GCT Semiconductor Holding, Inc.

Overview

This section discusses the material components of the executive compensation program for our executive officers who are named below. As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for our principal executive officer and our two other most highly compensated executive officers.

In 2024, our chief executive officer and our two other most highly compensated executive officers, referred to collectively as the “named executive officers” (or “NEOs”) were as follows:

•

John Schlaefer, Chief Executive Officer

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Edmond Cheng, Chief Financial Officer

•

Alex Sum, Sr. VP of Sales and Marketing

Summary Compensation Table

The following table sets out the compensation paid or payable to the NEOs during the last two fiscal years:

(1)

Amount reflects 401(k) plan matching benefit of $10,703 and group term life insurance premium of $1,980.

(2)

Amount reflects the grant date fair value of restricted stock units calculated in accordance with FASB ASC Topic 718. On December 11, 2023, Mr. Schlaefer received an award of 12,804 restricted stock units under the Company’s 2011 Incentive Compensation Plan. The fair value of the restricted stock units is based on the fair market value of the Company’s Common Stock on the date of grant, which was $6.16. The restricted stock units vest in equal annual installments over a four (4) year period measured from December 11, 2023, subject to the terms of the award agreement.

(3)

Amount reflects 401(k) plan matching benefit of $6,750 and group term life insurance premium of $1,405.

(4)

Mr. Cheng commenced employment with the Company on March 18, 2024.

(5)

Mr. Cheng’s 2024 salary reflects the amount he earned in 2024 beginning on his hire date on March 18, 2024.

(6)

Amount reflects a sign-on bonus paid to Mr. Cheng in May 2024.

(7)

Amount reflects the grant date fair value of restricted stock units calculated in accordance with FASB ASC Topic 718. On August 21, 2024, Mr. Cheng received an award of 76,000 restricted stock units under the Company’s 2024 Omnibus Incentive Compensation Plan. The fair value of the restricted stock units is based on the market price of the Company’s Common Stock on the date of grant, which was $3.46. The restricted stock units vest in equal annual installments over a four (4) year period measured from March 18, 2024, subject to the terms of the award agreement.

(8)

Amount reflects 401(k) plan matching benefit of $6,413 and group term life insurance premium of $1,650

(9)

Amount reflects 401(k) plan matching benefit of $8,796 and group term life insurance premium of $247.

(10)

Amount reflects the grant date fair value of restricted stock units calculated in accordance with FASB ASC Topic 718. On December 11, 2023, Mr. Sum received an award of 5,341 restricted stock units under the Company’s 2011 Incentive Compensation Plan. The fair value of the restricted stock units is based on the fair market value of the Company’s Common Stock on the date of grant, which was $6.16. The restricted stock units vest in equal annual installments over a four (4) year period measured from December 11, 2023, subject to the terms of the award agreement.

(11)

Amount reflects 401(k) plan matching benefit of $5,272.

Narrative to the Summary Compensation Table

Our compensation program for our NEOs is comprised of base salary, annual cash bonuses and periodic equity awards, however, we did not award annual bonuses to our NEOs in 2023 or 2024. Historically, the equity awards granted to the NEOs has consisted of stock options, however, Mr. Schlaefer and Mr. Sum were each granted a restricted stock unit award on December 11, 2023 and Mr. Cheng (who joined the company in March 2024) was granted a restricted stock unit award on August 21, 2024. For a description of the outstanding stock options and restricted stock unit awards granted to the NEOs, please see the “Outstanding Equity Awards at 2024 Fiscal Year-End” table below.

The NEOs are eligible to participate in our perquisites and benefits on the same basis as our employees, including health and welfare benefits and a 401(k) program.

