DEF 14A 1 a2020definitiveproxystatem.htm DEF 14A Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.     )
 
 
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
Axon Enterprise, Inc.
(Name of Registrant as Specified In Its Charter)
 
 
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To our shareholders:

This is supposed to be a letter about 2019, but that already feels like a long time ago. We had a great year — and I'll get to that.

But first, I want to address the unprecedented time we are living in. I am writing this to you from my home in Arizona — and the current state of the world is coronavirus quarantines, travel bans, and stresses to the global healthcare system. The stock market is volatile, and an oil price war is adding uncertainty.

At Axon, we have been clear eyed about the challenges and we aspire to lead from the front. Adversity brings opportunities for people and organizations that are the most adaptable. Ice ages created breakout opportunities for adaptable species to explosively grow in their aftermath. We certainly do not celebrate difficult times, but we do see them as challenges that can bring out the greatness in people.

Axon is “mission critical” under Department of Homeland Security guidelines and in the feedback from our customers, and we are doing everything we can to keep our manufacturing lines open and our employees and customers safe.

As always, our public safety customers are on the front lines of protecting the public, and sadly, many of them have already lost their lives to COVID-19. If current trends continue, the pandemic will take more lives this year than firearms or vehicle accidents, which are normally the two greatest risks to officers. We mourn for fallen officers and their families, and we have pivoted to utilize our supply chain to source critical safety equipment such as masks, gloves and hand sanitizer to help reduce the numbers infected. Only days into this effort, more than 6,000 agencies have reached out to Axon for help.

We have also stepped up to provide global access to the full feature set of Axon Citizen, at no cost this year, to every agency that is not currently using it. Axon Citizen is one of our many cloud software offerings and is highly useful for social distancing — it enables virtual evidence collection, eliminates the need for officers to have to collect digital files in person and reduces the need for community members to visit a station. Citizen is one of the investments we have made to grow our business, but I am confident that you, our shareholders, will agree that now isn’t the time to sell this solution. Now is the time to make it immediately available to every customer who needs it, and we can return to a more traditional business arrangement once we all get through this together.

This isn't the first time Axon has faced adversity.

In 2008, as the financial crisis gripped the world, we decided to transform our entire business from being a simple TASER devices manufacturing firm into an integrated technology company making wearables and cloud software. The transition was anything but easy — we had many difficult learning curves to overcome. As competitors in the public safety space retreated, we advanced into new opportunities and established ourselves as the clear market leader in cloud-hosted digital evidence management and camera sensors.





As a result, today Axon is stronger than ever. We ended 2019 with $396 million in cash equivalents and investments, zero debt and an underlying business that generates strong cash flow and high margin recurring revenues. Revenue grew 26% to $531 million last year, driven by demand for our latest generation camera, Axon Body 3, the cloud-connected TASER 7, and our cloud software. And our bottom line performance reflected our ability to scale manufacturing of TASER 7, continued growth of higher margin Axon Cloud software revenue (up 41% for the full year), and cost discipline. While net income was affected by catch-up stock compensation expense from our highly innovative eXponential Stock Performance and CEO plans, we delivered a record $88 million in adjusted EBITDA for the full year, up 43%, and Q4 2019 adjusted EBITDA more than tripled to $38 million, reflecting a 22% margin.

Objectively, we ended 2019 with a business among the strongest. In 2020, we will prove again that we are among the most adaptable.

When others retreat, we will advance. I am confident we will look back at 2020 as a pivotal year where we not only rose to the challenge, but we accelerated progress and created new opportunities. More importantly, we extended a hand to help our customers and their communities when it mattered.

Right now, we are supporting our customers through a period of upheaval, doing our best to be a stable and reliable partner in this storm. Beyond that, our strategic priorities in 2020 are to continue to execute in our core market, while accelerating our path-to-market in new product categories such as productivity (Records) and communications (Dispatch), and expanding to new customer categories, such as corrections, U.S. federal agencies and new international markets.

Beyond 2020, the future is very bright.

Axon remains fully committed to its mission to protect life. In my 2019 book, “The End of Killing,” I laid out our moonshot: before this decade is out, we will deliver a non-lethal weapon that will outperform a traditional handgun in terms of reliable stopping power. I’ve seen early prototypes, and I’m pretty excited.

There will come a day when front line officers in threatening situations reach for their TASER devices first, before their firearms, not out of the goodness of their hearts, but because they know it will actually work better and keep them safer — and this will lead to better outcomes for everyone.

We are also delivering upon a future where body and in-car cameras perform as smart devices — alerting command about critical incidents, transcribing human speech, reading driver’s licenses and license plates, and so much more. We are proud to be developing products that address some of society’s most entrenched problems and we believe we have the obligation to do so in a responsible way — one that promotes transparency, with built-in mechanisms for accountability. Our AI and Policing Technology Ethics Board provides expert guidance on these issues, and is being seen as a model for other industries to follow.

In June 2019, Axon said we would not put facial recognition on our body cameras, at this time, because the technology is not reliable enough for widespread use and there are important legal questions that must first be vetted. And in October 2019, we announced that Axon would launch the industry's first AI-powered Automated License Plate Recognition (ALPR) system built from the ground up using an ethical design and privacy-centric framework.

Axon has not, and will not ever sell public safety data. We believe the data is owned by public safety agencies and the communities they serve, and should not be resold to private entities whose interests may not be aligned with the public good. It’s important to me personally that we build a society that we all want to live in. We believe privacy-centric and ethics-minded design is not a hindrance to growth. Rather, it is a competitive advantage that our customers and their communities value deeply.

I will end this letter with a story. I was recently presenting at a university and was greeted by protesters. At the end of the presentation they took questions from the audience. One of the students stepped up and read from a sheet of paper,




“Mr. Smith, your company makes hundreds of millions of dollars selling for a profit to government agencies, how on Earth can we trust you?”

And I answered: “I appreciate the sentiment behind your question. When I was your age, I had two friends who were shot and killed. I was enraged that such a terrible thing could happen, and I wanted to do something about it. I could have gone out and started a non-profit to try to go after this problem. However, on a practical basis, that would mean I would have to spend a large portion of my time out asking people for money, for donations. Instead, I focused on seeing if I could develop a business model that could create technologies to address the problem. Here I am, 25 years later. Our company has sales around a half a billion dollars per year. We are set to spend over $100 million dollars per year on research and development. There are well over a thousand people working at my company to address this problem. And we have introduced significant breakthroughs in new systems to ensure accountability and transparency in how these products are used. Thousands of agencies around the world use TASER devices and body cameras today, and more than 200,000 people have been saved from potential death or serious injury with our systems. It is inconceivable that any other approach I could have taken would have near this scale or impact. Conscious capitalism is the most powerful force for good in solving the world’s most pressing problems. While no one is perfect, and there is always room for healthy skepticism, I believe the scale of our enterprise is exactly why idealistic young people like you should seriously consider entrepreneurship as the single greatest pathway to have impact at large scale on the problems you care about.”

We are a for-profit company, and I am proud of that fact. We are investing to solve big problems, and to deliver outstanding returns to all our stakeholders: shareholders, customers, communities and employees. And we have learned that business models that withstand the test of time are those that focus on building value in a sustainable way. Put simply: when we build products and services in a manner we can be proud of, they have a more positive impact on the world around us and create lasting sources of value.

I sincerely hope you, our shareholders, share our sense of pride and responsibility. We are building fantastic products and solutions, built with care to ensure we maximize their utility and minimize the risks of abuse. We are building a business that has grown from a garage to the industry-leading enterprise we have become today. And today is just a milestone on a longer journey where we will solve even bigger problems, creating even more value for all of our stakeholders.

Thank you for being a part of our mission,

-Rick




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AXON ENTERPRISE, INC.
17800 North 85th Street
Scottsdale, Arizona 85255
  
 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 29, 2020
  
 
To Our Shareholders:
The 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Axon Enterprise, Inc. (the “Company” or “Axon”) will be held at 10:00 a.m. (local time) on Friday, May 29, 2020. This year's Annual Meeting will be a completely virtual meeting of shareholders. You will be able to attend the Annual Meeting, vote your shares electronically, and submit your questions during the live webcast by visiting www.virtualshareholdermeeting.com/AAXN2020. You will need to have your 16-digit control number included on your Notice, on your proxy card, or in the instructions that accompanied your proxy materials. The Annual Meeting will be held for the following purposes:
 
1.
Electing the three Class B directors of the Company named in this proxy statement for a term of three years, and until their successors are elected and qualified;
2.
Advisory vote to approve the compensation of the Company's named executive officers;
3.
Ratifying the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for fiscal year 2020;
4A.
To approve an amendment to Article 5 of the Company's Certificate of Incorporation to remove the super-majority vote requirement and replace with a majority vote requirement;
4B.
To approve an amendment to Article 6 of the Company's Certificate of Incorporation to remove the super-majority vote requirement and replace with a majority vote requirement;
5.
Shareholder proposal to elect each director annually; and
6.
Transacting such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof.
Only holders of the Company’s common stock at the close of business on April 3, 2020 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. Only shareholders with a valid 16-digit control number will be able to attend the Annual Meeting and vote, ask questions, and access the list of shareholders as of the close of business on the Record Date for the Annual Meeting.

Your vote is very important. Whether or not you plan to attend the Annual Meeting virtually, we encourage you to read the proxy statement and vote as soon as possible. For specific instruction on how to vote your shares, please refer to the section entitled “General Information About the Annual Meeting and Voting” and the



instructions on your proxy card or the voting instruction card you receive from your broker, bank or other intermediary. Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

By Order of the Board of Directors,
 
/s/ ISAIAH FIELDS
Isaiah Fields
Corporate Secretary
Scottsdale, Arizona
April 15, 2020
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING VIRTUALLY, PLEASE VOTE ON THE INTERNET, BY TELEPHONE, OR MARK, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY OR VOTING INSTRUCTION CARD IN THE ENCLOSED ENVELOPE.




TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




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AXON ENTERPRISE, INC.
17800 North 85th Street
Scottsdale, Arizona 85255
   
 
PROXY STATEMENT FOR 2020 ANNUAL MEETING OF SHAREHOLDERS
   
 
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why am I receiving these proxy materials?
Our Board of Directors (the “Board” or “Board of Directors”) has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail in connection with the Board of Directors’ solicitation of proxies for use at the Annual Meeting, which will take place virtually at 10:00 a.m. local time on Friday, May 29, 2020. You will be able to attend the Annual Meeting, vote your shares electronically, access the list of shareholders as of the close of business on the Record Date, and submit your questions during the live webcast by visiting www.virtualshareholdermeeting.com/AAXN2020. You will need to have your 16-digit control number included on your Notice, on your proxy card, or in the instructions that accompanied your proxy materials. This proxy statement describes matters on which you, as a shareholder, are entitled to vote. It also gives you information on these matters so that you can make an informed decision. This proxy statement is first being made available or sent to shareholders on or about April 15, 2020.
What is included in these materials?
These materials include:
 
This proxy statement for the Annual Meeting; and
The Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”).
If you received printed versions of these materials by mail, these materials also include the proxy card or vote instruction form for the Annual Meeting.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of printed proxy materials?
In accordance with the rules of the Securities and Exchange Commission (“SEC”), instead of mailing a printed copy of our proxy materials to all of our shareholders, we have elected to furnish such materials to shareholders by providing access to these documents over the Internet. Accordingly, on April 15, 2020 we sent a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders of record and beneficial owners. Shareholders have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed or electronic set of the proxy materials by following the directions found in the Notice. The Company encourages you to take advantage of

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the availability of the proxy materials on the Internet in order to help reduce the cost and environmental impact of the Annual Meeting.
How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to: (1) view our proxy materials for the Annual Meeting on the Internet; (2) vote your shares after you have viewed our proxy materials; (3) request a printed or electronic copy of the proxy materials; and (4) instruct us to send our future proxy materials to you electronically by mail or by email. Copies of the proxy materials are also available for viewing at the investor relations page of the Company’s website at http://investor.axon.com.
What proposals will be voted on at the Annual Meeting and how does the Board of Directors recommend I vote?
Shareholders will vote on the following items at the Annual Meeting:
Proposal
Description
Board Recommendation
No. 1
The election of the three Class B directors of the Company named in this proxy statement for a term of three years, and until their successors are elected and qualified
FOR
(all nominees)
No. 2
Advisory vote to approve the compensation of the Company's named executive officers
FOR
No. 3
Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for fiscal year 2020
FOR
Nos. 4A and 4B
Amendments to the Company's Certificate of Incorporation to remove the super-majority vote requirements and replace with a majority vote requirement
Proposal 4A - Amendment of Article 5
Proposal 4B - Amendment of Article 6



FOR
FOR
No. 5
Shareholder proposal to elect each director annually
AGAINST
Shareholders will also vote on the transaction of any other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. To the maximum extent allowed by the SEC’s proxy rules, the proxy holders will vote your shares on such other matters as they determine in their discretion.
Where are the Company’s principal executive offices located and what is the Company’s main telephone number?
The Company’s principal executive offices are located at 17800 North 85th Street, Scottsdale, Arizona 85255. The Company’s main telephone number is (800) 978-2737.
Who may vote at the Annual Meeting?
As of April 3, 2020 (the “Record Date”), there were 59,824,261 shares of the Company’s common stock outstanding. Each share of common stock entitles the holder to one vote on each matter that may properly come before the Annual Meeting. The holders of a majority of the voting power of all shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Shareholders are not entitled to cumulative voting in the election of directors. Only shareholders as of the close of business on the Record Date are entitled to receive notice of, to attend, and to vote at the Annual Meeting.
What is the difference between a shareholder of record and a beneficial owner of shares held in street name?
Shareholder of Record
If your shares are registered directly in your name with the Company’s transfer agent, Broadridge Corporate Issuer Solutions, Inc., you are considered the shareholder of record with respect to those shares, and the Notice or printed

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materials were sent directly to you by the Company. If you request printed copies of the proxy materials by mail, you will also receive a printed proxy card.
Beneficial Owner of Shares Held in Street Name
If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the Notice or the printed proxy materials were forwarded to you by that organization. The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization how to vote the shares held in your account. If you request printed copies of the proxy materials by mail, you will also receive a printed vote instruction form.
If I am a shareholder of record of the Company’s shares, how do I vote?
There are multiple ways to vote:
:     Via the Internet. If you received a Notice, you may vote via the Internet:
Before the Meeting: visit http://www.proxyvote.com and enter the control number found in the Notice.
During the Meeting: visit http://www.annualshareholdermeeting.com/AAXN2020 and enter the control number found in the Notice.
(     By telephone. If you received or requested printed copies of the proxy materials by mail, you may vote by calling the toll free number found on the proxy card.
,     By mail. If you received or requested printed copies of the proxy materials by mail, you may vote by filling out the proxy card and returning it in the envelope provided.
If I am a beneficial owner of shares held in street name, how do I vote?
Your bank or broker will send you instructions on how to vote. There are four ways to vote:
:     Via the Internet. If you received a Notice, you may vote via the Internet:
Before the Meeting: visit http://www.proxyvote.com and enter the control number found in the Notice.
During the Meeting: visit http://www.annualshareholdermeeting.com/AAXN2020 and enter the control number found in the Notice.
(     By telephone. If you received or requested printed copies of the proxy materials by mail, you may vote by calling the toll free number found on the vote instruction form.
,     By mail. If you received or requested printed copies of the proxy materials by mail, you may vote by filling out the vote instruction form and returning it in the envelope provided.

To attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held in street name, you should contact your broker to obtain your 16-digit control number or otherwise vote through your broker. Only stockholders with a valid 16-digit control number, will be able to attend the Annual Meeting and vote, ask questions and access the list of stockholders as of the close of business on the Record Date for the Annual Meeting.
What constitutes a quorum in order to hold and transact business at the Annual Meeting?
Under Delaware law and the Company’s bylaws, the holders of a majority of the voting power of all shares entitled to vote, present in person or represented by proxy, at a meeting constitutes a quorum. Abstentions and broker non-votes will be counted as present to determine whether a quorum has been established. Once a share of the Company’s common

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stock is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournments or postponements. If a quorum is not present, the Annual Meeting may be adjourned until a quorum is obtained.
How are proxies voted?
All valid proxies received prior to the Annual Meeting will be voted. All shares represented by a proxy will be voted and, where a shareholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder’s instructions.
What happens if I do not give specific voting instructions?
Shareholder of Record If you are a shareholder of record and you indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board, or sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owner of Shares Held in Street Name If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on such matters with respect to your shares. This is generally referred to as a “broker non-vote.”
Which ballot measures are considered “routine” or “non-routine”?
Proposal No. 3 (ratification of the appointment of Grant Thornton as the Company's independent registered public accounting firm) is considered “routine.” A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected in connection with this proposal.
Proposals No. 1, No. 2, Nos. 4A and 4B, and No. 5 (election of directors, advisory vote to approve the compensation of the Company's named executive officers, approval of amendments to the Company's Certificate of Incorporation to remove the super-majority vote requirements and replace with a majority vote requirement, and the shareholder proposal to elect each director annually) are considered “non-routine.” A broker or other nominee cannot vote without specific instructions from the beneficial owner on non-routine matters, and therefore we anticipate there will be broker non-votes in connection with Proposals No. 1, No. 2, Nos. 4A and 4B and No. 5.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote during the Annual Meeting by voting again via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), by signing and returning a new proxy card or voting instruction form with a later date, or by attending the Annual Meeting virtually and voting during the meeting. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again during the virtual meeting or specifically request that your prior proxy be revoked by delivering to the Company’s Corporate Secretary at 17800 North 85th Street, Scottsdale, Arizona 85255, a written notice of revocation prior to the Annual Meeting.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements; to allow for the tabulation and certification of votes; and to facilitate a successful proxy solicitation.

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What is the voting requirement to approve each of the proposals?
Election of Directors
For Proposal No. 1, under our bylaws, assuming the existence of a quorum at the Annual Meeting, the three nominees for director who receive the affirmative vote of a plurality of all of the votes cast will be elected to the Board of Directors. This means that the three director nominees with the most votes will be elected. Votes to withhold will be counted toward a quorum, but will not affect the outcome of the vote on the election of directors. Broker non-votes will have no effect on the outcome of this proposal if a quorum is present.

Advisory Vote to Approve the Compensation of the Company's Named Executive Officers (“Say-on-Pay”)
For Proposal No. 2, assuming the existence of a quorum at the Annual Meeting, the affirmative vote of a majority of the total votes of shares of common stock properly cast for or against the proposal in person or by proxy at the Annual Meeting is required for ratification. Broker non-votes and abstentions will have no impact on the outcome of this proposal if a quorum is present.
Ratification of Independent Registered Public Accounting Firm
For Proposal No. 3, assuming the existence of a quorum at the Annual Meeting, the affirmative vote of a majority of the total votes of shares of common stock properly cast for or against the proposal in person or by proxy at the Annual Meeting is required for ratification. Broker non-votes and abstentions will have no impact on the outcome of this proposal if a quorum is present.
Amendments to the Company's Certificate of Incorporation to Remove Super-Majority Vote Requirements
For Proposal No. 4A, the affirmative vote of the holders of 75% of the outstanding shares of our common stock is necessary to adopt the proposed amendment to Article 5 of our certificate of incorporation. Unless otherwise instructed, proxy holders will vote the proxies received by them for this proposal. Broker non-votes and abstentions will have the effect of a vote against this proposal.
For Proposal No. 4B, the affirmative vote of the holders of 66.67% of the outstanding shares of our common stock is necessary to adopt the proposed amendment to Article 6 of our certificate of incorporation. Unless otherwise instructed, proxy holders will vote the proxies received by them for this proposal. Broker non-votes and abstentions will have the effect of a vote against this proposal.
Shareholder Proposal to Elect Each Director Annually
For Proposal No. 5, assuming the existence of a quorum at the Annual Meeting, the affirmative vote of a majority of the total votes of shares of common stock properly cast for or against the proposal in person or by proxy at the Annual Meeting is required for approval. Broker non-votes and abstentions will have no impact on the outcome of this proposal if a quorum is present.
Who will serve as the inspector of election?
A member of the Company’s internal legal department will serve as the inspector of election.
Where can I find the voting results of the Annual Meeting?
The final voting results will be tallied by the inspector of election and, within four business days after the Annual Meeting, the Company expects to report the final results on Form 8-K with the SEC.
Who is paying for the cost of this proxy solicitation?
The Company will bear the cost of solicitation of proxies for the Annual Meeting. We are soliciting your proxy on behalf of our Board. In addition to the use of mail, proxies may be solicited by personal interview, telephone, facsimile,

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electronically, including e-mail, or otherwise, by our officers, directors and other employees. They will not receive any additional compensation for these activities. We also will request persons, firms and corporations holding shares in their names, or in the names of their nominees, that are beneficially owned by others to send or cause to be sent proxy materials to, and obtain proxies from, such beneficial owners and will reimburse such holders for their reasonable expenses in so doing.


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GOVERNANCE
THE BOARD OF DIRECTORS
Director Nominations
The Nominating and Corporate Governance Committee (the “NCG Committee”) is responsible for identifying and evaluating nominees for director and for recommending to the Board a slate of nominees for election at each annual meeting of shareholders. Nominees may be suggested by directors, members of management, shareholders, or, in some cases, by a third-party firm.
Shareholders who wish the NCG Committee to consider their recommendations for nominees for the position of director should submit their recommendations in writing by mail to the Nominating and Corporate Governance Committee, c/o Axon Enterprise, Inc., 17800 North 85th Street, Scottsdale, AZ 85255. Recommendations by shareholders that are made in accordance with these procedures will receive the same consideration by the NCG Committee as other suggested nominees.
Qualifications for All Directors
In its assessment of each potential candidate, including those recommended by shareholders, the NCG Committee considers the potential nominee’s demonstrated character, judgment, relevant business, functional and industry experience, and whether they possess a high degree of business, technological, medical or law enforcement acumen, independence, and other such factors the NCG Committee determines are pertinent in light of the current needs of the Board. The NCG Committee also takes into account the ability of a potential nominee to devote the time and effort necessary to fulfill his or her responsibilities to the Board of Directors. While the NCG Committee does not have a formal diversity policy, it strives to achieve a well-rounded balance of varying skill sets and backgrounds in the composition of the Board.
The NCG Committee’s process for identifying and evaluating nominees typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. The Company has not historically paid third parties to identify or assist in identifying or evaluating potential nominees but reserves the right to do so in the future.

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Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board
The Board has identified particular qualifications, attributes, skills and experience that it believes are important to be represented on the Board as a whole in order to advise and contribute to the execution of the Company’s strategic objectives. Each Board member was selected in accordance with the process for the selection and nomination of directors described above. Accordingly, the Board believes that each of the Company’s Board members brings a myriad of attributes that combined benefit the Company and its shareholders. The following table summarizes certain key characteristics of the Company’s business and the associated attributes that have been identified as important to be represented on the Board.
Business Characteristics
 
Qualifications, Attributes, Skills & Experience
The Company’s business is multifaceted and involves complex financial transactions.
 
•     High level of financial literacy
•     Relevant CEO, CFO, or treasury
      experience
•     Certified Public Accountant,
      Certified Financial Analyst
The Company’s business requires compliance with a variety of regulatory requirements across a number of countries and relationships with various entities and non-governmental organizations.
 
•     Governmental, legal or political
      experience
The Company’s TASER product lines utilize Neuro-Muscular Incapacitation from electrical currents as the method to disable a resisting suspect, which inherently involves medical and scientific testing.
 
•     Medical and/or scientific experience
The Company’s primary markets are law enforcement, military and corrections agencies.
 
•     Law enforcement experience
•     Military experience
The Company’s business includes the innovative fields of cloud computing, software as a service, wearable technology, and other emerging technologies such as artificial intelligence, which involves different point of views and perspectives from its traditional TASER background.
 
•     Emerging technologies experience
The Board’s responsibilities include understanding and overseeing the various risks facing the Company and ensuring that appropriate policies and procedures are in place to effectively manage risk.
 
•     Risk oversight
•     Management expertise
Director Nominees in 2020
Mark Kroll, Ph.D.
Director since 2003
Class B
Age: 67
Board Committees: Litigation Committee (Chair), Scientific and Medical Committee (Chair)
Other Public Company Boards: Haemonetics Corporation
Dr. Kroll retired in July 2005 from St. Jude Medical, Inc., where he held various executive level positions since 1995, most recently as Senior Vice President and Chief Technology Officer, Cardiac Rhythm Management Division. Dr. Kroll holds a B.S. degree in Mathematics and a M.S. degree and a Ph.D. degree from the Electrical Engineering department of the University of Minnesota and an M.B.A. degree from the University of St. Thomas. Dr. Kroll is also the named inventor of over 350 issued U.S. patents and is a Fellow of the: American College of Cardiology, Heart Rhythm Society, Institute of Electronics and Electrical Engineering ("IEEE"), and the American Institute for Medicine and Biology in Engineering ("AIMBE").

Axon Enterprise, Inc. | 2020 Proxy Statement | 8



Specific Qualifications, Attributes, Skills and Experience:
Technology Expertise
Advanced mathematical and scientific education and technology and scientific accomplishments as recognized by “Fellow” designations from IEEE and AIMBE provide a strong scientific background that is beneficial to the Company.
Medical and Scientific
Expertise
Scientific accomplishments as recognized by “Fellow” designations from the American College of Cardiology and the Heart Rhythm Society provide invaluable skills and experience to the TASER business.
Risk Oversight & Management
Service on Haemonetic Corporation’s board of directors as well as leadership positions at St. Jude’s Medical, Inc. provides beneficial experience in management and oversight.
Matthew R. McBrady, Ph.D
Director since 2016
Class B
Age: 49
Board Committees: Audit Committee, Compensation Committee, Merger and Acquisition Committee (Chair)
Other Public Company Boards: None

From August 1998 through January 2000, Dr. McBrady served as an international economist with President Clinton’s Council of Economic Advisers and the U.S. Treasury Department. Dr. McBrady subsequently served as a professor of finance at the Wharton School of Business at the University of Pennsylvania (from September 2002 through May 2003) and at the Darden Graduate School of Business Administration at the University of Virginia (from May 2003 through December 2006). Dr. McBrady then worked as an investment professional within the North American Private Equity group at Bain Capital, LLC (from January 2007 through January 2009). Dr. McBrady then joined Silver Creek Capital Management, LLC as Managing Director and Head of Investment Strategy and Risk Management (from January 2009 through January 2014) prior to joining BlackRock, Inc. where he served as Managing Director and Chief Investment Officer of Multi-Strategy Hedge Funds from January 2014 through September 2016. Dr. McBrady holds a B.A. degree in Economics from Harvard University, a M.S. degree in International Economics from Oxford University (U.K.), and a Masters and Ph.D. degree in Business Economics from Harvard University. Dr. McBrady previously served as a director for the Company from January 2001 through June 2014.

Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial 
Literacy
Service as a member of President Clinton’s Council of Economic Advisory and teaching positions at the Harvard Business School, the Wharton School of Business and the Darden Graduate School of Business Administration providing Dr. McBrady valuable financial knowledge and context. Service as Chief Investment Officer for BlackRock and investment strategy and management positions for other investment management firms.
Relevant Political Background
Service as a member of President Clinton’s Council of Economic Advisors giving him insight into government processes.
Patrick W. Smith, Chief Executive Officer
Director since 1993
Class B
Age: 49
Other Public Company Boards: None

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Mr. Smith has served as Chief Executive Officer (“CEO”) and as a director of the Company since 1993. He is also co-founder of the Company. After graduating from Harvard, cum laude, in just three years (class of 1991), Mr. Smith entered directly into the Master of Business Administration program at the University of Chicago. In two years, he completed both a master’s degree in international finance from the University of Leuven in Leuven, Belgium and an M.B.A. degree with honors at the University of Chicago, graduating in the top 5% of his class. After completing graduate school in the summer of 1993, he co-founded Axon Enterprise, Inc. (F.K.A. TASER International, Inc.) in September 1993 with his brother, Thomas P. Smith.

