Immersion (IMMR) PRE 14APreliminary proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Schedule 14A Information (Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

April [11], 2022

TO THE STOCKHOLDERS OF IMMERSION CORPORATION

Dear Stockholder:

At the Annual Meeting, stockholders will be asked to vote on each of the four (4) proposals set forth in the Notice of Annual Meeting of Stockholders and the Proxy Statement, which describe the formal business to be conducted at the Annual Meeting and follow this letter.

It is important that your shares be represented and voted at the Annual Meeting regardless of the size of your holdings. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Voting electronically, by telephone, or by returning your proxy card in advance of the Annual Meeting does not deprive you of your right to attend the Annual Meeting.

On behalf of the Board of Directors, I would like to express our appreciation for your continued support for and interest in the affairs of our company. We look forward to seeing you at the Annual Meeting.

Sincerely,

Francis Jose

Chief Executive Officer and General Counsel

Only stockholders of record at the close of business on March 24, 2022 are entitled to notice of, and to vote at, the Annual Meeting and at any adjournments or postponements thereof. The vote of each eligible stockholder is important. Please vote as soon as possible to ensure that your vote is recorded promptly even if you plan to attend the Annual Meeting.

BY ORDER OF THE BOARD OF DIRECTORS,

Francis Jose

Aventura, Florida, April [11], 2022

We intend to hold our Annual Meeting in person. If you choose to attend the Annual Meeting, please be advised that pursuant to, or as recommended by, the laws of Santa Clara County, masks and proof of vaccination status may be required for attendees. In person seating may also be limited due to social distancing requirements. We are actively monitoring the coronavirus (COVID-19) situation and are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. If we take this step, we will announce the decision to do so in advance by filing Definitive Additional Materials with the SEC along with notice of the change(s) to the Annual Meeting, and details on how to participate will be available at www.envisionreports.com/IMMR.

You may vote your shares as follows – in all cases, have your proxy card in hand:

If you plan to vote in person at the Annual Meeting and you hold your shares of Immersion Corporation common stock in street name, you must obtain a proxy from your broker and bring that proxy to the Annual Meeting.

Who counts the votes?

We have hired Computershare to count the votes represented by proxies and cast by ballot, and our General Counsel and Corporate Secretary, or other individual as appointed by the Board of Directors, will act as Inspector of Election.

When will we announce the voting results?

We will announce the preliminary voting results at the Annual Meeting. Within four business days of the Annual Meeting, we will report the final results in a Current Report on Form 8-K filed with the SEC, a copy of which will be available at www.sec.gov.

Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting?

If you do not provide a proxy or vote your shares held in your name, your shares will not be voted. If you hold your shares in street name, your broker has the authority to vote your shares for “routine” matters even if you do not provide the broker with voting instructions.

Without instructions from you, the broker may not vote on any proposals other than the ratification of Armanino LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022, which is a routine matter.

What if I am a stockholder of record and return my proxy but don’t vote for some of the matters listed on my proxy card?

If you return a signed proxy card without indicating your vote, your shares will be voted “FOR” the director nominees listed on the card (Proposal 1), “FOR” the ratification of Armanino LLP as our independent registered public accounting firm (Proposal 2), “FOR” the advisory vote to approve the compensation of our named executive officers (Proposal 3), and “FOR” the ratification of the Company’s Section 382 Tax Benefits Preservation Plan (Proposal 4).

What if I am a beneficial owner and do not give voting instructions to my broker?

As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank or broker by the deadline provided in the materials you receive from your bank or broker. If you do not provide voting instructions to your bank or broker, whether your shares can be voted by such person depends on the type of item being considered for vote. Brokers may not vote shares held in street name on non-routine matters unless they have received voting instructions from the beneficial owners on how to vote those shares. The ratification of Armanino LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 is the only

routine matter to be presented at the Annual Meeting on which brokers may vote in their discretion on behalf of beneficial owners who have not provided voting instructions. All other matters are considered “non-routine”.

Do we have a policy about directors’ attendance at the Annual Meeting?

Pursuant to the Corporate Governance Principles, directors are strongly encouraged, but not required, to attend the Annual Meeting. All four of our then-current director nominees attended the 2021 Annual Meeting of Stockholders.

How can I access Immersion Corporation’s proxy materials and annual report electronically?

Who bears the cost of this proxy solicitation?

We have engaged a proxy solicitor, Saratoga Proxy Consulting LLC, to assist the Company’s Board of Directors and management in obtaining adequate votes to achieve the required quorum for the Annual

Meeting and to obtain approval for the proposals included in this Proxy Statement. The Company will pay the proxy solicitation fees to Saratoga Proxy Consulting LLC and estimates that such fees will total approximately $30,000 or less.