Employment Agreement

Edmond Cheng Employment Agreement

In connection with Mr. Cheng’s appointment as Chief Financial Officer, the Company and Mr. Cheng entered into an employment agreement effective as of March 18, 2024 (the “Cheng Employment Agreement”). The Cheng Employment Agreement has no fixed term and is terminable at will. Mr. Cheng is entitled under the Cheng Employment Agreement to an annual base salary of $285,000 and will be eligible to earn a bonus annually with a targeted incentive rate of 25% of base salary (however, he did not receive an annual bonus in 2024). Mr. Cheng is also entitled to participate in the benefit plans generally available to our employees, such as group health care coverage and 401(k) plan participation. As provided under the Cheng Employment Agreement, Mr. Cheng received a one-time sign-on bonus of $25,000 and received an initial grant of 76,000 restricted stock units that vest in equal annual installments over a (4) four-year period of service measured from the vesting commencement date. In connection with Mr. Cheng’s employment, Mr. Cheng entered into a Proprietary Information & Invention Assignment Agreement with the Company.

Amended and Restated 2011 Incentive Compensation Plan

The GCT Amended and Restated 2011 Incentive Compensation Plan (the “2011 Incentive Compensation Plan”) was adopted by GCT’s board of directors and approved by its stockholders on May 5, 2011. The 2011 Incentive Compensation Plan was terminated following the Closing, and we will not grant any further awards under such plan. However, 668,348 outstanding stock options and 392,135 outstanding restricted stock units granted under the 2011 Incentive Compensation Plan were assumed and continued in connection with the Business Combination.

The maximum aggregate number of shares of the Company’s Common Stock that were authorized for issuance under the 2011 Incentive Compensation Plan was 16,747,041 shares, subject to adjustment as provided therein.

Our compensation committee of the Board administers the 2011 Incentive Compensation Plan and has the authority, among other matters, to construe and interpret the terms of the 2011 Incentive Compensation Plan and awards granted thereunder.

GCT 2024 Incentive Compensation Plan

In December 2023, our Board adopted the GCT 2024 Omnibus Incentive Compensation Plan, which was subsequently approved by our stockholders in February 2024 (the “2024 Incentive Compensation Plan”) under which we may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which we compete, which is essential to our long-term success. The maximum aggregate number of shares of the Company’s Common Stock that are authorized for issuance under the 2024 Incentive Compensation Plan is 3,983,334 shares, subject to adjustment as provided therein. The 2024 Incentive Compensation Plan became effective on March 26, 2024, the Closing.

GCT 2024 Employee Stock Purchase Plan

In December 2023, our Board adopted 2024 Employee Stock Purchase Plan, which was subsequently approved by our stockholders in February 2024 (the “2024 Employee Stock Purchase Plan”), under which eligible employees will be provided with the opportunity to periodically purchase shares of the Company’s Common Stock at a discount through their accumulated periodic payroll deductions. The maximum aggregate number of shares of the Company’s Common Stock that are authorized for issuance under the 2024 Employee Stock Purchase Plan is 600,000 shares, subject to adjustment as provided therein. As of the date of this Annual Report, the 2024 Employee Stock Purchase Plan has not been implemented.

The 2024 Employee Stock Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (“Section 423”) for one or more specified offerings under the 2024 Employee Stock Purchase Plan. The 2024 Employee Stock Purchase Plan also authorizes us to establish offerings under the 2024 Employee Stock Purchase Plan that are not designed to comply with the requirements of Section 423 but that are intended to comply with local law.

Outstanding Equity Awards at 2024 Fiscal Year-End

The following table sets forth information concerning outstanding equity awards for each of the NEOs and directors as of the end of the fiscal year ended December 31, 2024.

(1)

Represents the aggregate market value of the shares subject to the award calculated using the closing price of the Company’s Common Stock on December 31, 2024, which was $2.33.

(2)

The option was granted on February 23, 2015 and vests with respect to twenty-five percent (25%) of the option upon completion of one (1) year of service measured from the vesting commencement date, and for the balance of the option in a series of thirty-six (36) successive equal monthly installments upon completion of each additional month of service over the thirty-six (36) month period measured from the first anniversary of the vesting commencement date.

(3)

The restricted stock units were granted on December 11, 2023 and vest in equal annual installments over a four (4) year period measured from December 11, 2023, subject to the terms of the award agreement.

