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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.  )
Filed by the Registrant ☒
Filed by a party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
SecureWorks Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
 
 
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11
 
 
 
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
(2)
Aggregate number of securities to which transaction applies:
 
 
 
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
(4)
Proposed maximum aggregate value of transaction:
 
 
 
 
(5)
Total fee paid:
 
 
 
 
 
 
Fee paid previously with preliminary materials.
 
 
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
 
 
(1)
Amount Previously Paid:
 
 
 
 
(2)
Form, Schedule or Registration Statement No.:
 
 
 
 
(3)
Filing Party:
 
 
 
 
(4)
Date Filed:
 
 
 

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NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
May 11, 2021
Dear fellow stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to SecureWorks Corp.’s 2021 Annual Meeting of Stockholders. The meeting will be held virtually on Monday, June 21, 2021, at 11:00 a.m., Eastern Time. The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2021, where you may listen to the meeting live, submit questions and vote online.
You will find information regarding the matters to be voted on in the accompanying Notice of Annual Meeting of Stockholders and proxy statement. We are sending many of our stockholders a notice regarding the availability of this proxy statement, our Annual Report on Form 10-K for the fiscal year ended January 29, 2021 and other materials via the internet. A paper or electronic copy of these materials may be requested using one of the methods described in the accompanying proxy statement or the Notice of Internet Availability of Proxy Materials.
You may visit investors.secureworks.com to access various web-based reports, executive messages and timely information on our global business.
Whether or not you plan to attend the annual meeting, please submit your proxy for your shares of Class A common stock or voting instructions using one of the voting methods described in the accompanying proxy statement. Submitting your proxy or voting instructions by any of these methods will not affect your right to attend the virtual meeting and vote your shares at the virtual meeting if you wish to do so.
If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of the accompanying proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com.
If your bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information.
Sincerely,
Michael S. Dell
Chairman of the Board of Directors

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of SecureWorks Corp.:
NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders of SecureWorks Corp., or Secureworks, will be held virtually on Monday, June 21, 2021, at 11:00 a.m., Eastern Time. The annual meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2021, where you will be able to listen to the annual meeting live, submit questions and vote online. The annual meeting is being held for the following purposes:
1.
To elect to the Board of Directors the two nominees specified in the accompanying proxy statement to serve as Class II directors, each for a three-year term expiring at the 2024 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified
2.
To ratify the appointment of PricewaterhouseCoopers LLP as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022
3.
To approve an amendment to the SecureWorks Corp. 2016 Long-Term Incentive Plan to increase the number of shares of Class A common stock issuable under the plan
In addition, stockholders will consider and take action upon any other business that may properly come before the annual meeting or any adjournment or postponement thereof.
The holders of record of Secureworks’ outstanding Class A common stock and Class B common stock as of the close of business on April 26, 2021, which is the record date fixed by the Board of Directors, are entitled to notice of and to vote at the annual meeting or at any adjournment or postponement thereof.
We encourage you to access the annual meeting before the start time of 11:00 a.m., Eastern Time, on June 21, 2021. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on June 21, 2021. A complete list of stockholders entitled to vote at the annual meeting will be available (1) for at least ten days before the annual meeting during ordinary business hours at our headquarters located at One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328 and (2) during the annual meeting at the website listed above using the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
Whether or not you plan to attend the annual meeting, your Board of Directors urges you to read the proxy statement and submit a proxy for your shares of Class A common stock or voting instructions via the internet or by telephone, or complete, date, sign and return your proxy card or voting instruction form in the pre-addressed, postage-paid envelope provided. We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs.
This Notice of Annual Meeting of Stockholders and the proxy statement are accompanied by Secureworks’ Annual Report on Form 10-K for the fiscal year ended January 29, 2021, which is our annual report to stockholders for our 2021 fiscal year.
If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of the accompanying proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com.
If a bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information.
By Order of the Board of Directors
George B. Hanna
Corporate Secretary
May 11, 2021

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YOUR VOTE IS IMPORTANT
  Whether or not you plan to attend Secureworks’ annual meeting, please submit your proxy or voting instructions as soon as possible. Under stock exchange rules, if you hold your shares of Class A common stock through a bank, brokerage firm or other nominee, your nominee holding shares on your behalf will NOT be able to vote your shares on Proposal 1 (election of directors) or Proposal 3 (approval of share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan) unless it receives specific instructions from you. We strongly encourage you to submit your voting instructions.
  We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs. For instructions on how to submit your proxy or voting instructions and how to vote your shares, please refer to the section entitled “Questions and Answers About the Annual Meeting” beginning on page 3 of the accompanying proxy statement.
 

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2021 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex A - SecureWorks Corp. 2016 Long-Term Incentive Plan

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SECUREWORKS CORP.
PROXY STATEMENT
SUMMARY INFORMATION
This summary highlights information contained elsewhere in this proxy statement. For more complete information, we encourage you to review the entire proxy statement and Secureworks’ Annual Report on Form 10-K for the fiscal year ended January 29, 2021.
The Notice of Internet Availability of Proxy Materials is first being distributed to stockholders on or about May 11, 2021. On or about May 12, 2021, we will begin mailing a full set of proxy materials to some of our stockholders. All references to “Secureworks,” “we,” “us,” “our” and “Company” in this proxy statement refer to SecureWorks Corp.
Annual Meeting of Stockholders
Date:
Monday, June 21, 2021
Time:
11:00 a.m., Eastern Time
Record Date:
April 26, 2021
Webcast:
The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2021, where you will be able to listen to the meeting live, submit questions and vote online.
Voting Methods:





 
 
 
 
 
Submit your proxy
or voting
instructions by
internet
Submit your proxy
by mobile device
Submit your proxy
or voting
instructions by
telephone
Submit your proxy
or voting
instructions by
mail
Submit your vote
online during the
meeting
Go to www.proxyvote.com and enter the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
Scan this QR code to vote with your mobile device. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
Call the number on your proxy card or voting instruction form. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed, postage-paid envelope.
See the instructions in the section captioned “Webcast” above regarding attendance at the virtual annual meeting to vote online. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs.
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Meeting Proposals and Voting Recommendations
Meeting Proposal
Board Recommendation
Page
Election of the Class II director nominees specified in this proxy statement
FOR ALL NOMINEES
Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending January 28, 2022
FOR
Vote to approve share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan
FOR
The holders of our Class A common stock and Class B common stock will vote as a single class on these proposals and any other business that properly comes before the stockholders for a vote at the meeting.
Election of Director Nominees (Proposal 1)
The Board of Directors is asking you to vote “FOR” election of each of the director nominees listed below to serve as Class II directors, as described under “Proposal 1 – Election of Directors.” Each nominee will be elected to serve for a three-year term expiring at the 2024 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified.
Each nominee currently serves as a member of the Board of Directors as a Class II director. Set forth below is summary information about each director nominee.
Nominee and
Principal Occupation
Age
Director
Since
Director
Class
Independent
Current Committee
Membership
Pamela Daley
Former Senior Vice President and Senior Advisor to the Chairman of the General Electric Company
68
2016
II
Audit
Nominating and Governance (Chair)
Kyle Paster
Managing Director of Silver Lake
34
2020
II
 
 
Ratification of Independent Registered Public Accounting Firm (Proposal 2)
The Board of Directors is asking you to vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm for the fiscal year ending January 28, 2022. All PwC fees incurred in connection with professional services rendered to Secureworks during our fiscal year ended January 29, 2021 and our fiscal year ended January 31, 2020 are summarized under “Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm.”
Share Increase Amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan (Proposal 3)
The Board of Directors is asking you to vote “FOR” approval of an amendment to the SecureWorks Corp. 2016 Long-Term Incentive Plan to increase the number of shares of Class A common stock issuable under the plan, as described under “Proposal 3 — Approval of Share Increase Amendment Under the SecureWorks Corp. 2016 Long-Term Incentive Plan.”
Stockholder Proposals for 2022 Annual Meeting of Stockholders
Deadline for stockholder proposals to be included in our 2022 proxy statement: January 12, 2022
Deadline for proposed business and nominations for director that will not be included in our 2022 proxy statement: February 21, 2022 – March 23, 2022
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders To Be Held on Monday, June 21, 2021:

The accompanying notice of the 2021 Annual Meeting of Stockholders,
proxy statement, form of proxy card and Secureworks Annual Report on Form 10-K
for the fiscal year ended January 29, 2021 are available electronically
on our website at investors.secureworks.com
and at www.proxyvote.com.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
The following summary briefly answers some questions you may have about the 2021 Annual Meeting of Stockholders, or the annual meeting. This summary may not address all questions that could be important to you as a Secureworks stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement and the documents referred to in this proxy statement.
Q:
Why am I receiving these materials?
A:
You are receiving these proxy materials in connection with the solicitation of proxies for our Class A common stock on behalf of our Board of Directors for use at the 2021 Annual Meeting of Stockholders, which will take place on Monday, June 21, 2021, at 11:00 a.m., Eastern Time. As a stockholder as of the close of business on April 26, 2021, which is the record date fixed by the Board of Directors, you are invited to attend the online annual meeting and are entitled and urged to vote your shares on the proposals described in this proxy statement on which you are entitled to vote.
Q:
What information is contained in these materials?
A:
These materials include
our notice of the annual meeting of stockholders;
our proxy statement for the annual meeting; and
our Annual Report on Form 10-K for our fiscal year ended January 29, 2021, or Fiscal 2021, which includes our audited consolidated financial statements and which is our annual report to stockholders for the fiscal year.
If you received a full set of printed versions of these materials by mail, these materials also should have included a proxy card for your shares of Class A common stock or a voting instruction form.
Our annual report to stockholders is not deemed to be soliciting material for purposes of the solicitation of proxies in connection with the annual meeting.
Q:
Why might I have received a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
A:
As permitted by the rules of the Securities and Exchange Commission, or the SEC, we are furnishing proxy materials to many of our stockholders via the internet, rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials, or Notice, by mail, you will not receive a paper or e-mail copy of the proxy materials unless you request one. To request a paper or e-mail copy of the proxy materials (free of charge), you should follow the instructions included in the Notice. The Notice also provides instructions on how to access the proxy materials online, how to submit your proxy or voting instructions via the internet, by telephone or by mail, how to attend the annual meeting and access the complete list of stockholders entitled to vote at the meeting during the meeting and how to vote online at the annual meeting.
Q:
Why did some stockholders not receive a Notice in the mail?
A:
Some Secureworks stockholders, including stockholders who previously have requested to receive paper copies, will receive paper copies of the proxy materials instead of a Notice.
In addition, stockholders who previously have elected delivery of proxy materials electronically will receive a Notice by e-mail. Those stockholders should have received an e-mail containing a link to the website hosting the proxy materials and a link to the proxy voting website.
Q:
How do I access the proxy materials or request a paper or electronic copy if I received a Notice?
A:
The Notice you received from Secureworks or your bank, brokerage firm or other nominee provides instructions regarding how to view Secureworks’ proxy materials for the annual meeting online. As explained in the Notice, to view the proxy materials and submit your proxy or voting instructions, you will
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need to follow the instructions in your Notice and have available your 16-digit control number contained in your Notice. The proxy statement and our Annual Report on Form 10-K for Fiscal 2021 are also available electronically on our website at investors.secureworks.com.
A paper or e-mail copy of the materials may be requested (free of charge) using one of the methods described in the Notice.
Q:
What proposals will be voted on at the annual meeting?
A:
Stockholders will vote on three proposals at the annual meeting:
Proposal 1 – To elect to the Board of Directors the two nominees specified in this proxy statement as Class II directors, each for a three-year term expiring at the 2024 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified
Proposal 2 – To ratify the appointment of PwC as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022
Proposal 3 – To approve an amendment to the SecureWorks Corp. 2016 Long-Term Incentive Plan to increase the number of shares of Class A common stock issuable under the plan
Q:
How does the Board of Directors recommend that I vote on these proposals?
A:
The Board of Directors unanimously recommends that you vote your shares:
FOR” the election of each of the Board’s director nominees, as described in Proposal 1
FOR” the ratification of the appointment of PwC as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022, as described in Proposal 2
FOR” approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan, as described in Proposal 3
Q:
Who is entitled to vote at the annual meeting?
A:
Holders of record of our Class A common stock and of our Class B common stock as of the close of business on April 26, 2021, which is the record date fixed by the Board of Directors, are entitled to vote their shares at the annual meeting.
A complete list of stockholders entitled to vote at the annual meeting will be available for inspection by any stockholder for any purpose germane to the annual meeting for at least ten days before the annual meeting during ordinary business hours at our headquarters located at One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328. Any stockholder who wishes to inspect the stockholder list for any purpose germane to the annual meeting may e-mail our Investor Relations department at investorrelations@secureworks.com or call our Investor Relations department at (404) 639-9191 to schedule an appointment. In addition, the list will be available to any stockholder for examination online during the annual meeting. To access the list during the annual meeting, please visit www.virtualshareholdermeeting.com/SCWX2021 and enter the 16-digit control number provided on your proxy card, voting instruction form or Notice.
Q:
What constitutes a quorum for the annual meeting?
A:
To conduct any business at the annual meeting, a quorum must be present in person or represented by valid proxies. The holders of shares of our common stock representing a majority in voting power of the shares of our common stock outstanding and entitled to vote at the annual meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting.
Q:
How many shares may be voted at the annual meeting?
A:
As of the record date for the annual meeting, 83,549,707 shares of common stock are outstanding and entitled to vote at the meeting.
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Secureworks has issued and outstanding shares of two series of common stock entitled to vote at the annual meeting:
Class A common stock, of which 13,549,707 shares are outstanding as of the record date
Class B common stock, of which 70,000,000 shares are outstanding as of the record date
Our Class A common stock is listed on the Nasdaq Global Select Market of The Nasdaq Stock Market LLC, or Nasdaq, and is registered under Section 12 of the Securities Exchange Act of 1934, or the Exchange Act. Our Class B common stock is not listed on any securities exchange or registered under the Exchange Act.
Q:
What shares may I vote and what are the voting rights of the holders of Secureworks’ common stock?
A:
You may vote all of the shares of Secureworks’ common stock owned by you as of the close of business on the record date.
Each share of Class A common stock is entitled to one vote per share.
Each share of Class B common stock is entitled to ten votes per share.
Stockholders are not entitled to cumulate their votes in the election of directors.
The holders of shares of both outstanding series of common stock will vote together as a single class on Proposals 1, 2 and 3, as well as on any other business that properly comes before the stockholders at the annual meeting. Of the total number of votes that may be cast at the annual meeting, the outstanding Class A common stock is entitled to approximately 1.9% of the votes and the outstanding Class B common stock is entitled to approximately 98.1% of the votes.
Q:
May I attend the annual meeting? What do I need in order to attend the meeting?
A:
The annual meeting will be conducted completely online via the internet. Stockholders may attend and participate in the meeting by visiting www.virtualshareholdermeeting.com/SCWX2021. To access the annual meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on your voting instruction form.
We encourage you to access the annual meeting before the start time of 11:00 a.m., Eastern Time, on June 21, 2021. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on June 21, 2021.
Q:
Why is the annual meeting a virtual, online meeting?
A:
By conducting our annual meeting solely online via the internet, we eliminate many of the costs associated with a physical meeting. In addition, we believe that a virtual meeting will provide greater accessibility for stockholders, encourage stockholder participation from around the world and improve our ability to communicate more effectively with our stockholders during the meeting.
Q:
What is the difference between a “stockholder of record” and a “beneficial owner”?
A:
Whether you are a “stockholder of record” or a “beneficial owner” with respect to your shares of Secureworks common stock depends on how you hold your shares:
Stockholder of record: If you hold shares directly in your name on records maintained by Secureworks’ transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the “stockholder of record” with respect to those shares. The proxy materials or Notice have been sent directly to you by Secureworks, and you may submit a proxy and vote those shares in the manner described in this proxy statement.
Beneficial owner: If your shares of Class A common stock are held through a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” The proxy materials (or a Notice, if applicable) are being forwarded to you by your nominee along with a voting instruction form. You may use the voting instruction form to direct your nominee on how to vote your shares using one of the methods described on the voting instruction form.
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Q:
How may I vote my shares at the virtual annual meeting?
A:
If you hold shares of Secureworks common stock as the stockholder of record, you have the right to vote those shares at the virtual annual meeting. If you are a beneficial owner and hold shares of Secureworks common stock in street name, you may vote the shares you beneficially own through the online voting platform under a legal proxy from your bank, brokerage firm or other nominee and are not required to take any additional action to obtain a legal proxy. Please follow the instructions at www.virtualshareholdermeeting.com/SCWX2021 in order to vote your shares during the meeting, whether you hold your shares of record or in street name. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice.
Even if you plan to attend the virtual annual meeting, we encourage you to submit your proxy or voting instructions for your shares in advance, so that your vote will be counted if you later decide not to attend the virtual annual meeting.
Q:
How may I vote my shares without attending the annual meeting?
A:
Even if you plan to attend the virtual annual meeting, we encourage you to submit your proxy or voting instructions before the meeting by the method or methods described below:
If you received a Notice by mail: You may access the proxy materials and voting instructions electronically over the internet via the web address provided in the Notice. To access the materials and to submit your proxy or voting instructions, you will need the 16-digit control number provided in the Notice you received in the mail. You may submit your proxy or voting instructions by following the instructions in the Notice or on the proxy voting website.
If you received the proxy materials by e-mail: You may access the proxy materials and voting instructions electronically over the internet via the web address provided in the e-mail. To submit your proxy or voting instructions, you will need the 16-digit control number provided in the e-mail. You may submit your proxy or voting instructions by following the instructions in the e-mail or on the proxy voting website.
If you received the proxy materials by mail: You may submit your proxy or voting instructions by following the instructions provided on the proxy card or voting instruction form. If you submit your proxy or voting instructions via the internet or by telephone, you will need the 16-digit control number provided on the proxy card or voting instruction form. If you submit your proxy or voting instructions by mail, please complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed, postage-paid envelope.
Q:
What is the deadline for submitting a proxy or voting instructions via the internet or by telephone?
A:
If you are a stockholder of record and do not vote at the virtual annual meeting, you may submit your proxy via the internet or by telephone until 11:59 p.m., Eastern Time, on Sunday, June 20, 2021, which is the day before the annual meeting.
If you are a beneficial owner of shares of Class A common stock held through a bank, brokerage firm or other nominee, please follow the instructions on your voting instruction form.
Q:
May I revoke my proxy or voting instructions before my shares are voted at the annual meeting?
A:
Yes. Stockholders generally have the right to revoke their proxy or voting instructions before their shares are voted at the annual meeting, subject to the voting deadlines described in the answer to the immediately preceding question. Your attendance at the annual meeting will not automatically revoke your proxy unless you vote at the meeting or file a written notice with the Corporate Secretary of Secureworks requesting that your prior proxy be revoked, as described below.
Stockholders of record: If you are a stockholder of record, you may revoke a proxy by:
signing another proxy card with a later date and delivering it to an officer of the Company before the annual meeting;
submitting a later proxy via the internet or by telephone until 11:59 p.m., Eastern Time, on June 20, 2021;
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providing written notice of your revocation to our Corporate Secretary at SecureWorks Corp., One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328, Attn: Corporate Secretary; or
voting online at the annual meeting.
Stockholders of record may change their proxy by using any one of these methods regardless of the method they previously used to submit their proxy. Only the latest dated proxy you submit will be counted.
Beneficial owners: If you are a beneficial owner of shares of Class A common stock held through a bank, brokerage firm or other nominee, you may submit new voting instructions by:
submitting new voting instructions in the manner stated in the voting instruction form; or
voting your shares online at the annual meeting (you may vote the shares you beneficially own through the online voting platform under a legal proxy from your bank, broker or other nominee and are not required to take any additional action to obtain a legal proxy).
Only the latest dated voting instruction form you submit will be counted.
Q:
How do I elect to receive future proxy materials electronically?
A:
If you received a paper copy of the proxy materials or the Notice, you may elect to receive future Secureworks proxy materials electronically by following the instructions on your proxy card or voting instruction form or at www.proxyvote.com. Choosing to receive your future proxy materials by e-mail will help us conserve natural resources and reduce the costs of printing and distributing our proxy materials. If you choose to receive future proxy materials by e-mail, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.
Q:
What does it mean if I receive more than one proxy card or voting instruction form?
A:
If your shares of Class A common stock are held in more than one account, you will receive a proxy card or voting instruction form for each account. To ensure that all of your shares are voted, please follow the instructions you receive for each account to submit a proxy or voting instructions via the internet or by telephone, or by completing, dating, signing and returning your proxy card or voting instruction form in the pre-addressed, postage-paid envelope provided.
Q:
How will my shares be voted if I submit my proxy or voting instruction form but do not provide specific voting instructions in the proxy or voting instruction form I submit?
A:
The effect of submitting a proxy or voting instruction form without providing specific voting instructions depends on how you hold your shares.
Stockholders of record: If you sign and submit a proxy to Secureworks but do not indicate any voting instructions, your shares will be voted as follows:
FOR” the election of each director nominee specified in Proposal 1
FOR” Proposal 2 (ratification of appointment of independent registered public accounting firm)
FOR” Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan)
If any other business properly comes before the stockholders for a vote at the annual meeting, or any adjournment or postponement of the meeting, your shares will be voted according to the discretion of the Company’s proxy holders.
Beneficial owners: If you are a beneficial owner and want your vote to count on Proposal 1 (election of directors) and Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan), you must instruct your bank, brokerage firm or other nominee how to vote your shares. A bank, brokerage firm or other nominee that holds shares of Class A common stock for a beneficial owner will be entitled to vote those shares without
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instructions from the beneficial owner on matters that are considered “routine” in nature. The ratification of the appointment of PwC as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022 in Proposal 2 is the only proposal to be acted on at the annual meeting that is considered “routine.” Unless instructed by the beneficial owner on how to vote, a bank, brokerage firm or other nominee is not entitled to vote the shares it holds for a beneficial owner on any proposal that is considered “non-routine,” which for the annual meeting is Proposal 1 (election of directors) and Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan).
Consequently, if you hold your shares of Secureworks common stock through a bank, brokerage firm or other nominee and you do not submit any voting instructions to your nominee, your nominee (1) may not exercise its discretion to vote your shares on Proposal 1 (election of directors) or Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan), but (2) may exercise its discretion to vote your shares on Proposal 2 (ratification of appointment of independent registered public accounting firm). If your shares are voted as directed by your bank, brokerage firm or other nominee on the routine proposal (Proposal 2), your shares will constitute “broker non-votes” on the non-routine proposals (Proposals 1 and 3) and will not affect the outcome of the vote for such non-routine proposals (see below for a further discussion of broker non-votes).
Q:
What vote is required to approve each of the proposals?
A:
The voting requirements for approval of the proposals at the annual meeting, assuming a quorum is present or represented at the meeting, are as follows:
Proposal
Vote required
Broker discretionary
voting allowed?
Proposal 1: Election of Class II directors
Plurality of votes cast with respect to shares present and entitled to vote on the election of directors
No
Proposal 2: Ratification of appointment of independent registered public accounting firm
Affirmative vote of holders of shares representing a majority in voting power of shares present and entitled to vote on the proposal
Yes
Proposal 3: Approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan
Affirmative vote of holders of shares representing a majority in voting power of shares present and entitled to vote on the proposal
No
In addition, approval of Proposal 3 under Nasdaq rules requires approval by a majority of the total votes cast on the proposal.
Q:
What effect do abstentions and broker non-votes have on the proposals?
A:
If your shares are counted as either a broker non-vote or an abstention, your shares will be included in the number of shares represented for purposes of determining whether a quorum is present.
The effect of abstentions and broker non-votes on the outcome of the proposals will vary with the proposal:
Abstentions: Abstentions will have no effect on the outcome of the vote on Proposal 1 (election of directors). Abstentions will have the same effect as a vote against Proposal 2 (ratification of appointment of independent registered public accounting firm) and Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan).
Broker non-votes: There are not expected to be any broker non-votes with respect to voting on Proposal 2 (ratification of appointment of independent registered public accounting firm). Broker non-votes will have no effect on the outcome of the vote on Proposal 1 (election of directors) and Proposal 3 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan). A “broker non-vote” occurs when (1) the beneficial owner of shares held through a bank, brokerage firm or other nominee in “street name” does not give the nominee specific voting
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instructions on the matter, (2) the proposal being voted on is a matter that is considered “non-routine” in nature and (3) there is at least one “routine” proposal being voted on at the same meeting. If you are a beneficial owner of Class A common stock and do not submit any voting instructions to your bank, brokerage firm or other nominee, your nominee may exercise its discretion to vote your shares on Proposal 2, because that proposal is considered “routine.” However, a nominee is not entitled to vote the shares it holds for a beneficial owner on any “non-routine” proposals. Therefore, if you do not provide specific voting instructions to your nominee, and if your shares are voted as directed by your nominee on, or your nominee abstains with respect to, Proposal 2, your shares will constitute broker non-votes with respect to Proposal 1 and Proposal 3 because these are non-routine proposals.
Q:
How will the voting power of the Class B common stock held by our principal stockholder affect approval of the proposals being voted on at the annual meeting?
A:
By reason of its ownership of our Class B common stock representing a majority of the total voting power represented by all of the outstanding shares of the Class A common stock and the Class B common stock, Dell Technologies Inc., or Dell Technologies (acting through its indirect wholly-owned subsidiary), has the ability to elect all director nominees, to approve the ratification of the appointment of PwC as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022 and to approve the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan. We expect that Dell Technologies will vote “FOR” Proposals 1, 2 and 3.
As indicated above, each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. The holders of our Class A common stock and Class B common stock will vote together as a single class on all proposals to be acted on at the annual meeting.
As of the record date for the annual meeting, Dell Technologies, our ultimate parent company and controlling stockholder, beneficially owned (through an indirect wholly-owned subsidiary) all of the outstanding Class B common stock, representing approximately 83.8% of the outstanding shares of our common stock, or approximately 98.1% of the total voting power of the outstanding shares of our common stock.
Q:
What happens if additional matters are presented at the annual meeting?
A:
If you grant a proxy to the Company, the Company’s proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the annual meeting. Other than the proposals described in this proxy statement, as of the date of this proxy statement, Secureworks has not received valid notice of any other business to be acted upon at the annual meeting.
Q:
Who will count the votes?
A:
Broadridge Financial Solutions, Inc. will count the votes for the annual meeting. A representative or agent of Broadridge Financial Solutions, Inc. will certify the votes as the inspector of election.
Q:
Where can I find the voting results of the annual meeting?
A:
Secureworks will report the voting results by filing a current report on Form 8-K with the SEC within four business days after the date of the annual meeting. If the final voting results are not known when Secureworks files its report, it will amend the initial report to disclose the final voting results within four business days after those results become known.
Q:
Who will bear the cost of soliciting votes for the annual meeting?
A:
Secureworks will bear all costs of this proxy solicitation. Proxies may be solicited by mail, in person, by telephone, by facsimile, by electronic means or by advertisements by directors, executive officers and other employees of Secureworks or its subsidiaries, without additional compensation. Secureworks will reimburse banks, brokerage firms and other nominees for their reasonable expenses to forward proxy materials to beneficial owners.
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Q:
Are copies of the proxy materials for the annual meeting and Secureworks’ Annual Report on Form 10-K available electronically?
A:
Yes. Copies of the proxy materials for the annual meeting and Secureworks’ Annual Report on Form 10-K for Fiscal 2021, which is our annual report to stockholders for the fiscal year, are available without exhibits at investors.secureworks.com, and with exhibits at the website maintained by the SEC at www.sec.gov.
Q:
How may I propose matters for inclusion in Secureworks’ proxy materials for the 2022 Annual Meeting of Stockholders or for consideration at the 2022 Annual Meeting of Stockholders, and what are the deadlines?
A:
For information on how to propose matters for inclusion in Secureworks’ proxy materials for the 2022 Annual Meeting of Stockholders or for consideration at the 2022 Annual Meeting of Stockholders without inclusion in our proxy materials, and for the specification of applicable deadlines, see “Additional Information – Stockholder Proposals for Next Year’s Annual Meeting.”
Q:
What are the implications of Secureworks being an “emerging growth company”?
A:
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For so long as we remain an emerging growth company, we are permitted to rely, and currently intend to continue to rely, on certain provisions of the JOBS Act that contain exceptions to and exemptions from disclosure and other requirements that otherwise are applicable to companies that file periodic reports with the SEC. Among other provisions, the JOBS Act permits us to include reduced disclosure regarding executive compensation in this proxy statement and our other SEC filings and provides an exemption from the requirement to hold a non-binding, advisory vote on executive compensation and stockholder approval of any golden parachute arrangements not previously approved.
Q:
What is “householding” and how does it affect me?
A:
For information on “householding” of proxy materials and how it may affect you, including how to obtain a separate set of voting materials, see “Additional Information – Stockholders Sharing the Same Last Name and Address.”
Q:
What is the address of Secureworks’ principal executive offices?
A:
The mailing address of our principal executive offices is One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328.
Q:
Who can help answer my other questions or help me if I need other assistance?
A:
If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of this proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com.
If your bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information.
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PROPOSAL 1 – ELECTION OF DIRECTORS
Upon the recommendation of our Nominating and Governance Committee, consisting exclusively of independent directors, the Board of Directors has nominated Pamela Daley and Kyle Paster for election to the Board as Class II directors at this annual meeting. Stockholders are being asked to vote for the election of the two nominees to the Board. Each nominee is currently serving as a Class II director. The directors to be elected at this annual meeting will serve a three-year term until the 2024 Annual Meeting of Stockholders and until their successors are elected and qualified.
Director Classes
As of the date of this proxy statement, our Board of Directors is composed of six members. Our certificate of incorporation provides that the number of directors will be fixed by resolution of the Board of Directors and may be no fewer than three directors or more than 15 directors.
The Board of Directors is divided into the following three classes that serve staggered three-year terms:
Class I directors, who were elected at last year’s annual meeting and whose term will expire at the 2023 Annual Meeting of Stockholders
Class II directors, whose term will expire at this 2021 Annual Meeting of Stockholders
Class III directors, whose term will expire at the 2022 Annual Meeting of Stockholders
The following directors currently serve on the Board of Directors:
Michael R. Cote and Yagyensh C. (Buno) Pati serve as Class I directors
Pamela Daley and Kyle Paster serve as Class II directors
Michael S. Dell and Mark J. Hawkins serve as Class III directors
Directors of each class hold office until the annual meeting for the year in which their term expires (as indicated above) and until their successors are elected and qualified, subject to the prior death, resignation, retirement, disqualification or removal of a director from office. The number of directors in each class may be changed only by resolution adopted by the affirmative vote of a majority of the authorized number of directors. Any additional directorships resulting from any increase in the number of directors will be distributed among the three classes so as to ensure that the classes are as nearly equal in number as permitted by the then-authorized number of directors constituting the full Board of Directors.
Director Nominees
Each director nominee has consented to serve as a nominee, to serve as a director if elected and to be named as a nominee in this proxy statement. If any nominee is unavailable for election or unable to serve upon election, the Company’s proxy holders will vote the shares of Class A common stock for which they have received validly executed proxies for any substitute nominee proposed by the Board of Directors, unless the Board of Directors chooses to reduce the number of directors on the Board in accordance with our certificate of incorporation, or to leave unfilled the resulting vacancy on the Board.
Biographical and qualification information about each nominee is included under “– Directors Standing for Election.” The Board’s recommendation of its director nominees is based on its carefully considered judgment that the qualifications and experience of the nominees, particularly in areas relevant to Secureworks’ strategy and operations, make them suitable candidates to serve on the Board.
The Board of Directors unanimously recommends a vote “FOR” each of the Board’s nominees for Class II director.
Director Qualifications and Information
Director Qualifications – The Board of Directors believes that, as set forth in our Corporate Governance Principles, individuals who serve on the Board should have demonstrated notable or significant achievements in business, education or public service; should possess the requisite intelligence, education, experience and judgment to make a significant contribution to the Board and bring a range of skills, diverse perspectives and
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backgrounds to its deliberations; and should have the highest standards of ethics and integrity, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. The following are qualifications, experience and skills for Board members that are important to our business and our future:
Leadership Experience – Secureworks seeks directors who demonstrate extraordinary leadership qualities. Strong leaders bring vision, strategic agility, diverse and global perspectives and broad business insight to the Company. They demonstrate practical management experience, skills for managing change and deep knowledge of industries, geographies and risk management strategies relevant to the Company. They have experience in identifying and developing our current and future leaders.
Industry Experience – Secureworks also seeks directors who have relevant industry experience. We value experience in our high-priority areas, including new or expanding services and solutions, client segments or geographies, organic and inorganic growth strategies and existing and new technologies; deep or unique understanding of Secureworks’ business environments; and experience with, exposure to, or reputation among a broad subset of our client base.
Financial Experience – Secureworks believes that all directors should possess an understanding of finance and related corporate reporting processes. We also seek directors who qualify as an “audit committee financial expert,” as defined in the SEC’s rules, for service on the Audit Committee.
International Experience – Secureworks seeks directors with a global mindset and experience in emerging markets to help guide our growth. In addition, we seek directors with operational experience to understand the competitive dynamics of our business strategy and execution and key business processes.
Diversity of Background – A current strength of the Board stems from the diversity of perspectives and understanding that arises from discussions involving individuals of varied backgrounds and experience. While the Board of Directors has not established any formal diversity policy to be used to identify director nominees, when assessing a candidate’s background and experience, the Nominating and Governance Committee takes into consideration a broad range of factors, including a candidate’s gender, age, race and ethnicity. The Board seeks to include in the pool from which director nominees are chosen highly qualified diverse candidates.
Director Matrix – The Nominating and Governance Committee evaluates, selects and recommends to the full Board of Directors qualified candidates for election or appointment to the Board. The following matrix outlines specific qualifications and attributes through which our directors bring to the Board a diversity of experience, background and international perspective and enables the committee to identify areas of expertise and experience that may benefit the Board of Directors in the future as well as gaps in those areas that may arise as directors retire. The matrix below shows how the current directors (including the nominees for election at this annual meeting) contribute the various skills, experiences, diversity and perspectives that the Board and the Nominating and Governance Committee consider important.
 