How do I submit a proposal for action at the 2023 Annual Meeting of Stockholders?

In addition, the stockholder proponent, or a representative who is qualified under state law, must appear in person at the 2023 Annual Meeting of Stockholders to present such proposal. Our Bylaws, which are publicly available as an exhibit to the Annual Report, provide detailed information on how to properly submit stockholder proposals and director nominations, and should be read carefully.

Proposals should be sent to our Corporate Secretary, Immersion Corporation, P.O. Box 640504, San Jose, California 95164.

We will promptly deliver free of charge a copy of our Annual Report to any stockholder requesting a copy. Requests should be directed to our Corporate Secretary, Immersion Corporation, P.O. Box 640504, San Jose, California 95164.

We will promptly deliver, upon oral or written request, a separate copy of the proxy statement to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies for the current year or future years should be directed to our Corporate Secretary, Immersion Corporation, P.O. Box 640504, San Jose, California 95164.

Stockholders of record residing at the same address and currently receiving multiple copies of the proxy statement may contact our registrar and transfer agent, Computershare, to request that only a single copy of the proxy statement be mailed in the future. Contact Computershare by phone at (877) 373-6374 or by mail at 462 South 4th Street, Suite 1600, Louisville, KY 40202.

Beneficial owners should contact their broker or bank.

The Nominating and Corporate Governance Committee communicates with the Board to identify backgrounds, qualifications, professional experiences, and areas of expertise that impact our business that are particularly desirable for our directors to possess in order to help meet specific Board needs, including:

The following table highlights each director’s or director nominee’s specific skills, knowledge and experience. A particular director may possess other skills, knowledge or experience even though they are not indicated below.

The Board does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership. Diversity is important because a variety of perspectives contribute to a more effective decision-making process.

2022 Nominees for Director

We have no reason to believe that the nominees listed above will be unable or unwilling to serve if elected. However, if any of these nominees should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors. The Board believes that the nominees’ qualifications, skills and experiences would contribute to an effective and well-functioning Board.

Included in each nominee’s biography below is an assessment of his specific qualifications, attributes, skills, and experience based on the qualifications described above.

There are no family relationships between the nominees, any directors, or any of our executive officers.

Nominees for Directors – To Be Elected for a Term Expiring in 2023

William Martin

Elias Nader

Eric Singer

Frederick Wasch

Sumit Agarwal

We are committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust. The Board of Directors has established Corporate Governance Principles which provide a framework for our effective governance. The principles address matters such as the director responsibilities, director qualifications, determination of director independence, Board committee structure, Chief Executive Officer performance evaluation and management succession. The Board regularly reviews developments in corporate governance and updates the Corporate Governance Principles and other governance materials as it deems necessary and appropriate.

The corporate governance section of our website makes available our corporate governance materials, including the Corporate Governance Principles, our Stock Ownership Policy, the charters for each Board committee and our Code of Business Conduct and Ethics. These documents are available on our website at https://ir.immersion.com/corporate-governance.

Our Board exercises its oversight responsibility for risk both directly and through its standing committees. Strategic, operational and competitive risks also are presented and discussed at our Board’s quarterly meetings, and more often as needed. On at least an annual basis, our Board conducts a review of our long-term strategic plans and members of our executive team report on our top risks and the steps management has taken or will take to mitigate these risks. On a regular basis between Board meetings, our Chief Executive Officer provides updates to the Board on the critical issues we face and recent developments in our principal markets.

Our Audit Committee is responsible for reviewing our risk management framework and programs, as well as the framework by which management discusses our risk profile and risk exposures with our full Board and its committees. Our Audit Committee meets regularly with our Chief Financial Officer (who is also our General Counsel), our independent auditor, our General Counsel, and other members of senior management to discuss our major financial risk exposures, financial reporting, internal controls, credit and liquidity risk, compliance risk, key operational risks, cybersecurity risk and our risk management framework and programs. Other responsibilities include at least annually reviewing the implementation and effectiveness of our compliance and ethics program and our business continuity plan and test results. Our Audit Committee meets regularly in separate executive sessions with the independent auditor, as well as with Audit Committee members only, to facilitate a full and candid discussion of risk and other issues.

Our Compensation Committee is responsible for overseeing human capital and compensation risks, including evaluating and assessing risks arising from our compensation policies and practices for all employees and ensuring executive compensation is aligned with performance. Our Compensation Committee also is charged with monitoring our incentive and equity-based compensation plans, including employee benefit plans. For additional information regarding the Compensation Committee’s review of compensation-related risk, please see the section of this proxy statement entitled “Compensation Discussion and Analysis—Risk Assessment of Compensation Programs.”