Among other qualifications, Mr. Smith is the founder and visionary of the Company and brings to the Board extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service, and support as well as technology innovation as he currently holds 35 patents.
Incumbent Directors in 2020
Michael Garnreiter, Chairman
Director since 2006
Class A
Age: 68
Board Committees: Audit Committee (Chair), Compensation Committee, NCG Committee, Litigation Committee
Other Public Company Boards: Knight-Swift Transportation Holdings, Amtech Systems
Mr. Garnreiter most recently served as Vice President of Finance and Treasurer of Shamrock Foods, a privately-held manufacturer and distributor of foods and food-related products. He retired from this position in December 2015. From January 2010 until August 2012, Mr. Garnreiter was a managing director of Fenix Financial Forensics, a Phoenix-based litigation and financial consulting firm. From April 2002 through June 2006, Mr. Garnreiter was Executive Vice President, Treasurer, and Chief Financial Officer of the Main Street Restaurant Group. Mr. Garnreiter previously served with the international accounting firm, Arthur Andersen, from 1974 through March 2002 with increasing levels of responsibility, culminating as a partner. Mr. Garnreiter holds a B.S. degree in accounting from California State University at Long Beach and is a Certified Public Accountant.
Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial 
Literacy
Certified Public Accountant and former partner at Arthur Andersen. Served on the audit committee for each board he has served in the past.
Risk Oversight & Management
Board Experience for Knight-Swift Transportation Holdings, Amtech Systems, IA Global Inc., and Fenix Financial Forensics gives ample experience relating to public company corporate governance matters.
Hadi Partovi
Director since 2010
Class A
Age: 47
Board Committees: Compensation Committee (Chair), NCG Committee, Merger and Acquisition Committee, Technology Committee
Other Public Company Boards: None

Mr. Partovi is the CEO and co-founder of the non-profit education organization Code.org, and serves as a Director on the board of Convoy. Mr. Partovi is a past or present strategic advisor or early investor at numerous technology companies, including Facebook, Dropbox, Uber, airbnb, SpaceX, and Zappos. From 2009 through 2010, Mr. Partovi was Senior Vice President of Technology for MySpace (via acquisition) and from 2006 through 2009 he was President and Co-Founder of ILIKE, Inc. which was acquired by MySpace in 2009. From 2002 through 2005, Mr. Partovi was

Axon Enterprise, Inc. | 2020 Proxy Statement | 10


General Manager, Microsoft MSN Entertainment and MSN.com and from 1999 through 2001, he was Co-Founder and VP of Product and Professional Services for TELLME Networks, Inc. From 1994 through 1999, he was Program Manager for Microsoft Internet Explorer. Mr. Partovi holds B.A. and M.S. degrees in Computer Science, summa cum laude, from Harvard University.

Specific Qualifications, Attributes, Skills and Experience:
Technology Expertise
Experience as an investor in technology companies provides Mr. Partovi with invaluable insight into software and Internet-related business development initiatives.
Risk Oversight & Management
Experience as an advisor to multiple start-up companies provides Mr. Partovi experience in the unique challenges facing companies pursuing new technology.
Vice Admiral (Retired) Richard H. Carmona M.D., M.P.H., F.A.C.S.
Director since 2007
Class C
Age: 70
Board Committees: NCG Committee (Chair), Litigation Committee, Scientific and Medical Committee
Other Public Company Boards: The Clorox Company, The Herbalife Company

Dr. Carmona was sworn in as the 17th Surgeon General of the United States on August 5, 2002 and served the statutory four year term. Prior to being named United States Surgeon General, Dr. Carmona was the chairman of the State of Arizona Southern Regional Emergency Medical System, a professor of surgery, public health and family and community medicine at the University of Arizona, and the Pima County Sheriff's Department surgeon and deputy sheriff. He is currently employed as Chief of Health Innovation of Canyon Ranch Health in Tucson, Arizona and has held that position since October 1, 2006. Dr. Carmona attended Bronx Community College of the City University of New York where he earned his associate of arts degree. Dr. Carmona holds a B.S. degree and medical degree from the University of California, San Francisco. He has also earned a Master’s Degree in Public Health from the University of Arizona.

Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial 
Literacy
As Chief of Heath Innovation at Canyon Ranch, CEO of Canyon Ranch Health, and as a member of other public company boards, Dr. Carmona is able to contribute to the oversight of the Company's financial matters.
Risk Oversight & Management
Service on the Clorox Company and the Herbalife Company boards of directors provides valuable insight into public company corporate governance matters.
Relevant Political Background
Service as the former Surgeon General of the U.S. provides a unique insight into political matters.
Medical and Scientific Expertise
As the Surgeon General of the U.S. as well as Dr. Carmona's extensive career in emergency medical services, provides him a deep understanding of health, safety and medicine.
Law Enforcement/Military Experience
Dr. Carmona is a combat decorated and disabled U.S. Army Special Forces Veteran and a highly decorated police officer, giving him unusual insight into our diverse customer base.
Julie Cullivan
Director since 2017
Class C
Age: 54
Board Committees: Audit Committee, Information Security Committee (Chair)
Other Public Company Boards: None.

Axon Enterprise, Inc. | 2020 Proxy Statement | 11



Ms. Cullivan is the SVP, Business Operations and CIO at ForeScout Technologies, Inc., a leading Internet of Things (IoT) security company, where she is responsible for leading the cross functional initiatives and information security strategy to support the fast-growing company. Formerly EVP, Business Operations and CIO at FireEye, Inc., Ms. Cullivan was a member of the executive team that set the company’s strategy. With responsibility for both Business Operations and Information Technology, Ms. Cullivan helped scale FireEye from a private company, through its successful IPO, to a global publicly traded company.

Specific Qualifications, Attributes, Skills and Experience:
Technology Expertise
Ms. Cullivan is a recognized leader in the cyber security field and a sought-after speaker on topics including women in security, security as a boardroom imperative, innovation and building high impact teams.
Risk Oversight & Management
Experience as SVP, Business Operations and CIO where Ms. Cullivan leads cross functional initiatives and information security strategy in a high-growth environment.
Caitlin Kalinowski
Director since 2019
Class C
Age: 39
Board Committees: Information Security Committee, Technology Committee (Chair)
Other Public Company Boards: None

Ms. Kalinowski is the Head of VR Hardware for Oculus, the augmented reality/virtual reality division at Facebook. Ms. Kalinowski previously served in a number of hardware design roles at Facebook, Inc., Apple Inc., and OQO. Ms. Kalinowski is also on the strategic board of Lesbians Who Tech & Allies, the largest LGBTQ technical organization in the world. Ms. Kalinowski holds a B.S. in Mechanical Engineering from Stanford University.

Specific Qualifications, Attributes, Skills and Experience:
Technology Expertise
Ms. Kalinowski has extensive experience in established technology organizations such as Facebook and Apple. Ms. Kalinowski led technical teams at Apple and currently heads Oculus VR at Facebook. She has tremendous insight into product design and engineering for technology focused initiatives.
BOARD AND COMMITTEE GOVERNANCE
Role of the Board of Directors
The principal duties of the Board of Directors are to oversee management and evaluate strategy. The fundamental responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interest of the Company and its shareholders. Our governance structure is designed to foster disciplined actions, effective decision-making, and appropriate oversight of both compliance and performance.

Axon’s key governance documents, including our Corporate Governance Guidelines, are available at http://investor.axon.com/governance/documents-and-charters.

Board Leadership Structure
The Company’s governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s shareholders. The current leadership structure is anchored by a non-management director as Chairman of the Board. The Board believes this structure

Axon Enterprise, Inc. | 2020 Proxy Statement | 12


provides a very well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors.

Chairman of the Board: Michael Garnreiter
Chief Executive Officer: Patrick W. Smith
The principal role of the Chairman of the Board is to manage and to provide leadership to the Board of Directors of the Company. The Chairman is accountable to the Board and acts as a direct liaison between the Board and the management of the Company, through the CEO. The Chairman acts as the communicator for Board decisions where appropriate. The separation of the role of the Chairman from that of the CEO is based on the Board's view that the Chairman should be free from any interest and any business or other relationship that could interfere with the Chairman’s judgment, other than interests resulting from Company shareholdings and remuneration.

The Board conducts an annual evaluation of the performance of the Board and each of its standing committees, including peer assessments of each individual director.
Meetings of the Board of Directors
During the year ended December 31, 2019, the Board held five meetings. During 2019, each director attended at least 75% of all regular Board and applicable committee meetings.
Committees of the Board of Directors
The following table summarizes the current membership of our standing non-management Board committees, and identifies the chairman of each committee and the number of committee meetings held in fiscal 2019:
 
Audit
Committee
 
Compensation
Committee
 
NCG
Committee
 
Litigation
Committee
 
Merger and Acquisition Committee
 
Scientific and Medical Committee
 
Technology Committee
 
Information Security Committee
# Meetings
4
 
3
 
1
 
1
 
 
1
 
 
Director
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Carmona
 
 
 
 
*
 
X
 
 
 
X
 
 
 
 
Julie Cullivan
X
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Michael Garnreiter
*
 
X
 
X
 
X
 
 
 
 
 
 
 
 
Caitlin Kalinowski
 
 
 
 
 
 
 
 
 
 
 
 
*
 
X
Mark Kroll
 
 
 
 
 
 
*
 
 
 
*
 
 
 
 
Matthew McBrady
X
 
X
 
 
 
 
 
*
 
 
 
 
 
 
Hadi Partovi
 
 
*
 
X
 
 
 
X
 
 
 
X
 
 
  X = Member
* = Chair
The Audit Committee, established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), exercises sole authority with respect to the selection of the Company’s independent registered public accounting firm and the terms of its engagement; reviews the policies and procedures of the Company and management with respect to maintaining the Company’s books and records; reviews with the independent registered public accounting firm, upon the completion of its audit, the results of the auditing engagement and any other recommendations the independent registered public accounting firm may have with respect to the Company’s financial, accounting or auditing systems; and reviews with the independent registered public accounting firm, upon the completion of its quarterly review of the Company’s financial statements, the results of the quarterly review and any other recommendations the independent registered public accounting firm may have in connection with such quarterly reviews. The Report of the Audit Committee for the year ended December 31, 2019 is included in this proxy statement.

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The Compensation Committee determines salaries, stock and bonus awards and considers employment agreements for appointed officers of the Company, and prepares reports on these matters; considers and reviews grants of options and other equity awards under the Company’s compensations plans and administers such plans; and considers matters of director compensation, benefits and other forms of remuneration. The Compensation Committee Report for the year ended December 31, 2019 is included in this proxy statement. See “Compensation Discussion and Analysis” for more information regarding the Compensation Committee.

The NCG Committee is charged with identifying qualified candidates for nomination for election to the Board and nominating such candidates for election; and reviewing and making recommendation to the Board concerning the composition and size of the Board and its committees. The Committee also monitors the process to assess the Board’s effectiveness and is primarily responsible for oversight of corporate governance, and to develop and update our Corporate Governance Principles.
The Litigation Committee is responsible for reviewing and approving the settlement of certain litigation matters against the Company or its officers and directors to ensure the settlement is fair, reasonable and in the best interests of the Company’s shareholders. No member of the Litigation Committee was a named party in any pending litigation involving the Company.
The Merger and Acquisition Committee serves to focus on issues related to any proposed merger and acquisition activity or plans identified by the Company's management.
The Scientific and Medical Committee aims to create board linkage with the Company's Scientific and Medical Advisory Board which provides important feedback directly to the Company's management about scientific, medical and electrophysiology issues related to the Company's TASER products.
The Technology Committee was established to stay abreast of new technology and the impact of new technology on the Company's products and strategy.
The Information Security Committee was established to ensure that members of the Board of Directors actively understand information security protections and associated risks. The Information Security Committee engages in key decisions to help set the direction for the Company's information security strategy, as well as understand and prioritize information security capabilities and associated risk remediation.
The Audit Committee, Compensation Committee, NCG Committee, and Litigation Committee have each adopted charters that govern their respective authority, responsibilities and operation. The charters of these committees are available on our website at http://investor.axon.com/governance/documents-and-charters.
Audit Committee Financial Experts
The Board of Directors determined that Mr. Garnreiter and Dr. McBrady, independent directors of the Company, are audit committee financial experts within the meaning of that term under applicable rules promulgated by the SEC. Information about the past business and educational experience of Mr. Garnreiter and Dr. McBrady are included in this proxy statement under the heading “Governance--The Board of Directors.” The Board has also determined that each current member of the Audit Committee is financially literate and that Mr. Garnreiter and Dr. McBrady satisfy the financial sophistication requirements under the current listing standards of NASDAQ.
Director Independence
As of the date of this proxy statement, based upon the information submitted by each of its directors, the Board has made a determination that a majority of our current Board is independent as that term is defined by NASDAQ listing standards and that all of the members of our Board committees also meet any additional specific independence standards applicable to any committee on which such director serves, including the more stringent audit committee and compensation committee independence committee criteria. The Company has determined that all Board members, other than Patrick W. Smith and Dr. Mark Kroll, are independent under applicable NASDAQ and SEC rules. Each of our

Axon Enterprise, Inc. | 2020 Proxy Statement | 14


directors other than Mr. Smith and Dr. Kroll is also a “non-employee director” (within the meaning of Rule 16b-3 under the Exchange Act) and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code and related Treasury Regulations. The Board also had determined that Bret Taylor, who resigned from the Board of Directors in June 2019, was independent while he served on the Board.
Patrick W. Smith is not independent because he is an executive officer of the Company. Dr. Mark Kroll is not independent because he provides medical advisory and consulting services to the Company (see “Certain Relationships and Related Transactions – Consulting Services”).
Board of Directors' Role in Risk Oversight
The Company’s risk management process is intended to ensure that risks are taken knowingly and purposefully. As such, the Company’s executive management keeps the Board apprised by presenting results of the process to identify, assess, prioritize and address strategic, financial, operating, business, compliance, litigation, regulatory, safety, reputational and other risks to the Company. Executive management meets with the Board on a quarterly basis to address high priority risks and on an as-needed basis to evaluate and monitor emerging risks.
Code of Ethics
The Company has adopted a Code of Ethics which is applicable to all employees, directors and consultants of the Company. A copy of the Company’s Code of Ethics is published and available on the investors portion of Company’s website at http://investor.axon.com/governance/documents-and-charters. The Company intends to disclose any future amendments or waivers to the Code of Ethics on the Company’s website within four business days following the date of such amendment or waiver, unless required by NASDAQ rules to disclose such event on Form 8-K.
Director Attendance at Annual Meetings of Shareholders
Directors are encouraged by the Company to attend each annual meeting of shareholders if their schedules permit. All of our directors attended the 2019 Annual Meeting of Shareholders.
Shareholder Communications with Directors
Shareholders may communicate with members of the Board by mail addressed to the Chairman, or any other individual member of the Board, to the full Board, or to a particular committee of the Board. In each case, such correspondence should be sent to the Company’s headquarters at 17800 North 85th Street, Scottsdale, AZ 85255. In general, any shareholder communication about bona fide issues concerning the Company delivered to the Secretary for forwarding to the Board of specified member or members will be forwarded in accordance with the shareholder's instructions.
DIRECTOR COMPENSATION
Members of the Board who are employees of the Company are not separately compensated for serving on the Board. Board compensation is reviewed periodically by the Company's Compensation Committee. In March of 2017, the Company retained Compensia Inc. ("Compensia") to assist the Compensation Committee with reviewing peer group data and updating the Company's Board compensation. As a result of this analysis, the Compensation Committee approved updated compensation plans bringing the Company's total Board compensation levels in line with the median level of its peer group. Non-employee directors of the Company are paid $9,000 per quarter and are eligible to receive annual grants of restricted stock units (“RSUs”) of the Company’s stock with a grant date fair value equal to approximately $160,000 vesting in equal annual installments over three years. New Board members are eligible to receive an initial grant of RSUs with a grant date fair value equal to approximately $160,000 in their first year of service vesting in equal annual installments over three years. The Chairman of the Board receives an additional $5,000 in cash per quarter and an annual grant of RSUs with a grant date fair value equal to $20,000 vesting over one year. Board members that provide any special Board advisory consultations in their official capacity as a Board member (other than Board and committee meetings) are paid compensation at the rate of $2,500 per day or $1,250 per half day, with no pay for travel days. All directors are reimbursed for reasonable expense incurred in connection with their attendance at meetings.