Leadership
Financial
International
Diversity
Name
Security
Industry
Chief Executive
Officer
Experience
Financial
Literacy
Audit
Committee
Financial
Expert
Chief
Financial
Officer
Experience
Global
Mindset,
Emerging
Markets,
Operational
Experience
Gender
Ethnicity
Michael R. Cote
X
X
X
 
X
X
 
 
Pamela Daley
 
 
X
 
 
X
X
Michael S. Dell
X
X
X
 
 
X
 
 
Kyle Paster
 
 
X
 
 
X
 
 
Mark J. Hawkins
 
 
X
X
X
X
 
 
Yagyensh C. (Buno) Pati
 
X
X
 
 
X
 
X
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Set forth below is biographical information, as of May 1, 2021, about the persons whom the Board of Directors has nominated for election at the annual meeting and the continuing directors, including the qualifications, experience and skills the Board considered in determining that each such person should serve as a director:
Directors Standing for Election
Pamela Daley
Class II Director
Term expires: 2021 Annual Meeting
Age: 68
Director since April 2016
Board committees:
 Audit
 Nominating and Governance    (Chair)


Before her retirement in January 2014 from the General Electric Company, or GE, one of the world’s largest infrastructure and financial services companies, Ms. Daley served with GE in a number of roles, including Senior Vice President and Senior Advisor to the Chairman from April 2013 to January 2014, Senior Vice President of Corporate Business Development from August 2004 to March 2013 and Vice President and Senior Counsel for Transactions from 1991 to July 2004. As Senior Vice President for Corporate Business Development, Ms. Daley was responsible for GE’s merger, acquisition and divestiture activities worldwide. Before she joined GE in 1989 as Tax Counsel, Ms. Daley was a partner at Morgan, Lewis & Bockius, an international law firm, where she specialized in domestic and cross-border tax-oriented financings and commercial transactions. Ms. Daley also serves as a director of BlackRock, Inc., a global asset management company, and BP plc, an integrated energy company. She was a director of BG Group plc, an international gas and oil company traded on the London Stock Exchange, until BG Group was acquired by Royal Dutch Shell plc in February 2016. Ms. Daley was also a director of Patheon N.V., a global pharmaceutical contract development and manufacturing organization, until August 2017, when Patheon was acquired by Thermo Fisher Scientific Inc.

Director Qualifications

Leadership Experience – Over 20 years of service as an executive with GE

Strategic and Transactional Experience – Over 35 years of experience in leadership development, international operations, transactions, business development and global strategy

In selecting Ms. Daley for service on the Board of Directors, the Board also considered Ms. Daley’s gender in the context of the Board’s diversity objective for Board membership.
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Kyle Paster
Class II Director
Term expires: 2021 Annual Meeting
Age: 34
Director since May 2020


Mr. Paster is a Managing Director of Silver Lake, a global technology investment firm, where he has worked since July 2011. Previously, he worked in the Technology Investment Banking Group at Credit Suisse in San Francisco from July 2009 to June 2011. Mr. Paster currently serves on the board of directors of ServiceMax, Inc., a cloud-based field service management software company.

Director Qualifications

Industry and Finance Experience – Experience in technology and finance
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Continuing Directors
Michael R. Cote
Class I Director
Term expires: 2023 Annual Meeting
Age: 60
Director since May 2015


Mr. Cote has served as our Chief Executive Officer since May 2015 and as President and Chief Executive Officer from May 2015 to April 2020. He served as General Manager and as Vice President of Dell Inc. from our acquisition by Dell Inc. in February 2011 until May 2015. Before our acquisition by Dell Inc., Mr. Cote had served as our Chairman, President and Chief Executive Officer since February 2002. From January 2000 to January 2002, Mr. Cote was Chief Financial Officer of Talus Solutions, Inc., a pricing and revenue management software firm acquired in December 2000 by Manugistics Group, Inc., a public supply chain management software company. From February 1997 until September 1999, Mr. Cote served as Chief Operating Officer and Chief Financial Officer of MSI Solutions Inc., a web application development and systems integration company that was acquired in September 1999 by Eclipsys Corporation, a public healthcare software company. From April 1993 to January 1997, Mr. Cote served as the Chief Financial Officer of Medaphis Corporation, or Medaphis (subsequently acquired by Per-Se Technologies, Inc.), a provider of financial and administrative healthcare solutions, where he managed numerous acquisitions and equity offerings. He served as the Controller of Medaphis from March 1992 until April 1993. Before March 1992, Mr. Cote held various positions at KPMG LLP, an independent registered public accounting firm. Mr. Cote serves on the board of directors of Extrahop Networks, Inc., Children’s Healthcare of Atlanta, the board of regents of Boston College and the board of trustees of Marist School.

Director Qualifications

Leadership Experience – Principal executive officer of Secureworks since 2002

Finance Experience – Broad finance experience as former chief financial officer of multiple companies in the information technology industry
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Michael S. Dell
Class III Director
Term expires: 2022 Annual Meeting
Age: 56
Director since December 2015


Mr. Dell has served as a director and our non-executive Chairman of the Board since December 11, 2015. Mr. Dell serves as Chairman of the Board and Chief Executive Officer of Dell Technologies. Mr. Dell served as Chief Executive Officer of Dell Inc., a wholly-owned subsidiary of Dell Technologies, from 1984 until July 2004 and resumed that role in January 2007. In 1998, Mr. Dell formed MSD Capital, L.P. for the purpose of managing his and his family’s investments, and, in 1999, he and his wife established the Michael & Susan Dell Foundation to provide philanthropic support to a variety of global causes. He is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. Mr. Dell serves as a member of the Technology CEO Council and is a member of the Business Roundtable. He also serves on the advisory board of Tsinghua University’s School of Economics and Management in Beijing, China, on the governing board of the Indian School of Business in Hyderabad, India, and as a board member of Catalyst, a non-profit organization that promotes inclusive workplaces for women. In June 2014, Mr. Dell was named the United Nations Foundation’s first Global Advocate for Entrepreneurship. Mr. Dell is also Chairman of the Board of Directors of VMware, Inc., a cloud infrastructure and digital workspace technology company, which is a public majority-owned subsidiary of Dell Technologies. He was a board member of Pivotal Software, Inc., formerly a public majority-owned subsidiary of Dell Technologies that provides a leading cloud-native platform, from September 2016 until it merged with VMware, Inc. in December 2019.

Director Qualifications

Leadership Experience – Founder of Dell Inc. and Chairman of the Board and CEO of Dell Technologies

Industry Experience – Deep knowledge of new and existing technologies and the information technology industry
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Mark J. Hawkins
Class III Director
Term expires: 2022 Annual Meeting
Age: 62
Director since April 2016
Board committees:
 Audit (Chair)
 Compensation


Effective February 2021, Mr. Hawkins serves as President and CFO Emeritus Advisor for Salesforce.com, Inc., a provider of enterprise cloud computing solutions with a focus on customer relationship management. Mr. Hawkins served as President of Salesforce from August 2016 to January 2021, and as Chief Financial Officer from August 2014 to January 2021. He served as Executive Vice President of Salesforce from August 2014 to August 2016. Mr. Hawkins previously served as Chief Financial Officer, Executive Vice President and Principal Financial Officer of Autodesk, Inc., a provider of three-dimensional design, engineering and entertainment software, from April 2009 to July 2014. From April 2006 to April 2009, Mr. Hawkins served as Chief Financial Officer and Senior Vice President of Finance & Information Technology at Logitech International S.A., a global provider of personal computer and tablet accessories. From January 2000 to March 2006, Mr. Hawkins served as Vice President of Finance for Dell Inc.’s Worldwide Procurement and Logistics organization, as well as Vice President of Finance for Dell Inc.’s U.S. Home Segment. Before joining Dell Inc., Mr. Hawkins spent nearly 19 years at Hewlett-Packard Company, a global IT company, where he held a variety of finance and business management roles. Mr. Hawkins also serves on the board of directors of Toast, Inc., a cloud-based restaurant software company, and Plex Systems, Inc., a provider of cloud-delivered smart manufacturing solutions.

Director Qualifications

Finance Experience – Decades of experience with leading finance organizations at public global software and technology companies

Leadership Experience – Decades of executive management experience and expertise providing leadership and insight in finance, global operations, and merger and acquisition activities

Industry Experience – Extensive experience serving in top positions with leading global software and technology companies
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Yagyensh C. (Buno) Pati
Class I Director
Term expires: 2023 Annual Meeting
Age: 57
Director since September 2016
Board committees:
 Audit
 Compensation (Chair)
 Nominating and Governance


Mr. Pati currently serves as the Chief Executive Officer of Infoworks.io, an enterprise software company, and has served as its Chairman from its inception, and as its Executive Chairman from September 2017 through January 2019. Mr. Pati also has been a Partner of Centerview Capital Technology, or Centerview, a private investment firm, since May 2016. At Centerview, Mr. Pati’s investment focus is on cybersecurity and data and analytics. Previously, Mr. Pati served as an Advisor to Centerview from June 2014 to May 2016. Before his association with Centerview, Mr. Pati founded Numerical Technologies, Inc., a company that redefined how integrated circuits are designed and manufactured, and served as the company’s Chief Executive Officer from October 1995 to August 2002 and as Chairman from August 2002 to March 2003, when the company was acquired by Synopsys, Inc. He helped launch Nexus Venture Partners, a pioneer in Indian venture capital, and has served as Advisor to that firm since January 2012. Mr. Pati also founded Sezmi Corporation, a company that developed and marketed video services offerings for telecommunications service providers, and served as Chief Executive Officer and a director of the company from June 2006 to December 2011.

Director Qualifications

Leadership Experience – Founder and CEO of two technology companies; experience as chairman or advisor to several other companies

Industry Experience – Extensive knowledge of hardware and software technologies; specialization in technology investment in cybersecurity and data and analytics sectors

In selecting Mr. Pati for service on the Board of Directors, the Board also considered Mr. Pati’s ethnic background in the context of the Board’s diversity objective for Board membership.
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Corporate Governance
Corporate Governance Principles – The Board of Directors is committed to achieving business success and increasing long-term stockholder value with the highest standards of ethics. The Board of Directors maintains Secureworks’ Corporate Governance Principles to provide an effective corporate governance framework for the Company. The Corporate Governance Principles reflect a set of core values that provide the foundation for our governance and management systems and our interactions with others. A copy of those principles can be found on the Company’s website at investors.secureworks.com in the Governance section under Documents & Charters.
Controlled Company Status – The Class A common stock is listed on the Nasdaq Global Select Market under the ticker symbol “SCWX.” Accordingly, Secureworks is subject to corporate governance requirements under the Nasdaq rules.
Secureworks is a “controlled company” under Nasdaq corporate governance standards. As a result, it qualifies for an exemption from, and is entitled to elect not to comply with, certain corporate governance requirements under the Nasdaq rules, including the requirements that Secureworks have a board of directors that is composed of a majority of “independent directors,” as defined under the Nasdaq rules, and a compensation committee and a nominating committee that are each composed solely of independent directors. Even though Secureworks is a controlled company, it is required to comply with SEC and Nasdaq rules relating to the membership, qualifications and operations of its Audit Committee, as discussed below. In reliance on the controlled company exemption, Secureworks has elected not to maintain a majority of independent directors on the Board of Directors.
The Nasdaq rules define a “controlled company” as a company of which more than 50% of the voting power is held by an individual, a group or another company. As of the record date for the annual meeting, Dell Technologies held no shares of our outstanding Class A common stock and, through an indirect wholly-owned subsidiary, all 70,000,000 outstanding shares of our Class B common stock, which as of that date represented approximately 83.8% of our total outstanding shares of common stock and approximately 98.1% of the combined voting power of both classes of our outstanding common stock.
Notwithstanding our eligibility for the exemption from these requirements, we currently have a Compensation Committee and a Nominating and Governance Committee that is each composed solely of independent directors. We are not required to maintain compliance with Nasdaq’s composition requirements for these committees applicable to a listed company that is not a controlled company. We may choose to change our committee composition or other arrangements in the future to manage these aspects of our corporate governance in accordance with the controlled company exemption. If we cease to be a controlled company and the Class A common stock continues to be listed on Nasdaq, we will be required to comply with Nasdaq’s corporate governance requirements applicable to listed companies generally, subject to a phase-in period during the first year after we cease to be a controlled company.
Director Independence – The Board of Directors has affirmatively determined that Ms. Daley, Mr. Hawkins and Mr. Pati, constituting three of our six directors, are independent under the Nasdaq rules and the standards for independent directors established in our Corporate Governance Principles, which incorporate the director independence requirements of the Nasdaq rules. The Nasdaq rules provide that, in order to determine that a director is independent, the Board of Directors must determine that the director has no relationship which, in the Board’s opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Board Leadership Structure – Our current leadership structure separates the role of the Chairman of the Board, which is held by Mr. Dell, and the role of the Chief Executive Officer, which is held by Mr. Cote. The Chairman of the Board presides over meetings of the Board of Directors. The Chief Executive Officer has management responsibility for the business and affairs of the Company. The Board of Directors has determined that this separation is appropriate for Secureworks and our stockholders under current circumstances because it allows for a division of responsibilities and a sharing of ideas between directors with different perspectives.
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As reflected in our Corporate Governance Principles, the Board observes a number of practices to maintain effective and independent oversight of management, including the following:
Executive sessions without management and non-independent directors present are a standing Board agenda item at no fewer than two regular meetings of the Board each year. Executive sessions of the independent directors are held at any time requested by a majority of the independent directors. The agenda for each executive session focuses principally on whether management is performing its responsibilities in a manner consistent with the Board’s direction.
All Board committee members are independent directors. The committee chairs have authority to hold executive sessions without management and non-independent directors present.
Board Committees – The Board maintains three standing committees composed solely of independent directors that consist of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. These committees assist the Board in discharging its oversight and governance responsibilities. The Board has adopted a written charter for each of the committees. These charters form an integral part of our Corporate Governance Principles. A copy of each charter can be found on Secureworks’ website at investors.secureworks.com in the Governance section under Documents & Charters. In addition to the foregoing standing committees, the Board may form additional committees from time to time for specific purposes.
The following table shows, as of May 8, 2021, the members of the Board of Directors and the standing committees of the Board to which they belong. The table also identifies the directors determined by the Board of Directors to be independent under the Nasdaq rules and our Corporate Governance Principles, which incorporate the director independence requirements of the Nasdaq rules.
Name
Independent
Audit
Committee
Compensation
Committee
Nominating and
Governance Committee
Michael R. Cote
 
 
 
 
Pamela Daley
 
Chair
Michael S. Dell
 
 
 
 
Kyle Paster
 
 
 