Our Nominating and Corporate Governance Committee oversees risks related to our overall corporate governance, including Board and committee composition, Board size and structure, director independence, and our corporate governance profile and ratings. Our Nominating and Corporate Governance Committee also is actively engaged in overseeing risks associated with succession planning for our Board and management.

Our Strategy Committee provides assistance to our Board in various matters, including fulfilling its responsibilities with respect to reviewing, evaluating and making recommendations to the Board regarding the Company’s corporate strategy, capital allocation, cost structure, business opportunities and related matters.

Our Board believes that one of its primary responsibilities is to oversee the development and retention of executive talent and to ensure that an appropriate succession plan is in place for our Chief Executive Officer and other members of management. Each year, the Nominating and Corporate Governance Committee meets with our Human Resources department and our executives to discuss management succession planning and to address potential vacancies in senior leadership. The Nominating and Corporate Governance Committee also annually reviews with the Board succession planning for our Chief Executive Officer. In addition to executive and management succession, the Nominating and Corporate Governance Committee regularly oversees and plans for director succession and refreshment of the Board to ensure a mix of skills, experience, tenure, and diversity that promote and support our long-term strategy. In doing so, the Nominating and Corporate Governance Committee takes into consideration the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director candidate qualifications. Individuals identified by the Nominating and Corporate Governance Committee as qualified to become directors are then recommended to the Board for nomination or election.

The Code of Business Conduct and Ethics is applicable to all of our directors, employees, and officers and is available on our website at https://ir.immersion.com/corporate-governance. Any substantive amendment or waiver of this policy may be made only by our Board upon a recommendation of the Audit Committee and, as required by applicable SEC rules, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K by disclosing such information on our website.

The Stock Ownership Policy is applicable to our executives and non-employee directors and is available on our website at https://ir.immersion.com/corporate-governance. This policy requires that these individuals hold stock equal in value to, in the case of our CEO and non-employee directors, three times, and our other executives, one times, the amount of their annual cash retainer/base salary.  This is calculated once a year and there is a five-year period in which to comply.  If it is determined that a particular person does not comply with the policy, the individual will be notified and will be required to retain 50% of the net shares received as a result of any exercise, vesting or payment of any equity awards until he or she becomes compliant. 

The Insider Trading Policy applies to all of our current and former employees, directors, independent contractors, agents and consultants. The Insider Trading Policy prohibits short sales, the buying or selling of puts, calls or other derivative or similar securities of the Company or engaging in any other hedging transaction, using the Company’s securities as collateral in a margin account, or pledging the Company’s securities as collateral for a loan (or modifying an existing pledge).

Communications by Stockholders with Directors

Board Meetings and Committees of the Board

Our Board and its committees meet throughout the year on a set schedule, hold special meetings as needed, and act by written consent from time to time. The Board met seven times during 2021. Each director attended at least 75% of the meetings of the Board and of any committees of the Board on which he or she serves. The total number of meetings held by each committee is set forth below under “Committees of the Board.”

We make every effort to schedule our annual meeting of stockholders at a time and date to accommodate attendance by directors, taking into account the directors’ schedules. All directors are encouraged to attend the annual meeting of stockholders. All four (4) of our then-current director nominees attended our 2021 annual meeting of stockholders.

The non-executive members of our Board and all committees of our Board meet in executive session without management present at each regularly scheduled in-person Board and committee meeting.

The Board has a separately-designated standing Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Strategy Committee.

The Board has also adopted a written charter for each of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Each written charter is available on our website at https://ir.immersion.com/corporate-governance.

In each case, our Board has delegated the responsibilities set forth below to the respective committee; however, our Board may from time to time, perform the duties itself.

This section includes biographical information for our named executive officers for the fiscal year end December 31, 2021, other than Mr. Singer and Mr. Martin.

Francis Jose

Aaron Akerman

Over the past few years, we have undertaken a strategic transformation of our business, and in turn, our executive leadership team and organizational structure, to effectively position ourselves to compete in a rapidly-evolving technology environment. Our overarching executive compensation objectives are to effectively align our compensation program design to our business strategy, and to attract, develop and retain executives with the background and experience required to lead us forward and provide the best opportunity to achieve sustained growth and profitability. This goal is difficult to accomplish for any business, but it can be particularly complicated when facing a global pandemic and challenging and volatile industry and business dynamics.

As of a result of our ongoing transformation efforts, we have had changes in our leadership structure and the individuals who fill these leadership roles. In August 2021, we promoted Francis Jose to be our Chief Executive Officer, following his appointment to serve as our General Counsel in May 2021. Also in August 2021, Eric Singer, our Executive Chairman of the Board, transitioned from an independent director to an executive officer. William C. Martin, our Chief Strategy Officer, also transitioned from an independent director to an executive officer at the end of 2021. We have also made other changes within our executive leadership team and broader organization over the past few years.

