RSUs to the same extent as it has with regards to
2026 PROXY STATEMENT | 59 |
PROPOSAL NO. 4
awards under the 2021 Plan. The Committee may permit the executive holder of an Executive RSU to satisfy tax withholdings relating to awards granted under the Executive RSUs pursuant to procedures it determines, as permitted by applicable laws, including allowing the executive to (a) pay us the amount of the withholding obligation in cash, (b) have us withhold otherwise deliverable shares under an award or to deliver to us already owned shares of common stock at the minimum statutory withholding amount or such greater amount as the Committee permits if it determines such amount would not have adverse accounting consequences, (c) have us withhold from the executive holders’ wages or other cash compensation, (d) delivering to us Shares that the executive holder owns and that have already vested at the minimum statutory withholding amount, or such greater amount as the Committee permits if it determines such amount would not have adverse accounting consequences, (d) have us sell a sufficient number of shares otherwise deliverable under the Executive RSUs (whether through a broker or otherwise) at the minimum statutory withholding amount or such greater amount as the Committee permits if it determines such amount would not have adverse accounting consequences. The Committee may amend or terminate outstanding Executive RSUs to the same extent as it can amend or terminate awards under the 2021 Plan. However, amendment or termination will require the executive holder’s consent in certain circumstances if it would materially adversely affect the executive’s interests under the Executive RSUs.
The Executive RSUs are not generally assignable or transferable by the executive other than by will or the laws of descent and distribution (which includes by beneficiary designation if available). However, the Committee, in its discretion, may permit awards to be transferred, subject to such terms and conditions as the Committee determines to be appropriate. Each executive holder of an Executive RSU may, in the manner determined by the Committee and to the extent the Committee has permitted, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to such award upon the participant’s death.
In the event of a dividend or other distribution (whether in cash, our securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, reclassification, repurchase, or exchange of our common stock or our other securities, or other change in our corporate structure affecting our common stock (other than ordinary dividends or other ordinary distributions), the number and class of shares issuable under the approval sought here and/or the number and class (as applicable) of shares covered by each outstanding Executive RSU will be adjusted proportionately in order to prevent the diminution or enlargement of benefits or potential benefits intended under the Executive RSUs and the authorization sought here.
Assuming that it is approved by our stockholders, the authorization to issue shares pursuant to the Executive RSUs will continue until May 15, 2032.
The Executive RSUs are subject to our compensation recoupment policy as in effect on November 15, 2025, and will be subject to any applicable compensation recoupment policy we implement to comply with the requirements of applicable laws.
2026 PROXY STATEMENT | 60 |
PROPOSAL NO. 4
Certain Federal Tax Effects
The following discussion is limited to a summary of the U.S. federal income tax provisions relating to the grant and vesting of the Executive RSUs and the subsequent sale of common stock acquired thereunder. The tax consequences of awards may vary according to the country of participation. Also, the tax consequences of the grant or vesting of awards vary depending upon the particular circumstances, and it should be noted that income tax laws and regulations and interpretations thereof, change frequently.
An executive holder generally will not have taxable income at the time an award of restricted stock units are granted. Instead, the executive will recognize ordinary income in an amount equal to the fair market value of shares issued to the executive at the end of the applicable vesting period or, if later, the settlement date of the award. Such ordinary income generally is subject to tax withholding by us. Any gain or loss recognized upon any later disposition of shares acquired under the Executive RSUs generally will be treated as capital gain or loss.
The Company generally will be entitled to a tax deduction in connection with the vesting and issuance of shares under an Executive RSU in an amount equal to the ordinary income recognized by the executive holder at the time that the executive recognizes such income, except as follows. Under Section 162(m) of the Code, the deductibility of compensation paid to certain individuals, including our President and Chief Executive Officer and other “covered employees” within the meaning of Code Section 162(m), is limited to $1,000,000 per person per year.
Executive RSU Benefits
The following table sets forth information on the shares subject to the Executive RSUs for which approval is being sought, taking into account the closing price for our common stock on March 31, 2026 which was $6.07.
Name and Position(1) |
|
Dollar Value |
|
|
Number of Shares |
|
Benjamin Wolff, President, Chief Executive Officer and Director |
$ |
27,138,618 |
|
|
4,470,942 |
|
Denis Garagić, Chief Technology Officer |
$ |
2,713,861 |
|
|
447,094 |
|
Stephen Sonne, Chief Legal Officer and Secretary |
$ |
895,574 |
|
|
147,541 |
|
All Current Executive Officers as a Group (4 people) |
$ |
31,643,626 |
|
|
5,213,118 |
|
All Directors who are not Executive Officers as a Group (5 people) |
$ |
— |
|
|
— |
|
All Non-Executive Officer Employees as a Group (Including all Officers who are not Executive Officers) (1 participant) |
$ |
895,574 |
|
|
147,541 |
|
2026 PROXY STATEMENT | 61 |
PROPOSAL NO. 4
Vote Required
Approval of the Executive RSUs requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote AGAINST the proposal. Broker non-votes will have no effect on the proposal.
Board Recommendation
|
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE EXECUTIVE RSUs
|
|
2026 PROXY STATEMENT | 62 |
EXECUTIVE OFFICERS
The following table sets forth certain information about our executive officers as of March 31, 2026.
Name |
|
Age |
|
Position |
Benjamin G. Wolff(1) |
|
57 |
|
President, Chief Executive Officer and Director |
Denis Garagić |
|
57 |
|
Chief Technology Officer |
Stephen Sonne |
|
57 |
|
Chief Legal Officer and Secretary |
Trevor Thatcher |
|
40 |
|
Chief Financial Officer |
|
Dr. Denis Garagić |
|
|
|
|
|
|
|
|
|
|
|
Dr. Denis Garagić has served as our Chief Technology Officer since January 2022. Dr. Garagić is the co-founder of our AI/ML software business and served as Old Sarcos' Chief Scientist, Advanced Systems and AI from June 2020 until the Business Combination when he became our Chief Scientist, Advanced Systems & AI, a position he held until his promotion in January 2022. Prior to joining Old Sarcos, he served as Chief Scientist at BAE Systems (OTCMKTS: BAESY) FAST Labs from April 2007 to May 2020, guiding the creation of cognitive computing solutions that provide machine intelligence and anticipatory intelligence to solve challenges across the Department of Defense and intelligence community. Dr. Garagić has been a Technical Review Authority, Principal Investigator or Research Lead on numerous programs, including the Defense Advanced Research Projects Agency (DARPA) and Air Force Research Labs research programs. Dr. Garagić is also a regular speaker at international meetings and conferences on AI & machine learning. Dr. Garagić received his B.S. and M.S. degrees in Mechanical Engineering and Technical Cybernetics from The Czech Technical University in Prague and received his Ph.D. in Mechanical Engineering from The Ohio State University. |
|
|
||
|
|
|
2026 PROXY STATEMENT | 63 |
EXECUTIVE OFFICERS
|
Stephen Sonne |
|
|
|
|
|
|
|
|
|
|
|
Stephen Sonne has served as our Chief Legal Officer and Secretary since September 2022, overseeing all legal activities for the Company. Beginning in February 2024, he also began overseeing the Company's human resource function. Prior to becoming Chief Legal Officer, Mr. Sonne served as Senior Vice President and General Counsel from February 2022 to September 2022. From January 2013 until March 2021, he served as Senior Vice President, Associate General Counsel and, from April 2018 to March 2021, Corporate Secretary for Booking Holdings (Nasdaq: BKNG), the parent company of Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com and OpenTable, overseeing Booking Holdings' public reporting, securities offering, mergers and acquisitions and corporate governance activities, among other things. Prior to Booking Holdings, Mr. Sonne served as a Partner at O'Melveny & Myers LLP, a premier international law firm. He holds a Bachelor of Arts in Political Science and Spanish from Brigham Young University, an MBA from Duke University's Fuqua School of Business and a Juris Doctor degree from the Duke University School of Law. |
|
|
||
|
|
|
2026 PROXY STATEMENT | 64 |
EXECUTIVE OFFICERS
|
Trevor Thatcher |
|
|
|
|
|
|
|
|
|
|
|
Trevor Thatcher has served as our Chief Financial Officer since March 2024. Mr. Thatcher has over 10 years of experience providing strategic and operational financial leadership to public companies. Mr. Thatcher joined us in December 2021 as VP, Corporate Controller. Before joining Palladyne AI Corp., Mr. Thatcher served in various accounting roles from 2014 to 2016 at LifeVantage Corporation (Nasdaq: LFVN), a health, wellness and fitness company, and served as its SVP, Corporate Controller from 2016 until 2021. He oversaw the company's accounting, tax, commissions, treasury and internal audit functions, was a member of the company's international and product expansion teams and helped to align and consolidate company-wide processes to drive operational efficiencies. Previous to LifeVantage, Mr. Thatcher served in other accounting and finance roles and began his career in public accounting at a local Utah accounting firm. Mr. Thatcher earned his Masters of Accounting from the University of Utah and his Bachelors of Science in Accounting and Economics from Utah State University. He is a Certified Public Accountant in Utah and was a recipient of the Direct Selling "Forces Under 40" award in 2017 while working for LifeVantage Corporation. |
|
|
||
|
|
|
2026 PROXY STATEMENT | 65 |
EXECUTIVE COMPENSATION
We have designed our compensation and benefits programs to attract, retain, incentivize and reward talented and qualified executives. We believe our compensation program should promote our success and align executive incentives with the long-term interests of our stockholders. Our current compensation programs primarily consist of salary, bonuses and equity compensation awards. We believe that our use of equity compensation awards strongly aligns the interests of our executive officers with those of our stockholders by providing meaningful compensation opportunities through the use of long-term equity incentives. Further, we believe that the vesting schedules associated with our equity compensation awards promote our accomplishment of key objectives and our long-term success. As a result, we do not believe that our compensation programs promote excessive or inappropriate risk-taking. As our needs evolve, we intend to continue to evaluate our philosophy and compensation programs as circumstances require.