 
Mark J. Hawkins
Chair
 
Yagyensh C. (Buno) Pati
Chair
Descriptions of the primary responsibilities of each standing committee are set forth below. Additional information about the responsibilities of each of the committees can be found in the committee’s charter.
Audit Committee
The Audit Committee is composed entirely of directors who satisfy the standards of independence for independent directors under Nasdaq rules as well as additional independence standards applicable to audit committee members established in accordance with Rule 10A-3 under the Exchange Act and Nasdaq standards applicable to the independence of audit committee members. The Board of Directors has further determined that Mr. Hawkins meets the financial sophistication requirement for audit committee service under Nasdaq rules and is an “audit committee financial expert” within the meaning of SEC rules. The Board also has determined that each Audit Committee member meets the financial literacy requirement for audit committee members established under Nasdaq rules.
The Audit Committee’s primary responsibilities include, among other matters:
reviewing with our independent registered public accounting firm the scope and results of the firm’s annual audit of our financial statements;
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;
overseeing, and discussing with management, policies and guidelines to govern the process by which risk assessment and risk management, including legal and regulatory risk, is undertaken;
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overseeing our compliance with legal and regulatory requirements, including, among others, compliance with federal banking laws and regulations applicable to us in connection with the solutions we provide to financial institutions regulated by the member agencies of the Federal Financial Institutions Examination Council, including that agency’s examination of the Company;
reviewing our accounting and financial reporting policies and practices and accounting controls;
reviewing with our management the scope and results of management’s evaluation of our disclosure controls and procedures and management’s assessment of our internal control over financial reporting, including the related certifications to be included in the periodic reports we file with the SEC;
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters, or other ethics or compliance issues; and
monitoring the compliance by our directors and executive officers with our Code of Conduct.
The Audit Committee also appoints, retains, compensates and oversees the Company’s independent registered public accounting firm and pre-approves all audit and permissible non-audit services to be performed by that firm required to be approved by the Company’s policies and SEC rules. Further, in conjunction with the mandatory rotation of the audit firm’s lead engagement partner or partner responsible for reviewing the audit, the Audit Committee and its chair oversee selection of the independent registered public accounting firm’s new lead engagement partner.
Compensation Committee
Although we are not required to maintain a compensation committee composed solely of independent directors in light of our status as a controlled company under the Nasdaq rules, our Board of Directors has determined that each member of our Compensation Committee is independent under the standards of independence for independent directors under Nasdaq rules as well as additional independence standards applicable to compensation committee members established under SEC and Nasdaq rules.
The Compensation Committee’s primary responsibilities include, among other matters:
annually reviewing and approving our executive compensation plans, programs and policies;
annually reviewing and recommending all forms of compensation for our chief executive officer for approval by the Board of Directors;
annually reviewing and approving all forms of compensation for our other executive officers;
evaluating the need for, and provisions of, employment contracts or severance arrangements for our executive officers;
acting as administrator of our equity-based and other incentive plans;
reviewing the compensation of our non-employee directors for service on the Board of Directors and its committees at least once each year and recommending any changes to such compensation to the Board of Directors; and
reviewing and (except in the case of the CEO) approving our management succession plan, and discussing with the full Board the succession plan and the Company’s leadership development strategies and executive retention and diversity strategies, in each case at least annually.
Subject to applicable legal requirements, the Compensation Committee may delegate authority to undertake any of its responsibilities to a subcommittee consisting of one or more of its members. The committee did not delegate authority to a subcommittee in Fiscal 2021.
In addition, the Compensation Committee may delegate its authority under the SecureWorks Corp. 2016 Long-Term Incentive Plan to the Chief Executive Officer or any other officer of the Company, subject to specified exceptions and applicable law. These exceptions provide, among other matters, that the Compensation Committee may not delegate to any officer the authority to make awards under the plan to the Company’s directors or executive officers or to interpret the terms of the plan or any award agreement. The Compensation Committee has delegated to the Chief Executive Officer authority to make offers of equity-based awards under the plan to individuals who are not executive officers or members of senior management, up to a specified
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number of shares annually, which awards become effective only upon subsequent approval by the Compensation Committee. In addition, the Committee has authorized the Chief Executive Officer to delegate to the Company’s Chief Legal and Administrative Officer any or all of the authority to make offers of equity-based awards delegated to the Chief Executive Officer by the Committee as described above, subject to compliance by the Chief Legal and Administrative Officer with the requirements established by the Committee.
The Compensation Committee also may delegate some or all of its authority under the SecureWorks Corp. Amended and Restated Incentive Bonus Plan, or the Incentive Bonus Plan, to our management employees, except with respect to determinations regarding our executive officers. Determinations under the Incentive Bonus Plan regarding our Chief Executive Officer are made by the Board of Directors upon the recommendation of the Compensation Committee. Determinations under the Incentive Bonus Plan regarding our other executive officers and other members of senior management are made by the Compensation Committee. The Compensation Committee has delegated certain aspects of its authority under the Incentive Bonus Plan to our Chief Executive Officer and our Chief Legal and Administrative Officer to make specified determinations with respect to other eligible employees. For additional information about the Incentive Bonus Plan and the SecureWorks Corp. 2016 Long-Term Incentive Plan, see “Compensation of Executive Officers – Benefit Plans – SecureWorks Corp. Amended and Restated Incentive Bonus Plan” and “– SecureWorks Corp. 2016 Long-Term Incentive Plan.”
The Compensation Committee engaged Frederic W. Cook & Co., Inc., an independent consultant, to perform services for the committee in Fiscal 2021, which included advice on the amount and form of executive and director compensation and the provision of market and peer company compensation data and analysis. Frederic W. Cook & Co., Inc. was engaged directly by the committee and does not provide services to our management or other services to the Company.
Our Chief Executive Officer provides the Compensation Committee with recommendations on the total compensation opportunities for all other executive officers and other members of senior management and his views regarding (1) the individual performance of those individuals in connection with the committee’s determination of amounts to be paid under our annual incentive bonus and equity-based long term incentive programs and (2) the performance goals used to assess our financial performance under those programs.
Nominating and Governance Committee
Although we are not required to maintain a nominating committee composed solely of independent directors in light of our status as a controlled company under Nasdaq rules, our Board of Directors has determined that each member of our Nominating and Governance Committee is independent under those rules.
The Nominating and Governance Committee’s primary responsibilities include, among other matters:
identifying and evaluating potential candidates to be considered for appointment or election to the Board of Directors, including the consideration and inclusion of diverse candidates;
making recommendations to the Board of Directors regarding the selection and approval by the Board of nominees to be submitted for election by a stockholder vote;
monitoring and reviewing any issues regarding the independence of our non-employee directors or involving potential conflicts of interest affecting these directors;
reviewing the Board’s committee structure and composition and making recommendations annually to the Board of Directors regarding the appointment of directors to serve as members of each committee;
reviewing our Corporate Governance Principles at least annually and recommending any changes to these principles to the Board of Directors;
reviewing, overseeing, approving, ratifying or disapproving any transactions with related persons in accordance with Secureworks’ policy relating to these transactions; and
periodically reviewing and approving changes to our Code of Conduct and other policies with respect to legal compliance, conflicts of interest and ethical conduct.
The Nominating and Governance Committee’s policies and processes for identifying, evaluating and recommending director candidates for approval by the Board of Directors, including candidates recommended by stockholders, are described under “Additional Information – Director Nomination Process.”
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Compensation Committee Interlocks and Insider Participation – No member of the Compensation Committee is or has been an officer or employee of Secureworks. None of our executive officers served on the board of directors or compensation committee (or other committee serving an equivalent function) of any other entity that has or had one or more executive officers who served as a member of the Board of Directors or the Compensation Committee during Fiscal 2021.
Board Risk Oversight – The Board oversees and maintains Secureworks’ governance and compliance processes and procedures to promote the conduct of Secureworks’ business in accordance with applicable laws and regulations and with the highest standards of responsibility, ethics and integrity. The Board also is responsible for overseeing the assessment, management and mitigation of risks facing the Company. An analysis of strategic and operational risks is presented to the Board in reports submitted on a regular basis by the Chief Executive Officer, the Chief Financial Officer, the Chief Legal and Administrative Officer and the chair of each of the Board’s standing committees. Directors also have complete and open access to all Secureworks employees and are free to communicate, and do communicate, directly with management.
The Board of Directors discharges its risk oversight responsibilities in part through its committees, including the following specific areas of risk.
The Audit Committee is responsible for the oversight of risk policies and risk assessment monitoring and mitigation measures relating to Secureworks’ financial statements and financial reporting, major information technology risk exposures (including cybersecurity risks) and compliance risk. The Audit Committee reviews and discusses with senior members of management and Secureworks’ independent registered public accounting firm significant risks to Secureworks and the steps management has taken or plans to take to minimize or manage such risks. The Audit Committee generally meets in executive session with members of senior management and the independent registered public accounting firm at regular meetings of the committee.
The Compensation Committee oversees assessment and management of risks associated with succession planning and leadership development and with our compensation plans and arrangements. In this role, the Compensation Committee evaluates the effect that Secureworks’ incentive compensation arrangements may have on risk decisions and reviews the relationship between risk management practices and compensation.
The Nominating and Governance Committee oversees assessment and management of risks related to Secureworks’ governance structure and process.
The committees report regularly to the Board on matters relating to their risk oversight activities.
Although the Board of Directors is responsible for risk oversight, management is responsible for risk management. Secureworks seeks to maintain an effective internal control environment and has processes to identify and manage risk, including through a committee composed of members of management that exercises oversight of the various risk monitoring and controls processes across the Company. These include an annual risk assessment process that supports the annual internal audit plan. Secureworks also maintains and enforces a Code of Conduct, a Code of Ethics for Senior Financial Officers and an ethics and compliance program.
Policy on Hedging Transactions and Pledging of Securities − Secureworks maintains a securities trading policy that applies to our directors and employees, including executive officers and other officers, and prohibits certain activities relating to specified securities, as described below. The policy also generally applies to family members who reside with any director or employee, any other person who lives in the director or employee’s household, and any other family members whose transactions in securities are directed by, or subject to the influence or control of, the director or employee, as well as entities, such as a corporation, partnership or trust, controlled by the director or employee.
The activities prohibited by the policy include (1) hedging and monetization transactions that would permit any such person to continue to own the securities without the full risks and rewards of ownership, (2) transactions in put options, call options or other derivative securities on an exchange or in any other organized market and (3) the holding of the securities in a margin account or other pledging of the securities as
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collateral for a loan. The policy prohibits hedging and monetization transactions without regard to the means by which they are accomplished, whether through the use of financial instruments such as prepaid variable forwards, equity swaps, collars or exchange funds or otherwise, including short sales, option positions and pledges arising from certain types of hedging transactions.
The foregoing provisions of the securities trading policy apply to transactions in all securities, including equity securities, issued by Secureworks that are held by any person covered by the policy. Equity securities subject to the policy include awards granted under equity compensation plans, as well as derivative securities that are not issued by Secureworks, such as exchange-traded put or call options or swaps relating to Secureworks’ securities.
The administrator of the policy has the discretion, on a case-by-case basis and in appropriate circumstances, to waive or modify the restrictions and prohibitions on the hedging and other transactions described above.
CEO Succession Planning; Leadership Development – The Board of Directors has the responsibility to ensure that the leadership of Secureworks is meeting the needs of the Company now and can meet those needs in the future. The Board of Directors reviews succession planning for the CEO at least annually. The Board (upon the recommendation of the Compensation Committee, where applicable):
maintains a plan to address any unexpected short-term absence of the CEO and identifies candidates who could act as interim CEO in the event of any such unexpected absence; and
identifies potential successors to the CEO and, for internal candidates, reviews each candidate’s performance and development plan against the criteria and profile for the CEO role.
The Compensation Committee reviews and, except in the case of the CEO, approves the Company’s management succession plans and leadership development strategies. The CEO reviews the annual performance of each member of the management team with the Compensation Committee, which engages in a discussion with the CEO and the Chief Legal and Administrative Officer regarding each team member and that team member’s development.
Meetings and Attendance – During Fiscal 2021, the full Board of Directors met eight times, the Audit Committee met eight times, the Compensation Committee met three times, and the Nominating and Governance Committee met one time. In Fiscal 2021, each member of the Board of Directors who served as a director during Fiscal 2021 attended at least 75% of the total number of the meetings of the Board of Directors and each Board committee held during the period in which such member served as a director of Secureworks or as a member of such committee.
Our policy is that each director is encouraged to attend our annual meeting of stockholders each year. Five of our six then-serving directors attended last year’s annual meeting held on June 18, 2020.
Communications with Directors – Our stockholders may send communications to the Board as a whole, the independent directors as a group, any Board committee or any individual member of the Board. Any stockholder who wishes to send such a communication may obtain the appropriate contact information at Secureworks_Board_of_Directors@secureworks.com.
In addition, any person who has a concern about our conduct, accounting, financial reporting, internal controls or auditing matters may communicate that concern directly to our independent directors or to the Audit Committee (through the committee chair). These communications should be sent c/o Global Ethics and Compliance Office to the Corporate Secretary, SecureWorks Corp., One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328, and may be made on a confidential and anonymous basis. All such concerns will be forwarded to the appropriate directors for their review and will be simultaneously reviewed and addressed by the Global Ethics and Compliance Office in the same manner in which our management addresses other concerns.
The status of all outstanding concerns addressed to the independent directors or the Audit Committee will be reported to the full Board of Directors on a quarterly basis. The independent directors or the Audit Committee may undertake special action, including the retention of outside advisors or counsel, with respect to any concern addressed to them. Our Code of Conduct prohibits any employee from retaliating against any person who in good faith initiates or participates in the Company’s ethics process, asks questions or raises concerns.
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Director Compensation
Our Board of Directors has adopted a compensation policy for our independent directors that we believe enables us to attract and retain qualified directors, provides them with compensation at a level that is consistent with our compensation objectives and encourages their ownership of our Class A common stock to further the alignment of their interests with the interests of our stockholders. In accordance with the independent director compensation policy, our compensation program for independent directors includes the following elements:
an annual cash retainer of $35,000;
an additional annual cash retainer for service as a member (but not chair) of the Audit, Compensation or Nominating and Governance Committee of $10,000, $6,000 or $4,000, respectively;
an additional annual cash retainer for service as chair of the Audit, Compensation or Nominating and Governance Committee of $20,000, $12,000 or $8,000, respectively;
an initial equity retainer upon the director’s appointment to the Board of Directors, in the form of a restricted stock unit, or RSU, award, with a value of $400,000 that will settle in shares of our Class A common stock and that will vest, subject to the director’s continued service, in three equal annual installments beginning with the first anniversary of the grant date; and
an annual equity retainer with a value of $180,000 in each year of service, in the form of an RSU award that will vest, subject to the director’s continued service, in full on the first anniversary of the grant date.
All of the equity-based awards to our independent directors are granted under the SecureWorks Corp. 2016 Long-Term Incentive Plan.
An independent director elected to the Board of Directors, other than through election at an annual meeting of stockholders, will be awarded (1) a pro-rated portion of each applicable annual cash retainer (including pro-rated fees for committee service and service as a committee chair), (2) at the discretion of the Board of Directors, a pro-rated annual equity retainer, and (3) the full amount of the initial equity retainer. Under our independent director compensation policy as in effect at the time of appointment of each of our current independent directors to the Board, the initial equity retainer awarded to each director was granted in the form of options to purchase shares of our Class A common stock.
The Board of Directors determines fees payable to our independent directors for service on ad hoc committees of the Board.
We reimburse our directors for their reasonable expenses incurred in attending meetings of our Board of Directors or committees.
The retainers, fees and grants provided for under our independent director compensation policy may be modified or adjusted from time to time as determined by the Board of Directors on the recommendation of the Compensation Committee.
We also provide our directors with liability insurance coverage for their activities as directors. Our bylaws provide that our directors are entitled to indemnification and advancement of expenses from us to the fullest extent permitted by Delaware law. We have entered into indemnification agreements with our directors to afford them contractual assurances regarding the scope of their indemnification and to provide procedures for the determination of a director’s right to receive indemnification and to receive reimbursement of expenses as incurred in connection with any related legal proceedings.
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The following table sets forth the compensation earned by or paid to our independent directors for Fiscal 2021.
Fiscal 2021 Director Compensation
Name
Fees earned
or paid in
cash(1)
($)
Stock
awards(2)(3)
($)
Option
awards(3)
($)
Total
($)
Pamela Daley
143,000
179,992
322,922
Mark J. Hawkins
151,000
179,992
330,992
Yagyensh C. (Buno) Pati
61,000
179,992
240,992
(1)
Amounts reported in this column include compensation for committee service during Fiscal 2021.
(2)
Amounts reported in this column reflect the aggregate grant date fair value of each RSU award granted to the director during Fiscal 2021, computed in accordance with FASB ASC Topic 718. These awards represent annual equity retainer awards in the form of RSUs that settle in shares of Class A common stock. The assumptions used by us in calculating these amounts are incorporated herein by reference to Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for Fiscal 2021, filed with the SEC on March 25, 2021.
(3)
The table below sets forth the aggregate number of unexercised stock option awards and the aggregate number of unvested stock awards (in the form of RSUs) held by each of our independent directors that were outstanding as of January 29, 2021.
Name
Aggregate
number of option
awards outstanding at
fiscal year end
Aggregate
number of stock
awards outstanding at
fiscal year end
Pamela Daley
48,143
15,100
Mark J. Hawkins
48,143
15,100
Yagyensh C. (Buno) Pati
49,916
15,100
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PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors is asking stockholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP, or PwC, as Secureworks’ independent registered public accounting firm for the fiscal year ending January 28, 2022, or Fiscal 2022.
PwC is a registered independent public accounting firm and has served as Secureworks’ independent registered public accounting firm since 2014. Although current law, rules and regulations, as well as the Audit Committee’s charter, require Secureworks’ independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of an independent registered public accounting firm to be an important matter of stockholder concern and considers a proposal for stockholders to ratify such selection to be an opportunity for stockholders to provide direct feedback to Secureworks on an important issue of corporate governance. If stockholders do not ratify the selection of PwC, the Audit Committee will take the vote into consideration in determining whether to retain PwC and whether to engage the firm in future years, but may continue to retain PwC. If the appointment is ratified by stockholders, the Audit Committee in its discretion nevertheless may change the appointment at any time during the current fiscal year if it determines that a change would be in the best interests of the Company and its stockholders.
Representatives of PwC are expected to be present at the annual meeting and available to respond to appropriate questions, and will have an opportunity to make a statement if they desire to do so.
The Board unanimously recommends a vote “FOR” the ratification of PwC as Secureworks’ independent registered public accounting firm for Fiscal 2022.
In addition to retaining PwC to conduct an independent audit of the consolidated financial statements, Secureworks engages PwC from time to time to perform other permissible services. The following table sets forth all fees incurred in connection with professional services rendered to Secureworks by PwC for Fiscal 2021 and the fiscal year ended January 31, 2020, or Fiscal 2020.
Independent Registered Public Accounting Firm Fees
Fee Type
Fiscal 2021
($)
Fiscal 2020
($)
Audit Fees(a)
1,950,000
1,874,500
Audit-Related Fees(b)
160,000
Tax Fees
All Other Fees
Total
2,110,000
1,874,500
(a)
This category includes fees incurred for professional services rendered in connection with the audit of the annual financial statements, review of the quarterly financial statements and services that are normally provided in connection with statutory audits of international subsidiaries.
(b)
This category includes fees incurred for professional services in connection with Secureworks’ preparation for compliance with Section 404(b) of the Sarbanes-Oxley Act of 2002, which will be applicable to the Company beginning with the Fiscal 2022 audit.
The Audit Committee pre-approved performance by PwC of the foregoing services that were required to be pre-approved under SEC rules. The Audit Committee has adopted a policy requiring pre-approval by the committee of all audit and non-audit services to be provided by Secureworks’ independent registered public accounting firm, other than pursuant to a limited exception provided under SEC rules. In accordance with that policy, the Audit Committee has given its approval for the provision of audit services by PwC for Fiscal 2022, including audit fees, and also has given its approval for up to one year in advance for the provision by PwC of particular categories or types of audit-related, tax and other permitted non-audit services. With respect to circumstances in which the provision of any services is not covered by one of those approvals, the Audit Committee has delegated authority to the chair of the Audit Committee or other designated members of the Audit Committee to pre-approve PwC’s services. Any pre-approvals granted under this delegated authority must be communicated to the full Audit Committee.
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PROPOSAL 3 – APPROVAL OF SHARE INCREASE AMENDMENT UNDER THE SECUREWORKS CORP. 2016 LONG-TERM INCENTIVE PLAN
The stockholders are being asked to consider and vote upon a proposal to amend the SecureWorks Corp. 2016 Long-Term Incentive Plan, as amended and restated, which we refer to as the plan, to increase by 5,000,000 shares the total number of shares of Class A common stock authorized and available for issuance under the plan from 1,760,928 shares to 6,760,928 shares based on the number of shares available for issuance under the plan as of May 1, 2021. We refer to the amendment as the share increase amendment.
The Board of Directors approved the share increase amendment, upon the recommendation of the Compensation Committee and subject to stockholder approval at this annual meeting, as of March 15, 2021. If approved by stockholders at the annual meeting, the share increase amendment will be effective at the time of stockholder approval.
Secureworks is seeking approval of the share increase amendment to comply with Nasdaq stockholder approval requirements applicable to material amendments to equity plans that have been approved by stockholders. The plan was originally approved and adopted by the Board of Directors as of April 18, 2016 and approved by Secureworks’ sole stockholder as of April 20, 2016. At the 2018 annual meeting held on June 21, 2018, stockholders approved an amendment to the plan increasing the total number of shares of Class A common stock issuable under the plan by 4,000,000 shares to a total of 12,500,000 shares. As of May 1, 2021, 1,760,928 shares remained available for issuance for future awards under the plan.
The Board of Directors believes that approval of the share increase amendment is in the best interests of Secureworks and its stockholders. Approval of this proposal is necessary to enable us to recruit and retain key employees critical to our success and to align the interests of our management with the interests of our stockholders.
Our executive officers and directors have an interest in this proposal as they would be eligible to receive equity awards under the plan representing an interest in shares authorized by the share increase amendment. In addition, on March 9, 2021, in connection with annual compensation determinations, the Compensation Committee awarded to certain executive officers and employees of the Company time-based RSUs and performance stock units, or PSUs, that were granted subject to stockholder approval of the share increase amendment. In accordance with the terms of these awards, if stockholder approval of this Proposal 3 is not obtained, each of the RSUs and PSUs will be canceled and no shares of Class A common stock will be issued in connection with these awards. For information about these awards as well as other awards under the plan previously granted to our directors, executive officers and employees, see “– Plan Benefits” below.
Stockholders are urged to read this entire proposal and the complete plan document, which is attached as Annex A to this proxy statement, in the form in which it would be effective upon approval of the share increase amendment by stockholders.
The Board of Directors unanimously recommends a vote “FOR” approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan.
How Our Plan is Designed to Protect Stockholder Interests
The Board of Directors has designed the plan to include terms that it believes reinforce the alignment between our equity-based compensation arrangements and the interests of our stockholders. These terms generally provide for the following:
Limits on terms of stock options and SARs: The maximum term of nonqualified stock options and stock appreciation rights that may be granted under the plan is ten years.
No stock option or SAR repricing: The plan prohibits repricing of stock options and stock appreciation rights without stockholder approval, whether by reducing the exercise price or by exchanging the stock option or stock appreciation right for cash or a new award with a lower (or no) exercise price.
No “reload” stock options: The plan does not contain any term providing that the exercise of a stock option can automatically trigger the grant of a new stock option with respect to the number of shares used to pay for the exercise of the initial stock option.
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No liberal share recycling: The number of shares issuable under the plan will not be increased by the number of shares (1) tendered, withheld or subject to awards that are surrendered in connection with the purchase of shares upon exercise of stock options, (2) not issued upon the net settlement or net exercise of stock appreciation rights that are settled in shares, (3) deducted or delivered from payment of an award in connection with tax withholding obligations or (4) purchased by us with proceeds from stock option exercises.
No “evergreen” provision: The plan does not permit an automatic increase in the number of shares available for issuance without stockholder approval.
Performance-based vesting of dividends and dividend equivalent rights: Dividends and dividend equivalent rights granted as a component of awards which vest or are earned based on the achievement of performance goals may not vest unless the performance goals for the underlying awards are achieved.
Clawback requirement: The plan provides for mandatory repayment of any award to the extent necessary to comply with any clawback, recoupment or similar policy adopted by the Board of Directors or the Compensation Committee or to comply with applicable law.
Forfeiture provisions: The Compensation Committee is authorized to cancel any outstanding award if the participant is terminated for “cause.”
Share Authorization and Dilution
As of May 1, 2021, approximately 1,760,928 shares of Class A common stock remained available for issuance for future awards under the plan.
The following table illustrates the potential dilutive impact of awards under the plan if stockholders approve this proposal.
Plan Share Authorization (shares in millions)
 