To understand the design of our executive compensation program, it is important to consider our guiding compensation objectives in the context of our evolving business and management team transition. For 2021, the Compensation Committee focused on attracting, developing and retaining our executive team while incentivizing them to focus on building long-term value for stockholders. These considerations, along with a review of peer group and industry practices, resulted in our granting annual bonuses to Mr. Jose and Mr. Singer based on their performance.

The past year involved a managerial transition at the Chief Executive Officer position. Jared Smith departed as Interim Chief Executive Officer, effective August 30, 2021. Francis Jose, the Company’s General Counsel, was appointed as Chief Executive Officer, effective August 30, 2021. In connection with Mr. Jose’s appointment as Chief Executive Officer, the Compensation Committee approved an increase to Mr. Jose’s then-current annual base salary from $315,000 to $345,000, effective as of August 30, 2021.

The following are some of the highlights of our business results in 2021:

In many respects, 2021 was a transition year for Immersion. We experienced significant changes in our leadership, while we continued to implement changes to our operations and corporate strategy, all of which resulted in changes to the compensation of our executive officers in 2021.

The following are some of the highlights related to the 2021 compensation of our named executive officers:

In August 2021, the Board reviewed the duties and responsibilities of our Executive Chairman, Mr. Singer, and noted how Mr. Singer’s level of responsibility and involvement with the Company had grown since taking on this role and, in particular, since the departure of our Chief Executive Officer prior to Jared Smith. The Board noted that these responsibilities, including direct and active management of capital allocation strategies, the execution of at-the-market offerings, oversight of adherence to budgets, implementing tighter controls on spending, monitoring performance against operating plan, advising on communications with stockholders and in some cases communicating directly with investors, had resulted in a significant commitment for Mr. Singer. As a result, the Board concluded that Mr. Singer should become an executive officer of the Company and should no longer be considered an independent director for so long as he continued to serve in his current role of Executive Chairman. At this time, we changed the way we compensated Mr. Singer so that he was effectively compensated as an executive officer and no longer solely as a director. Specifically, Mr. Singer’s compensation was changed so that he received an annual base salary of $370,000, and he was no longer paid any cash compensation separately for his services as a director. Mr. Singer’s base salary was made effective retroactively to January 1, 2021 (which was when the members of the Compensation Committee believed it was appropriate to recognize Mr. Singer for his increased commitment to the Company), but any cash compensation previously paid to Mr. Singer for his services as a director in 2021 served to offset his retroactive pay in 2021. Mr. Singer would continue to be eligible for director restricted stock grants.

Also in August 2021, the Compensation Committee reviewed Mr. Martin’s role and noted his contributions to the Company’s capital allocation strategies and his active involvement in strategic matters for the Company. At this time, Mr. Martin was appointed to serve as the Chairman of the Strategy Committee of the Board. In connection with his appointment and in recognition of Mr. Martin’s expanded role, Mr. Martin’s annual director fees were increased by $175,000. At this time, the Board determined that Mr.

Martin’s role had not reached a level where he should lose his status as an independent director, and Mr. Martin continued to serve as an independent director.

December 2021, the Compensation Committee also reviewed our Executive Chairman’s performance in 2021, his expanded role and commitment throughout the year and the Company’s performance. The Committee noted Mr. Singer’s performance in 2021 included the following: (i) oversaw, drove and originated cost reductions that the Company had implemented since its restructuring activities began; (ii) oversaw the efficient management of the Company’s service provider arrangements, which also contributed to cost savings for the Company; (iii) advised management on material agreements; (iv) drove accountability and reporting from management to the Board; (v) led and oversaw the implementation of the Company’s at-the-market offering of its common stock, which raised approximately $60.0 million for the Company, to enable it to execute its corporate strategic objectives; (vi) worked with management on a day-to-day basis to drive sales pipeline, better managed the current sales workforce and drive more effective transactions for the Company; (vii) worked directly with the Company’s Chief Executive Officer and Chief Financial Officer on many day-to-day aspects of the Company’s operations; (viii) detailed focus on a day-to-day basis of the Company’s adherence to budgets and expense controls; and (ix) co-led a continual evaluation of the Company’s strategic opportunities and general corporate strategy. In light of this performance and what had evolved into an executive role at the Company over time in 2021, the Compensation Committee recommended to the full Board that Mr. Singer’s annual base salary be increased to $450,000 effective January 1, 2022, and Mr. Singer be awarded a cash bonus of $500,000 for performance in 2021. After consideration of this recommendation and review of the information presented by the members of the Compensation Committee, the Board approved these recommendations (with Mr. Singer not participating in these discussions).