Our named executive officers, consisting of each individual serving in the role of principal executive officer in 2025, the next two most highly compensated executive officers (other than our principal executive officer during 2025) as of December 31, 2025, and up to two additional individuals who were executive officers in 2025 but were not serving as executive officers as of December 31, 2025, were:
Summary Compensation Table
The following table presents information regarding the compensation of our named executive officers for services rendered during the fiscal years ended December 31, 2025 and December 31, 2024 if they were an executive officer during those years:
Name and Principal Position |
Fiscal |
Salary ($) |
|
|
Bonus |
|
|
Stock Awards |
|
|
Option |
|
|
All Other Compensation ($) |
|
|
Total ($) |
|
||||||
Benjamin G. Wolff(4) |
2025 |
$ |
10,094 |
|
|
|
— |
|
|
$ |
3,345,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
3,355,094 |
|
President, Chief Executive Officer and Director |
2024 |
$ |
228,797 |
|
|
|
— |
|
|
$ |
369,125 |
|
|
|
— |
|
|
|
— |
|
|
$ |
597,922 |
|
Denis Garagić |
2025 |
$ |
440,937 |
|
|
$ |
40,000 |
|
|
$ |
766,800 |
|
|
|
— |
|
|
|
— |
|
|
$ |
1,247,737 |
|
Chief Technology Officer |
2024 |
$ |
412,174 |
|
|
$ |
364,417 |
|
|
$ |
295,301 |
|
|
$ |
74,514 |
|
|
|
— |
|
|
$ |
1,146,406 |
|
Stephen Sonne |
2025 |
$ |
383,875 |
|
|
$ |
55,000 |
|
|
$ |
447,300 |
|
|
|
— |
|
|
|
— |
|
|
$ |
886,175 |
|
Chief Legal Officer and Secretary |
2024 |
$ |
370,000 |
|
|
$ |
240,500 |
|
|
$ |
59,060 |
|
|
$ |
14,818 |
|
|
|
— |
|
|
$ |
684,378 |
|
2026 PROXY STATEMENT | 66 |
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal 2025 Year-End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2025.
|
|
Stock Awards |
|
Option Awards |
|
|
|
|
|
||||||||||
Name |
Grant |
Number of |
|
|
Market Value |
|
Number of |
|
Number of |
|
|
Option |
|
Option |
|||||
Benjamin Wolff |
7/2/2025 |
|
1,500,000 |
|
(3) |
$ |
6,390,000 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
Denis Garagić |
5/29/2020 |
|
— |
|
|
|
— |
|
|
9,348 |
|
|
12,024 |
|
(4) |
$ |
1.59 |
|
5/29/2030 |
|
5/20/2022 |
|
— |
|
|
|
— |
|
|
6,212 |
|
|
7,992 |
|
(4) |
$ |
1.59 |
|
5/20/2032 |
|
5/20/2022 |
|
1,122 |
|
(5) |
$ |
4,780 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
3/29/2023 |
|
— |
|
|
|
— |
|
|
29,961 |
|
|
38,525 |
|
(4) |
$ |
1.59 |
|
3/29/2033 |
|
3/29/2023 |
|
13,947 |
|
(6) |
$ |
59,414 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
2/23/2024 |
|
281,250 |
|
(7) |
$ |
1,198,125 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
3/10/2025 |
|
120,000 |
|
(8) |
$ |
511,200 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
Stephen Sonne |
4/1/2022 |
|
— |
|
|
|
— |
|
|
8,642 |
|
|
11,115 |
|
(4) |
$ |
1.59 |
|
2/7/2032 |
|
4/1/2022 |
|
513 |
|
(9) |
$ |
2,185 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
3/29/2023 |
|
— |
|
|
|
— |
|
|
37,669 |
|
|
17,120 |
|
(10) |
$ |
2.82 |
|
3/29/2033 |
|
3/29/2023 |
|
11,156 |
|
(6) |
$ |
47,525 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
2/23/2024 |
|
56,250 |
|
(7) |
$ |
239,625 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
3/10/2025 |
|
70,000 |
|
(8) |
$ |
298,200 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
2026 PROXY STATEMENT | 67 |
EXECUTIVE COMPENSATION
2025 Named Executive Officer Equity Compensation Decisions
In March 2025, the Compensation Committee approved grants of RSUs under our 2021 Plan. Dr. Garagić and Mr. Sonne were awarded 120,000 and 70,000 RSUs, respectively, with 25% of the award vesting on the one-year anniversary of grant, and 1/12 of the remaining portion of the award vesting on each quarterly vesting date thereafter, subject to continued service through such date.
On November 15, 2025, based on the recommendation of the Compensation Committee, our Board of Directors approved the Executive RSUs. While approved, these awards will terminate without vesting unless approved by our stockholders at the Annual Meeting or an adjournment thereof. Accordingly, the Executive RSUs are not reflected in the Summary Compensation Table or Outstanding Equity Awards Table for 2025. For a discussion of the Executive RSUs, please see "Proposal 4," above.
Clawback Policy
We have adopted a compensation recovery policy designed to comply with the mandatory compensation "clawback" requirements under applicable SEC and Nasdaq listing rules. Under the policy, in the event of certain accounting restatements, we will be required to recover erroneously received incentive-based compensation from our executive officers representing the excess of the amount actually received over the amount that would have been received had the financial statements been correct in the first instance. The Compensation Committee has discretion to make certain exceptions to the clawback requirements (when permitted by Nasdaq rules) and ultimately determine whether any adjustment will be made.
Named Executive Officer Employment Arrangements
Our named executive officers were at-will employees. The key terms of employment with respect to our named executive officers are discussed below. In addition, each of our named executive officers has executed our standard form of confidential information, invention assignment, nonsolicitation and noncompetition agreement, or confidentiality agreement and our form indemnification agreement, in each case as in use at the time they were entered into.