(4)

The option was granted on March 18, 2018 and vests with respect to twenty-five percent (25%) of the option upon completion of one (1) year of service measured from the vesting commencement date, and for the balance of the option in a series of thirty-six (36) successive equal monthly installments upon completion of each additional month of service over the thirty-six (36) month period measured from the first anniversary of the vesting commencement date.

(5)

The option was granted on April 19, 2019 and vests with respect to twenty-five percent (25%) of the option upon completion of one (1) year of service measured from the vesting commencement date, and for the balance of the option in a series of thirty-six (36) successive equal monthly installments upon completion of each additional month of service over the thirty-six (36) month period measured from the first anniversary of the vesting commencement date.

(6)

The option was granted on June 8, 2020 and vests with respect to twenty-five percent (25%) of the option upon completion of one (1) year of service measured from the vesting commencement date, and for the balance of the option in a series of thirty-six (36) successive equal monthly installments upon completion of each additional month of service over the thirty-six (36) month period measured from the first anniversary of the vesting commencement date.

(7)

The restricted stock units were granted on August 21, 2024 and vest in equal annual installments over a four (4) year period measured from March 18, 2024, subject to the terms of the award agreement.

Termination or Change in Control Agreements

Below is a description of the potential payments and benefits that would be provided to the NEOs upon termination of their employment or a change of control under the 2011 and 2024 Incentive Compensation Plans and the retention plan.

2011 and 2024 Incentive Compensation Plans

The awards granted under the 2011 Incentive Compensation Plan and 2024 Incentive Compensation Plan may be assumed, substituted or continued in connection with a change of control. If not assumed, substituted or continued, then the awards will vest in full and become payable at the time of the change of control. Additionally, the NEOs are eligible to participate in the Retention Plan, which provides accelerated vesting of outstanding equity awards upon certain terminations of employment (see “Retention Plan” below).

Retention Plan

We have adopted an executive retention plan, pursuant to which each of our NEOs is entitled to receive severance payments and benefits upon an involuntary termination of the NEO’s employment. Should the NEO’s employment be involuntarily terminated by the Company without cause or by the NEO for good reason at any time other than during the 12 months following a change in control of the Company, the NEO will be entitled to receive (i) continued base salary for a period of 6 months, (ii) continued health care coverage for the NEO and the NEO’s eligible dependents for a period of 6 months, and (iii) accelerated vesting of 50% of the unvested shares subject to any outstanding equity awards. In the event that such involuntary termination occurs within 12 months following a change in control of the Company, then the NEO will be entitled to receive (i) continued base salary for a period of 12 months, (ii) continued health care coverage for the NEO and the NEO’s eligible dependents for a period of 12 months, and (iii) full accelerated vesting of outstanding equity awards.

If any payment or benefit in connection with a change in control or the subsequent termination of an NEOs employment would be subject to an excise tax under Section 280G of the Internal Revenue Code, then such payment of benefit will be reduced to the extent necessary to maximize the NEOs net after tax benefits.

As a condition to the severance payments and benefits, each named executive officer must deliver a general release of all claims against us and our affiliates.

Director Compensation

The following table sets forth the compensation awarded to, earned by or paid to Messrs. Robert Barker, Dr. Kukjin Chun, Hyunsoo Shin, Dr. Kyeongho Lee, Jeff Tuder and Nelson C. Chan for services as our non-employee directors during 2024. There was no director compensation policy in place beyond the compensation and awards set forth in the following table.

(1)

Amounts reflect the director fees earned for 2024, for the period prior to the Business Combination (i.e., January 1, 2024 through March 31, 2024) and for the period after the Business Combination (i.e., April 1, 2024 through December 31, 2024), as described in more detail in the footnotes below.

(2)

Represents the grant date value of the restricted stock unit award granted to each non-employee director on June 27, 2024. The number of shares subject to, and issuable under the award upon vesting, is determined on the last day of each quarter during the period April 1, 2024 through March 31, 2025, by dividing $27,500 by the fair market value per share of the Company’s Common Stock as of the last day of the applicable quarter, rounded down the nearest whole share. See “Equity Awards” below for additional detail regarding the awards. The fair market value was $5.21 on June 28, 2024 (representing 5,278 shares), $3.35 on September 30, 2024 (representing 8,208 shares) and $2.33 on December 31, 2024 (representing 11,802 shares); the last quarterly determination date will be March 31, 2025. The restricted stock unit awards vest on March 31, 2025, subject to the non-employe director’s continued service through such date.