Axon Enterprise, Inc. | 2020 Proxy Statement | 15


In addition, board members serving on committees in either the chair or member capacity earn extra fees as summarized in the following table:
Committee
 
Quarterly Chair Fee
 
Quarterly Member Fee
Audit
 
$
5,000

 
$
2,500

Compensation
 
2,500

 
1,500

NCG
 
2,250

 
1,250

Litigation
 
1,500

 
750

Merger and Acquisition
 
2,500

 
1,500

Science and Medical
 
6,000

 
2,500

Technology
 
2,500

 
1,500

Information Security Committee
 
2,500

 
1,500

The annual RSU awards are typically granted on the date of the Company’s annual shareholder’s meeting. Directors have the option of deferring all or a portion of their cash compensation into a non-qualified deferred compensation plan.
The following table summarizes the compensation paid to non-employee directors for the fiscal year ended December 31, 2019.
Name
 
Fees Earned or
Paid in Cash 
($)
 
Stock Awards 
($) (1)
 
All Other
Compensation ($) (2)
 
Total ($)
Richard H. Carmona
 
$
58,000

 
$
160,005

 
$

 
$
218,005

Julie Cullivan
 
46,000

 
160,005

 

 
206,005

Michael Garnreiter (3)
 
90,000

 
201,542

 

 
291,542

Caitlin E. Kalinowski
 
13,500

 
160,020

 

 
173,520

Mark W. Kroll (4)
 
66,000

 
160,005

 
81,838

 
307,843

Matthew McBrady
 
62,000

 
160,005

 

 
222,005

Hadi Partovi
 
63,000

 
160,005

 

 
223,005

Bret Taylor (5)
 
26,000

 
160,005

 

 
186,005

(1) 
Amounts in this column represent the aggregate grant date fair value of RSUs, computed in accordance with stock-based compensation accounting rules (ASC Topic 718). The fair value of each RSU is the closing price of our common stock on the date of grant. Each non-employee director, with the exception of Ms. Kalinowski, received an award of 2,396 RSUs on May 31, 2019. The awards vest in three equal installments on May 31, 2020, 2021 and 2022. Ms. Kalinowski received an award of 2,625 RSUs on August 26, 2019, which vest in three equal installments on August 26, 2020, 2021, and 2022. Pursuant to SEC regulations, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The assumptions used in the calculations of the grant date fair value for stock awards are included in Note 1 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2019.
The following table shows equity-based awards granted in 2019, as well as the aggregate number of outstanding RSUs and options outstanding as of December 31, 2019. Prior to 2012, when the Company transitioned to the use of restricted stock units, non-employee directors received grants of options to acquire common stock under certain of the Company’s stock compensation plans.

Axon Enterprise, Inc. | 2020 Proxy Statement | 16


 
 
2019 Stock-based Awards
 
As of December 31, 2019
Name
 
Restricted Stock
Units Granted
 
Grant Date
 
Approximate
Grant Date Fair
Value ($)
 
Aggregate
Restricted Stock
Units Outstanding
 
Aggregate
Options
Outstanding
Richard H. Carmona
 
2,396

 
5/31/2019
 
$
160,005

 
6,249

 
45,067

Julie Cullivan
 
2,396

 
5/31/2019
 
160,005

 
6,215

 

Michael Garnreiter
 
3,018

 
Various (3)
 
201,542

 
6,549

 

Caitlin E. Kalinowski
 
2,625

 
8/26/2019
 
160,020

 
2,625

 

Mark W. Kroll
 
2,396

 
5/31/2019
 
160,005

 
6,249

 

Matthew McBrady
 
2,396

 
5/31/2019
 
160,005

 
7,327

 

Hadi Partovi
 
2,396

 
5/31/2019
 
160,005

 
6,249

 

Bret Taylor
 
2,396

 
5/31/2019
 
160,005

 

 

(2) 
Other compensation for Dr. Kroll represents fees for consulting services provided. See “Certain Relationships and Related Transactions – Consulting Services” below.
(3) 
Pursuant to his service as Chairman of the Board, on May 31, 2019, Mr. Garnreiter received a grant of 300 shares which vest one year from the award date. Mr. Garnreiter also received an additional grant of 322 shares which vested upon grant on May 31, 2019 in recognition of his service as Chairman of the Board for 2018.
(4) 
Non-employee directors have the option of participating in the non-qualified deferred compensation plan through which participants may elect to postpone the receipt and taxation of a portion of their compensation. All gains or losses are allocated fully to plan participants and the Company does not guarantee a rate of return on deferred balances. The Company does not make discretionary payments to the plan. There were no above-market returns for participants in the plan. Dr. Kroll participates in the Company's deferred compensation plan, and elected to defer $66,000 of earned compensation into the plan during the year ended December 31, 2019.
(5) 
Mr. Taylor served as a Director until June 14, 2019.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company reviews all relationships and transactions in which we and our directors, executive officers or their immediate family members are participants, to determine whether such persons have a direct or indirect material interest. Management is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related party transactions and for then determining, based on the facts and circumstances, whether the Company or a related party has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related party are disclosed in our proxy statement. In addition, pursuant to the Audit Committee Charter, the Audit Committee, or a committee of independent directors duly appointed by the Board, reviews, approves, or ratifies related party transactions in accordance with NASDAQ rules. The Audit Committee is authorized to consult with independent legal counsel at the Company’s expense in determining whether to approve any such transaction.
Consulting Services

The Company engages Dr. Mark Kroll, a member of the Board of Directors, to provide consulting services. The expenses related to these services, excluding travel related reimbursements, were approximately $0.1 million for the year ended December 31, 2019. At December 31, 2019, the Company had no accrued liabilities related to these services.
Software Services
The Company subscribes to a mobile collaboration software suite from Quip, a company that was co-founded and managed by Bret Taylor, a former member of our Board of Directors. Mr. Taylor resigned from the Board of Directors in June 2019. In April 2016, Quip was acquired by Salesforce.com, and subsequent to the acquisition, the Company

Axon Enterprise, Inc. | 2020 Proxy Statement | 17


continued to consider Quip a related party. In November 2017, Mr. Taylor was appointed to President and Chief Product Officer of Salesforce.com. The Company now considers the consolidated Salesforce.com entity to be a related party. The cost to subscribe to various cloud-based hosting arrangements from Salesforce.com and Quip was $1.9 million for the year ended December 31, 2019, and the Company had a negligible amount of accrued liabilities due to Salesforce.com as of December 31, 2019. The Board of Directors considered the transactions between Axon and Salesforce.com and Quip in evaluating the independence of Mr. Taylor and determined these transactions did not impair Mr. Taylor's independence.
Transactions related to "The End of Killing" by CEO Patrick W. Smith
In 2019, the Company's CEO, Patrick W. Smith, published a book titled "The End of Killing." The book is meant to provide thought leadership on how to build a safer society, and promotes the use of less-lethal technology. The concepts outlined in the book, which promote the use of less lethal technology, are intertwined with the Company's business and mission.
Axon has used this book in a limited capacity to strengthen its relationships with customers, investors, and lawmakers. The total amount paid by the Company during 2019 in connection with Mr. Smith's book was less than $50,000.
The activities included the purchase of approximately 3,700 copies of the book at production cost, which were provided to customers, potential customers, employees, investors, and select members of Congress. Mr. Smith earned no royalties on the books purchased by the Company. The Company also paid for some shipping costs related to the books. The Company paid for the cost of website design and maintenance, and for the domain names for websites related to the book, as well as certain other promotional activities. Finally, the Company offered discounted or free consumer TASER devices in connection with certain book purchases.
The transactions between the parties are considered a mutual marketing agreement as the promotion of the book benefits the Axon brand, and are not taxable compensation for Mr. Smith.

Axon Enterprise, Inc. | 2020 Proxy Statement | 18


SHARE OWNERSHIP
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
The following table sets forth information, as of March 31, 2020, with respect to beneficial ownership of the Company’s common stock by each current director or nominee for director, by each of our named executive officers (as defined by Item 402(a)(3) of Regulation S-K)(the “NEOs”), by all directors and executive officers as a group, and by each person who is known to the Company to be the beneficial owner of more than five percent of the Company’s outstanding common stock. The Company believes that, except as otherwise described below, each named beneficial owner has sole voting and investment power with respect to the shares listed. As of March 31, 2020, there were no shares currently pledged by any NEO or director.
Name of Beneficial Owner (1)
 
Shares Owned
 
Shares
Acquirable
Within 60
Days (2)
 
Total
Beneficial
Ownership
 
Percent of
Class (3)
BlackRock, Inc. (4)
 
7,735,929

 

 
7,735,929

 
12.9
%
The Vanguard Group (5)
 
5,527,463

 

 
5,527,463

 
9.2

Wellington Management Group LLP (6)
 
4,933,527

 

 
4,933,527

 
8.2

Baillie Gifford & Co (7)
 
4,188,918

 

 
4,188,918

 
7.0

 
 
 
 
 
 
 
 
 
Patrick W. Smith
 
662,788

 

 
662,788

 
1.1

Hadi Partovi
 
284,337

 
2,135

 
286,472

 
*

Richard H. Carmona
 
9,372

 
47,202

 
56,574

 
*

Mark W. Kroll
 
13,244

 
2,135

 
15,379

 
*

Michael Garnreiter
 
25,730

 
2,135

 
27,865

 
*

Matthew R. McBrady
 
6,659

 
2,135

 
8,794

 
*

Julie Cullivan
 
1,600

 

 
1,600

 
*

Caitlin Kalinowski
 

 

 

 
*

 
 
 
 
 
 
 
 
 
Jawad A. Ahsan
 
29,567

 
11,111

 
40,678

 
*

Jeffrey C. Kunins
 

 

 

 
*

Luke S. Larson
 
40,882

 

 
40,882

 
*

Joshua M. Isner
 

 

 

 
*

 
 
 
 
 
 
 
 
 
All directors and executive officers as a group (12 persons)
 
1,074,179

 
66,853

 
1,141,032

 
1.9
%
* Less than 1%
(1) 
Except as noted in Notes 4, 5, 6, and 7 below, the address of each of the persons listed is c/o Axon Enterprise, Inc., 17800 North 85th Street, Scottsdale, AZ 85255.
(2) 
Reflects the number of shares that could be purchased by exercise of options exercisable at March 31, 2020, or options or restricted stock units vesting within 60 days thereafter under the Company’s stock incentive plans.
(3) 
Based on 59,811,768 shares outstanding as of March 31, 2020. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above, any security which such person or group has the right to acquire within 60 days of March 31, 2020, is deemed to be outstanding for the purpose of computing the percentage ownership of such person or group, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person or group.
(4) 
Represents shares of the Company's common stock beneficially owned as of December 31, 2019, based on the Schedule 13G/A filed on February 4, 2020 by BlackRock, Inc. In such filing, BlackRock, Inc. lists its address

Axon Enterprise, Inc. | 2020 Proxy Statement | 19


as 55 East 52nd Street, New York, New York 10055, and indicates it has sole voting power with respect to 7,632,665 shares of the Company's common stock, shared voting power with respect to no shares of the Company's common stock, sole dispositive power with respect to 7,735,929 shares of the Company's common stock, and shared dispositive power with respect to no shares of the Company's common stock.
(5) 
Represents shares of the Company's common stock beneficially owned as of December 31, 2019, based on the Schedule 13G/A filed on February 12, 2020 by The Vanguard Group. In such filing, The Vanguard Group lists its address as 100 Vanguard Blvd., Malvern, PA 19355, and indicates it has sole voting power with respect to 122,659 shares of the Company's common stock, shared voting power with respect to 10,630 shares of the Company's common stock, sole dispositive power with respect to 5,401,451 shares of the Company's common stock, and shared dispositive power with respect to 126,012 shares of the Company's common stock.
(6) 
Represents shares of the Company's common stock beneficially owned as of December 31, 2019, based on the Schedule 13G/A filed on January 28, 2020 by Wellington Management Group LLP ("WGM"), Wellington Group Holdings LLP ("WGH"), Wellington Investment Advisors Holdings LLP ("WIAH"), and Wellington Management Company LLP ("WMC"). The business address listed for these filers is 280 Congress Street, Boston, MA 02210. In such filing, WGM, WGH, and WIAH reported sole voting power with respect to no shares of the Company's common stock, shared voting power with respect to 4,405,976 shares of the Company's common stock, sole dispositive power with respect to no shares of the Company's common stock, and shared dispositive power with respect to 4,933,527 shares of the Company's common stock. WMC reported sole voting power with respect to no shares of the Company's common stock, shared voting power with respect to 4,385,702 shares of the Company's common stock, sole dispositive power with respect to no shares of the Company's common stock, and shared dispositive power with respect to 4,857,872 shares of the Company's common stock.
(7) 
Represents shares of the Company's common stock beneficially owned as of December 31, 2019, based on the Schedule 13G/A filed on February 3, 2020 by Baillie Gifford & Co. In such filing, Baillie Gifford & Co lists its address as Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, United Kingdom, and indicates it has sole voting power with respect to 3,688,267 shares of the Company's common stock, shared voting power with respect to no shares of the Company's common stock, sole dispositive power with respect to 4,188,918 shares of the Company's common stock, and shared dispositive power with respect to no shares of the Company's common stock.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who beneficially own more than 10 percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10 percent beneficial owners are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely on a review of the copies of Section 16(a) reports furnished to the Company and written representations from certain reporting persons that no other reports were required, to the Company’s knowledge, such persons complied with all of the Section 16(a) filing requirements applicable to them in 2019, except as follows: Joshua M. Isner filed two late Form 4s (one reporting one transaction and one reporting two transactions), Luke S. Larson filed two late Form 4s (one reporting one transaction and one reporting three transactions), and Patrick W. Smith filed three late Form 4s (one reporting one transaction, one reporting two transactions, and one reporting three transactions).
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
See “Governance--The Board of Directors” for biographical information for Patrick W. Smith, who is also our CEO.