2026 PROXY STATEMENT | 68 |
EXECUTIVE COMPENSATION
Benjamin G. Wolff
In February 2024, Mr. Wolff was appointed as President and Chief Executive Officer. In connection with this appointment, we entered into an employment agreement with Mr. Wolff in January 2024. This employment agreement provided for an at-will employment term of one year, subject to extension for an additional year upon notice by us no less than 90 days prior to the expiration date in February, 2025.
Pursuant to this employment agreement, Mr. Wolff was entitled to an annual base salary of $240,000 and eligibility for one or more bonuses at the discretion of the Board or the Compensation Committee (though Mr. Wolff was not entitled to participate in our annual bonus plan unless otherwise determined at the discretion of the Board or the Compensation Committee).
In addition, Mr. Wolff was entitled to the following equity awards:
In the event that Mr. Wolff’s employment terminated before the last day of the employment term (i) by us without Cause (as defined in the agreement) and without Mr. Wolff’s consent, or (ii) by Mr. Wolff for Good Reason (as defined in the agreement), then, contingent on Mr. Wolff’s signing and not revoking a separation agreement and release of claims in a form reasonably acceptable to the Company and compliance with the terms of his intellectual property agreement, Mr. Wolff would have been eligible to receive:
2026 PROXY STATEMENT | 69 |
EXECUTIVE COMPENSATION
In December 2024, we entered into a new employment agreement with Mr. Wolff for the three-year period beginning January 1, 2025, in extension of Mr. Wolff’s term of service as President and Chief Executive Officer. Pursuant to this agreement, Mr. Wolff agreed to an annual base salary for 2025 at a rate intended to provide Mr. Wolff with net pay of approximately $1 per year after reduction for applicable withholding and deductions (allowing for full participation in the Company’s benefit plans); and an annual salary of $250,000 prior to applicable withholding and deductions for the years 2026 and 2027.
Under this agreement, Mr. Wolff was not entitled to participate in our annual bonus plan for 2025, but at the discretion of the Board may be eligible to participate in our annual bonus plan or receive one or more discretionary bonuses; and will be eligible to participate in our annual bonus plan for 2026 and 2027, with a target annual bonus opportunity equal to 150% of his then-current annual base salary.
Also under this agreement, Mr. Wolff was entitled to a cash payment upon the earliest to occur of the following: (a) his continued employment through and until October 31, 2027; (b) the termination of his employment by us without Cause (as defined in the agreement); (c) termination of his employment by Mr. Wolff for Good Reason (as defined in the agreement); (d) continued employment until a Change in Control (as defined in the agreement); and (e) termination of his employment due to death or by us for Disability (as defined in the agreement). These conditions are referred to here as the “Wolff Cash Payment Vesting Conditions”. For purposes of vesting that does not result from termination of Mr. Wolff’s employment due to death or by us for Disability, this cash payment would have equaled 1,800,000 times (i) the volume-weighted average closing price per share of our common stock for the 10 consecutive trading days ending on the trading day immediately prior to the event triggering the payment or (ii) if the payment is due to a Change in Control, the value of the consideration paid in the Change in Control per share of our common stock ((i) or (ii), as applicable, the “Stock FMV”). For purposes of vesting that results from termination of Mr. Wolff’s employment due to death or by us for Disability, this cash payment would have been prorated for Mr. Wolff’s service during the period from November 1, 2024 through October 31, 2027.
In accordance with this agreement, this cash payment was eliminated upon our grant to Mr. Wolff of a restricted stock award of 1,500,000 shares in July 2025 following stockholder approval of the award in June 2025. The restricted stock award vests upon the earliest of the Vesting Conditions and in the same relative amount as the cash payment, subject to Mr. Wolff’s continued service through such date and the terms and conditions of the restricted stock award.
In the event of a termination of Mr. Wolff’s employment before the last day of the employment term that is (i) by us without Cause (as defined in the agreement) or (ii) by Mr. Wolff for Good Reason (as defined in the agreement), then, contingent on Mr. Wolff’s signing and not revoking a separation agreement and release and compliance with the terms of the Employment Agreement and his intellectual property agreement, Mr. Wolff will be eligible to receive:
2026 PROXY STATEMENT | 70 |
EXECUTIVE COMPENSATION
In the event that Mr. Wolff incurs any excise tax liability for golden parachute payments in connection with a change in control event that occurs on or before the first anniversary of the end of the employment term, he will be entitled to receive a gross-up payment to cover the amount of that excise tax on an after-tax basis.
Denis Garagić
In June 2023, we entered into an employment agreement with Dr. Garagić, which was later amended in March 2024 (the "Garagić Employment Agreement"). The Garagić Employment Agreement does not have a specific term and provides that Dr. Garagić is an at-will employee. Pursuant to the Garagić Employment Agreement, Dr. Garagić is entitled to an initial base salary of $337,050 per year and is eligible to receive an annual target bonus of 50% of Dr. Garagić's annual base salary.
If, within the period beginning three months before and ending twelve months after a change in control, or the change in control period, Dr. Garagić's employment is terminated without "cause" (excluding by reason of death or "disability") or Dr. Garagić resigns for "good reason" (as such terms are defined in the Garagić Employment Agreement), Dr. Garagić will become entitled to the following benefits:
2026 PROXY STATEMENT | 71 |
EXECUTIVE COMPENSATION
If, outside the change in control period, Dr. Garagić's employment is terminated without cause (excluding by reason of death or disability) or Dr. Garagić resigns for good reason, Dr. Garagić will become entitled to the following benefits:
The receipt of the payments and benefits above is conditioned on Dr. Garagić's timely signing and not revoking a release of claims, complying with his confidentiality agreement and the Garagić Employment Agreement.
In addition, if any of the payments or benefits provided for under the Garagić Employment Agreement or otherwise payable to Dr. Garagić would constitute "parachute payments" within the meaning of Section 280G of the Code, and would be subject to the related excise tax, he will be entitled to receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to him. Dr. Garagić's employment agreement does not require us to provide any tax gross-up payments to him.
Stephen Sonne
In January 2023, we entered into an employment agreement with Mr. Sonne which was later amended in March 2024 (the "Sonne Employment Agreement"). The Sonne Employment Agreement does not have a specific term and provides that Mr. Sonne is an at-will employee. Pursuant to the Sonne Employment Agreement, Mr. Sonne is entitled to an initial base salary of $275,000 per year and is eligible to receive an annual target bonus of 50% of Mr. Sonne's annual base salary.
If, within the period beginning three months before and ending twelve months after a change in control, or the change in control period, Mr. Sonne's employment is terminated without "cause" (excluding by reason of death or "disability") or Mr. Sonne resigns for "good reason" (as such terms are defined in the Sonne Employment Agreement), Mr. Sonne will become entitled to the following benefits:
2026 PROXY STATEMENT | 72 |
EXECUTIVE COMPENSATION
If, outside the change in control period, Mr. Sonne's employment is terminated without cause (excluding by reason of death or disability) or Mr. Sonne resigns for good reason, Mr. Sonne will become entitled to the following benefits:
The receipt of the payments and benefits above is conditioned on Mr. Sonne's timely signing and not revoking a release of claims, complying with his confidentiality agreement and the Sonne Employment Agreement.
In addition, if any of the payments or benefits provided for under the Sonne Employment Agreement or otherwise payable to Mr. Sonne would constitute "parachute payments" within the meaning of Section 280G of the Code, and would be subject to the related excise tax, he will be entitled to receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to him. Mr. Sonne's employment agreement does not require us to provide any tax gross-up payments to him.