Total Shares
Available
Equity Dilution:
Percentage of Shares of
Common Stock Outstanding(2)
Shares of Class A common stock available for future awards if proposal is approved(1)
6.8
8.0%
(1)
Reflects shares of Class A common stock that remain available for issuance for future awards under the plan as of May 1, 2021, and additional shares that will be available for future awards if stockholders approve this proposal (including awards of RSUs and PSUs to certain executive officers and employees of the Company granted subject to stockholder approval of the share increase amendment as discussed under “—Plan Benefits” below). For more information about our outstanding awards and shares of Class A common stock available for future awards, as of December 31, 2020 see “—Equity Compensation Plan Information” below.
(2)
As of May 1, 2021, Secureworks had issued and outstanding 83,549,707 shares of common stock, consisting of 13,549,707 shares of Class A common stock and 70,000,000 shares of Class B common stock.
Summary of Material Provisions of Plan
The following summary of the material provisions of the plan is qualified in its entirety by reference to the complete text of the plan in the form in which it would become effective upon approval of this proposal. The text of that form is attached as Annex A to this proxy statement and incorporated by reference into this proposal. You are urged to read this proposal and the text of the plan in their entirety.
Effective Date and Term. The plan became effective on April 18, 2016 and will terminate on April 18, 2026 unless it is terminated earlier by the Board of Directors or in connection with a change in control of Secureworks.
Purpose and Types of Awards. We believe that maintenance of the plan assists us in recruiting, rewarding and retaining employees, officers, non-employee directors and other service providers. We believe that granting
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awards under the plan provides recipients with an incentive to contribute to the success of Secureworks and to operate and manage our business in a manner that will provide for our long-term growth and profitability to benefit our stockholders and other important stakeholders, including our employees and customers, and will ensure that key personnel act in our best interests during and after their service to our company as a condition of enjoying the benefits of such rewards.
The plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals.
Administration. The plan is administered by the Compensation Committee. The composition of the Compensation Committee will satisfy the requirements of any stock exchange on which our Class A common stock is listed. During any period of time in which we do not have a Compensation Committee, the plan will be administered by the Board of Directors or another committee appointed by the Board of Directors. With certain exceptions and if permitted by applicable law, the Compensation Committee may delegate some or all of its authority to our chief executive officer or any other officer.
The Compensation Committee has full power and authority to take all actions and to make all determinations required or provided for under, and to interpret all provisions of, the plan and any award or award agreement thereunder. The Compensation Committee also determines who will receive awards under the plan, the type of award and its terms and conditions, and the number of shares of Class A common stock subject to the award or to which an award relates, except with respect to awards to our chief executive officer, which are approved by the Board of Directors upon the recommendation of the Compensation Committee.
Eligibility. Awards may be granted under the plan to individuals who are employees, officers, or non-employee directors of Secureworks or any of our affiliates, consultants and advisors who perform services for Secureworks or any of our affiliates, and any other individual whose participation in the plan is determined to be in the best interests of Secureworks by the Compensation Committee in connection with our incentive and compensation programs. As of May 1, 2021, approximately 633 individuals were eligible to participate in the plan, consisting of the following: three executive officers (including our Chief Executive Officer, who is also a director); three non-employee directors; and the balance of approximately 627 eligible participants, employees of Secureworks and its subsidiaries (excluding our employee director and our executive officers). No consultants or advisors who perform services for Secureworks or our affiliates currently participate in the plan.
Share Authorization and Usage. As of the date of this proxy statement, the plan authorizes the issuance of 12,500,000 shares of Class A common stock for awards under the plan. As of May 1, 2021, 5,216,170 shares were subject to outstanding awards and 1,760,928 shares remained available for issuance for future awards.
If this proposal is approved, subject to adjustments for changes in our capitalization and the other plan provisions described below, the aggregate number of shares of Class A common stock issuable pursuant to all awards granted on or after the date of stockholder approval will not exceed the sum of:
5,000,000 shares of Class A common stock, plus;
any shares of Class A common stock remaining available for issuance for future awards under the plan as of the date of the annual meeting (1,760,928 shares as of May 1, 2021).
The foregoing sum is inclusive of all shares of Class A common stock issuable in connection with awards of RSUs and PSUs made to certain executive officers and employees on March 9, 2021 that were granted subject to stockholder approval of the share increase amendment, as described below. In addition, any shares of Class A common stock covered by outstanding awards granted under the plan that terminate by expiration, forfeiture, cancellation, settlement in cash in lieu of shares, or otherwise without the issuance of such shares, in each case, in accordance with the plan, will again become available for issuance under the plan. The share limit described above also will be increased by the number of shares of Class A common stock subject to awards assumed by Secureworks, at the direction of the Compensation Committee, in connection with certain mergers, reorganizations, separations or similar transactions and any substitute awards issued for those awards.
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The number of shares of Class A common stock available for issuance under the plan, however, will not be increased by the number of shares:
tendered, withheld or subject to an award granted under the plan and that are surrendered in connection with the purchase of shares of Class A common stock upon exercise of an option;
not issued upon the net settlement or net exercise of a stock appreciation right granted under the plan that is settled in shares;
deducted or delivered from payment of an award granted under the plan in connection with our tax withholding obligations; or
purchased by us with the proceeds from option exercises.
Shares that are subject to awards granted under the plan will be counted against the share limit described above as one share of Class A common stock for every one share of Class A common stock subject to the award. An award that, by its terms, may not be settled in shares of Class A common stock will not count against the plan share limit.
References to shares of our Class A common stock above include any security into which the shares may be changed or for which the shares may be exchanged in connection with a change in capitalization of the Company as set forth in the plan and as described below.
The shares of Class A common stock to be issued under the plan may be authorized and unissued shares of Class A common stock, treasury shares or any combination of the foregoing.
Limits on Awards. The maximum number of shares of Class A common stock subject to options or stock appreciation rights that may be granted under the plan to any person in any single calendar year is 2,000,000 shares. The maximum number of shares of Class A common stock that may be granted under the plan to any person pursuant to awards, other than pursuant to options or stock appreciation rights, that are stock-denominated and are either stock-settled or cash-settled in any single calendar year is 1,500,000 shares. The maximum amount that may be paid as annual incentive awards (whether or not cash-settled) in a calendar year to any person eligible for an award is $5 million, and the maximum amount that may be paid as cash-denominated performance awards (whether or not cash-settled) for a performance period of greater than 12 months to any person eligible for an award is $10 million.
Adjustments for Certain Events. The Compensation Committee will make appropriate adjustments in outstanding awards and the number of shares of Class A common stock reserved and available for issuance under the plan, including the individual limitations on awards, to reflect certain changes in our stock on account of mergers, reorganizations, recapitalizations, reclassifications, stock splits, spin-offs, combinations of stock, exchanges of stock, stock dividends and other, similar events.
Fair Market Value Determination. For so long as our Class A common stock remains listed on the Nasdaq Global Select Market (or is listed on any other established stock exchange or publicly traded on any other securities market), the fair market value of a share of our Class A common stock, as of any date of determination, will be as follows:
if there is a reported closing price on that date, the closing price for a share of Class A common stock as reported on that exchange or market (if there is more than one stock exchange or securities market on which our Class A common stock is listed or traded, the Compensation Committee will designate the appropriate stock exchange or securities market for purposes of the fair market value determination); and
if there is no reported closing price on that date, the closing price for a share of Class A common stock on the next preceding date on which any sale of our Class A common stock was reported.
If on such a date our Class A common stock is not listed on an established stock exchange or traded on an established securities market, the Compensation Committee will determine the fair market value by the reasonable application of a reasonable valuation method in a manner consistent with Section 409A of the Internal Revenue Code, or Code.
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Options. The plan permits the grant of incentive stock options (under Section 422 of the Code) and options that do not qualify as incentive stock options, which we refer to as nonqualified stock options. Any or all of the shares of Class A common stock reserved for issuance under the plan are available for issuance pursuant to incentive stock options, but incentive stock options may be granted only to our employees and employees of our corporate subsidiaries. The exercise price of each option will be determined by the Compensation Committee, except that the exercise price may not be less than 100% (or, for incentive stock options granted to any person who owns more than 10% of the total combined voting power of all classes of our voting stock, 110%) of the fair market value of a share of Class A common stock on the date on which the option is granted. If the aggregate fair market value of shares of Class A common stock determined on the date of grant with respect to which incentive stock options are exercisable for the first time during any calendar year exceeds $100,000, the option, or such excess portion of the option, will be treated as a nonqualified stock option.
The term of an option may not exceed ten years (or, for incentive stock options granted to any greater than 10% stockholder as described above, five years) from the date of grant. The Compensation Committee determines the time or times at which each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments, and the exercisability of options may be accelerated by the Compensation Committee. Awards of options are nontransferable, except for transfers by will or the laws of descent and distribution or, if authorized in the applicable award agreement, for transfers of nonqualified stock options, not for value, to family members pursuant to the terms and conditions of the plan.
Stock Appreciation Rights. The plan permits the grant of stock appreciation rights. A stock appreciation right represents the participant’s right to receive a compensation amount, based on the value of the appreciation in our Class A common stock from the date of grant to the date of exercise, if vesting criteria or other terms and conditions established by the Compensation Committee are met. The exercise price of each stock appreciation right is determined by the Compensation Committee, except that the exercise price may not be less than 100% of the fair market value of a share of Class A common stock on the date on which the stock appreciation right is granted, and the term of a stock appreciation right may not exceed ten years from the date of grant. A participant who receives stock appreciation rights will have no rights of a stockholder as to the shares of Class A common stock on which the stock appreciation right is based. If the vesting criteria or other terms and conditions are met, we will settle stock appreciation rights in cash, shares of Class A common stock, or a combination of the two. Awards of stock appreciation rights are nontransferable, except for transfers by will or the laws of descent and distribution or, if authorized in the applicable award agreement, for transfers not for value to family members pursuant to the terms and conditions of the plan.
No Repricing. The Compensation Committee may not amend the terms of outstanding options or stock appreciation rights to reduce the applicable exercise price, cancel outstanding options or stock appreciation rights in exchange for or substitution of options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights, or cancel outstanding options or stock appreciation rights with an exercise price above the current fair market value of a share of our Class A common stock in exchange for cash or other securities, in each case, unless such action is subject to and approved by our stockholders or would not be deemed to be a repricing under the rules of any stock exchange on which our Class A common stock is listed.
Restricted Stock. The plan permits the grant (or sale at the purchase price determined by the Compensation Committee) of restricted stock awards. A restricted stock award is an award of shares of Class A common stock that may be subject to restrictions on transferability and other restrictions as the Compensation Committee determines in its sole discretion on the date of grant. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments, or otherwise, as the Compensation Committee may determine. Unless otherwise provided in an award agreement, a participant who receives restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares of Class A common stock, except that the Compensation Committee may require any dividends to be withheld and accumulated contingent on vesting of the underlying shares or reinvested in shares of restricted stock. Dividends paid on shares of restricted stock which vest or are earned based on the achievement of performance goals will not vest unless the applicable
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performance goals are achieved. During the period, if any, in which shares of restricted stock are nontransferable or forfeitable, a participant is prohibited from selling, transferring, assigning, pledging or otherwise encumbering or disposing of the participant’s shares of restricted stock.
Restricted Stock Units and Deferred Stock Units. The plan permits the grant of restricted stock units and deferred stock units. Restricted stock units represent the participant’s right to receive a compensation amount, based on the value of the shares of Class A common stock, if vesting criteria or other terms and conditions established by the Compensation Committee are met. If the vesting criteria or other terms and conditions are met, we will settle restricted stock units in cash, shares of Class A common stock or a combination of the two. Deferred stock units are restricted stock units that provide for the settlement and delivery of cash, shares of Class A common stock or a combination of the two after the date of vesting, consistent with the terms of Section 409A of the Code. A participant who receives restricted stock units or deferred stock units will have no rights of a stockholder as to the shares of Class A common stock on which the restricted stock unit or deferred stock unit is based, though the Compensation Committee may provide that a recipient of restricted stock units or deferred stock units will be entitled to receive dividend equivalent rights paid on an equivalent number of shares of Class A common stock. The Compensation Committee may provide that any such dividend equivalent rights will be deemed withheld and accumulated contingent on vesting of the underlying award or reinvested in shares of restricted or deferred stock or other awards. Dividend equivalent rights paid on restricted stock units or deferred stock units which vest or are earned based on the achievement of performance goals will not vest unless the applicable performance goals are achieved. During the period, if any, in which restricted stock units or deferred stock units are nontransferable or forfeitable, a participant is prohibited from selling, transferring, assigning, pledging or otherwise encumbering or disposing of the participant’s restricted stock units or deferred stock units.
Unrestricted Stock and Other Equity-Based Awards. The plan permits the grant (or, for unrestricted stock, sale at the purchase price determined by the Compensation Committee) of unrestricted stock and other types of Class A common stock-based awards. An unrestricted stock award is an award of shares of Class A common stock free of any restrictions. Other equity-based awards are payable in cash, shares of Class A common stock or other equity, or a combination thereof, and may be restricted or unrestricted, as determined by the Compensation Committee. The terms and conditions that apply to other equity-based awards are determined by the Compensation Committee.
Dividend Equivalent Rights. The plan permits the grant of dividend equivalent rights in connection with the grant of any equity-based award, other than options and stock appreciation rights. Dividend equivalent rights are rights to receive (or to receive credits for the future payment of) cash, shares of Class A common stock, other awards or other property equal in value to dividend payments or distributions paid or made with respect to a specified number of shares of Class A common stock. The Compensation Committee will determine the terms and conditions of any dividend equivalent rights, except that are described above, dividend equivalent rights granted as a component of an award which vests or is earned based on the achievement of performance goals will not vest unless the applicable performance goals are achieved.
Performance Awards. The plan permits the grant of performance awards and annual incentive awards in such amounts and upon such terms as the Compensation Committee may determine. Each grant of a performance award will have an initial actual or target cash value or an actual or target number of shares of Class A common stock that is established by the Compensation Committee at the time of grant. The Compensation Committee may set performance goals in its discretion which, depending on the extent to which they are met, will determine the amount of cash or value and/or number of shares of Class A common stock that are earned by a participant under such performance awards and annual incentive awards. The Compensation Committee will establish the performance periods for performance awards and annual incentive awards. Performance awards and annual incentive awards may be payable in cash or shares of Class A common stock, or a combination thereof, as determined by the Compensation Committee.
The plan identifies some conditions that may warrant revision or alteration of performance goals after they are established by the Compensation Committee. Such conditions may include the following:
asset write-downs;
litigation or claims, judgments or settlements;
the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results;
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any reorganization or restructuring events or programs;
extraordinary, unusual, non-core, non-operating or non-recurring items and items that are either of an unusual nature or of a type that indicates infrequency of occurrence as a separate component of income from continuing operations;
acquisitions or divestitures;
foreign exchange gains and losses;
impact of repurchase of shares of Class A common stock acquired through share repurchase programs;
tax valuation allowance reversals;
impairment expense; and
environmental expense.
Performance Measures. Under the plan, one or more of the following performance measures may be used by the Compensation Committee in establishing performance goals:
net earnings or net income;
operating earnings;
pretax earnings;
earnings per share;
share price, including growth measures and total stockholder return;
earnings before interest and taxes;
earnings before interest, taxes, depreciation and/or amortization;
earnings before interest, taxes, depreciation and/or amortization as adjusted to exclude any one or more of the following: stock-based compensation expense; income from discontinued operations; gain on cancellation of debt; debt extinguishment and related costs; restructuring, separation and/or integration charges and costs; reorganization and/or recapitalization charges and costs; impairment charges; merger-related events; impact of purchase accounting; gain or loss related to investments; amortization of intangible assets; sales and use tax settlements; legal proceeding settlements; gain on non-monetary transactions; and adjustments for the income tax effect of any of the preceding adjustments;
sales or revenue growth or targets, whether in general or by type of product, service or customer;
gross or operating margins;
return measures, including return on assets, capital, investment, equity, sales or revenue;
cash flow, including: operating cash flow; free cash flow, defined as operating cash flow less capital expenditures or as earnings before interest, taxes, depreciation and/or amortization (as adjusted to exclude any one or more of the items that may be excluded pursuant to the performance measure specified in the eighth bullet point above) less capital expenditures; levered free cash flow, defined as free cash flow less interest expense; cash flow return on equity; and cash flow return on investment;