(3)

Mr. Robert Barker received $7,500 regular board retainer fees for the 1 st fiscal quarter of 2024. Mr. Barker also received $30,000 regular board retainer fees, $3,750 Compensation Committee member fees, $11,250 Audit Committee chairman fees, and $7,500 Nominating & Corporate Governance Committee chairman fees collectively for the 2 nd, 3 rd, and 4 th fiscal quarters of 2024.

(4)

Dr. Kukjin Chun received $7,500 regular board retainer fees for the 1 st fiscal quarter of 2024. Dr. Chun also received $33,750 regular board retainer fees, $5,625 Audit Committee member fees collectively for the 2 nd, 3 rd, and 4 th fiscal quarters of 2024.

(5)

Mr. Hyunsoo Shin received $7,500 regular board retainer fees for the 1 st fiscal quarter of 2024. Mr. Shin also received $33,750 regular board retainer fees and $5,625 Audit Committee member fees collectively for the 2 nd, 3 rd, and 4 th fiscal quarters of 2024.

(6)

Dr. Kyeongho Lee received $30,000 regular board retainer fees, $7,500 Compensation Committee chairman fees, and $3,750 Nominating & Corporate Governance committee member fees in fiscal 2024 (for the 2 nd, 3 rd, and 4 thfiscal quarters of 2024).

(7)

Mr. Jeff Tuder received $35,625 regular board retainer fees, and $3,750 Compensation Committee member fees in fiscal 2024 (for the 2 nd, 3 rd, and 4 thfiscal quarters of 2024).

(8)

Mr. Nelson C. Chan received $35,625 regular board retainer fees, and $3,750 Nominating & Corporate Governance member fees in fiscal 2024 (for the 2 nd, 3 rd, and 4 th fiscal quarters of 2024).

Cash Retainer and Fees:

Each non-employee director receives an annual retainer in the following amounts:

In addition to an annual cash retainer, our non-employee directors receive the additional compensation described below, as applicable. All cash retainers are paid in quarterly installments based on each director’s service on the board or a committee during such quarter.

Equity Awards:

RSU Awards:

On June 27, 2024, each non-employee director was granted an award of restricted stock units under the 2024 Incentive Compensation Plan covering $110,000 worth of shares of the Company’s Common Stock, subject to the following terms:

•

The number of shares of the Company’s Common Stock issuable under the award is determined on a quarterly basis on the last day of each calendar quarter during the period April 1, 2024 through March 31, 2025 by dividing $27,500 by the fair market value per share of the Company’s Common Stock on such date, rounded down to the nearest whole share. The total number of shares subject to the award will be the aggregate of the number of shares determined for each such quarter.

•

The award vests on March 31, 2025, subject to the non-employee director’s continued service through such date.

•

Shares that vest under the award are issued as soon as practicable following the vesting date, subject to any deferral election as described below.

Each non-employee director was allowed to make a deferral election, until the earliest to occur of a Distribution Event or a calendar year specified by the director (but no earlier than 2026), with respect to the number of restricted stock units determined on any of the quarterly determination dates ending on or after September 30, 2024 (i.e., the non-employee directors were not permitted to make a deferral election for the restricted stock units determined for the quarter ending June 30, 2024). A Distribution Event means a separation from service from the Company, a change in control event involving the Company, death or becoming disabled. Messrs. Robert Barker and Jeff Tuder elected to defer the issuance of shares until the earliest Distribution Event; Dr. Kyeongho Lee elected to defer the issuance of shares until the earliest to occur of (i) a Distribution Event or (ii) 2027.

Maximum Director Compensation:

Under the terms of the 2024 Incentive Compensation Plan, the maximum aggregate value of awards granted to any non-employee director under the plan in any calendar year, taken together with any cash retainer paid to such non-employee director in respect of such calendar year, may not exceed $500,000 in total value.