Retirement Benefits
All of our named executive officers are eligible to participate in our 401(k) plan on the same basis as our other employees. Our 401(k) plan provides that each participant may contribute up to 100% of such participant's pre-tax compensation, up to a statutory limit of $23,000 in 2024 and $23,500 in 2025. Participants who are at least 50 years old can also make "catch-up" contributions of an additional $7,500 above the statutory limit in 2024 and 2025. Our 401(k) plan includes a safe harbor matching contribution that is not subject to a vesting schedule, and also permits us to make discretionary nonelective and additional matching contributions subject to established limits and a vesting schedule. To date, we have not made any discretionary nonelective or additional matching contributions to the plan on behalf of participating employees. We do not offer any retirement plans or benefits other than our 401(k) plan.
Policies and Practices Related to the Grant of Certain Equity Awards
2026 PROXY STATEMENT | 73 |
EXECUTIVE COMPENSATION
2026 PROXY STATEMENT | 74 |
EXECUTIVE COMPENSATION
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2025. All outstanding awards relate to our common stock.
Plan Category |
|
(a) Number of |
|
|
(b) Weighted- |
|
|
(c) Number of |
|
|||
Equity compensation plans approved by security holders |
|
|
|
|
|
|
|
|
|
|||
2015 Equity Incentive Plan(2) |
|
|
291,967 |
|
(3) |
$ |
2.18 |
|
|
|
— |
|
2021 Equity Incentive Plan(4) |
|
|
2,188,787 |
|
(5) |
$ |
2.25 |
|
|
|
1,857,478 |
|
2021 Employee Stock Purchase Plan(4) |
|
|
— |
|
|
|
— |
|
|
|
469,087 |
|
Equity compensation plans not approved by security holders(6) |
|
|
297,208 |
|
(7) |
|
6.39 |
|
|
|
202,792 |
|
Total |
|
|
2,777,962 |
|
|
$ |
2.32 |
|
|
|
2,529,357 |
|
2026 PROXY STATEMENT | 75 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the actual beneficial ownership of Common Stock as of April 1, 2026 by:
Beneficial ownership is determined according to SEC rules, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including restricted stock units, options and warrants that are currently exercisable or exercisable within 60 days. Except as described in the footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed below has sole voting and investment power with respect to such shares.
2026 PROXY STATEMENT | 76 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The beneficial ownership of Company Common Stock is based on 47,244,225 shares of Company Common Stock issued and outstanding as of April 1, 2026. For purposes of calculating the ownership percentages in the table below, the number of shares outstanding for each person assumes the vesting of restricted stock units within 60 days of April 1, 2026 and the full exercise of options and warrants that are exercisable within 60 days of April 1, 2026.
Name and Address of Beneficial Owners(1) |
|
Number of |
|
|
% |
|
|
||
Directors and Named Executive Officers of the Company |
|
|
|
|
|
|
|
||
Benjamin G. Wolff(2) |
|
|
3,436,476 |
|
|
|
7.3 |
% |
|
Denis Garagić(3) |
|
|
291,046 |
|
|
* |
|
|
|
Stephen Sonne(4) |
|
|
134,796 |
|
|
* |
|
|
|
Brian D. Finn(5) |
|
|
1,244,595 |
|
|
2.6 |
% |
|
|
Eric T. Olson(6) |
|
|
111,275 |
|
|
* |
|
|
|
Stephen M. Twitty(7) |
|
|
5,152 |
|
|
|
|
|
|
Dennis Weibling(8) |
|
|
1,158,676 |
|
|
|
2.4 |
% |
|
Michael T. Young(9) |
|
|
24,967 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
||
All Current Executive Officers and Directors as a Group (8 individuals) |
|
|
6,481,841 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
||
5% Holders |
|
|
|
|
|
|
|
||
Kerber William Xavier III(10) |
|
|
2,356,314 |
|
|
|
5.0 |
% |
|
BlackRock Portfolio Management LLC(11) |
|
|
3,042,065 |
|
|
|
6.4 |
% |
|
* Represents less than 1%
2026 PROXY STATEMENT | 77 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
2026 PROXY STATEMENT | 78 |
In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements, discussed in the sections titled "Board of Directors and Corporate Governance" and "Executive Compensation," the following is a description of each transaction since January 1, 2024, and each currently proposed transaction, in which:
Muta Employment Agreement
Effective March 2, 2026, we entered into an employment agreement (the “Muta Employment Agreement”) with Matthew Shigenobu Muta, who served as a member of our board of directors from September 2021 to March 2, 2026. The Muta Employment Agreement provides the following compensation and benefits for Mr. Muta’s role as President, Commercial and Industrial: (a) an annual base salary of $345,000; and (b) an award of 125,000 restricted stock units, which is scheduled to vest as to 25% of the award on March 10, 2027, with 1/12 of the remaining award vesting on each quarterly vesting date applicable thereafter, subject to continued service. Mr. Muta will be eligible for a discretionary bonus targeted annually at 50% of the actual paid salary during the year for which any bonus is awarded based on our and Mr. Muta’s performance. The Muta Employment Agreement can be terminated by either party.
Private Placements of our Securities to Certain of Our Executive Officers and Directors
On October 31, 2024, we entered into a Securities Purchase Agreement (“Investor Purchase Agreement”) with an accredited investor pursuant to which we agreed to issue and sell 2,790,700 shares of our common stock, at a price per share of $2.15 (such offering, the “Registered Offering”). Each such share was sold with one Common Warrant (as defined below) at a combined purchase price of $2.15.
In connection with the Registered Offering, each of our executive officers and directors entered into a lock-up agreement pursuant to which they agreed not to sell or transfer any securities of the Company held by them for a period commencing on October 31, 2024 and ending sixty (60) days thereafter, subject to certain exceptions.
Concurrently with the Registered Offering and pursuant to a separate Securities Purchase Agreement dated October 31, 2024, with Benjamin G. Wolff, our President and Chief Executive Officer and Dennis Weibling and Brian D. Finn, each members of our Board of Directors, (“Insiders Purchase Agreement”), we conducted a private placement (“Insider Private Placement”) of an aggregate of 430,105 shares of
2026 PROXY STATEMENT | 79 |
RELATED PERSON TRANSACTIONS
our common stock and warrants (“Insider Common Warrants” and together with the common warrants issued under the Investor Purchase Agreement, the “Common Warrants”) to purchase up to 430,105 shares of our common stock. Pursuant to the Insider Purchase Agreement, the Company agreed to issue and sell (i) the shares of our common stock at a price per share of $2.20, which was the consolidated closing bid price per share of our common stock on the Nasdaq Global Market on the day the Insiders Purchase Agreement was entered into, and (ii) the Insider Common Warrants at an offering price of $0.125 per Insider Common Warrant. We received approximately $1 million in gross proceeds from the Insider Private Placement.
The Common Warrants have an exercise price of $2.30 per share (subject to adjustment as set forth in the Common Warrants), became exercisable six months after issuance and will expire five and one-half years from the date of their issuance. The Common Warrants contain standard anti-dilution adjustments to the exercise price including for share splits, share dividends, rights offerings and pro rata distributions.
Indemnification Agreements
We are party to indemnification agreements with Old Sarcos' directors and executive officers. We have also entered into indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our second amended and restated certificate of incorporation and amended and restated bylaws. We believe that these provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. The limitation of liability and indemnification provisions in our second amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder's investment may decline in value to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
We have adopted a written policy regarding related person transactions. This written policy regarding related person transactions provides that a related person transaction is a transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships, in which we are a participant and in which a related person has, had or will have a direct or indirect material interest and in which the aggregate amount involved exceeds $120,000. For purposes of this policy, a related person means any of our executive officers and directors (including director nominees), in each case at any time since the beginning of our last fiscal year, or holders of more than 5% of any class of our voting securities and any member of the immediate family of, or person sharing the household with, any of the foregoing persons.