The Compensation Committee and Board also reviewed Mr. Martin’s expanding role in the development and execution of the Company’s strategy, including its capital allocation strategies and other corporate strategic matters. The Committee and Board noted that, similar to Mr. Singer and Mr. Jose, Mr. Martin’s role and time commitment to the Company had increased over 2021 during such a transitional year in the leadership of the Company. As a result, the Board appointed Mr. Martin to serve as the Company’s Chief Strategy Officer. The Board also determined that Mr. Martin should be deemed an executive officer moving forward in recognition of his expanded role and restructured his compensation such that he was paid an annual base salary of $350,000, effective January 1, 2022, and he would no longer be eligible for cash compensation as a director but would continue to be eligible for equity awards to directors for Board service. Mr. Martin did not participate in these deliberations or decision.

After the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan at a special meeting of stockholders in January 2022, the Compensation Committee reviewed equity compensation for our executive officers with the objective of aligning our executive officer’s performance with the interests of our stockholders and to incent them to continue to perform in their roles that had expanded throughout 2021. In light of the fact that neither Mr. Singer nor Mr. Martin had received initial equity incentive awards in connection with their appointments as executive officers, the Committee reviewed market data and considered an appropriate initial equity incentive award structure for each of them, with a primary objective of tying performance that benefited our stockholders directly to the receipt of a significant portion of this equity compensation. As a result, the Committee approved performance restricted stock units, or PSUs, which had vesting provisions tied directly to stock price performance. This means that neither Mr. Singer nor Mr. Martin would vest in these PSUs unless the stock price increased considerably. Each of Mr. Singer and Mr. Martin were awarded 300,000 PSUs, which only vest upon both the achievement of certain stock price targets and continued service over a three-year period. The stock price targets set by the Committee were significantly higher than the then current trading price of the Company’s stock, and were $7.50 per share, $8.75 per share and $10.00 per share. The closing price of the Company’s Common Stock on the date of approval of these awards was $4.78 per share. One-third of the total number of PSUs will vest only if the volume weighted average price of the Company’s Common Stock meets or exceed such stock price target in any 100-calendar day period falling within the

period beginning on January 1, 2022 and ending on January 1, 2027. In addition, the Committee determined that a portion of the equity incentive compensation for Mr. Martin and Mr. Singer should consist of time-based restricted stock units, or RSUs, and each were awarded 300,000 RSUs which will vest over a three-year period, subject to continued service to the Company. The Compensation Committee intends to review appropriate annual cash incentives and long -term equity incentives for our other named executive officers in connection with a normal annual review cycle later in 2022.

In determining the compensation of our named executive officers, the Compensation Committee evaluates various factors, including the following:

In designing our executive compensation program, we have implemented policies and practices to create alignment with our stockholders and that support our commitment to good corporate governance as follows:

At the annual meeting of our stockholders held in May 2021, approximately 95% of the total stockholders’ votes cast were voted in favor of the fiscal 2021 compensation of our named executive officers. While this vote was not binding on the Company, the Board, or the Compensation Committee, we believe that it is important for our shareholders to have an opportunity to vote on this proposal on an annual basis to express their views regarding executive compensation.

Additionally, in evaluating our compensation program, we routinely have discussions with our largest shareholders regarding many topics, which include discussions related to our compensation strategies.

We have determined that our stockholders should vote on a say on pay proposal each year, consistent with the preference expressed by our stockholders at the 2017 annual meeting.

Although the Compensation Committee has not established a fixed policy for the allocation between cash and equity compensation or short-term and long-term compensation, the Compensation Committee, as part of its evaluation of the compensation of our executive officers, reviews not only the individual elements of compensation, but also total compensation.

At the same time, our Compensation Committee views the compensation of our executive officers in the context of our overall corporate strategy and objectives. In 2020 and 2021, one of the primary objectives of the Company was to realign its cost structure with its sales and focus on achieving and maintaining profitability. As a result, our Compensation Committee has approached executive compensation with an objective of maintaining and incenting talented executives, but at the same time being judicious with corporate resources to further overall corporate objectives.

The Compensation Committee reviews and recommends to the Board for approval all compensation programs (including equity compensation) applicable to our named executive officers and directors, our overall strategy for employee compensation, and the specific compensation of our Chief Executive Officer.

The Compensation Committee approves the compensation of all other executive officers. The Compensation Committee has the sole authority to select and retain consultants, consulting firms, legal counsel, accounting and other advisers, as it deems appropriate.