productivity ratios;
costs, reductions in cost and cost control measures;
expense targets;
market or market segment share or penetration;
financial ratios as provided in any credit agreements of Secureworks and its subsidiaries;
working capital targets;
completion of acquisitions of businesses, companies or assets or completion of integration activities following an acquisition of businesses, companies or assets;
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completion of divestitures and asset sales;
regulatory achievements or compliance;
customer satisfaction measurements;
execution of contractual arrangements or satisfaction of contractual requirements or milestones;
product development achievements;
monthly recurring revenue;
revenue retention rates; and
any combination of the foregoing business criteria.
The Compensation Committee may establish performance goals on a company-wide basis or with respect to one or more business units, divisions, affiliates or operating segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices.
The Compensation Committee has the authority to provide for accelerated vesting of any performance award or annual incentive award based on the achievement of performance goals pursuant to the performance measures and the discretion to adjust awards, either on a formula or discretionary basis, or on any combination thereof.
Change in Control. Unless otherwise provided in an applicable award agreement, if we experience a change in control in which outstanding awards will not be assumed or continued by the surviving entity:
except for performance awards and annual incentive awards, immediately before the change in control, all outstanding shares of restricted stock and all restricted stock units, deferred stock units and dividend equivalent rights will vest, and the shares of Class A common stock underlying, or cash payment promised under, such awards will be delivered; and
at the discretion of the Compensation Committee, either or both of the following will occur: (1) all options and stock appreciation rights will become exercisable at least 15 days before the change in control and terminate, if unexercised, upon the completion of the change in control; or (2) all options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units and dividend equivalent rights will be canceled in exchange for cash and/or shares of our stock; and in the case of performance awards and annual incentive awards, if less than half of the performance period has lapsed, the awards will be treated as though target performance thereunder has been achieved, if at least half of the performance period has lapsed, actual performance to date (if determinable) will be determined and treated as achieved, and if actual performance is not determinable, the awards will be treated as though target performance thereunder has been achieved.
Other equity-based awards will be governed by the terms of the applicable award agreement.
Unless otherwise provided in an applicable award agreement, if we experience a change in control in which outstanding awards will be assumed or continued by the surviving entity, the plan and awards granted thereunder will continue under their terms, with appropriate adjustments to the number of shares subject to or underlying an award and to the exercise prices of options and stock appreciation rights.
Forms of Payment. The exercise price for any option or the purchase price (if any) for restricted stock, restricted stock units and deferred stock units is generally payable as follows:
in cash or cash equivalents acceptable to us;
if the applicable award agreement so provides, by the surrender of shares of our Class A common stock (or attestation of ownership of shares of our Class A common stock) with an aggregate fair market value, on the date of the surrender, of the exercise price or purchase price;
if permissible by applicable law and if the award agreement so provides, by payment through a broker in accordance with procedures set by us; or
if the applicable award agreement so provides and/or unless otherwise specified in an award agreement, any other form permissible by applicable law, including net exercise or net settlement and service rendered to us or our affiliates.
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Amendment, Suspension or Termination. The Board of Directors may, at any time and from time to time, amend, suspend or terminate the plan so long as no amendment, suspension or termination impairs the rights or obligations under any outstanding award without the affected participant’s consent. The effectiveness of any future amendment to the plan will be conditioned on approval of such amendment by our stockholders if provided by the Board of Directors or required by applicable laws (including, for so long as our Class A common stock is listed on a stock exchange, the rules of that stock exchange).
Summary of Material U.S. Federal Income Tax Consequences
The following is a summary of material U.S. federal income tax consequences of the plan under current U.S. federal income tax law. This summary deals with the general tax principles applicable to the plan and is based on laws, regulations, rulings and decisions currently in effect, all of which are subject to change. This summary does not address foreign, state and local tax laws or employment, estate and gift tax considerations because they may vary depending on individual circumstances and from jurisdiction to jurisdiction.
Nonqualified Stock Options. There are no immediate U.S. federal income tax consequences of receiving an award of nonqualified stock options under the plan. Upon exercise of the option, the difference between the exercise price and the fair market value of the shares subject to the option on the exercise date will constitute ordinary income taxable to the participant. Upon the participant’s disposition of shares acquired upon exercise, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. The capital gain or loss will be long-term if the participant held the shares for more than one year. Otherwise, the capital gain or loss will be short-term.
Incentive Stock Options. There are no immediate U.S. federal income tax consequences of receiving an award of incentive stock options under the plan. In addition, although a participant generally will not recognize taxable income upon the exercise of an incentive stock option, the participant’s alternative minimum taxable income will be increased by the amount by which the aggregate fair market value of the shares underlying the option, which is generally determined as of the exercise date, exceeds the aggregate exercise price. Further, except in the case of the participant’s death or disability, if an option is exercised more than three months after the participant’s termination of employment, the option will cease to be treated as an incentive stock option and will be subject to taxation under the rules applicable to nonqualified stock options.
If a participant sells the shares acquired upon exercise of an incentive stock option at least two years after the date on which the incentive stock option was granted and at least one year after the date on which the incentive stock option was exercised, any excess of the sale price of the option shares over the exercise price will be treated as long-term capital gain taxable to the option holder at the time of the sale. If the disposition occurs before the completion of the two-year and one-year periods, the excess of the fair market value of the option shares on the disposition date over the exercise price will be taxable income to the option holder at the time of the disposition. Of that income, the amount up to the excess of the fair market value of the shares at the time the option was exercised over the exercise price will be ordinary income for U.S. federal income tax purposes, and the balance, if any, will be long-term or short-term capital gain, depending upon whether or not the shares were sold more than one year after the option was exercised. We will not be entitled to a business expense deduction with respect to an incentive stock option unless the participant engages in a disqualifying disposition, at which time we will be entitled to a deduction equal to the amount of the ordinary income taxable to the participant.
Stock Appreciation Rights. There are no immediate U.S. federal income tax consequences of receiving an award of stock appreciation rights under the plan. Upon exercise of stock appreciation rights, the distribution of shares of Class A common stock or the cash payment in satisfaction of the stock appreciation rights will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment.
Restricted Stock. Generally, a participant under the plan will not recognize any taxable income for U.S. federal income tax purposes in the year of the restricted stock award if the shares of Class A common stock subject to the award are nontransferable and subject to a substantial risk of forfeiture. A participant, however, may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the award date, determined without regard to the
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restrictions. If a participant does not make a Section 83(b) election, the fair market value of the shares on the date on which the restrictions lapse will be treated as compensation income to the participant and will be taxable in the year in which the restrictions lapse. Dividends and distributions paid on restricted stock for which a participant has not made a Section 83(b) election are taxed as compensation income subject to withholding taxes. After the restricted stock vests (or earlier upon a participant’s timely Section 83(b) election), dividends and distributions paid on the restricted stock will no longer be considered compensation income.
Restricted Stock Units and Deferred Stock Units. There are no immediate U.S. federal income tax consequences of receiving an award of restricted stock units or deferred stock units under the plan. A distribution of shares of Class A common stock or payment of cash in satisfaction of an award of restricted stock units or deferred stock units will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment.
Unrestricted Stock. If a participant under the plan receives an award of unrestricted stock, the participant will be required to recognize ordinary income for U.S. federal income tax purposes in an amount equal to the fair market value of the shares on the award date, reduced by the amount, if any, paid for the shares. Upon the participant’s disposition of shares of unrestricted stock, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. The capital gain or loss will be long-term if the participant held the shares for more than one year. Otherwise, the capital gain or loss will be short-term.
Dividend Equivalent Rights. There are no immediate U.S. federal income tax consequences of receiving an award of dividend equivalent rights under the plan. A participant who receives dividend equivalent rights will recognize ordinary income on the date of payment in the amount distributed to the participant pursuant to the award.
Performance Awards. There are no immediate U.S. federal income tax consequences of receiving a performance or an annual incentive award under the plan. A distribution of shares of Class A common stock or payment of cash in satisfaction of a performance or an annual incentive award will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment.
Business Expense Deductions. If we comply with applicable reporting requirements, we will generally be entitled to a business expense deduction in the same amount and generally at the same time as participants recognize ordinary income arising out of their awards, subject to the limitation on deductibility under Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the federal tax deductibility of compensation paid in one year to the chief executive officer, the chief financial officer and the three other most highly compensated executive officers. Certain payments may be exempt from this limitation under grandfathering provisions of a prior version of Section 162(m) of the Code. While tax deductibility is one consideration, the Compensation Committee may exercise its discretion to award compensation, including under the plan, that is not deductible.
Section 280G of the Code. If payments which are contingent on a change in control of our company are determined to exceed certain limitations set forth in the Code, those payments may be subject to a 20% excise tax, and our deduction with respect to the associated compensation expense may be disallowed in whole or in part. The plan includes a Section 280G “best after tax” provision. Under this provision, if any of the payments under the plan or otherwise would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed under Section 4999 of the Code, the payments will be reduced by the amount required to avoid the excise tax if the reduction would give the participant a better after-tax result than if the participant received the payments in full.
Plan Benefits
The number of shares of Class A common stock or other equity-based awards that will be awarded to plan participants other than independent directors under the plan in the future is not currently determinable, except as to awards of time-based RSUs and PSUs made to certain executive officers and employees of the Company by
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the Compensation Committee on March 9, 2021 that were granted subject to stockholder approval of the share increase amendment, as described below. Future awards are within the discretion of the Compensation Committee, and the Compensation Committee has not determined such awards or the plan participants who might receive them.
Under our current independent director compensation policy, each of our independent directors will receive annual equity awards with a value of $180,000 under the plan in the form of restricted stock units that settle in shares of Class A common stock. For additional information about the compensation of our independent directors, see “Proposal 1 - Election of Directors - Director Compensation.”
The following table sets forth the number of RSUs and PSUs awarded by the Compensation Committee subject to stockholder approval of the share increase amendment. In accordance with the terms of these awards, if stockholder approval of this Proposal 3 is not obtained, each of the RSUs and PSUs will be canceled and no shares of Class A common stock will be issued in connection with these awards.
NEW PLAN BENEFITS
SecureWorks Corp. 2016 Long-Term Incentive Plan
Name and position
Dollar value ($)(1)
Number of units
Michael R. Cote
Chief Executive Officer
Paul Parrish
Chief Financial Officer
$1,737,348
114,904(2)
Wendy Thomas
President of Customer Success
$3,559,097
235,390(3)
All current executive officers as a group
$5,296,445
350,294
All current directors who are not executive officers as a group
All employees, including all current officers who are not executive
officers, as a group
22,659,875
1,498,669(4)
(1)
Based on the closing price per share of Class A common stock of $15.12 as of March 9, 2021 as reported on the Nasdaq Global Select Market.
(2)
Amount reflects (a) 57,452 time-based RSUs and (b) 57,452 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 114,904 PSUs may be earned in connection with this award).
(3)
Amount reflects (a) 117,695 time-based RSUs and (b) 117,695 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 235,390 PSUs may be earned in connection with this award).
(4)
Of these awards, 1,270,506 were granted in the form of time-based RSUs and 228,163 were granted in the form of PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 456,326 PSUs may be earned in connection with such awards of PSUs).
We granted stock options under the plan to the following persons from April 18, 2016, which was the effective date of the plan, through May 1, 2021: Mr. Cote, 889,183; Mr. Parrish, 0; Ms. Thomas, 55,030; all current executive officers as a group, 944,213; all current directors who are not executive officers, as a group, 146,202; each nominee for election as a director: Ms. Daley, 48,143 and Mr. Paster, 0; and all employees of Secureworks and our subsidiaries, including all current officers who are not executive officers, as a group, 593,536. For information about the material terms of the options awarded to our named executive officers under the plan, see “Compensation of Executive Officers – Outstanding Equity Awards at End of Fiscal 2021.”
On May 3, 2021, the closing price per share of our Class A common stock as reported on the Nasdaq Global Select Market was $13.23.
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Equity Compensation Plan Information
The following table sets forth certain information about our equity compensation plans as of the end of Fiscal 2021.
Plan category
Number of securities
to be issued upon
exercise of
outstanding
options,
warrants and rights
Weighted-average
exercise price of
outstanding
options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in first column)
Equity compensation plans approved by security holders
5,535,807(1)
$14.00(2)
1,974,275(3)
Equity compensation plans not approved by security holders
Total:
5,535,807
$14.00
1,974,275
(1)
Represents, as of the end of Fiscal 2021, the aggregate number of shares of Class A common stock that were issuable upon the exercise or settlement of 1,775,565 outstanding options and 3,760,242 outstanding RSUs granted under the plan.
(2)
Weighted-average exercise prices do not reflect shares issuable in connection with the settlement of RSUs, as RSUs have no exercise price.
(3)
Represents, as of the end of Fiscal 2021, the aggregate number of shares of Class A common stock that were available for future issuance in connection with grants of options, stock appreciation rights, restricted stock, RSUs, deferred stock units, unrestricted stock, dividend equivalent rights and other equity-based awards under the plan.
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COMPENSATION OF EXECUTIVE OFFICERS
Fiscal 2021 Summary Compensation Table
The following table shows the total compensation paid for Fiscal 2021, which ended on January 29, 2021, and Fiscal 2020, which ended on January 31, 2020, by Secureworks to our principal executive officer, our principal financial officer and our third executive officer. We refer to these individuals as our named executive officers.
Name and
principal position
Year
Salary(1)(2)
($)
Bonus(3)
($)
Stock
awards(4)
($)
Non-equity
incentive plan
compensation(5)
($)
All other
compensation(6)
($)
Total
($)
Michael R. Cote
Chief Executive Officer
2021
500,000
5,863,643
664,200
20,744
7,048,587
2020
500,000
3,421,250
541,100
19,923
4,482,273
Paul Parrish
Chief Financial Officer
2021
450,000
1,524,550
307,395
12,041
2,293,986
2020
67,500
260,000
3,226,372
10,083
3,563,954
Wendy Thomas
President of Customer Success
2021
381,592
2,540,912
321,453
11,652
3,255,610
(1)
Mr. Parrish commenced employment with us as our Chief Financial Officer effective on December 9, 2019. Mr. Parrish’s annual base salary, which is $450,000, was pro-rated from the date of his commencement of employment through fiscal year-end. The amount shown for Mr. Parrish for Fiscal 2020 includes compensation in the amount of $6,923 for consulting services he provided to us in December 2019 prior to his appointment as Chief Financial Officer.
(2)
Ms. Thomas was appointed President of Customer Success effective June 27, 2020. Her salary increase was effective as of that date and was pro-rated through fiscal year-end.
(3)
Represents a signing bonus for Mr. Parrish.
(4)
Amounts reported for Fiscal 2021 represent restricted shares of Class A common stock granted on April 17, 2020 to Mr. Cote and restricted stock units granted on April 16, 2020 to Mr. Parrish and Ms. Thomas. The assumptions used by us in calculating these amounts are incorporated herein by reference to Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for Fiscal 2021. Amounts reported for Fiscal 2020 represent restricted shares of Class A common stock granted on April 2, 2019 to Mr. Cote and restricted stock units granted on December 13, 2019 to Mr. Parrish. Assuming achievement of the highest level of performance conditions, the grant date fair value of each of these awards would have been (a) for Mr. Cote, $8,795,465 and $5,987,188 for Fiscal 2021 and Fiscal 2020, respectively, (b) for Mr. Parrish, $1,905,687 for Fiscal 2021 and (c) for Ms. Thomas $3,176,137 for Fiscal 2021. Mr. Parrish’s Fiscal 2020 award was not subject to performance conditions.
(5)
Amounts reported for Fiscal 2021 and Fiscal 2020 represent awards earned under the SecureWorks Corp. Amended and Restated Incentive Bonus Plan described below under “– Benefit Plans – SecureWorks Corp. Amended and Restated Incentive Bonus Plan.”
(6)
The table below shows the components of all other compensation paid to our named executive officers for Fiscal 2021. The amounts shown in the benefit plans column represent the amounts paid for term life insurance coverage and wellness incentives under health and welfare plans. The amount shown in the remote work stipend column represents an allowance for home office set-up and internet access.
Name
401(k) plan matching
contribution
($)
Annual
physical
($)
Benefit
plans
($)
Remote work
stipend
($)
Total
($)
Michael R. Cote
7,125
7,940
5,402
277
20,744
Paul Parrish
7,125
4,916
12,041
Wendy Thomas
10,161
1,491
11,652
Base Salaries
The amounts of Mr. Cote’s salary for Fiscal 2021 and Fiscal 2020 shown in the Fiscal 2021 Summary Compensation Table reflect his base salary at an annual rate of $500,000. The amount of Mr. Parrish’s salary for Fiscal 2021 shown in the table reflects his base salary at an annual rate of $450,000, which was pro-rated for Fiscal 2020 based on the date Mr. Parrish began employment with the Company, which was December 9, 2019.
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The amount of Ms. Thomas’s salary for Fiscal 2021 shown in the table reflects her base salary at an annual rate of $425,000, which was pro-rated based on the date she was appointed President of Customer Success. Ms. Thomas was appointed to that position effective June 27, 2020 and her salary increase to an annual rate of $425,000 was effective as of that date and pro-rated through the fiscal year-end.
In general, base salaries for our named executive officers, and any base salary adjustments, are determined by evaluating the responsibilities of the executive’s position, the executive’s experience, and industry practice among our peer companies and other companies with which we compete for executive talent.
Non-Equity Incentive Plan Compensation