Our Audit Committee has the primary responsibility for reviewing, approving, ratifying or disapproving related person transactions under our policy. In determining whether to approve, ratify or disapprove any such transaction, our Audit Committee will consider, among other factors, (1) whether the transaction is fair to us and on terms no less favorable than terms generally available to unaffiliated third parties under the same or similar circumstances, (2) the extent of the related person's interest in the transaction, (3) whether there are business reasons for us to enter into such transaction, (4)
2026 PROXY STATEMENT | 80 |
RELATED PERSON TRANSACTIONS
whether the transaction would impair the independence of any of our outside directors and (5) whether the transaction would present an improper conflict of interest for any of our directors or executive officers.
The policy grants standing pre-approval of certain transactions, including (1) certain compensation arrangements for our directors or executive officers, (2) transactions with another company at which a related person's only relationship is as a non-executive employee, director or beneficial owner of less than 10% of that company's shares, provided that the aggregate amount involved does not exceed the greater of $200,000 or 5% of such company's total annual revenues and the transaction is on terms no less favorable than terms generally available to unaffiliated third parties under the same or similar circumstances, (3) charitable contributions by us to a charitable organization, foundation or university at which a related person's only relationship is as a non-executive employee or director, provided that the aggregate amount involved does not exceed the greater of $200,000 or 5% of such organization's total annual receipts, (4) transactions where a related person's interest arises solely from the ownership of our Common Stock and all holders of our Common Stock received the same benefit on a pro rata basis and (5) any indemnification or advancement of expenses made pursuant to our Charter or Bylaws or any agreement.
2026 PROXY STATEMENT | 81 |
OTHER MATTERS
Stockholder Proposals or Director Nominations for 2027 Annual Meeting of Stockholders
If a stockholder would like us to consider including a proposal in our proxy statement for our 2027 annual meeting of stockholders pursuant to Rule 14a-8 of the Exchange Act, the proposal must be received by our Corporate Secretary at our principal executive offices on or before December 23, 2026. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:
Palladyne AI Corp.
Attention: Corporate Secretary
650 South 500 West, Suite 150
Salt Lake City, Utah 84101
Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal or nominate a director at an annual meeting of stockholders, but do not seek to include the proposal or director nominee in our proxy statement. In order for such proposal or nomination to be properly brought before our 2026 annual meeting of stockholders, the stockholder must provide timely written notice to our Corporate Secretary, at our principal executive offices, as set forth above, and any such proposal or nomination must constitute a proper matter for stockholder action. The written notice must contain the information specified in our amended and restated bylaws. To be timely, a stockholder's written notice must be received by our Corporate Secretary at our principal executive offices in accordance with the following deadlines, which are further detailed in our amended and restated bylaws:
In the event that the date of our 2027 annual meeting of stockholders is more than 25 days before or after the one-year anniversary of the Annual Meeting, such written notice must be received by our Corporate Secretary at our principal executive offices:
Stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must also comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.
2026 PROXY STATEMENT | 82 |
OTHER MATTERS
If a stockholder who has properly notified us in accordance with our bylaws or Rule 14a-8, as applicable, of such stockholder's intention to present a proposal at an annual meeting of stockholders does not appear to present the proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting.
Availability of Bylaws
A copy of our amended and restated bylaws may be obtained by accessing our filings on the SEC's website at www.sec.gov. You may also contact our Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on a review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during 2025, our directors, executive officers, and 10% stockholders complied with all Section 16(a) filing requirements applicable to them.
2025 Annual Report
Our financial statements for our fiscal year ended December 31, 2025 are included in our annual report, which we will make available to stockholders at the same time as this proxy statement. Our proxy materials and our annual report are posted on our website at www.palladyneai.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report, free of charge, by sending a written request to Palladyne AI Corp., 650 South 500 West, Suite 150, Salt Lake City, Utah 84101, Attention: Corporate Secretary.
Website
Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.
2026 PROXY STATEMENT | 83 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
The information provided in the "question and answer" format below is for your convenience only and is merely a summary of certain information contained in this proxy statement. You should read this entire proxy statement carefully.
Why am I receiving these materials?
This proxy statement and the form of proxy are furnished in connection with the solicitation of proxies by our Board of Directors for use at the 2026 Annual Meeting of Stockholders of Palladyne AI Corp., a Delaware corporation, and any postponements, adjournments or continuations thereof (the "Annual Meeting"). The Annual Meeting will be held on Monday, June 8, 2026 at 2:00 p.m., Mountain Time, at our offices located at 650 South 500 West, Suite 150, Salt Lake City, Utah 84101.
The Notice of Internet Availability of Proxy Materials, or Notice of Internet Availability, containing instructions on how to access this proxy statement, the accompanying notice of annual meeting and form of proxy and our annual report, is first being sent or given on or about April 22, 2026 to all stockholders of record as of the close of business on April 14, 2026. The proxy materials and our annual report can be accessed on or about April 22, 2026 by visiting www.proxydocs.com/PDYN. If you receive a Notice of Internet Availability, then you will not receive a printed copy of the proxy materials or our annual report in the mail unless you specifically request these materials. Instructions for requesting a printed copy of the proxy materials and our annual report are set forth in the Notice of Internet Availability.
What proposals will be voted on at the Annual Meeting?
The following proposals will be voted on at the Annual Meeting:
2026 PROXY STATEMENT | 84 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
As of the date of this proxy statement, our management and Board of Directors were not aware of any other matters to be presented at the Annual Meeting.
How does the Board of Directors recommend that I vote on these proposals?
Our Board of Directors recommends that you vote your shares:
Who is entitled to vote at the Annual Meeting?
Holders of our common stock as of the close of business on April 14, 2026, the record date for the Annual Meeting, may vote at the Annual Meeting. As of the record date, there were 47,244,225 shares of our common stock outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting. Stockholders are not permitted to cumulate votes with respect to the election of directors.
Stockholders of Record. If your shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and the Notice of Internet Availability was sent directly to you. As a stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote on your own behalf at the Annual Meeting. Throughout this proxy statement, we refer to these holders as "stockholders of record."
Street Name Stockholders. If your shares are held in a brokerage account or by a broker, bank or other nominee, then you are considered the beneficial owner of shares held in street name, and the Notice of Internet Availability was forwarded to you by your broker, bank or other nominee, which is considered the stockholder of record with respect to those shares. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in your account by following the instructions that your broker, bank or other nominee sent to you. Throughout this proxy statement, we refer to these holders as "street name stockholders."
Is there a list of stockholders of record entitled to vote at the Annual Meeting?
A list of stockholders of record entitled to vote at the Annual Meeting will be made available for examination by any stockholder for any purpose germane to the meeting at the Annual Meeting and for
2026 PROXY STATEMENT | 85 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
a period of at least ten days ending on the day before the date of the Annual Meeting between the hours of 9:00 a.m. and 4:30 p.m., Mountain Time, at our principal executive offices located at 650 South 500 West, Suite 150, Salt Lake City, Utah 84101 by contacting our Corporate Secretary at that address or by calling 1-888-927-7296.
How many votes are needed for approval of each proposal?
2026 PROXY STATEMENT | 86 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
What is the quorum requirement for the Annual Meeting?
A quorum is the minimum number of shares required to be present or represented by proxy at the Annual Meeting for the meeting to be properly held under our amended and restated bylaws and Delaware law. The presence, in person or by proxy, of a majority of the voting power of our issued and outstanding capital stock entitled to vote will constitute a quorum to transact business at the Annual Meeting. Abstentions, choosing to withhold authority to vote and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. The chairperson of the Annual Meeting shall have the power to adjourn the meeting to another place, date or time, whether or not a quorum is present. If there is no quorum present at the start of the Annual Meeting, the chairperson of the meeting may adjourn the meeting to another time or place so that efforts can be made to achieve a quorum.
How do I vote and what are the voting deadlines?
Stockholder of Record. If you are a stockholder of record, you may vote in one of the following ways:
2026 PROXY STATEMENT | 87 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Street Name Stockholders. If you are a street name stockholder, then you will receive voting instructions from your broker, bank or other nominee. The availability of Internet and telephone voting options will depend on the voting process of your broker, bank or other nominee. We therefore recommend that you follow the voting instructions in the materials you receive. If you are a street name stockholder, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from the broker, bank or other nominee who is the stockholder of record for your shares.
