Adeia Inc

The Compensation Committee oversees our executive compensation program. In designing and implementing the various components of our 2023 executive compensation program, the Compensation Committee considered market and industry practices and trends and input from the Compensation Committee’s independent compensation consultant and management, as well as the impact of our compensation program on our financial results. While the Compensation Committee considers all factors in its deliberations, it places no formal weighting on any one factor.

The Compensation Committee retained Compensia, a national compensation consulting firm, to assist it in the determination of the key elements of our executive compensation program. See discussion in the “Setting Executive Compensation” section below for a discussion regarding the 2023 compensation peer group. Compensia provided advice to the Compensation Committee with respect to competitive practices and the amounts and nature of compensation paid to executive officers in similar organizations. Compensia also advised on, among other things, structuring our various compensation programs and understanding competitive levels of base salary, annual performance-based cash incentive compensation and other long-term incentive compensation payable to our executive officers. Compensia reports to and is accountable to the Compensation Committee and may not conduct any other work for us without the authorization of the Compensation Committee. Compensia did not provide any services to us in 2023 beyond its engagement as an advisor to the Compensation Committee on executive and Board compensation matters. After review and consultation with Compensia, the Compensation Committee has determined that Compensia is independent and there is no conflict of interest resulting from retaining Compensia currently or during the year ended December 31, 2023. In reaching these conclusions, the Compensation Committee considered the factors set forth in Exchange Act Rule 10C-1 and Nasdaq listing standards.

To aid the Compensation Committee in making its 2023 compensation determinations, our CEO, provided recommendations to the Compensation Committee regarding the compensation of all executive officers, excluding himself. Each NEO other than our CEO, in turn, participated in an annual performance review with our CEO to provide input about their contributions to our success for the period being assessed. The Compensation Committee gathered data on our CEO’s performance through several channels, including qualitative and quantitative assessments of the Company’s performance, discussions with other members of the management team and discussions with other members of our Board. Each Compensation Committee meeting ordinarily includes an executive session without members of our management team present.

For purposes of our annual and long-term incentive compensation programs, corporate performance goals for 2023 awards were based on the Company’s 2023 financial plan as approved by our Board. Our CEO, after discussions with the management team, then recommended a subset of these goals to the Compensation Committee as the corporate performance goals underlying our annual performance-based cash incentive plan and performance-based equity awards. We believe that the achievement of these performance goals is based on the successful efforts and contributions of our NEOs. As described below, the Compensation Committee retains the authority under our annual performance-based cash incentive plan to authorize bonus payments to our NEOs that are less than the bonus payments that would otherwise be awarded based on our achievement of the performance goals established for the plan.

Setting Executive Compensation

The Compensation Committee reviews competitive compensation practices and the financial performance of comparable companies, typically, at least annually. This analysis provides the necessary background to the Compensation Committee to ensure that compensation opportunities for our executive officers are competitive with compensation practices among comparable companies and that actual compensation paid to our executive officers is appropriately aligned with our performance in the past year.

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Compensia worked with the Compensation Committee to identify a peer group of companies to be used in the competitive assessment of 2023 compensation. The companies comprising the compensation peer group were selected because the Compensation Committee, management and Compensia believed that they are representative of the type of companies which we may compete with for executive talent. In selecting peer companies, we used a number of targeted criteria designed to reflect our business structure. Given the limited number of directly comparable companies from a business perspective, the criteria were expanded in some cases to include companies that the Compensation Committee considered to be a close fit in terms of business focus and/or with which we might compete for executive talent. As a result, some companies may not satisfy all of the selection criteria. Our compensation peer group is based on the following criteria:

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Industry: Companies in the media, semiconductor, audio and imaging technology, IP licensing, software and other technology sectors.

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Revenue: Companies with revenue that were 0.3x to 3.0x our annual revenue.

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Market Capitalization: Companies with market capitalizations that reflect the differences in our business model as an IP and technology licensing company, which would not be accurately reflected if we selected peer companies based solely on annual revenue. We selected companies with a market capitalization that was generally within a range of 0.25x to 4.0x our market capitalization.

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Geography Location: Companies based in the U.S. with an emphasis on firms headquartered in the San Francisco Bay Area.

Although we maintain the compensation peer group for executive compensation and performance reference purposes, the peer group compensation data is limited to publicly available information and therefore does not necessarily provide comparisons for all executive officers. In contrast, broad executive compensation survey data has the advantage of including data on executive positions beyond what is available in public filings, but may not be specific to the selected companies in the peer group. In light of this, the Compensation Committee also reviewed data from the Radford Executive Survey, filtered to public companies in the U.S. primarily from technology industries with revenues between $100 million and $1.5 billion for our NEOs (other than our CEO and CFO). With respect to the survey data presented to the Compensation Committee, the identities of the 219 individual companies included in the specified survey cut were not provided to the Compensation Committee, and the Compensation Committee did not refer to individual compensation information for such companies.

We believe that by utilizing both publicly available peer group data and the survey data from the published surveys in which we participate, we are able to develop the best set of robust competitive data reasonably available for use in making compensation decisions. The Compensation Committee, when making compensation adjustments for our NEOs, reviews the publicly available peer group data and the survey data to ensure that, following any compensation adjustment, the total compensation of NEOs falls within the Company’s guidelines.

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Based on the objectives outlined above, the Compensation Committee strives to set target total direct compensation opportunities at competitive levels for the markets in which we compete for executive talent and that are appropriate for the skills, experience and performance of each individual. However, the Compensation Committee does not establish compensation levels based solely on benchmarking. The Compensation Committee also relies on the judgment of its members in making compensation decisions regarding base salaries, target annual cash incentive opportunities and long-term equity incentive awards after reviewing our performance and carefully evaluating each NEO’s performance during the year, leadership qualities, business responsibilities, tenure with the Company, current compensation arrangements and long-term potential to enhance stockholder value. The Compensation Committee does not guarantee that any NEO will receive a specific market-derived compensation level.

In addition, the Compensation Committee has taken the approach of determining the mix of compensation elements, such as base salary, target annual cash incentive opportunities and equity awards, on an individual basis. The Compensation Committee allocates target total direct compensation between cash and equity compensation based on a number of objective and subjective factors, including competitive practices among the comparable companies, the role and responsibilities of the individual executive officer, and the nature of the behaviors the incentives are intended to motivate. The Compensation Committee’s philosophy is to balance compensation between long-term and short-term compensation, cash and non-cash compensation, and to take into account the roles and responsibilities of the individual executive officer.

Impact of 2023 “Say-on-Pay” Vote

We held our most recent “say-on-pay” vote in 2023 and over 94% of the votes cast on such proposal were voted in favor of the compensation of our NEOs. The Compensation Committee will continue to take into account future stockholder advisory votes on named executive officer compensation and other relevant market developments affecting executive officer compensation in order to determine whether any subsequent changes to our executive compensation program and policies are warranted to reflect stockholder concerns or to address market developments.

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