Arlo Technologies Inc

Base Salary

Base salaries are generally reviewed and approved by the Compensation and Human Capital Committee each year. In 2024 and 2023, the Compensation and Human Capital Committee did not make any changes to our named executive officer base salaries, except for Mr. Busse in 2024, whose base salary was increased by 5% based on our peer group study.

Performance Bonus

The annual performance bonus program provides each named executive officer with the opportunity to earn annual incentive payments based upon the attainment of certain corporate financial or operational measures or objectives as appropriate for the year, based on such participant’s annual performance bonus opportunity, expressed as a percentage of base salary.

2024 Target Performance Bonus

For 2024, Messrs. McRae, Binder and Busse had the opportunity to earn a target annual performance bonus equal to 100%, 70% and 50% of their annual base salary, respectively. The target percentages applicable to such named executive officers for 2024 were unchanged from 2023.

2024 Performance Goals and Achievements

For 2024, the Compensation and Human Capital Committee established non-GAAP operating income (loss), product return reduction, and subscriber retention and churn improvement metrics as the corporate performance goals applicable to the 2024 plan year. The Compensation and Human Capital Committee chose these metrics because they not only incentivized our executives to drive revenue growth, manage operating expenses, and improve profitability, but also focused on our customer-centric approach to improve overall customer experience and subscription retention. For the financial performance goal, accounted for 80% of the total bonus program, the target is derived based on the annual operating plan established at the beginning of 2024. For the operational performance goals, each accounted for 10% of the total bonus program, the targets are based on improvements in product return rates and subscriber retention rates benchmarked as of December 31, 2023. On both financial and operational performance goals, over-achievement is allowed at a maximum of 150% of target metrics such that the total payout is capped at 150% of target bonus. Similarly, a threshold performance level is established for each performance goal, below which no bonus will be paid.

We do not disclose the specific target levels for the above-described metrics because we believe that such disclosure would result in competitive harm to us. We purposely set these targets at aggressive levels. Revealing these metrics, including the reasoning for setting targets at specific levels, could potentially reveal insights about our objectives that our competitors could use against us in the marketplace for similar products. We believe each of these target levels was challenging but attainable under assumed conditions if we had what we considered to be a successful year.

After assessing our 2024 performance, the full Board determined that each of our named executive officers received a performance bonus equal to 71% of their target bonus. The 2024 amounts reflected as Non-Equity Incentive Plan Compensation in the Summary Compensation Table for our named executive officers reflect the value of the bonuses earned for 2024 performance under Arlo’s 2024 executive bonus plan. These bonuses were paid in fully-vested RSUs issued in February 2025.

Equity-Based Incentives

Since our IPO, we have granted equity compensation to our executive officers primarily in the form of RSU and/or performance-based stock unit awards (which we refer to as “performance-based RSU” or “PSU” awards). We grant equity incentive awards to support long-term alignment between our executive officers and our stockholders, and to enable us to obtain and retain the services of highly qualified senior management team members, which we believe is essential to our long-term success.

2024 Annual Equity Awards

During 2024, we granted each of our named executive officers performance-based incentives upon the achievement of cumulative paid subscribers (“CPS”) and a blended 60% service gross margin thresholds as reflected in the table below. We determined to only grant performance-based incentives in response to stockholder feedback and to further strengthen alignment between pay and performance.

The Compensation and Human Capital Committee chose each named executive officer’s grant level based on the amount which they felt, in their judgment, was appropriate to retain and incentivize the named executive officers, while remaining reasonable within market standards. In making these determinations, the Compensation and Human Capital Committee considered each of the named executive officer’s current equity holdings, the extent to which such holdings remained unvested (and therefore continued to serve as a retention tool), the market data provided by Pay Governance reflecting equity value based on approximate grant date fair value, internal equity amongst the team, individual performance and length of service.

The performance-based CPS PSUs vest in substantially equal installments upon achievement of 3,813,000, 4,813,000, and 5,813,000 cumulative paid subscribers and a blended 60% service gross margin on or prior to September 30, 2027. We selected these specific goals because, as of the date of approval, we believed that they represented rigorous but achievable targets. Further, we believe that awards vesting based on achievement of cumulative paid subscribers are an important and useful incentive because paid subscribers represent a significant portion of our revenue. The first goal for these CPS PSUs was achieved in July 2024 and accordingly Messrs. McRae, Binder, and Busse vested in 288,823, 333,333, and 50,000 PSUs, respectively.

Executive Retention Plan Awards

In August 2022, we adopted an Executive Retention Plan under which Messrs. McRae and Busse have the opportunity to earn cash and equity payouts upon achievement by us of certain cumulative paid subscribers and a blended 60% service gross margin thresholds over a five-year performance period beginning in September 2022 and ending in September 2027. We adopted this program – our first and only executive retention program – in consultation with our previous compensation consultants because we were facing extenuating circumstances. In particular, we were in the midst of a transformation into a services organization with recurring revenue and KPIs driven by a subscription model. We were also cash-constrained and so looked to equity awards as a

EXECUTIVE COMPENSATION

primary component of such retention plan to maintain our liquidity position. At the time, retention of our C-suite was critical as two chief financial officers, a chief information officer and other key executives had already left, making us even more dependent on our chief executive officer and general counsel.

Cumulative Paid Subscribers means, on a cumulative basis, ordinary course paid subscription accounts generated by us which collectively are expected to generate at least a blended 60% service gross margin as reasonably determined in the sole discretion of the Board or the Compensation and Human Capital Committee. We implemented the Executive Retention Plan in recognition of the significant benefits to us in retaining and incentivizing such participants to continue their employment relationship with us. Compensation and Human Capital Committee chose CPS as the performance goal for the Executive Retention Plan because paid account subscribers drives our service revenue growth that generate over 80% gross margin.

Upon achievement by us during the five-year performance period of each of the CPS Targets and blended service gross margin listed in the table below, each of Messrs. McRae and Busse is entitled to receive a cash payment and a PSU equal to, or calculated by reference to, such Participant’s base amount or base PSU as reflected below. The CPS Targets were set in 2022 at levels the Board felt would be challenging based upon our historical performance, internal forecasts at the time of approval and industry-wide conditions. The Board has no intention to use “special” or off-cycle cash or equity retention awards for executives in the foreseeable future.

In November 2024, after considering stockholder feedback solicited following our advisory vote on the compensation of our named executive officers, our Compensation and Human Capital Committee approved, and each of Messrs. McRae and Busse accepted, the grant of PSUs in lieu of the cash bonus that would otherwise be payable upon achievement of the 5 Million CPS Target (“Substitute PSUs”). Such Substitute PSUs vest upon achievement of all of the following: (i) achievement of the 5 Million CPS Target and a blended 60% service gross margin, (ii) achievement by us of at least $300 million in ARR, and (iii) continuous service through the later of October 1, 2025, or the date on which the latter of the conditions described in (i) and (ii) is achieved (provided that such conditions must be achieved, if at all, on or prior to September 30, 2027). The number of Substitute PSUs granted to each was determined by dividing $2,000,000 (for Mr. McRae) or $200,000 (for Mr. Busse) by the 30-day trailing average price per share of our common stock, calculated and inclusive as of the grant date, rounded down to the nearest whole unit, which was 178,094 and 17,809 PSUs for each of Messrs. McRae and Busse, respectively.

Upon the grants of the last tranche for the 5 Million CPS Target in November 2024, all charges have been recognized and there is no further awards under the 2022 Retention Program.

The CPS PSUs and Substitute PSUs are eligible for acceleration or different vesting upon certain change in control or termination events as described below under “Potential Payments upon Termination or Change in Control”.