What if I do not specify how my shares are to be voted or fail to provide timely directions to my broker, bank or other nominee?
Stockholder of Record. If you are a stockholder of record and you submit a proxy, but you do not provide voting instructions, your shares will be voted:
In addition, if any other matters are properly brought before the Annual Meeting, the persons named as proxies will be authorized to vote or otherwise act on those matters in accordance with their judgment.
Street Name Stockholders. Brokers, banks and other nominees holding shares of common stock in street name for customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker, bank or other nominee will have discretion to vote your shares on Proposal 2, our routine matter. Absent direction from you, your broker, bank or other nominee will not have discretion to vote on Proposal 1, Proposal 3 and Proposal 4, as they are considered non-routine matters. In the event that your broker, bank or other nominee does not receive instruction from you and therefore is not able to vote your shares on Proposal 1, Proposal 3 or Proposal 4, which are our non-routine matters, your shares will be treated as broker non-votes with respect to such proposals. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote to ensure that your shares are counted on each of the proposals.
2026 PROXY STATEMENT | 88 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Can I change my vote or revoke my proxy?
Stockholders of Record. If you are a stockholder of record, you can change your vote or revoke your proxy before the Annual Meeting by:
Street Name Stockholders. If you are a street name stockholder, then your broker, bank or other nominee can provide you with instructions on how to change or revoke your proxy.
What do I need to do to attend the Annual Meeting?
Stockholder of Record. If you are a stockholder of record as of the record date, the close of business on April 14, 2026, you may attend the Annual Meeting in person. To attend the meeting in person, you must present valid government-issued photo identification (e.g., driver's license or passport).
Street Name Stockholders. If you are a street name stockholder as of the record date, the close of business on April 14, 2026, you may attend the Annual Meeting in person but, as discussed above, you may not vote your shares at the Annual Meeting unless you obtain a legal proxy from the broker, bank or other nominee that is the stockholder of record with respect to your shares. To attend the meeting in person, you must provide proof of beneficial ownership as of the record date, such as your account statement reflecting ownership on the record date or your voting instruction card provided to you by your broker, bank or other nominee and you must present valid government-issued photo identification (e.g., driver's license or passport).
Please note that no cameras or recording equipment will be permitted in the Annual Meeting.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our Board of Directors. Each of Benjamin G. Wolff, our President and Chief Executive Officer, and Trevor Thatcher, our Chief Financial Officer, has been designated as a proxy holder for the Annual Meeting by our Board of Directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If the proxy is dated and signed, but no specific instructions are given, however, the shares will be voted in accordance with the
2026 PROXY STATEMENT | 89 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
recommendations of our Board of Directors on the proposals as described above. If any other matters are properly brought before the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is postponed or adjourned, then the proxy holders can vote your shares on the new meeting date, unless you have properly revoked your proxy, as described above.
Who will count the votes?
A Company employee will tabulate the votes and act as inspector of election.
How can I contact Palladyne AI Corp.'s transfer agent?
You may contact our transfer agent, Continental Stock Transfer & Trust Company, by telephone at 1-800-509-5586, or by writing Continental Stock Transfer & Trust, at 1 State Street, 30th Floor, New York, NY 10004. You may also access instructions with respect to certain stockholder matters (e.g., change of address) via the Internet at www.continentalstock.com.
How are proxies solicited for the Annual Meeting and who is paying for such solicitation?
Our Board of Directors is soliciting proxies for use at the Annual Meeting by means of the proxy materials. We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communications or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services, although we may reimburse such individuals for their reasonable out-of-pocket expenses in connection with such solicitation. We may also decide to engage a third-party proxy solicitor, in which case we do not expect related costs to be significant.
Will the meeting be webcast?
No, we do not plan to webcast the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
We will disclose voting results on a Current Report on Form 8‑K that we will file with the SEC, within four business days after the meeting. If final voting results are not available to us in time to file a Form 8‑K, we will file a Form 8‑K to publish preliminary results and will provide the final results in an amendment to the Form 8‑K as soon as they become available.
2026 PROXY STATEMENT | 90 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Why did I receive a Notice of Internet Availability instead of a full set of proxy materials?
In accordance with the rules of the SEC we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability instead of a paper copy of the proxy materials. The Notice of Internet Availability contains instructions on how to access our proxy materials on the Internet, how to vote on the proposals, how to request printed copies of the proxy materials and our annual report, and how to request to receive all future proxy materials in printed form by mail or electronically by e-mail. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce our costs and the environmental impact of our annual meetings of stockholders.
What does it mean if I receive more than one Notice of Internet Availability or more than one set of printed proxy materials?
If you receive more than one Notice of Internet Availability or more than one set of printed proxy materials, then your shares may be registered in more than one name and/or are registered in different accounts. Please follow the voting instructions on each Notice of Internet Availability or each set of printed proxy materials, as applicable, to ensure that all of your shares are voted.
2026 PROXY STATEMENT | 91 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
I share an address with another stockholder, and we received only one paper copy of the Notice of Internet Availability or proxy statement and annual report. How may I obtain an additional copy of the Notice of Internet Availability or proxy statement and annual report?
We have adopted a procedure approved by the SEC called "householding," under which we can deliver a single copy of the Notice of Internet Availability and, if applicable, the proxy statement and annual report, to multiple stockholders who share the same address unless we receive contrary instructions from one or more stockholders. This procedure reduces our printing and mailing costs and the environmental impact of our annual meetings of stockholders. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice of Internet Availability and, if applicable, the proxy statement and annual report, to any stockholder at a shared address to which we delivered a single copy of these documents. To receive a separate copy, or, if you are receiving multiple copies, to request that we only send a single copy of next year's Notice of Internet Availability or proxy statement and annual report, as applicable, you may contact us as follows:
Palladyne AI Corp.
Attention: Corporate Secretary
650 South 500 West, Suite 150
Salt Lake City, UT 84101
Tel: 888-927-7296
Street name stockholders may contact their broker, bank or other nominee to request information about householding.
2026 PROXY STATEMENT | 92 |
APPENDIX A
PALLADYNE AI CORP.
AMENDED AND RESTATED 2021 EQUITY INCENTIVE PLAN
(effective as of June [ ], 2026)
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Performance Awards.
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For purposes of this Section 2.6, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
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Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (y) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
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In addition, for purposes of determining the fair market value of shares for any reason other than the determination of the exercise price of Options or Stock Appreciation Rights, fair market value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such purpose. The determination of fair market value for purposes of tax withholding may be made in the Administrator’s sole discretion subject to Applicable Laws and is not required to be consistent with the determination of fair market value for other purposes.
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An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable tax withholdings). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and such Participant’s spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
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At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
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In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise such Participant’s outstanding Options and Stock Appreciation Rights (or portions thereof) not assumed or substituted for, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock, Restricted Stock Units, or Performance Awards (or portions thereof) not assumed or substituted for will lapse, and, with respect to Awards with performance-based vesting (or portions thereof) not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, in each case, unless specifically provided otherwise under the applicable Award Agreement or other written
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agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parents, as applicable. In addition, unless specifically provided otherwise under the applicable Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parents, as applicable, if an Option or Stock Appreciation Right (or portion thereof) is not assumed or substituted in the event of a merger or Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right (or its applicable portion) will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right (or its applicable portion) will terminate upon the expiration of such period.
For the purposes of this Section 15.3 and Section 15.4 below, an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, or Performance Award, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.
Notwithstanding anything in this Section 15.3 to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent, in all cases, unless specifically provided otherwise under the applicable Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parents, as applicable; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
Notwithstanding anything in this Section 15.3 to the contrary, and unless otherwise provided in an Award Agreement, if an Award that vests, is earned or paid-out under an Award Agreement is subject to Section 409A and if the change in control definition contained in the Award Agreement (or other agreement related to the Award, as applicable) does not comply with the definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Section 409A without triggering any penalties applicable under Section 409A.