Luke S. Larson
Title: President
Joined Axon in 2008
Age: 39

Mr. Larson serves as Axon’s President. Mr. Larson is responsible for day to day operations and execution for all aspects of the Company’s business. Mr. Larson joined Axon in June of 2008 and has served in a variety of executive and management roles including director of video products, product manager and product development manager. Prior to joining Axon, Mr. Larson served as a Marine Corps infantry officer. Mr. Larson graduated from University of Arizona with honors where he was an NROTC Scholarship recipient. He also received an MBA in International Business from Thunderbird School of Global Management. 
Jawad A. Ahsan
Title: Chief Financial Officer
Joined Axon in 2017
Age: 40

Mr. Ahsan joined Axon in 2017 and is responsible for leading the company's global finance, corporate strategy, legal and IT organizations, as well as Axon’s consumer-facing business. Prior to Axon, Mr. Ahsan was CFO for Market Track, private-equity backed SaaS company that he helped guide to an exit to Vista Equity. He spent 13 years in various roles at GE, most notably serving as CFO for GE Healthcare’s electronic health record and enterprise software solutions. Mr. Ahsan gained substantial international experience while at GE, working across more than 20 countries in several industries including healthcare, aviation, financial services, and film & entertainment. Mr. Ahsan is a graduate of GE's Corporate Audit Staff and Financial Management leadership development programs. He earned his MBA from the MIT Sloan School of Management and a BA in Economics from the College of the Holy Cross.
Joshua M. Isner
Title: Chief Revenue Officer
Joined Axon in 2009
Age: 34

Mr. Isner came to Axon in 2009 as a member of our Leadership Development Program. After rotating through several departments in the Company, he eventually helmed our domestic video and cloud sales team, which he led to a record year in 2014. Mr. Isner now oversees our entire sales organization. Mr. Isner was previously the Director of Leadership Development, Northeast Regional Sales Executive, VP of Video and Cloud Sales, and EVP of Global Sales at Axon. Mr. Isner has a B.S. in Government & Political Science from Harvard University.
Jeffrey C. Kunins
Title: Chief Product Officer and Executive Vice President of Software
Joined Axon in 2019
Age: 45

Mr. Kunins joined the Company in September 2019. Most recently, he served as Vice President of Alexa Entertainment at Amazon from February 2018 until joining Axon. Mr. Kunins served as the Vice President of Kindle at Amazon from March 2014 to February 2018. Prior to Amazon, Mr. Kunins served as General Manager (GM) of Product and Design at Skype, GM of Windows Live Messenger at Microsoft, and VP of Product at TELLME Networks, Inc. Mr. Kunins has a B.S. in Information & Decision Systems from Carnegie Mellon University.

Each executive officer serves at the discretion of our Board of Directors and no officer is subject to an agreement that requires the officer to serve the Company for a specified number of years. We have entered into employment-related agreements with each of the executive officers listed above. These agreements require notice of termination by the Company in certain situations that are described in further detail in this proxy statement under the heading “Compensation Discussion and Analysis--Employment Agreements and Other Arrangements.”
COMPENSATION DISCUSSION AND ANALYSIS
The purpose of this Compensation Discussion and Analysis is to provide material information about our compensation objectives and policies and to explain and provide context for the material elements of the disclosure which follows in this proxy statement with respect to the compensation of our named executive officers (“NEOs”).

Fiscal 2019 Company Highlights and Compensation Overview
Our financial and business highlights for fiscal 2019 include the following:

Full year revenue of $531 million, up 26% compared to fiscal 2018.
Axon Cloud revenue of $130 million, up 41% compared to fiscal 2018.
71% of full-year revenue was in recurring contracts, up from 55% in 2018.
We launched Axon Body 3, our latest generation body camera.

As described in more detail below and in the compensation tables that follow this Compensation Discussion and Analysis, our compensation structure applicable to our named executive officers did change significantly during 2019, with the exception of compensation for Mr. Smith, our CEO.
Our Compensation Philosophy
The Compensation Committee (in this section, the “Committee”) is in place to address matters relating to the fair and competitive compensation of our NEOs and non-employee directors, together with matters relating to our other benefit plans. The Committee believes that executive compensation should be aligned with the values, objectives and financial performance of the Company.
Objectives of NEO compensation include:
 
Attract and retain highly qualified individuals who are capable of making significant contributions critical to our long-term success;
Promote a performance-oriented environment that encourages Company and individual achievement;
Reward NEOs for long-term strategic management and the enhancement of shareholder value;
Strengthen the relationship between pay and performance by emphasizing variable, at-risk compensation that is dependent upon the achievement of specified corporate and personal performance goals; and
Align long-term management interests with those of shareholders, including long-term at-risk pay.

Axon Enterprise, Inc. | 2020 Proxy Statement | 20


Our Compensation Programs
CEO Performance Award
On May 24, 2018, Axon's shareholders approved the Board of Directors’ grant of non-qualified stock options to purchase 6,365,856 shares of common stock to Patrick W. Smith (the "CEO Performance Award"). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each vesting date. Each of the 12 vesting tranches of the CEO Performance Award have a 10-year contractual term and will vest upon certification by the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of the following eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters. 
Eight Separate Revenue Goals (1)
(in thousands)
 
Eight Separate Adjusted EBITDA (CEO Performance Award) Goals
(in thousands)
Goal #1, $710,058
 
Goal #9, $125,000
Goal #2, $860,058
 
Goal #10, $155,000
Goal #3, $1,010,058
 
Goal #11, $175,000
Goal #4, $1,210,058
 
Goal #12, $190,000
Goal #5, $1,410,058
 
Goal #13, $200,000
Goal #6, $1,610,058
 
Goal #14, $210,000
Goal #7, $1,810,058
 
Goal #15, $220,000
Goal #8, $2,010,058
 
Goal #16, $230,000
(1) In connection with the business acquisition that was completed during 2018, the revenue goals were adjusted for the acquiree's Target Revenue, as defined in the CEO Performance Award agreement.
As of December 31, 2019, the following operational goals were considered probable of achievement:
Total revenue of $710.1 million, $860.1 million, and $1,010.1 million; and
Adjusted EBITDA (CEO Performance Award) of $125.0 million, $155.0 million, $175.0 million, $190.0 million, $200.0 million, and $210.0 million.
The first two market capitalization goals have been achieved as of December 31, 2019. However, none of the shares subject to the CEO Performance Award have vested as of the date of this filing as the market capitalization goals and operational goals have not yet been achieved. The number of stock options expected to vest, based on the tranches considered probable of attainment, is approximately 4.8 million shares. The total grant date fair value of the CEO Performance Award, including those tranches not considered probable of attainment as of December 31, 2019, was approximately $246.0 million. The fair value of the options when the CEO Performance Award was approved by our Board and accepted by Mr. Smith in February 2018 was approximately $72.4 million. Due to a significant increase in the price of Axon's common stock between February 2018 and May 2018, when our shareholders approved the CEO Performance Award, the grant date fair value for accounting purposes increased to the amount disclosed in the Summary Compensation Table for 2018.
Mr. Smith’s compensation for 2019 and 2018, following the approval of the CEO Performance Award, consists of an annual base salary consistent with the minimum wage requirements of Arizona law and the CEO Performance Award.

Axon Enterprise, Inc. | 2020 Proxy Statement | 21


eXponential Stock Performance Plan
On February 12, 2019, our shareholders approved the 2019 Stock Incentive Plan (the "2019 Plan"), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units ("XSUs") under the plan. There were five main reasons why the Board recommended that shareholders approve the 2019 Plan. The XSPP and equity incentive awards under the 2019 Plan:
1.
Substitute short-term guaranteed share-based compensation and cash compensation for long-term, performance-vesting share-based compensation to deliver market competitive total pay,
2.
Align the entire Company around clearly defined market cap, revenue and Adjusted EBITDA performance goals through a broad-based plan that is offered to every employee,
3.
Strengthen Axon’s ability to retain and recruit top technical talent,
4.
Further align the interests of employees with those of the Company’s other shareholders, and
5.
Incorporated shareholder feedback and input on plan design.
Pursuant to the XSPP, all eligible full-time U.S. employees were granted an award of 60 XSUs in January 2019, and certain employees had the opportunity to elect to receive a percentage of the value of their target compensation over a nine year period from 2019 to 2027 in the form of additional XSUs. For employees who elected to receive XSUs, the XSU grants were made as an up front, lump sum grant in January 2019, and are intended to replace that portion of the target compensation they elected to receive in the form of XSUs for the next nine years. Accordingly, their annual go forward target compensation will be reduced until 2027 by the amount of such compensation that the employees elected to receive in the form of the January 2019 XSU grants. 

Other than Mr. Smith, each of the NEOs received an XSU grant with a target value of $1,000,000 prior to the 3x risk and 9x time multipliers. The number of shares granted was based on the closing stock price on the respective grant dates. Messrs. Ahsan, Isner, and Larson each received an XSU grant of 598,537 shares on January 2, 2019. Mr. Kunins received an XSU grant of 432,000 shares on September 23, 2019. There were no PSUs granted to the named executive officers for fiscal 2019 as XSUs are intended to generally replace shorter-term PSUs.

The market capitalization and operational goals are identical to the CEO Performance Award, except for the number of shares that are used to calculate the market capitalization goals if shares outstanding exceed the XSU Maximum. Additionally, because the grant date is different than that of the CEO Performance Award, the measurement period for market capitalization is not identical.

The XSUs are grants of restricted stock units, each with a term of approximately nine years, that vest in 12 equal tranches. Each of the 12 tranches will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters.

The XSPP contains an anti-dilution provision, which is used to calculate a maximum number of shares outstanding for purposes of determining achievement of the market capitalization goals whereby the maximum number of shares used to calculate the market capitalization goal is calculated by organically growing the current number of shares outstanding by 3% per year (the "XSU Maximum"). Any shares of Stock issued to Patrick W. Smith upon the exercise of the stock options granted to Mr. Smith under the CEO Performance Award shall increase the XSU Maximum. The XSU Maximum shall also be adjusted for acquisitions, spin-offs or other changes in the number of outstanding shares of common stock, if such changes have a corresponding adjustment on the market capitalization goals.

Axon’s shareholder outreach prior to introducing the XSPP included speaking with portfolio managers, analysts and corporate governance representatives at institutions that were among the highest percentage holders of Axon common stock for the purpose of gathering input and understanding best practices and shareholder preferences regarding share-based compensation plans. Shareholders tended to favor broad-based employee-wide plans over highly concentrated

Axon Enterprise, Inc. | 2020 Proxy Statement | 22


plans among senior management, and favor using performance-based share-based compensation, rather than cash, in delivering market-competitive total pay. Axon addressed shareholders’ dilution concerns by adopting into the XSPP a dilution guardrail of 3% annual share count growth, calculated on a daily basis, which removes any management incentive to dilute the share count to achieve the market cap goals. We credit our shareholder outreach efforts in helping us to design an employee-wide share-based compensation plan that drives alignment among shareholders, senior management and every employee.
Other Executive Compensation
We utilize various non-cash compensation programs, in addition to traditional cash-based compensation methods. Specifically, we have utilized stock-based awards.
The principal components of compensation in 2019 and 2020 for our NEOs (other than the CEO) consist of the following:
Annual salary;
Annual performance-based cash incentive plans, comprised of:
Commissions on bookings growth for 2019 and on revenue growth for 2020 for our Chief Revenue Officer; and
Payouts under the 2019 annual cash incentive plan based on the achievement of annual financial goals, including goals related to: total booked contract value; adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"); product goals related to Axon Body 3, Axon Records, and TASER 7; increase in net promoter score; increase in customer engagement on Axon network; and top 1200 customer churn;
Long-term equity compensation in the form of service-based restricted stock units (“RSUs”) awarded pursuant to the 2018 and 2019 Stock Incentive Plans; and
Long-term equity compensation in the form of XSUs subject to certain milestone vesting periods.
Any decision to materially increase compensation is based upon the objectives listed above, taking into account all forms of compensation, as well as based upon individual achievement of performance goals. These goals include revenue and earnings targets as well as specific operational goals. Decisions regarding the CEO’s compensation are made by the Committee and reflect the same considerations used for the other NEOs. The Board has not adopted any clawback policies, but adopted stock ownership guidelines in December 2018. 
Stock Ownership Guidelines

We adopted stock ownership guidelines for our named executive officers and Board members in December 2018.  The stock ownership guidelines state that non-employee directors hold at least 8,000 shares of Company stock and that named executive officers own at least 50,000 shares of the Company’s stock. For purposes of these guidelines, stock ownership includes shares for which the executive or director has direct or indirect ownership or control, including Axon common stock plus vested and unvested Axon stock options and RSUs, including unvested performance-based RSUs and XSUs. Executives and directors are expected to meet their ownership guidelines once they have received enough grants to add up to the required minimum.
Processes and Procedures for Considering and Determining Executive Compensation
The Committee assists the Board of Directors in addressing matters relating to the fair and competitive compensation of our NEOs and non-employee directors, together with matters relating to our other benefit plans. The Committee is currently composed of three independent directors: Hadi Partovi (Chair), Matthew McBrady, and Michael Garnreiter. The Committee makes the sole decision regarding compensation for the Chief Executive Officer and each NEO.
The Committee met three times in 2019. All Committee members were present for each meeting.