While the Compensation Committee determines our overall compensation philosophy, our Board sets the compensation for our Chief Executive Officer. Our Chief Executive Officer also provides our Board and the Compensation Committee with his perspective on the performance of our named executive officers as part of the determination of the individual portion payable under the executive incentive plans (as described below) and the annual personnel review as well as a self-assessment of his own performance. Our Chief Executive Officer is not a current member of our Board of Directors and is not present during discussions by the Compensation Committee or our Board relating to his own compensation. Our Chief Executive Officer recommends to the Compensation Committee specific compensation amounts for named executive officers other than himself, and the Compensation Committee considers those recommendations and the information provided by its compensation consultant concerning peer group comparisons and industry trends when making its compensation decisions. Our Chief Executive Officer and members of our Human Resources department regularly attend portions of the Compensation Committee’s meetings to provide perspectives on the competitive landscape and the needs of the business, information regarding our performance, and technical advice. Members of the Compensation Committee also participate in our Board’s annual review of the Chief Executive Officer’s performance and its setting of annual performance goals, in each case led by our Executive Chairman of the Board.

The Compensation Committee uses a compensation consultant primarily to provide input on compensation trends and developments and to assist with the analysis of competitive executive compensation levels and trends. The compensation consultant also provides a valuable outside perspective on executive compensation practices.

In establishing executive compensation for fiscal 2020, the Compensation Committee engaged Compensia to serve as its compensation consultant up until June 2021 after which Semler was engaged. During fiscal 2021, Semler advised the Compensation Committee to provide guidance on non-employee director compensation, including compensation paid to the Executive Chairman of the Board.

Compensia and Semler were engaged directly by the Compensation Committee and do not provide any other unrelated products or services to us. Based on its review of the factors set forth in the Nasdaq listing standards, the Compensation Committee has determined that the work performed by Compensia and Semler during fiscal year 2021 did not raise a conflict of interest.

In 2021, there was no change to the following peer group established by Compensia in 2020:

While the Compensation Committee believes that comparisons to competitive market data are a useful tool, it does not believe that it is appropriate to establish executive compensation levels based solely on a comparison to market data. Due to the variations between companies’ reporting and the roles for which compensation for these companies is ultimately disclosed, directly comparable information is not available from each peer group company with respect to each of our named executive officers. In considering market compensation data, the Compensation Committee recognizes that executives at different companies can play significantly different roles, with different responsibilities and scopes of work, even though they may hold similar titles or nominal positions. The Compensation Committee therefore uses the competitive market data as a starting point while also considering subjective factors such as experience, skills, competencies and performance.

PSUs are intended to align our named executive officers’ interests with the interests of stockholders in increasing sustainable, long-term stockholder value. The Compensation Committee views PSUs as an element of performance-based compensation because they only deliver value to a recipient if the weighted average price of our common stock meets certain stock price targets and the vesting requirements have been met. PSUs vest over at least three years and are subject to continued employment with the Company through the applicable vesting dates.

vest on November 10, 2021 and the remaining shares eligible to vest in equal installments each quarterly anniversary thereafter.

Each stock price target is achieved upon certification of the Compensation Committee that the volume weighted average price of the common stock meets or exceeds such stock price target in any 100 calendar day-period falling within the period beginning on November 10, 2020 and ending on November 10, 2025.  

In November 2021, the Compensation Committee certified that the highest stock price target of $10.50 in terms of the 100-day VWAP condition had been met resulting in the PSUs being earned at 100%.

We provide certain named executive officers with perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall compensation programs and philosophy and which benefits are generally available to all our employees.

Our executive officers and non-employee directors are subject to a stock ownership policy that is available on our website at https://ir.immersion.com/corporate-governance. See “Corporate Governance—Company Policies” above.

The Company considers the effects of Section 162(m) of the Internal Revenue Code, which generally disallows the tax deduction for compensation in excess of $1 million for certain covered individuals. The compensation committee believes that stockholder interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. Therefore, the compensation committee has approved salaries and other awards for executive officers that were not fully deductible because of Section 162(m) and, in light of the repeal of the performance-based compensation exception to Section 162(m), expects in the future to approve additional compensation that is not deductible for income tax purposes.

Although we did not pay any bonuses or grant any equity, the Compensation Committee considers potential risks when reviewing and approving our compensation programs. We have designed our compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding our employees for achieving financial and strategic objectives through prudent business judgment and appropriate risk taking. The following elements have been incorporated in our compensation programs for our named executive officers:

Mary Dotz and Sumit Agarwal were members of our Compensation Committee during the 2021 fiscal year. William Martin served on the Compensation Committee until his appointment as the Chief Strategy Officer on December 28, 2021, at such time Mr. William ceased to be a member of the Compensation Committee. At the time of his appointment to the Board in March 2022, Elias Nader was appointed to the Compensation Committee, and Ms. Dotz resigned from the Compensation Committee. On April 1, 2022, Mr. Nader was appointed as Chairman of the Compensation Committee. None of the individuals serving on our Compensation Committee were at any time during 2021, or at any other time, an officer or employee of us, nor did they have any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of certain relationships and related party transactions. None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee.