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APPENDIX B
PALLADYNE AI CORP.
STAND-ALONE RESTRICTED STOCK UNIT AGREEMENT
NOTICE OF RESTRICTED STOCK UNIT GRANT
Participant Name: (“Participant”)
Address:
Participant has been granted an award of Restricted Stock Units (the “Award”) subject to the terms and conditions of this Stand-Alone Restricted Stock Unit Agreement, which includes this Notice of Restricted Stock Unit Grant (the “Notice of Grant”), the Terms and Conditions of Restricted Stock Unit Grant attached hereto as Exhibit A, and all other exhibits, appendices and addenda attached hereto (the “Award Agreement”).
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Vesting Commencement Date: |
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Total Number of Restricted Stock Units: |
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Event Deadline Date: |
11/15/2030 |
Stockholder Approval:
The Company intends to submit this Award to the Company’s stockholders for their approval at the next annual meeting of the stockholders of the Company, which is expected to occur in or around June of 2026 (the “Annual Meeting”) or at an earlier special meeting of stockholders called for the purpose of approving this Award. In the event that the stockholders of the Company do not approve this Award by the date of such Annual Meeting or the last adjournment thereof, the Award shall be null and void, and of no further effect, and Participant will have no further rights under the Award Agreement. In no event will any portion of this Award vest prior to stockholder approval of this Award. To the extent that any vesting condition with respect to this Award otherwise would be satisfied pursuant to the Vesting Schedule prior to the date of any such stockholder approval, the applicable vesting date for the portion of the Award will not occur before, and will be delayed until, the date of such stockholder approval.
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Vesting Schedule:
Subject to any acceleration provisions contained in this Award Agreement, or any other written agreement authorized by the Administrator between Participant and the Company (or any Parent or Subsidiary of the Company, as applicable) governing the terms of this Award entered into after the Date of Grant, the Restricted Stock Units will be scheduled to vest according to the following vesting schedule:
As detailed in the table below, the Restricted Stock Units are divided into ten (10) vesting tranches (each a “Tranche”), with each Tranche representing one tenth (1/10th) of the Total Number of Restricted Stock Units. The vesting of each Tranche is conditioned on the satisfaction of both the Service Requirement and attainment of the Tranche’s designated Stock Price Goal, and applies only to Restricted Stock Units that become Eligible RSUs, in each case as described below.
Vesting Tranche |
Stock Price Threshold * |
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$20.00 |
2 |
$25.00 |
3 |
$30.00 |
4 |
$35.00 |
5 |
$40.00 |
6 |
$45.00 |
7 |
$50.00 |
8 |
$55.00 |
9 |
$60.00 |
10 |
$65.00 |
* These Stock Price Threshold figures will be appropriately and proportionately adjusted by the Plan Administrator in the event of any Capitalization Adjustment.
The “Stock Price Goal” for a Tranche is achieved if the closing price per share of the Company’s Common Stock equals or exceeds the Stock Price Threshold set forth in the table above (taking into account any adjustment by the Plan Administrator in response to any Capitalization Adjustment) for each of a series of sixty (60) consecutive trading days that ends on or prior to the Event Deadline Date.
If the Stock Price Goal for a Tranche is achieved, the number of Restricted Stock Units eligible for vesting under that Tranche for a given vesting date (before application of the percentage of such Restricted Stock Units available for vesting on that date pursuant to the table below) will be equal to the product of (i) the total number of Restricted Stock Units allocated to that Tranche, mulitiplied by (ii) the VWAP Growth Factor for such vesting date (such Restricted Stock Units, the “Eligible RSUs”). For this purpose the “VWAP Growth Factor” for a vesting date equals the quotient of (x) the difference of (A) the 20-day VWAP for such vesting date, reduced (but not below zero) by (B) the 20-day VWAP as of the Vesting Commencement Date, divided by (y) the 20-day VWAP as of the Vesting Commencement Date. For this purpose, the “20-day VWAP” represents the volume-weighted average closing price per share of
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the Company’s Common Stock, measured with respect to a given date over the consecutive, trailing 20 trading days ending on and including such date.
Participant will have no right with respect to any Restricted Stock Units allocated to a Tranche for which the Stock Price Goal is not achieved on or prior to the Event Deadline Date, or any Restricted Stock Units that do not become Eligible RSUs (regardless of the extent to which the Service-Based Requirement is satisfied).
If the Stock Price Goal for a Tranche is achieved:, the Service Requirement will be satisfied as to a portion of the Eligible RSUs for that Tranche on the first date on which that Stock Price Goal is achieved (the “Stock Price Achievement Date”), and as to an additional portion of the Eligible RSUs for that Tranche on the designated anniversaries of the Stock Price Achievement Date, in each case as set forth in the table below, subject in each case to Participant remaining an Employee through the Stock Price Achievement Date and remaining a Service Provider through the applicable vesting date.
Vesting Tranches |
Vesting on Stock Price Achievement Date |
Vesting following Stock Price Achievement Date |
1, 2, 3 and 4 |
25% |
25% on each of the six (6) month, twelve (12) month and eighteen (18) month anniversaries of the Stock Price Achievement Date |
5, 6, 7 and 8 |
25% |
25% on each of the three (3) month, six (6) month and twelve (12) month anniversaries of the Stock Price Achievement Date |
9 and 10 |
33.3% |
33.3% on the three (3) month anniversary and 33.4% on the six (6) month anniversary of the Stock Price Achievement Date |
Notwithstanding anything to the contrary herein, the total number of Eligible RSUs for a Tranche that become vested shall not exceed one hundred percent (100%) of the total number of Restricted Stock Units allocated to that Tranche.
Qualifying Termination of Employment:
In the event that Participant becomes eligible for severance payments in connection with a termination of Participant’s employment pursuant to an offer letter or employment agreement by and between Participant and the Company (or by and among Participant, the Company and a Company subsidiary) (Participant’s “Employment Agreement”) due to a termination by the Company or an affiliate without Cause (within the meaning of the Employment Agreement) or Participant’s resignation for Good Reason (within the meaning of the Employment Agreement) outside of the Change in Control Period or similar period of heighted protection designated therein, then, notwithstanding the Service Requirement as described above, subject to Participant’s satisfaction of all conditions of receipt of such severance payments under the Employment Agreement, including Participant’s entry into and non-revocation of a Separation Agreement and Release of Claims and Participant’s compliance with the Employee Intellectual Property and Non-Compete Agreement previously executed by Participant, Participant will become vested in each Tranche for which the Stock Price Goal has been achieved prior to the date of such termination,
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with respect to any portion of such Tranche for which the vesting date has not occurred on or prior to such termination.
[Qualifying Termination of Board Service:
In the event that Participant ceases to be an Employee, but continues to be a Director following such cessation of employment, and Participant subsequently ceases to be a Director because Participant is not nominated by the Company for reelection to the Board (and not because Participant declines to stand for reelection), or the stockholders of the Company fail to reelect Participant to the Board, then, notwithstanding the Service Requirement as described above, subject to Participant’s satisfaction of all conditions of receipt of severance payments under the Employment Agreement applicable to a termination of employment by the Company without Cause, including Participant’s entry into and non-revocation of a Separation Agreement and Release of Claims and Participant’s compliance with the Employee Intellectual Property and Non-Compete Agreement previously executed by Participant, Participant will become vested in each Tranche for which the Stock Price Goal has been achieved, with respect to any portion of such Tranche for which the vesting date has not occurred on or prior to such cessation of service on the Board.]