In Fiscal 2021, each named executive officer was eligible to receive a payment pursuant to the SecureWorks Corp. Amended and Restated Incentive Bonus Plan, or the Incentive Bonus Plan, which is an annual cash incentive plan described below under “– Benefit Plans – SecureWorks Corp. Amended and Restated Incentive Bonus Plan.” In Fiscal 2020, Mr. Cote and Ms. Thomas participated in the Incentive Bonus Plan. Annual awards under the Incentive Bonus Plan for named executive officers are determined based on our achievement relative to corporate-level goals for the relevant fiscal year, subject to modification based on individual performance.
For Fiscal 2021, Mr. Cote’s annual award under the Incentive Bonus Plan was calculated by multiplying his target bonus amount of 100% of base salary by a corporate modifier of 108.0% and by an individual performance modifier of 123%, resulting in a payment of $664,200. For Fiscal 2021, Mr. Parrish’s award was calculated by multiplying his target bonus amount of 55% of base salary by a corporate modifier of 108.0% and by an individual performance modifier of 115%, resulting in a payment of $307,395. For Fiscal 2021, Ms. Thomas’s award was calculated by multiplying the sum of her target bonus amount of 60% of base salary that was pro-rated based on an effective date of June 27, 2020 and a target bonus amount of 55% of her pro-rated base salary prior to her appointment as President of Customer Success, by a corporate modifier of 108.0% and by an individual performance modifier of 130%, resulting in a payment of $321,453.
Stock Awards
On April 17, 2020, Mr. Cote received an award of 454,546 restricted shares of Class A common stock. Of these restricted shares, 227,273 vest ratably over a three-year period beginning on the first anniversary of the grant date, and 227,273 may be earned based on performance criteria established by the Compensation Committee and vest ratably (to the extent earned) over a three-year period beginning on the date of certification of achievement of performance criteria by the Compensation Committee (which we refer to as the certification date) or, if later, the first anniversary of the grant date.
On April 16, 2020, Mr. Parrish received an award of 136,364 restricted stock units. Of these restricted stock units, 102,273 vest ratably over a three-year period beginning on the first anniversary of the grant date, and 34,091 may be earned based on performance criteria established by the Compensation Committee and vest ratably (to the extent earned) over a three-year period beginning on the date of certification or, if later, the first anniversary of the grant date.
On April 16, 2020, Ms. Thomas received an award of 227,273 restricted stock units. Of these restricted stock units, 170,455 vest ratably over a three-year period beginning on the first anniversary of the grant date, and 56,818 may be earned based on performance criteria established by the Compensation Committee and vest ratably (to the extent earned) over a three-year period beginning on the date of certification or, if later, the first anniversary of the grant date.
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Outstanding Equity Awards at End of Fiscal 2021
The following table sets forth information with respect to our named executive officers’ outstanding equity awards as of January 29, 2021.
Name
Option awards
Stock awards
Number of
securities
underlying
unexercised
options
(#)
exercisable
Number of
securities
underlying
unexercised
options
(#)
unexercisable
Option
exercise
price
($)
Option
expiration
date
Number of
shares
or units of
stock that
have not
vested
(#)
Market
value of
shares or
units of
stock that
have not
vested
($)(1)
Equity
incentive
plan awards:
Number of
unearned
shares, units
or other
rights that
have not
vested
(#)
Equity
incentive
plan awards:
Market or
payout value
of unearned
shares, units
or other
rights that
have not
vested
($)(1)
Michael R. Cote
711,346(2)
177,837(2)
14.00
4/21/2026
82,445(3)
1,141,039
34,346(4)
475,349
46,667(5)
645,871
58,333(6)
807,329
58,333(7)
807,329
227,273(8)
3,145,458
227,273(9)
3,145,458
Paul Parrish
173,213(10)
2,397,268
102,273(11)
1,415,458
34,091(12)
471,819
Wendy Thomas
6,132(13)
84,867
8,334(14)
115,343
4,906(15)
67,899
6,667(16)
92,271
16,667(17)
230,671
16,667(18)
230,671
33,333(19)
461,329
170,455(20)
2,359,097
56,818(21)
786,361
(1)
Based on the closing price per share of Class A common stock of $13.84 as of January 29, 2021 as reported on the Nasdaq Global Select Market.
(2)
Reflects shares of Class A common stock subject to option awards. The grant vests ratably over a five-year period beginning on the first anniversary of the April 21, 2016 grant date.
(3)
Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a five-year period beginning on the first anniversary of the April 22, 2016 grant date.
(4)
Reflects shares of Class A common stock subject to performance-based restricted share awards granted on March 2, 2018. Under the applicable award agreement, shares were earned in connection with the certification by the Compensation Committee on February 25, 2019 of the partial achievement of specified performance measures relating to our company. Based on the certification by the Compensation Committee, 73.6% of the 140,000 shares granted were earned. The earned shares vested, or were specified to vest, in accordance with the terms of the award agreements in three equal installments on the first, second and third anniversaries of the grant date.
(5)
Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vested ratably over a three-year period beginning on the first anniversary of the March 2, 2018 grant date.
(6)
Reflects shares of Class A common stock subject to performance-based restricted share awards granted on April 2, 2019. Under the applicable award agreement, shares were earned in connection with the certification by the Compensation Committee on February 26, 2020. Based on the certification by the Compensation Committee, 100% of the 87,500 shares granted were earned. The earned shares vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(7)
Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a three-year period beginning on the first anniversary of the April 2, 2019 grant date.
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(8)
Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a three-year period beginning on the first anniversary of the April 17, 2020 grant date.
(9)
Reflects shares of Class A common stock subject to performance-based restricted share awards granted on April 17, 2020. Under the applicable award agreement, shares were earned in connection with the certification by the Compensation Committee on February 23, 2021. Based on the certification by the Compensation Committee, 108.0% of the 227,273 shares granted were earned. The earned shares vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(10)
Reflects award of time-based restricted stock units. The grant vests ratably over a four-year period beginning on the first anniversary of the December 13, 2019 grant date.
(11)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the April 16, 2020 grant date.
(12)
Reflects award of performance-based restricted stock units granted on April 16, 2020. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Compensation Committee on February 23, 2021. Based on the certification by the Compensation Committee, 108.0% of the 34,091 restricted stock units granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(13)
Reflects award of performance-based restricted stock units granted on March 1, 2018. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Compensation Committee on February 25, 2019 of the partial achievement of specified performance measures relating to our company. Based on the certification by the Compensation Committee, 73.6% of the 25,000 shares granted were earned. The earned restricted stock units vested, or were specified to vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(14)
Reflects award of time-based restricted stock units. The grant vested ratably over a three-year period beginning on the first anniversary of March 1, 2018 grant date.
(15)
Reflects award of performance-based restricted stock units granted on September 7, 2018. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Compensation Committee on February 25, 2019 of the partial achievement of specified performance measures relating to our company. Based on the certification by the Compensation Committee, 73.6% of the 20,000 shares granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(16)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the September 7, 2018 grant date.
(17)
Reflects award of performance-based restricted stock units granted on April 2, 2019. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Compensation Committee on February 26, 2020. Based on the certification by the Compensation Committee, 100% of the 25,000 shares granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
(18)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the April 2, 2019 grant date.
(19)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the September 26, 2019 grant date.
(20)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the April 16, 2020 grant date.
(21)
Reflects award of performance-based restricted stock units granted on April 16, 2020. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Compensation Committee on February 23, 2021. Based on the certification by the Compensation Committee, 108.0% of the 56,818 restricted stock units granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.
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Benefit Plans
SecureWorks Corp. Amended and Restated Incentive Bonus Plan
The Incentive Bonus Plan provides a means for us to reward our named executive officers and other eligible employees for helping us to meet or exceed our pre-defined performance goals, for delivering strong individual performance over the course of our fiscal year and for acting in a manner consistent with our mission and values. Annual cash bonuses are awarded to those eligible employees who are selected to participate during our fiscal year, so long as our corporate-level performance goals are achieved at a level sufficient to fund the bonus pool and the eligible employee’s individual performance goals are satisfied.
The Incentive Bonus Plan is administered by the Compensation Committee, except as to decisions regarding awards under the plan to our Chief Executive Officer, as indicated below. The Compensation Committee has full power and authority to administer the Incentive Bonus Plan and to make all determinations under and to interpret all provisions of the plan. For Fiscal 2021, a broad group of our company’s employees were designated by the Compensation Committee to participate in the Incentive Bonus Plan. In Fiscal 2021, Mr. Cote, Mr. Parrish and Ms. Thomas participated in the Incentive Bonus Plan.
Except with respect to determinations and decisions regarding our executive officers, as designated by our Board of Directors, the Compensation Committee may delegate some or all of its authority under the Incentive Bonus Plan to our management employees. Decisions regarding our Chief Executive Officer are made by the Board of Directors upon consideration of the recommendations of the Compensation Committee. Decisions regarding our other executive officers and other members of senior management are made by the Compensation Committee. The Compensation Committee has delegated certain aspects of its authority under the Incentive Bonus Plan to our Chief Executive Officer and our Chief Legal and Administrative Officer to make specified determinations and decisions with respect to other eligible employees.
SecureWorks Corp. 2016 Long-Term Incentive Plan
The SecureWorks Corp. 2016 Long-Term Incentive Plan, which we refer to as the 2016 Plan, provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals. The 2016 Plan is administered by the Compensation Committee, except that decisions regarding awards to our Chief Executive Officer are made by the Board of Directors upon consideration of the recommendations of the Compensation Committee. For a description of the material terms of the 2016 Plan, see “Proposal 3 – Approval of Share Increase Amendment Under the SecureWorks Corp. 2016 Long-Term Incentive Plan.”
Retirement Benefits
Our employees, including our named executive officers, currently may participate in the Dell Inc. 401(k) retirement savings plan. Participants will receive matching contributions, in which they will vest immediately, equal to 100% of each participant’s voluntary contributions, up to a maximum of 6% of the participant’s eligible compensation, not to exceed $7,500 in a calendar year. Matching contributions reported under “– Fiscal 2021 Summary Compensation Table” are based on the fiscal year. Participants may invest their contributions and the matching contributions in a variety of investment vehicles. To preserve financial flexibility in light of COVID-19, 401(k) matching contributions for eligible U.S. Secureworks employees, including our named executive officers, were suspended from June 1, 2021 through the end of the calendar year. As a result of the suspension, the IRS matching contribution limit for Fiscal 2021 was $7,125 instead of $7,500.
Confidentiality, Non-Solicitation and Non-Competition Agreements
Each of our named executive officers has entered into a protection of sensitive information, noncompetition and nonsolicitation agreement, referred to as a confidentiality, non-solicitation and non-competition agreement, with us. Under the agreement, if the executive’s employment were terminated by us without “cause,” we would be required to pay the executive an amount equal to 12 months’ base salary, as severance, subject to specified conditions. The agreement obligates the executive to comply with specified non-competition and non-solicitation obligations for a period of 12 months following the termination of the executive’s employment.
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Under the agreement, “cause” is generally defined as any of the following events:
a violation of confidentiality obligations;
acts resulting in being charged with a criminal offense that constitutes a felony or involves moral turpitude or dishonesty;
conduct that constitutes poor performance, gross neglect, insubordination, willful misconduct, or a breach of our Code of Conduct or a fiduciary duty to Secureworks or our stockholders; or
a determination that the executive violated laws relating to the workplace.
SecureWorks Corp. Amended and Restated Severance Pay Plan for Executive Employees
Our Amended and Restated Severance Pay Plan for Executive Employees, or Severance Pay Plan, generally provides for severance benefits payable to our named executive officers and other participants equal to 12 months of base salary, 12 months of subsidized COBRA coverage, six months of executive outplacement services and additional amounts equal to a portion of the value of certain outstanding short-term and long-term incentive awards. Benefits under the plan are available only in the case of a termination of employment pursuant to a workforce reduction and are offset by other severance payments.
Equity Awards Under SecureWorks Corp. 2016 Long-Term Incentive Plan
Equity grants to Mr. Cote under the 2016 Plan for Fiscal 2020 and Fiscal 2021 were in the form of restricted shares of Class A common stock and to Mr. Parrish and Ms. Thomas were in the form of restricted stock units that settle in shares of Class A common stock. Generally, the equity grants to our other employees consist of restricted stock units.
Under the 2016 Plan, our Board of Directors has authority to issue awards with provisions that accelerate vesting and exercisability upon a change in control of our company and to amend existing awards to provide for acceleration. The Board of Directors may choose to include these change-in-control acceleration provisions in any awards it may make to our named executive officers. For each of our named executive officers, the vesting of equity awards will be accelerated pursuant to the terms of the applicable award agreements upon an involuntary termination of employment within 12 months following a change in control.
Under the 2016 Plan, “change in control” is generally defined as any of the following events:
a transaction or a series of related transactions in which any person, entity or group (other than Dell Technologies or its affiliates, Michael S. Dell, any entity controlled by Mr. Dell, Susan Lieberman Dell Separate Property Trust, MSDC Denali Investors, L.P. and MSDC Denali EIV, LLC, Secureworks or any affiliate of the foregoing persons or entities) becomes the beneficial owner of more than 50% of the total voting power of the Company’s common stock;
the members of our Board of Directors who, as of April 28, 2016, constituted our Board of Directors, which we refer to as the Incumbent Board (together with any new directors elected or nominated by at least a majority of the members of the Incumbent Board then in office who either were members of the Incumbent Board or whose election or nomination for election was approved by a majority of the members of the Incumbent Board), cease to constitute a majority of the members of the Board of Directors;
Secureworks consolidates with, or merges with or into, any entity, or any entity consolidates with, or merges with or into, Secureworks, other than any merger or consolidation in which the holders of 100% of Secureworks’ common stock or other voting capital stock immediately prior to the merger or consolidation, referred to as the Prior Stockholders, own directly or indirectly at least a majority of the voting power of the voting capital stock or other equity interests of the surviving entity in the merger or consolidation immediately after the transaction;
a sale, lease or other transfer of all or substantially all of the assets of Secureworks and its subsidiaries, taken as a whole, to any entity or group (other than Secureworks or any of its affiliates), other than a sale, lease or other transfer in which the Prior Stockholders own at least a majority of the voting power of the voting capital stock or other equity interests of the entity or group immediately after the transaction; or
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our stockholders adopt a plan or proposal for the liquidation, winding up or dissolution of Secureworks.
Under our stock option agreements and restricted stock award agreements, “involuntary termination” is defined generally as a termination of employment by reason of:
the named executive officer’s involuntary dismissal by Secureworks for reasons other than “cause” (as defined below); or
the named executive officer’s voluntary resignation following the occurrence, without consent, of one or more of the following events (in each case referred to as “good reason”):
a material reduction in base salary, target annual or long-term incentive compensation, or health and welfare benefits, subject to exceptions,
a demotion of more than one job grade, or
a relocation to a principal work location which is more than 50 miles from the named executive officer’s current work location.
In addition to the above, we have agreed with Mr. Parrish that, for purposes of any employment or compensatory agreement with us (including the award agreements referred to above), the definition of “good reason” will be expanded to include a change in reporting to any person other than the Chief Executive Officer of Secureworks.
Under the terms of these agreements, “cause” is defined generally in the same manner as it is defined for purposes of the confidentiality, non-solicitation and non-competition agreements, as described above.
For additional information about our equity grants, see “– Fiscal 2021 Summary Compensation Table – Stock Awards” and “– Benefit Plans – SecureWorks Corp. 2016 Long-Term Incentive Plan.”
Potential Payments Upon Termination of Employment or Change in Control
The following table sets forth the amount of compensation that would become payable to each named executive officer then serving with Secureworks under existing plans and arrangements if one of the events described in the table had occurred on January 29, 2021, given the named executive officer’s compensation as of that date and, if applicable, based on the amount of outstanding equity-based awards held by the named executive officer as of that date and on the fair market value of the Class A common stock as of that date. These payments and benefits are in addition to benefits available before the occurrence of any termination of employment or change in control of Secureworks, including then-exercisable stock options, and benefits available generally to our salaried employees. In addition, in connection with any actual termination of employment or change-in-control transaction, Secureworks may determine to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or altering the terms of benefits described below, as our Board of Directors or Compensation Committee determines appropriate.
In the case of Michael R. Cote, our Chief Executive Officer, Paul Parrish, our Chief Financial Officer, and Wendy Thomas, our President of Customer Success, the actual amounts that would be paid upon the executive’s termination of employment or in connection with a change in control can be determined only at the time of any such event. Because of the number of factors that affect the nature and amount of any benefits, any actual amounts paid or distributed may be higher or lower than those reported below. Factors that could affect these amounts include, among others, the timing during the fiscal year of any such event, the executive’s current base salary, the amount of equity-based awards held by the executive at such time and the fair market value of the Class A common stock.
The Secureworks form of confidentiality, non-solicitation and non-competition agreement provides for severance payments in specified circumstances, as described under “– Severance Arrangements – Confidentiality, Non-Solicitation and Non-Competition Agreements.” Our Severance Pay Plan for Executive Employees provides for severance payments in connection with termination without cause pursuant to a workforce reduction, as described under “– Severance Arrangements – SecureWorks Corp. Amended and Restated Severance Pay Plan for Executive Employees.” The stock option agreements and restricted stock award agreements under our 2016 Long-Term Incentive Plan entered into with the named executive officers provide for acceleration of vesting of equity awards in connection with an involuntary termination of employment within 12 months following a change in control, as described under “– Equity Awards Under SecureWorks Corp. 2016 Long-Term Incentive Plan.”
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Name
Severance
payment
($)
Value of
accelerated
equity
awards
($)
Medical coverage
continuation and
outplacement
($)
Total
benefits
($)
Michael R. Cote
 