Axon Enterprise, Inc. | 2020 Proxy Statement | 23


One member of management, Patrick W. Smith, CEO, attended portions of the meetings. The agendas for these meetings were determined by the Committee members prior to the meetings. The Committee generally receives and reviews materials in advance of each meeting. Depending on the agenda for the particular meeting, materials may include:
Financial reports;
Reports on levels of achievement of corporate performance objectives;
Schedules setting forth the total compensation of the NEOs, including base salary, cash incentives, equity awards, perquisites and other compensation and any potential amounts payable to the NEOs pursuant to employment, severance and change of control agreements;
Summaries which show the NEOs’ total accumulated stock awards and stock option holdings;
Information regarding compensation paid by comparable companies identified in executive compensation surveys; and
Reports from consultants to the Committee.
The Committee’s primarily responsibilities are to:
Review and approve corporate goals and objectives relevant to the compensation of NEOs, evaluate the performance of the NEOs in light of these goals and objectives and determine and approve the compensation level of NEOs based on that evaluation;
Evaluate and establish the incentive components of the CEO’s compensation and related bonus awards, taking into account the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, the services rendered by the CEO and the awards given to the CEO in past years;
Review and approve the design of the compensation and benefit plans that pertain to the CEO and other NEOs who report directly to the CEO;
Administer equity-based plans, including stock incentive plans;
Approve the material terms of all employment, severance and change of control agreements for NEOs;
Retain compensation consultants and advisors as necessary, or appropriate, on an advisory basis to establish comparator groups, benchmarking and targets for compensation related matters;
Recommend to the Board the compensation for Board members, such as retainers, committee fees, chair fees, stock awards and other similar items;
Provide oversight regarding the Company’s benefit and other welfare plans, policies and arrangements;
Form and delegate authority to subcommittees when appropriate; and
Prepare the Compensation Committee report to be included in the Company’s annual proxy statement and Annual Report on Form 10-K filed with the SEC.
The Committee’s charter reflects these responsibilities, and the Committee and the Board periodically review and revise the charter. The full text of the Committee charter is available on our website at http://investor.axon.com/governance/documents-and-charters.
Role of Management and Consultants in Determining Executive Compensation
Our executive management supports the Committee in carrying out its responsibilities by preliminarily outlining compensation levels for NEOs, administering our benefit and other welfare plans and providing data to the Committee for analysis. Annually, compensation is initially proposed by the CEO for each executive (excluding the CEO), consisting of base salary, annual and long-term performance-based compensation and long-term equity compensation, which is then provided to the Committee for review and approval.
Our Committee has sole authority to engage the services of outside consultants and advisors, as it deems necessary or appropriate in the discharge of its duties and responsibilities. The Committee has budgetary authority to authorize and pay for the services of outside consultants and advisors, and such consultants and advisors report directly to the Committee. In 2017 and 2018, the Committee retained compensation consulting firm Compensia, Inc., which provided

Axon Enterprise, Inc. | 2020 Proxy Statement | 24


research, data analyses, benchmarking and design expertise in developing and structuring compensation programs for its executives. The Company utilized that information in the design of its 2018 and 2019 executive compensation plans, including the CEO Performance Award and XSPP. In 2018 and 2019, the Company also retained the compensation consulting division of Aon Consulting, Inc. to provide additional data analysis, modeling, and equity design expertise specific to developing and structuring the CEO Performance Award and XSPP.
The Committee also retained Compensia in 2019 for research, data analyses, benchmarking and design expertise in developing and structuring compensation for its new Chief Product Officer role. Compensia provided executive compensation information for Chief Product Officer roles based on its proprietary database for public companies with revenues between $150 million and $950 million and a market capitalization between $900 million and $10 billion.
Peer Comparator Group
The scope of Compensia’s review in 2018 included determining an appropriate comparator group to compare the Company’s executive compensation to, based primarily on the following criteria: Industry and Global Industry Classification code, revenue, and market capitalization. Compensia selected public technology companies with annual sales between $150 million and $950 million, with market capitalization of $900 million to $10 billion.

The Committee has selected the following comparator group when reviewing executive compensation:
2U, Inc.
  
Ellie Mae, Inc.
  
Proofpoint, Inc.
8x8, Inc.
  
Five9 Inc.
  
Qualys, Inc.
Alarm.com Holdings, Inc.
  
HubSpot, Inc.
  
RingCentral Inc.
Benefitfocus, Inc.
  
MINDBODY Inc.
  
SPS Commerce Inc.
Box. Inc.
  
New Relic, Inc.
  
Twilio Inc.
Carbonite, Inc.
  
Paycom Software, Inc.
  
Zendesk Inc.
Cornerstone OnDemand Inc.
 
Paylocity Holding Corp.
 
Zuora Inc.

In addition to the comparator group, to supplement the executive compensation information where publicly disclosed information was limited, Compensia provided executive compensation information for the NEOs based on its proprietary database for technology companies, primarily internet and software as a service companies, with revenues between $150 million and $950 million and a market capitalization between $900 million and $10 billion.

The following tables show the composition of each NEO’s total target direct compensation for 2019 and 2020:
2019
 
Annual Salary
 
Annual Target Incentive Compensation
(1)
 
Long-term Target Incentive Compensation--XSUs
(2)
 
Long-term Equity Compensation--RSUs
(3) (4)
 
Target Total Direct Compensation
Name
 
$
 
% Total
 
$
 
% Total
 
$
 
% Total
 
$
 
% Total
 
$
Patrick W. Smith
 
$
22,880

 
100.0
%
 
$

 
%
 
$

 
%
 
$

 
%
 
$
22,880

Luke S. Larson
 
325,000

 
14.8

 
300,000

 
13.6

 
1,000,000

 
45.5

 
575,000

 
26.1

 
2,200,000

Jawad A. Ahsan
 
300,000

 
14.3

 
300,000

 
14.3

 
1,000,000

 
47.6

 
500,000

 
23.8

 
2,100,000

Joshua M. Isner
 
275,000

 
14.5

 
500,000

 
26.3

 
1,000,000

 
52.6

 
125,000

 
6.6

 
1,900,000

Jeffrey C. Kunins (5)
 
300,000

 
13.6

 
300,000

 
13.6

 
1,000,000

 
45.5

 
600,000

 
27.3

 
2,200,000

(1) 
Presented at target levels. Actual results for 2019 exceeded targets, resulting in payouts under the annual cash incentive plan for Messrs. Larson and Ahsan in the amounts of approximately $301,000 each. Mr. Isner earned commissions in 2019 of approximately $1,267,000. See further discussion following under “Performance-Based Incentive Plans.”
(2) 
Represents XSUs granted to Messrs. Larson, Ahsan, and Isner on January 2, 2019 and to Mr. Kunins on September 23, 2019 which are discussed in more detail under “Executive Compensation — Compensation Discussion and Analysis — eXponential Stock Performance Plan". The grants had a target value of $1,000,000 prior to the 3x risk and 9x time multipliers and were granted in lieu of traditional performance-based RSUs.

Axon Enterprise, Inc. | 2020 Proxy Statement | 25


After application of these multipliers and estimating the grant date fair value pursuant to ASC 718, the fair value of the awards received was approximately $20.0 million for Messrs. Larson, Ahsan, Isner and $18.3 million for Mr. Kunins.
(3) 
Approximate value; actual value of the RSUs is based on the grant-date fair value. Except for Mr. Kunins, these RSUs were awarded on January 2, 2019 and cliff vest on the 3-year anniversary of the award date. The award for Mr. Kunins was granted on September 23, 2019 and will vest in equal amounts on the first, second, and third anniversaries of the grant date, subject to continued service. Mr. Kunins also received two other RSU awards intended as nonrecurring awards, which are not reflected in the table above: 1) 14,400 RSUs which vest two-thirds on the first anniversary and one-third on the second anniversary of the grant date, 2) 9,000 RSUs which vested on February 14, 2020.
(4) 
Excludes the value of RSUs awarded in December 2019, which are intended as 2020 compensation awards.
(5) 
Mr. Kunins was granted 5,400 shares vesting on February 14, 2020 in lieu of a cash bonus for 2019. Amount presented reflects the target value of his annual incentive compensation.
2020
 
Annual Salary
(1)
 
Annual Target Incentive Compensation
 
Long-term Target Incentive Compensation--XSUs
(2)
 
Long-term Equity Compensation--RSUs
(3)
 
Target Total Direct Compensation
Name
 
$
 
% Total
 
$
 
% Total
 
$
 
% Total
 
$
 
% Total
 
$
Patrick W. Smith
 
$
24,960

 
100.0
%
 
$

 
%
 
$

 
%
 
$

 
%
 
$
24,960

Luke S. Larson
 
350,000

 
15.5

 
305,000

 
13.5

 
1,000,000

 
44.3

 
600,000

 
26.6

 
2,255,000

Jawad A. Ahsan
 
325,000

 
15.1

 
330,000

 
15.3

 
1,000,000

 
46.4

 
500,000

 
23.2

 
2,155,000

Joshua M. Isner (4)
 
325,000

 
15.9

 
500,000

 
24.4

 
1,000,000

 
48.8

 
225,000

 
11.0

 
2,050,000

Jeffrey C. Kunins
 
300,000

 
18.8

 
300,000

 
18.8

 
1,000,000

 
62.5

 

 

 
1,600,000

(1) 
Annual salary effective January 1, 2020.
(2) 
Represents XSUs granted to Messrs. Larson, Ahsan, and Isner on January 2, 2019 and to Mr. Kunins on September 23, 2019 which are discussed in more detail under “Executive Compensation — Compensation Discussion and Analysis — eXponential Stock Performance Plan". The grants had a target value of $1,000,000 prior to the 3x risk and 9x time multipliers and were granted in 2019 in lieu of traditional performance-based RSUs. For purposes of the Summary Compensation Table, these amounts will not be reported as compensation in 2020 and represent the amount of 2020 target compensation that the executives elected to receive over nine years (2019 to 2027) in the form of XSUs. 
(3) 
Except for Mr. Kunins, reflects the value of RSUs awarded in December 2019, which are intended as 2020 compensation awards. Mr. Kunins did not receive an RSU award in December 2019 based on his September 2019 start date.
(4) 
The annual target incentive compensation for Mr. Isner reflects target commission based on 2020 revenue growth. The Compensation Committee may also issue a discretionary award in consideration of extraordinary performance, which amount is not reflected in the target amount.
Annual Salary
Salaries for NEOs are reviewed annually, as well as at the time of a promotion or other changes in responsibilities. Consistent with our goal for overall compensation, we set salaries at a competitive level to ensure we can attract and retain our executives. There is no set percentile of market that we use and executive salaries vary in their positioning to market depending on facts; such as, tenure with the Company, results of personal, department and corporate performance, complexity and scope of the executive's responsibilities, and the perceived detrimental effects to the Company that may result from such executive’s departure. The base salaries of our NEOs, other than the CEO, were proposed by the CEO, established by the Committee and approved by the independent directors after considering compensation salary trends, overall level of responsibilities, total performance and compensation levels for comparable positions in the market for executive talent based on salary surveys and compensation data from comparator group companies. After considering the above, the Committee increased the base salaries of Messrs. Ahsan, Isner and Larson for 2020.

Axon Enterprise, Inc. | 2020 Proxy Statement | 26


Annual Performance-Based Incentive Plans
The objective of the annual incentive payment plan have been to provide executives with a competitive total compensation opportunity, as well as to align executive rewards with company performance.
2019 Structure
The 2019 executive compensation structure included: payments under the annual cash incentive plan, and for Mr. Isner, bookings-based commissions, paid quarterly. Each component was designed to incentivize specific Company business goals.
Payouts under the 2019 annual cash incentive plan were based on the achievement of the following annual financial goals and operational metrics: total booked contract value; Adjusted EBITDA; product goals related to Axon Body 3, Axon Records, and TASER 7; increase in net promoter score; increase in customer engagement on Axon network; and top 1200 customer churn;
The Committee believed the criteria for the annual cash incentive plan were challenging, but achievable.
Sales commissions were earned based upon specific sales targets for each eligible NEO. Because the sales commissions are tied to bookings growth, the Committee did not set a maximum amount that could be paid under the plans for the NEOs.
2019 Performance - Based Cash Incentive Plans Metrics
Metric
 
Threshold
 
Target
 
Maximum
 
Actual
 
Weight
 
Weighted Payout
($ in millions)
Total booked contract value
 
$
725.0

 
$
775.0

 
$
800.0

 
$
872.5

 
30
%
 
45.0
%
Adjusted EBITDA
 
$
80.0

 
$
87.5

 
$
97.5

 
$
87.8

 
25

 
25.4

Product goals
 
0%

 
100.0
%
 
100.0
%
 
66.7
%
 
30

 
20.0

Net promoter score
 
61

 
61

 
63

 
58

 
5

 

Increase in customer engagement on Axon network
 
0%

 
5.0
%
 
10.0
%
 
5.0
%
 
5

 
5.0

Top 1200 customer retention
 
99.0%

 
99.5
%
 
100%

 
99.5
%
 
5

 
5.0

Actual attainment/plan payout
 
 
 
 
 
 
 
 
 
100
%
 
100.4
%
 

The 2019 performance-based cash incentive plan metrics were measured and paid after the Company determined its annual earnings for 2019. The total booked contract value, Adjusted EBITDA, and top 1200 customer retention metrics each have a threshold, target and maximum goal with corresponding base payouts of 50%, 100% and 150% of target, respectively. The weighted payout for the 2019 annual cash incentive plan is capped at a 135% payout. The weighted average payout achieved under the 2019 performance-based cash incentive plan was 100.4%.