Termination of Employment due to Death or Disability:
In the event that Participant’s employment terminates due to Participant’s death or due to a termination by the Company or an affiliate based on Participant’s Disability (within the meaning of the Employment Agreement), then, notwithstanding the Service Requirement as described above, subject to Participant’s satisfaction of all conditions of receipt of severance payments under such Employment Agreement applicable to a termination of employment by the Company without Cause, including Participant’s entry into and non-revocation of a Separation Agreement and Release of Claims (which may be executed by Participant’s representative, guardian or executor, as applicable, in the case of Participant’s incapacity or death) and Participant’s compliance with the Employee Intellectual Property and Non-Compete Agreement previously executed by Participant, Participant will become vested in each Tranche for which the Stock Price Goal has been achieved, with respect to any portion of such Tranche for which the vesting date has not occurred on or prior to such termination.
Change in Control:
In the event of a Change in Control that occurs before achievement of the Stock Price Goal for any Tranche, (i) achievement of such Stock Price Goal will be measured using the closing price of the Common Stock for the last trading day prior to the date of consummation of such Change in Control in lieu of measurement of the closing price over a consecutive sixty (60) trading day period that would otherwise apply, (ii) any such Tranche for which the Stock Price Goal is not achieved based on this measurement will be forfeited in full, and (iii) any Tranche for which the Stock Price Goal is so met will vest in full upon Participant’s continued service through the the date of consummation of such Change in Control.
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By Participant’s signature and the signature of the representative of the Company below, Participant and the Company agree that this Award of Restricted Stock Units is granted under and governed by the terms and conditions of this Award Agreement, including the Terms and Conditions of Restricted Stock Unit Grant, attached hereto as Exhibit A, and all other exhibits, appendices and addenda attached hereto, all of which are made a part of this document. Participant has reviewed this Award Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully understands all provisions of this Award Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to this Award Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address indicated below.
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PALLADYNE AI CORP. |
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EXHIBIT A
PALLADYNE AI CORP.
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT GRANT
Unless otherwise defined herein, defined terms shall have the meanings set forth in the Notice of Restricted Stock Unit Grant of this Award Agreement (the “Notice of Grant”) or in Section 30 below.
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In the event that the successor corporation does not assume or substitute for the Award of Restricted Stock Units (or portion thereof) in such a merger or Change in Control, all restrictions on the Award of Restricted Stock Units (or portion thereof) not assumed or substituted for will lapse, in each case unless specifically provided otherwise under this Award Agreement or other written agreement authorized by the Administrator between Participant and the Company or any of its Subsidiaries or Parents, as applicable.
For the purposes of this Section 10(c), the Award of Restricted Stock Units will be considered assumed if, following the merger or Change in Control, the Award of Restricted Stock Units confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).
Notwithstanding anything in this Section 10(c) to the contrary, and unless otherwise provided in this Award Agreement, if the Award of Restricted Stock Units is subject to Section 409A and if the change in control definition contained in the Award Agreement (or other agreement related to the Award, as applicable) does not comply with the definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Section 409A without triggering any penalties applicable under Section 409A.
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Participant understands that the Company and the Service Recipient may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Award of Restricted Stock Units.
Participant understands that Data may be transferred to a stock plan service provider, as may be selected by the Company in the future, assisting the Company with the implementation, administration and management of the Award of Restricted Stock Units. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country of operation (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company, any stock plan service provider selected by the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Award of Restricted Stock Units to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Award of Restricted Stock Units. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Award of Restricted Stock Units. Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her status as a Service Provider and career with the Service Recipient will not be adversely affected. The only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant Restricted Stock Units or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Award of Restricted Stock Units. For more information on the
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consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.
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For purposes of this Section 30(d), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (y) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
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APPENDIX A
PALLADYNE AI CORP.
COUNTRY ADDENDUM TO RESTRICTED STOCK UNIT AGREEMENT
Unless otherwise defined herein, capitalized terms used in this Country Addendum to Restricted Stock Unit Agreement (the “Country Addendum”) will be ascribed the same defined meanings as set forth in the Restricted Stock Unit Agreement of which this Country Addendum forms a part (or other written agreement as specified in the Restricted Stock Unit Agreement).
Terms and Conditions
This Country Addendum includes additional terms and conditions that govern the Award of Restricted Stock Units granted to a Participant to the extent Participant resides and/or works in one of the countries listed below. If Participant is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which Participant is currently residing and/or working, or if Participant relocates to another country after the Award of Restricted Stock Units is granted, the Company, in its discretion, will determine to what extent the terms and conditions contained herein will apply to Participant.
Notifications
This Country Addendum also may include information regarding exchange controls and certain other issues of which Participant should be aware with respect to Participant’s participation in the Award of Restricted Stock Units. The information is based on the securities, exchange control and other Applicable Laws in effect in the respective countries as of [DATE]. Such Applicable Laws often are complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the information in this Country Addendum as the only source of information relating to the consequences of Participant’s participation in the Award of Restricted Stock Units because the information may be out of date at the time Participant vests in or receives or sells the Shares covered by the Restricted Stock Units.
In addition, the information contained in this Country Addendum is general in nature and may not apply to Participant’s particular situation, and the Company is not in a position to assure Participant of any particular result. Participant should seek appropriate professional advice as to how the Applicable Laws in Participant’s country may apply to his or her situation.
Finally, if Participant is a citizen or resident of a country other than the one in which Participant currently is residing and/or working, transfers residence and/or employment to another country after the grant of the Restricted Stock Units, or is considered a resident of another country for local law purposes, the information in this Country Addendum may not apply to Participant in the same manner.
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CORPORATE OFFICE
Palladyne AI Corp.
650 South 500 West, Suite 150
Salt Lake City, UT 84101
DIRECTORS |
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EXECUTUVE OFFICERS |
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Brian D. Finn |
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Benjamin G. Wolff |
Eric T. Olson |
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President, Chief Executive Officer and Director |
Stephen M. Twitty |
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Dennis Weibling, Chairman |
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Denis Garagić |
Benjamin G. Wolff |
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Chief Technology Officer |
Michael T. Young |
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Stephen Sonne |
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Chief Legal Officer and Corporate Secretary |
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Trevor Thatcher |
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Chief Financial Officer |
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TRANSFER AGENT
Continental Stock Transfer & Trust Company
1 State Street 30th Floor,
New York, NY 10004-1561
STOCK LISTING
The Nasdaq Stock Market
Ticker Symbol: PDYN
Palladyne Ai P.O. BOX 8016, CARY, NC 27512-9903 Have your ballot ready and please use one of the methods below for easy voting: Your vote matters! Your control number Have the 12 digit control number located in the box above available when you access the website and follow the instructions. Internet: Palladyne AI Corp. Annual Meeting of Stockholders www.proxydocs.com/PDYN • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote For Stockholders of record as of April 14, 2026 Phone: 1-866-977-4326 Monday, June 8, 2026 2:00 PM, Mountain Time • Use any touch-tone telephone 650 South 500 West, Suite 150 Salt Lake City, Utah 84101 • Have your Proxy Card ready • Follow the simple recorded instructions Mail: • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid YOUR VOTE IS IMPORTANT! envelope provided PLEASE VOTE BY: 2:00 PM, Mountain Time, June 8, 2026. This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Benjamin G. Wolff and Trevor Thatcher (the "Named Proxies"), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Palladyne AI Corp. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE Copyright © 2026 BetaNXT, Inc. or its affiliates. All Rights Reserved
Palladyne AI Corp. Annual Meeting of Stockholders Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2, 3 AND 4 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. To elect one Class II director to hold office until our 2029 annual meeting of stockholders and his successor is elected and qualified. FOR WITHHOLD 1.01 Dennis Weibling FOR FOR AGAINST ABSTAIN 2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for FOR our fiscal year ending December 31, 2026. 3. To approve the Palladyne AI Corp. 2021 Equity Incentive Plan, as amended and restated, to FOR increase the number of shares authorized for issuance thereunder. 4. To approve restricted stock unit awards to our senior executives. FOR 5. To transact other business that may properly come before the annual meeting or any adjournments or postponements thereof. Check here if you would like to attend the meeting in person. Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Signature (if held jointly) Date Date