The following table sets forth information concerning the outstanding equity awards held as of December 31, 2021 by our named executive officers:

We entered into the following agreements with each of Messrs. Jose, Smith, Okada and Akerman that provide for severance and additional benefits in connection with termination or change in control:

We entered into a Retention and Ownership Change Event Agreement with Mr. Jose, which provides that in the event that his employment is terminated without cause or he resigns for good reason, Mr. Jose would be entitled to receive (i) a lump sum severance payment equal to 6 months base salary; and (ii) payments for COBRA premiums for up to 6 months following his termination date.

In the event that, within one year following a change in control, Mr. Jose’s employment is terminated without cause or if he resigns for good reason, he would be entitled to receive (a) a lump sum severance payment equal to 12 months base salary; (b) health insurance premium payments for up to 12 months following his termination date; and (c) immediate vesting of 100% of his then-unvested equity awards.

Payment of the foregoing benefits is conditioned upon execution of a general release of claims.

We entered into a Retention and Ownership Change Event Agreement with Mr. Akerman, which provides that in the event his employment is terminated without cause or he resigns for good reason, he would be entitled to receive (i) a lump sum severance payment equal to 12 months base salary at his final base salary rate; and (ii) health insurance premium payments for up to 12 months following his termination date.

In the event that, within one year following a change in control, Mr. Akerman’s employment is terminated without cause or he resigns for good reason, he would be entitled to receive (a) a lump sum severance payment equal to 12 months base salary at his final base salary rate; (b) health insurance premium payments for up to 12 months following his terminate date; and (c) immediate vesting of 100% of his then-unvested equity awards.

Payment of the foregoing benefits is conditioned upon execution of a general release of claims.

We previously entered into Retention and Ownership Change Event Agreements with Mr. Smith and Mr. Okada, which provided that in the event their employment is terminated without cause or they resign for good reason, they would have been entitled to receive (i) a lump sum severance payment equal to 6 months base salary at their final base salary rate; and (ii) payments for COBRA premiums for up to 6 months following their termination date.

In the event that, within one year following a change in control, Mr. Smith or Mr. Okada’s employment were terminated without cause or they resign for good reason, they would have been entitled to receive (a) a lump sum severance payment equal to 12 months base salary at their final base salary rate; (b) health insurance premium payments for up to 12 months following their terminate date; and (c) immediate vesting of 100% of their then-unvested equity awards.

Payment of the foregoing benefits were conditioned upon execution of a general release of claims.

Effective on May 21, 2021, Mr. Okada departed as General Counsel & Senior Vice President, IP Licensing and Legal Affairs of the Company. In connection with his departure, the Company and Mr. Okada entered into a Separation Agreement dated May 17, 2021 (the “Separation Agreement”), pursuant to which, in consideration for the execution of customary general releases in favor of the Company and Mr. Okada’s continuing observation and performance of the terms of the Separation Agreement:

Upon Mr. Smith’s resignation as Interim Chief Executive Officer, effective as of August 30, 2021, the Company did not make any severance payments to him.

The following table provides information as of December 31, 2021 concerning our equity compensation plans:

Under the guidance of a written charter adopted by our Board, the purpose of our Audit Committee is to retain an independent registered public accounting firm, to make such examinations as are necessary to monitor the corporate financial reporting of the internal and external audits and its subsidiaries, to provide to the Board the results of its examinations and recommendations derived there from, to outline to the Board the improvements made, or to be made, in internal accounting controls, and to provide the Board with such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board.

Management is primarily responsible for the system of internal controls and the financial reporting process. The independent registered public accounting firm is responsible for expressing an opinion on the financial statements based on an audit conducted in accordance with generally accepted auditing standards. Our Audit Committee is responsible for monitoring and overseeing these processes.

We are asking our stockholders to ratify the Audit Committee’s engagement of Armanino LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. In the event the stockholders fail to ratify the appointment, our Audit Committee will reconsider its engagement. Even if the engagement is ratified, our Audit Committee, in its discretion, may direct the engagement of a different independent registered public accounting firm at any time during the year if our Audit Committee feels that such a change would be in our and our stockholders’ best interest.

In accordance with standing policy, Armanino LLP periodically changes the personnel who work on the audit.

During the fiscal year ended December 31, 2019, and the subsequent interim periods through April 8, 2020, Armanino LLP provided tax services to the Company consisting of a review of the Company’s quarterly and annual tax provision calculations, preparation of our annual tax returns and providing advice regarding the Company’s international tax structure. In approving the selection of Armanino as the Company’s independent registered public accounting firm, the Audit Committee considered these services previously provided by Armanino LLP and concluded that such services would not adversely affect the independence of Armanino LLP.