Payouts under the 2019 annual cash incentive plan for Mr. Isner were based entirely on growth of the Company's bookings. For 2019, approximately $1,267,000 was based on the growth of total 2019 bookings as compared to 2018.
Other Long-Term Performance-Based Equity Compensation
During 2018 and 2019, the Company discontinued its long-term performance-based RSUs grants. Instead, NEOs now participate in the CEO Performance Award (for Mr. Smith) or the XSPP. The CEO Performance Award and XSPP are each an incentive for future performance in the form of a high-risk, high-reward compensation plan, and the value is realizable only if and when each set of market capitalization and operational goals are achieved and the options or shares vest associated with each tranche. The grant is intended to compensate the NEOs over an extended term and will become vested as to all options or shares subject to each grant only if our market capitalization increases to $13.5 billion and twelve operational goals are achieved during the ten year term of the award. If any portion of the awards have not vested by the end of the term of the award, they will be forfeited and the NEO will not realize the related

Axon Enterprise, Inc. | 2020 Proxy Statement | 27


value. As of the date of this filing, no sets of vesting milestones (a market capitalization goal paired with an operational goal) for this grant have been achieved and no shares subject to this grant have vested.
In January 2019, the Company granted XSU grants of 598,537 shares each to Messrs. Ahsan, Isner, and Larson. Mr. Kunins received an XSU grant of 432,000 shares on September 23, 2019. For additional discussion of the CEO Performance Award and the XSPP, see “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — CEO Performance Award” and “— eXponential Stock Performance Plan” above.
Long-Term Service-Based Equity Compensation
The Committee believes that service-based equity compensation with multi-year vesting periods ensures that our NEOs have a continuing stake in our long-term success. As such, for 2019, the Committee granted RSUs on January 2, 2019, which vest at the end of a three-year service period, to align our NEOs interests with those of shareholders, and to motivate our NEOs to make strategic long-term decisions. For 2020, the Committee granted RSUs on December 23, 2019, which vest at the end of a three-year service period.
In determining the total number of RSUs to award to each NEO, the Compensation Committee considered, among other things, the strategic objectives of the Company over the next three years, and the practice of comparator group companies. The following table sets forth the service-based RSU awards made to our continuing NEOs, other than Mr. Kunins, in January 2019 (for 2019) and in December 2019 (for 2020).
 
 
2019 Awards (1)
 
2020 Awards (2)
Named Executive
 
Number of
Service-based
RSUs Awarded
 
Approximate Grant Date
Fair Value
 
Number of
Service-based
RSUs Awarded
 
Approximate Grant Date
Fair Value
Patrick W. Smith
 

 

 

 

Luke S. Larson
 
12,747

 
575,000

 
8,306

 
600,000

Jawad A. Ahsan
 
11,085

 
500,000

 
6,922

 
500,000

Joshua M. Isner
 
2,772

 
125,000

 
3,115

 
225,000

Jeffrey C. Kunins (3)
 
38,400

 
2,400,000

 
N/A

 
N/A

(1) The 2019 awards vest fully on January 2, 2022, other than the award for Mr. Kunins.
(2) The 2020 awards vest fully on December 23, 2022, other than the award for Mr. Kunins.
(3) Mr. Kunins received four RSU awards on September 23, 2019: 1) 14,400 RSUs which vest two-thirds on the first anniversary and one-third on the second anniversary of the grant date, 2) 9,000 RSUs which vested on February 14, 2020, 3) 9,600 RSUs which vest in equal annual amounts on the first, second, and third anniversaries of the grant date, and 4) 5,400 shares which vested on February 14, 2020, which were granted in lieu of a cash bonus for 2019.  Mr. Kunins did not receive an additional grant for 2020.
Employment Agreements and Other Arrangements
In June 2019, the Company entered into revised employment agreements with Jawad A. Ahsan, Luke S. Larson, and Joshua M. Isner pursuant to their continued service. The fundamental terms and provisions of each executive’s agreement are substantially similar to the terms and provisions of each executive’s previously existing executive employment agreement except as follows: under the agreements, (1) the executives are no longer entitled to severance benefits following a resignation for good reason, except following Change in Control [as defined in the Company's 2019 Stock Incentive Plan (or any successor equity incentive plan adopted by the Company in the future)]; (2) following a termination without cause and the terminated executive's execution of a customary release, the terminated executive will be entitled only to continued vesting of unvested time-based restricted stock units (“RSUs”) scheduled to vest during the notice and severance period (one year) versus acceleration of all unvested equity awards; (3) following termination without cause and the terminated executive's execution of the customary release, the terminated executive will be entitled to a full year target annual bonus or full year target annual sales commission for the year in which the termination becomes effective, versus a prorated bonus for the year in which the termination occurs; and (4) following termination without

Axon Enterprise, Inc. | 2020 Proxy Statement | 28


cause and the terminated executive's execution of the customary release, a portion of the terminated executive’s XSUs may be entitled to accelerated vesting. In September 2019, the Company entered into an employment agreement with Jeffrey C. Kunins with the same terms.
Mr. Smith's employment agreement terminated following shareholder approval of the CEO Performance Award on May 24, 2018 and the Company has no further obligations thereunder.
Perquisites and Other Personal Benefits

We have a non-qualified deferred compensation plan for certain executives, key employees and non-employee directors through which participants may elect to postpone the receipt and taxation of a portion of their compensation received from us. The non-qualified deferred compensation plan allows eligible participants to defer up to 80% of their base salary and up to 100% of other types of compensation. The plan also allows for matching and discretionary employer contributions. Employee deferrals are deemed 100% vested upon contribution. Distributions from the plan generally commence upon retirement, death, separation of service, specified date or upon the occurrence of an unforeseeable emergency. Distributions can be paid in a variety of forms from lump sum to installments over a period of years. Participants in the plan are entitled to select from a wide variety of investments available under the plan and are allocated gains or losses based upon the performance of the investments selected by the participant. All gains or losses are allocated fully to plan participants and we do not guarantee a rate of return on deferred balances. Assets related to this plan consist of corporate-owned life insurance contracts and are included in other assets in the consolidated balance sheets. Participants have no rights or claims with respect to any plan assets and any such assets are subject to the claims of our general creditors.
We do not provide our NEOs with other significant perquisites or other benefits, except for Company matching contributions to our defined contribution benefit plans and health care benefits that are widely available to employees. The Committee periodically reviews the levels of perquisites and other benefits that could be provided to the NEOs.
Compensation Deductibility

In general, Section 162(m) of the U.S. tax code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per year per person to the executives designated in Section 162(m) of the Code, including, but not limited to, its chief executive officer, chief financial officer, and the next three highly compensated executives of such corporation whose compensation is required to be disclosed in its proxy statement. The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1,000,000 will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

Prior to the repeal of Section 162(m)’s performance-based exemption, we in general sought to structure our compensation programs in a manner intended to comply with Section 162(m), although our compensation committee reserved the right to provide compensation (such as base salary and service-based vesting RSUs) if, in its judgment, such payments were necessary to achieve our compensation objectives and in the best interests of the Company and its stockholders. However, despite the compensation committee’s efforts to structure certain compensation elements in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)’s exemption from the deduction limit, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will.

Going forward, the Committee will continue to monitor the impact that the repeal of the performance-based pay exception to Section 162(m) will have on the Company’s compensation programs and contracts.



Axon Enterprise, Inc. | 2020 Proxy Statement | 29


COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our 2019 Annual Report on Form 10-K.
.
The Compensation Committee:
Hadi Partovi, Chair
Michael Garnreiter
Matthew McBrady

The foregoing Compensation Committee Report will not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 (the "Securities Act") or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and will not otherwise be deemed filed under such Acts.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is, or was during or prior to fiscal 2019, an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers serves as a director or member of the compensation committee of another entity in a case where an executive officer of such other entity serves as a director or member of the Compensation Committee.

Axon Enterprise, Inc. | 2020 Proxy Statement | 30


SUMMARY COMPENSATION TABLE
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($) (1)
 
Option Awards
($) (2)
 
Non-Equity Incentive Plan Compensation
($) (3)
 
All Other
Compensation
($) (4)
 
Total ($)
Patrick W. Smith
 
2019
 
$
22,880

(5) 
$

 
$
2,040

 
$

 
$

 
$
13,609

 
$
38,529

Chief Executive Officer
 
2018
 
70,027

(5) 

 

 
245,953,429

 

 
3,254

 
246,026,710

 
2017
 
350,000

 

 
3,403,775

 

 

 
11,900

 
3,765,675

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Luke S. Larson
 
2019
 
325,000

 
50,000

(6) 
21,134,307

 

 
301,146

 
28,110

 
21,838,563

President
 
2018
 
325,000

 

 

 

 
191,624

 
12,604

 
529,228

 
 
2017
 
325,000

 
300,000

 
2,849,986

 

 
108,371

 
14,859

 
3,598,216

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Jawad A. Ahsan
 
2019
 
300,000

 

 
20,959,354

 

 
301,146

 
15,000

 
21,575,500

Chief Financial Officer
 
2018
 
300,000

 
200,000

 
299,984

 

 
255,499

 
1,504

 
1,056,987

 
2017
 
225,850

 
70,000

 
2,400,024

 

 
121,138

 
934

 
2,817,946

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joshua M. Isner
 
2019
 
275,000

 
270,193

(6) 
20,309,338

 

 
1,304,250

 
231,113

 
22,389,894

Chief Revenue Officer
 
2018
 
275,000

 
21,000

 

 

 
1,412,852

 
20,850

 
1,729,702

 
2017
 
275,000

 

 
1,525,007

 

 
512,038

 
19,358

 
2,331,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Jeffrey C. Kunins
 
2019
 
81,923

 

 
20,742,720

 

 

 
2,131

 
20,826,774

Chief Product Officer and EVP of Software

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(1) 
The amounts in this column reflect the aggregate grant date fair value for RSUs computed in accordance with stock-based accounting rules (ASC Topic 718). Pursuant to SEC regulations, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions included in the calculation of these amounts are included in footnote 1 to our financial statements for the fiscal year ended December 31, 2019 within our Annual Report on Form 10-K filed with the SEC.
On February 12, 2019, our shareholders approved the 2019 Plan, which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our XSPP and grants of XSUs under the plan. Pursuant to the XSPP, all eligible full-time U.S. employees were granted an award of 60 XSUs in January 2019, and certain employees had the opportunity to elect to receive a percentage of the value of their target compensation over the following nine years (2019-2027) in the form of additional XSUs. Messrs. Larson, Ahsan, Isner, and Kunins elected to receive XSUs, which XSU grants were made as an up front, lump sum grant in January 2019 (September 2019 for Mr. Kunins), and are intended to replace that portion of the target compensation they elected to receive in the form of XSUs for the subsequent nine years. Accordingly, their go forward target compensation will be reduced until 2027 by the amount of such compensation that the employees elected to receive in the form of the 2019 XSU grants. 
All of the XSUs will be vested only if our market capitalization increases to $13.5 billion and twelve operational goals are achieved during the nine year term of the award. 1/12th of the total number of options in the grant will become vested and exercisable each time: (i) Company market capitalization increases by $1 billion above the February 2018 market capitalization of approximately $1.5 billion (to align with the CEO Performance Award); and (ii) one of sixteen operational goals tied to revenue and adjusted EBITDA are attained, subject to continued service to the Company at each such vesting event. If any XSUs have not vested by the end of the nine year term of the award, they will be forfeited and the NEOs will not realize the value of such XSUs. As of the date of this filing, no sets of vesting milestones (a market capitalization goal paired with an operational goal) for this grant have been achieved and no shares subject to this grant have vested. The amounts and timing of compensation realized by the NEOs for the XSPP will differ from the amount reported here pursuant to the requirements for the Summary Compensation Table.


Axon Enterprise, Inc. | 2020 Proxy Statement | 31


The grant-date fair value of the 60 XSUs received by Messrs. Smith, Larson, Ahsan and Isner is approximately $2,000. Additional XSUs granted include amounts of $19,957,225 for Messrs. Larson, Ahsan and Isner and $18,342,720 for Mr. Kunins.
Other amounts of $575,017, $500,044 and $125,045 represent RSUs granted to Messrs. Larson, Ahsan and Isner, respectively, on January 2, 2019. Additionally, RSUs were granted on December 23, 2019 intended as 2020 compensation in the amounts of $600,025, $500,045 and $225,028 for Messrs. Larson, Ahsan and Isner, respectively. Mr. Kunins received 4 RSU grants totaling $2,400,000.
(2) 
The amount reported as compensation for Mr. Smith in 2018 represents the grant date fair value of options under the CEO Performance Award as computed in accordance with ASC Topic 718. Mr. Smith did not realize this amount in 2018 because vesting of the shares is entirely tied to achieving revenue, EBITDA and market capitalization performance milestones, which are described below. No options will vest simply through the passage of time, and to date, no options have vested.
The fair value of the options when the CEO Performance Award was approved by our Board and accepted by Mr. Smith in February 2018 was approximately $72.4 million. Due to a significant increase in the price of Axon's common stock between February 2018 and May 2018, when our shareholders approved the CEO Performance Award, the grant date fair value for accounting purposes increased to the amount disclosed in this Summary Compensation Table.
The CEO Performance Award granted to Mr. Smith is an incentive for future performance in the form of a high-risk, high-reward compensation plan, and the value is realizable only if and when each set of market capitalization and operational goals are achieved and the options vest associated with each tranche.
The grant is intended to compensate Mr. Smith over a ten year term. The XSPP was aligned to agree all milestones to the CEO Performance Award. See Note 1. The amounts and timing of compensation realized by Mr. Smith for the CEO Performance Award will differ from the amount reported here pursuant to the requirements for the Summary Compensation Table.
See “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — CEO Performance Award” above.
(3) 
In 2019, Messrs. Larson and Ahsan, received non-equity incentive compensation as a result of exceeding target metrics around bookings and other operating measures. Their 2019 incentive compensation was provided in the form of cash payouts, which were paid in February 2020. In 2018, all the Company’s NEOs, excluding Messrs. Smith and Isner, received non-equity incentive compensation as a result of exceeding target metrics around bookings and other operating measures. Their 2018 incentive compensation was provided in the form of cash payouts, which were paid in February 2019. In 2017, all the Company’s NEOs, excluding Messrs. Smith and Isner, received non-equity incentive compensation as a result of exceeding target metrics around sales and other operating measures. Their 2017 incentive compensation was provided in the form of cash payouts, of which 15% of targeted amounts were paid in May 2017, August 2017, and November 2017, with the remaining 55% with adjustments made for actual results, paid in February 2018. Amounts for Mr. Isner represent commissions and cash incentives earned upon completion of certain leadership development courses.
(4) 
In 2019, approximately $200,000 of Mr. Isner's compensation related to the taxes paid by the Company for a vehicle Mr. Isner received in lieu of a cash bonus. See Note 6 for more information. For the other NEOs, all other compensation consists of matching contributions made to 401(k), contributions to health savings accounts, employer paid life insurance premiums, taxable fringe items and payments made for taxes required to gross-up other earnings.
(5) 
The amount paid to Mr. Smith for 2019 is consistent with the minimum wage requirements for Arizona pursuant to the requirements of the CEO Performance Award. The amount paid to Mr. Smith for 2018 represents his existing salary level through February 28, 2018 and the Arizona minimum wage annually thereafter consistent with the requirements of the CEO Performance Award.
(6) 
The amount paid to Mr. Isner for 2019 represents a special incentive bonus. In lieu of a cash bonus, Mr. Isner elected to receive a vehicle. The amount paid to Mr. Larson for 2019 represents a one-time discretionary performance bonus.

Axon Enterprise, Inc. | 2020 Proxy Statement | 32


PAY RATIO OF CHIEF EXECUTIVE OFFICER COMPENSATION TO MEDIAN EMPLOYEE COMPENSATION

The Company's compensation practices and programs are designed with the goal of ensuring compensation programs are fair, equitable, globally compliant and are aligned with its business objectives. Our CEO, Patrick W. Smith, has agreed to a compensation arrangement in the CEO Performance Award, which was approved by shareholders in May 2018, that vests based solely on attainment of both market capitalization and internal operational goals. We are providing a ratio of (i) Mr. Smith's 2019 annual total compensation to (ii) the median of the 2019 annual total compensation of all Axon employees other than Mr. Smith, calculated pursuant to the disclosure requirements of the Summary Compensation Table above as if the median compensated employee was a named executive officer. Because of the treatment of the CEO Performance Award as compensation for Mr. Smith in 2018 for purposes of the Summary Compensation Table, there may be a significant disconnect between what is reported as compensation for Mr. Smith in a given year in the Summary Compensation Table and the value actually realized as compensation in that year or over a period of time. See “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — CEO Performance Award” above.

Mr. Smith’s annual total compensation, as reported in the Summary Compensation Table, for 2019 was $38,529, and the median 2019 annual total compensation of all other employees was $106,636. Consequently, the applicable ratio of such amounts for 2019 was 0.36:1.

Our methodology for identifying the median of the 2019 annual total compensation for each of our employees other than Mr. Smith was as follows:

We determined that as of December 31, 2019, Axon and all of our subsidiaries had 1,340 qualifying individuals (full-time, part-time and temporary employees other than Mr. Smith), of which 13% were based outside of the U.S. and 18% were production line employees.
We did not include in the population of qualifying individuals any employees of staffing agencies whose compensation is determined by such agencies.
We applied the requirements and assumptions required for the table in the Summary Compensation Table for each of such individuals as if he or she was a named executive officer to calculate the total annual compensation, including base salary or wages, performance-based commission payments, and equity awards based on their grant date fair values.
We converted any payment earned or paid in a foreign currency to U.S. dollar using the average of the prevailing conversion rates for the month of December 2019.
We selected the median of all total annual compensation amounts calculated in accordance with the foregoing.

The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, exclusions, and assumptions that reflect their compensation practices. As such, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, even those in a related industry or of a similar size and scope. Other companies may have different employment practices, regional demographics or may utilize different methodologies and assumptions in calculating their pay ratios.

Axon Enterprise, Inc. | 2020 Proxy Statement | 33


2019 GRANTS OF PLAN-BASED AWARDS
The following table shows information about awards made under various compensation plans during 2019:
 
 
 
 
Estimated future payouts under
non-equity incentive 
plan awards
 
Estimated future payouts 
under equity incentive plan awards
 
All other stock
awards:
number of
shares of stock or units (#)
 
Grant date fair
value of stock
awards
($) (1)
Name
 
Grant
Date
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
Patrick W. Smith
 
2/12/19
(4)

 

 

 
5

 
60

 
60

 

 
2,040

Luke S. Larson
 
1/2/19
(2)

 

 

 

 

 

 
12,747

 
575,017

 
 
2/12/19
(3)

 

 

 
49,878

 
598,537

 
598,537

 

 
19,957,225

 
 
2/12/19
(4)

 

 

 
5

 
60

 
60

 

 
2,040

 
 
12/23/19
(2)

 

 

 

 

 

 
8,306

 
600,025

 
 
 
 
149,970

 
300,000

 
405,000

(8)

 

 

 

 

Jawad A. Ahsan
 
1/2/19
(2)

 

 

 

 

 

 
11,085

 
500,044

 
 
2/12/19
(3)

 

 

 
49,878

 
598,537

 
598,537

 

 
19,957,225

 
 
2/12/19
(4)

 

 

 
5

 
60

 
60

 

 
2,040

 
 
12/23/19
(2)

 

 

 

 

 

 
6,922

 
500,045

 
 
 
 
149,970

 
300,000

 
405,000

(8)

 

 

 

 

Joshua M. Isner
 
1/2/19
(2)

 

 

 

 

 

 
2,772

 
125,045

 
 
2/12/19
(3)

 

 

 
49,878

 
598,537

 
598,537

 

 
19,957,225

 
 
2/12/19
(4)

 

 

 
5

 
60

 
60

 

 
2,040

 
 
12/23/19
(2)

 

 

 

 

 

 
3,115

 
225,028

 
 
 
 

 
500,000

 

(9)

 

 

 


 


Jeffrey C. Kunins
 
9/23/19
(3)

 

 

 
36,000

 
432,000

 
432,000

 

 
18,342,720

 
 
9/23/19
(5)

 

 

 

 

 

 
14,400

 
900,000

 
 
9/23/19
(6)

 

 

 

 

 

 
9,600

 
600,000

 
 
9/23/19
(7)

 

 

 

 

 

 
9,000

 
562,500

 
 
9/23/19
(7)

 

 

 

 

 

 
5,400

 
337,500

(1) 
Grant date fair value of RSUs and options, computed in accordance with stock-based compensation accounting rules (ASC 718). The fair value of each RSU is the closing price of our common stock on the date of grant. The assumptions used in the calculations of the grant date fair value for option awards are included in Note 1 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal 2019.
(2) 
RSUs cliff vest three years from the grant date. The awards granted on December 23, 2019 are intended as 2020 compensation. Pursuant to the rules and principles of the SEC, however, they are treated as 2019 compensation for purposes of this table and the Summary Compensation Table.
(3) 
On February 12, 2019, our shareholders approved the 2019 Plan, which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our XSPP and grants of XSUs under the plan. Pursuant to the XSPP, all eligible full-time U.S. employees were granted an award of 60 XSUs in January 2019, and certain employees had the opportunity to elect to receive a percentage of the value of their target compensation over the following nine years (2019-2027) in the form of additional XSUs. For employees who elected to receive XSUs, the XSU grants were made as an up front, lump sum grant in January 2019, and are intended to replace that portion of the target compensation they elected to receive in the form of XSUs for the subsequent nine years. Accordingly, their go forward target compensation will be reduced until 2027 by the amount of such compensation that the employees elected to receive in the form of the January 2019 XSU grants. 
Messrs. Larson, Ahsan, and Isner received their grants upon shareholder approval of the 2019 Plan on February 12, 2019. Mr. Kunins received his grant upon his hire date.     
The awards will become vested as to as to all shares subject to it only if both market capitalization and internal operational goals are attained during the approximately nine-year term of the award. 1/12th of the total number of shares will become vested upon certification by the Board of Directors that both: (i) one of the market capitalization goals is achieved; and

Axon Enterprise, Inc. | 2020 Proxy Statement | 34


(ii) one of sixteen specified internal operational goals relating to financial results is attained, subject to the NEO’s continued service at each such vesting event.
If any tranches have not vested by the end of the term of the award, they will be forfeited and the NEO will not realize the value of such shares. As of the date of this filing, none of the operational goals for this grant have been achieved and no shares subject to this grant have vested. See “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — eXponential Stock Performance Plan” above.
(4) 
Represents 60 XSUs granted to all eligible full-time U.S. employees in January 2019.
(5) 
Two thirds of the RSUs vest on the first anniversary of the grant date and remaining one third vests on the second anniversary of the grant date.
(6) 
RSUs vest annually over a period of three years from the grant date.
(7) 
RSUs vested on February 14, 2020.
(8) 
Payouts under the 2019 annual cash incentive plan are based on the achievement of annual financial goals, including goals related to: total booked contract value; Adjusted EBITDA; achievement of product goals; increase in net promoter score; increase in customer engagement with the Axon network; and top 1200 customer churn. Actual awards earned in 2019 were included in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.
(9) 
Mr. Isner was eligible for commissions based on bookings growth for the Company. There was no maximum amount related to these commissions. Actual commissions earned in 2019 were included in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.


Axon Enterprise, Inc. | 2020 Proxy Statement | 35


OUTSTANDING EQUITY AWARDS AT FISCAL 2019 YEAR-END
The following table includes certain information with respect to all outstanding equity awards previously awarded to the NEOs as of December 31, 2019.
 
 
Option Awards
 
Stock Awards
Name
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
 
Option 
Exercise
Price
($)
 
Option 
Expiration
Date
 
Number of
Shares or 
Units
of Stock That
Have Not 
Vested
(#)
 
Market 
Value 
of Shares
or Units
of Stock
That Have 
Not Vested
($)
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have
Not Vested
(#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights
That Have Not Vested
($)
Patrick W. Smith
 
6,365,856

(1) 
28.58

 
2/26/28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,767

(2) 
202,766

 
62,241

(4) 
4,561,020

 
 
 
 
 
 
 
 
64,625

(3) 
4,735,720

 
60

(5) 
4,397

Luke S. Larson
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,850

(3) 
1,894,288

 
24,896

(4) 
1,824,379

 
 
 
 
 
 
 
 
9,205

(6) 
674,542

 
598,537

(5) 
43,860,791

 
 
 
 
 
 
 
 
2,075

(2) 
152,056

 
60

(5) 
4,397

 
 
 
 
 
 
 
 
12,747

(7) 
934,100

 
 
 
 
 
 
 
 
 
 
 
 
8,306

(8) 
608,664

 
 
 
 
Jawad A. Ahsan
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,763

(3) 
788,713

 
24,896

(4) 
1,824,379

 
 
 
 
 
 
 
 
33,334

(9) 
2,442,716

 
7,239

(10) 
530,474

 
 
 
 
 
 
 
 
5,533

(2) 
405,458

 
598,537

(5) 
43,860,791

 
 
 
 
 
 
 
 
11,085

(7) 
812,309

 
60

(5) 
4,397

 
 
 
 
 
 
 
 
6,922

(8) 
507,244

 
 
 
 
Joshua M. Isner
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,078

(3) 
591,956

 
16,598

(4) 
1,216,301

 
 
 
 
 
 
 
 
3,682

(6) 
269,817

 
598,537

(5) 
43,860,791

 
 
 
 
 
 
 
 
1,383

(2) 
101,346

 
60

(5) 
4,397

 
 
 
 
 
 
 
 
2,772

(7) 
203,132

 
 
 
 
 
 
 
 
 
 
 
 
3,115

(8) 
228,267

 
 
 
 
Jeffrey C. Kunins
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,400

(11) 
1,055,232

 
432,000

(5) 
31,656,960

 
 
 
 
 
 
 
 
5,400

(12) 
395,712

 
 
 
 
 
 
 
 
 
 
 
 
9,000

(12) 
659,520

 
 
 
 
 
 
 
 
 
 
 
 
9,600

(13) 
703,488

 
 
 
 
(1) 
This grant is intended to compensate Mr. Smith over its ten-year term and will become vested as to all shares subject to it only if both market capitalization and internal operational goals are attained during such ten year period. 1/12th of the total number of shares subject to the options will become vested and exercisable upon certification by the Board of Directors that both: (i) one of the market capitalization goals is achieved; and (ii) one of sixteen specified internal operational goals relating to financial results is attained, subject to Mr. Smith’s continued service at each such vesting event. If any tranches have not vested by the end of the ten-year term of the award, they will be forfeited and Mr. Smith will not realize the value of such shares. As of the date of this filing, none of the operational goals for this grant have been achieved and no options subject to this grant have vested. See “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — CEO Performance Award” above.
(2) 
These stock awards vest at annual intervals over a three-year period and become fully vested in December 2020.
(3) 
These stock awards are performance based. The number of shares that ultimately vested was based upon the Company's compounded annual revenue growth rate (50% of target shares) and its compounded annual international bookings growth rate (50% of target shares) both compared to target for the three-year period ended December 31, 2019. Based upon the performance achieved, the number of shares that vested in February 2020 were 161.4% of target, which has been presented in the above table.

Axon Enterprise, Inc. | 2020 Proxy Statement | 36


(4) 
These stock awards are performance based. The number of shares that ultimately vest is based upon the Company's compounded annual revenue growth rate (80% of target shares) and its compounded annual EBITDA growth rate (20% of target shares) both compared to target for the three-year period ending December 31, 2020. These stock awards are scheduled to vest in February 2021. The number of unvested shares presented equals the target shares.
(5) 
These grant are intended to compensate our executives over their approximately nine-year term and will become vested as to all shares subject to each grant only if both market capitalization and internal operational goals are attained during such term. 1/12th of the total number of shares will become vested upon certification by the Board of Directors that both: (i) one of the market capitalization goals is achieved; and (ii) one of sixteen specified internal operational goals relating to financial results is attained, subject to the NEO's continued service at each such vesting event. If any tranches have not vested by the end of the term of the award, they will be forfeited and the NEO will not realize the value of such shares. As of the date of this filing, none of the operational goals for this grant have been achieved and no shares subject to this grant have vested. See “Executive Compensation — Compensation Discussion and Analysis — Our Compensation Programs — eXponential Stock Performance Plan” above.
(6) 
These stock awards vest at annual intervals over a five-year period and became fully vested in February 2020.
(7) 
These stock awards vest fully in January 2022.
(8) 
These stock awards vest fully in December 2022.
(9) 
This stock award vests at annual intervals over a five-year period and becomes fully vested in April 2022.
(10) 
This stock award is performance-based. The number of shares that ultimately vest is based upon the Company's compounded annual revenue growth rate compared to target for the three-year period ending December 31, 2020. This stock award is scheduled to vest in February 2021. The number of unvested shares presented equals the target shares.
(11) 
This stock award vests two thirds in September 2020 and one third in September 2021.
(12) 
These stock awards vested fully in February 2020.
(13) 
This stock award vests at annual intervals over a three-year period and becomes fully vested in September 2022.


2019 OPTION EXERCISES AND STOCK VESTED
The following table provides information related to option exercises and vested stock awards for each NEO during the year ended December 31, 2019:
 
 
Stock Awards
Name
 
Number of
Shares
Acquired upon
Vesting (#)
 
Value Realized on
Vesting ($)
Patrick W. Smith
 
84,571

 
$