One or more representatives of Armanino will be present at this year’s Annual Meeting. The representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

Ratification of the appointment of the independent public accounting firm requires the affirmative vote of the majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal 2. Abstentions will have the same effect as a vote “AGAINST” Proposal 2.

At the annual meeting of our stockholders held in May 2021, approximately 95% of the total stockholders’ votes cast were cast in favor of the fiscal 2020 compensation of our named executive officers. The Compensation Committee has and will consider this result in future executive compensation decisions.

The Board recommends that the stockholders vote FOR the following resolution:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative.”

Because your vote is advisory, it will not be binding upon the Company, the Board or the Compensation Committee. However, the Board values stockholders’ opinions and the Compensation Committee will consider the outcome of the vote when considering future executive compensation decisions.

The proposal to ratify the Section 382 Tax Benefits Preservation Plan will require the affirmative vote of the holders of a majority of the outstanding shares as of the Record Date that are present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter. As explained above, the Section 382 Tax Benefits Preservation Plan was adopted by the Board in an effort to protect a potentially valuable asset and preserve our future ability to use our NOLs. In the event stockholders do not ratify the Section 382 Tax Benefits Preservation Plan at the Annual Meeting, by its terms the Section 382 Tax Benefits Preservation Plan will expire at the close of business on the day following the certification of the voting results of the Annual Meeting.

The following is a summary description of the Rights. This summary is intended to provide a general description only, does not purport to be complete and is qualified in its entirety by reference to the complete text of the Section 382 Tax Benefits Preservation Plan. All capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Section 382 Tax Benefits Preservation Plan.

In general, under Section 382 of the Code, an “ownership change” occurs if a stockholder or a group of stockholders who are deemed to own at least 5% of the Common Stock individually or collectively increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. If an ownership change occurs, Section 382 would impose an annual limit on the amount of the Company’s NOLs that can be used to offset the Company’s federal taxable income equal to the product of the total value of the Company’s outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the federal long-term tax-exempt interest rate in effect for the month of the ownership change. A number of complex rules apply to calculating this annual limit and there are several special rules that, depending on the rule involved, may apply to reduce or increase such limit. If an ownership change were to occur, the limitations imposed by Section 382 could result in a substantial delay in the timing of the usage of the Company’s NOLs or in a material amount or all of the Company’s NOLs expiring unused and, therefore, significantly impair or eliminate the value of such NOLs. While the Company periodically monitors its NOLs and currently believes that an ownership change that would impair the value of its NOLs has not occurred, the complexity of Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has in fact occurred.

The Section 382 Tax Benefits Preservation Plan is intended to act as a deterrent to any person or group acquiring beneficial ownership of 4.99% or more of the outstanding Common Stock without the approval of the Board. A person who acquires, without the approval of the Board, beneficial ownership (other than as a result of repurchases of stock by the Company, dividends or distributions by the Company or certain inadvertent actions by stockholders) of 4.99% or more of the outstanding Common Stock (including any ownership interest held by that person’s Affiliates and Associates as defined under the Section 382 Tax Benefits Preservation Plan) could be subject to significant dilution. Stockholders who beneficially own 4.99% or more of the outstanding Common Stock prior to the first public announcement by the Company of the Board’s adoption of the Section 382 Tax Benefits Preservation Plan will not trigger the Section 382 Tax Benefits Preservation Plan so long as they do not acquire beneficial ownership of additional shares of the Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock) at a time when they still beneficially own 4.99% or more of such stock. In addition, the Board retains the sole discretion to exempt any person or group from the penalties imposed by the Section 382 Tax Benefits Preservation Plan.

A person (other than any “direct public group” within the meaning of Treasury Regulations Section 1.382-2T(j)(2)(ii)) will be treated as the beneficial owner of 4.99% or more shares of the Common Stock if, in the determination of the Board, that person would be treated as a “5-percent stockholder” for purposes of Section 382 (substituting “4.99” for “5” each time “five” or “5” is used in or for such purposes of Section 382).

Until the Distribution Date, the Common Stock certificates or the ownership statements issued with respect to uncertificated shares of Common Stock will evidence the Rights. Any transfer of shares of Common Stock prior to the Distribution Date will also constitute a transfer of the associated Rights. After the Distribution Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the underlying shares of Common Stock unless and until the Board has determined to effect an exchange pursuant to the Section 382 Tax Benefits Preservation Plan (as described below).

Ratification of the selection of the Section 382 Tax Benefits Preservation Plan requires the affirmative vote of the holders of a majority of the shares that are present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter (meaning that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “FOR” Proposal No. 4 for it to be approved). In the event ratification is not provided, by its terms the Tax Benefits Preservation Plan will expire at the close of business on the day following the certification of the voting results of the Annual Meeting.