 
 
 
Termination other than for cause
500,000(1)
500,000
Qualified termination following a change in control
500,000(1)
10,419,452(2)
10,919,452
Paul Parrish
 
 
 
 
Termination other than for cause
1,138,614(3)
19,009
1,157,623
Qualified termination following a change in control
635,625(4)
4,322,287(2)
19,009
4,976,922
Wendy Thomas
 
 
 
 
Termination other than for cause
1,792,260(3)
1,845
1,794,105
Qualified termination following a change in control
616,250(4)
4,491,412(2)
1,845
5,109,507
(1)
Reflects payments under a confidentiality, non-solicitation and non-competition agreement between Mr. Cote and us in the event of a termination of employment without cause.
(2)
Reflects the value of accelerated equity awards in the event of an involuntary termination of employment within 12 months following a change in control of Secureworks, based on the closing price of $13.84 per share of the Class A common stock as of January 29, 2021 as reported on the Nasdaq Global Select Market.
(3)
Reflects payments under our Severance Pay Plan for Executive Employees, assuming employment is terminated without cause pursuant to a workforce reduction. Payments under this plan include amounts equal to a portion of the value of certain outstanding short-term and long-term equity and non-equity incentive awards. In the event of a termination of employment without cause that is not a qualifying termination under this plan, pursuant to their confidentiality, non-solicitation and non-competition agreement with us, Mr. Parrish and Ms. Thomas would receive severance amounts equal to 12 months’ base salary ($450,000 and $425,000, respectively), subject to specified conditions.
(4)
Reflects payments under our Severance Pay Plan for Executive Employees, assuming employment is terminated pursuant to a workforce reduction, after giving effect under the plan to the acceleration of equity awards in the event of an involuntary termination of employment within 12 months following a change in control of Secureworks. In the event of a termination of employment that is not a qualifying termination under the plan, pursuant to their confidentiality, non-solicitation and non-competition agreements with us, Mr. Parrish and Ms. Thomas would receive severance amounts equal to 12 months’ base salary ($450,000 and $425,000, respectively), subject to specified conditions.
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CORPORATE RESPONSIBILITY
At Secureworks, we strive to create a positive and lasting impact on our most immediate communities and society at large by advancing sustainability, maintaining a strong commitment to ethics, cultivating inclusion and encouraging community involvement. We also recognize that effective governance is an essential part of our corporate responsibility strategy.
Advancing Sustainability – We have a responsibility to contribute to the health and prosperity of our society and of our customers, suppliers and communities. We are seeking to shrink our carbon footprint and migrate our workloads to a more efficient and sustainable public cloud / SaaS environment.
Upholding Ethics – Ethics play a critical role in establishing a strong foundation for positive social impact. Our internal policies reflect our commitment to acting ethically and with integrity in our own operations and all of our business relationships. We endeavor to embed ethical practices in all that we do and to be accountable for our actions while driving improvements wherever and whenever possible.
Cultivating Inclusion – We believe that our future growth and innovation depends on a company culture that promotes diversity and inclusion, and seek to advance these values in our hiring, development and advancement practices. Our commitment to diversity and inclusion starts at the top, with a highly skilled and diverse Board of Directors. As of the end of Fiscal 2021, of our five non-employee directors, the Board of Directors included one woman member and one ethnically diverse member. In Fiscal 2021, we instituted a talent acquisition policy aimed at ensuring that at least one candidate from an underrepresented group is included in external candidate interview slates, including at the executive officer level. We will continue to pursue inclusive employment policies that support women and diverse members of underrepresented groups.
Community Involvement – We aim to give back to the communities where we live and work and believe that this commitment helps in our efforts to attract and retain employees. We partner with a variety of universities and inclusion-focused programs to promote technology education for all. Beyond contributions of funds, our team members participate in numerous local events and provide volunteer services. We believe that our contributions make a meaningful difference in community volunteer service activities throughout the year.
Governance – The Board of Directors oversees the establishment and maintenance of our governance, compliance and risk oversight processes and procedures to promote the conduct of our business with the highest standards of responsibility, ethics and integrity. Guided by an integrated perspective and approach to corporate responsibility, the Nominating and Governance Committee is responsible for overseeing the development and implementation of policies and management systems relating to environmental, social and governance issues to promote our compliance with applicable laws and best practices and to measure our performance against sustainability objectives established under those policies and systems.
For more information on our commitment to corporate responsibility, see Annual Report on Form 10-K for Fiscal 2021.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents, as of April 26, 2021, except as otherwise indicated below, information based on filings with the SEC and our records regarding the beneficial ownership of our common stock by:
each director and director nominee;
each executive officer named in the Fiscal 2021 Summary Compensation Table under “Compensation of Executive Officers”;
all of our executive officers and directors as a group; and
each person known by us to own beneficially more than 5% of the outstanding shares of either class of our common stock.
We are authorized under our certificate of incorporation to issue shares of the following classes of common stock:
2,500,000,000 shares of Class A common stock, of which 13,549,707 shares were issued and outstanding as of April 26, 2021; and
500,000,000 shares of Class B common stock, of which 70,000,000 shares were issued and outstanding as of April 26, 2021.
The Class A common stock is registered under the Exchange Act and listed on the Nasdaq Global Select Market. The Class B common stock is not registered under the Exchange Act or listed on any securities exchange.
The calculation of beneficial ownership is made in accordance with SEC rules. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. Beneficial ownership as of any date includes any shares as to which a person has the right to acquire voting or investment power as of that date or within 60 days thereafter through the exercise of any stock option or other right or the vesting of any RSU, without regard to whether such right expires before the end of such 60-day period or continues thereafter. Under our certificate of incorporation, a holder of the Class B common stock has the right at any time to convert all or any shares of such Class B common stock into Class A common stock on a share-for-share basis. If two or more persons share voting power or investment power with respect to specific securities, all of such persons may be deemed to be beneficial owners of such securities.
The percentage of beneficial ownership as to any person as of April 26, 2021 (except as otherwise indicated below) is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after April 26, 2021, by the sum of the number of shares outstanding as of April 26, 2021 plus the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after April 26, 2021. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, Secureworks believes that the beneficial owners of the common stock listed below, based on information furnished by such beneficial owners, have sole voting and investment power with respect to the shares shown.
Name of Beneficial Owner
Number of Shares
of Class A
Beneficially
Owned(1)
Percentage of
Shares of
Class A
Beneficially
Owned(1)
Number of
Shares of
Class B
Beneficially
Owned(1)
Percentage of
Shares of
Class B
Beneficially
Owned(1)
Percentage of
Total
Voting
Power(1)
Principal Stockholders:
 
 
 
 
 
Michael S. Dell(2)
70,000,000
83.8%
70,000,000
100%
98.1%
Dell Technologies Inc.(3)
70,000,000
83.8%
70,000,000
100%
98.1%
Dell Marketing L.P.(3)
70,000,000
83.8%
70,000,000
100%
98.1%
Centerview Entities(4)
1,741,070
12.8%
*
ETF Managers Group LLC(5)
1,386,211
10.2%
*
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Name of Beneficial Owner
Number of Shares
of Class A
Beneficially
Owned(1)
Percentage of
Shares of
Class A
Beneficially
Owned(1)
Number of
Shares of
Class B
Beneficially
Owned(1)
Percentage of
Shares of
Class B
Beneficially
Owned(1)
Percentage of
Total
Voting
Power(1)
Neil Gagnon(6)
1,054,465
7.8%
*
Royce & Associates, LP(7)
921,432
6.8%
*
BlackRock, Inc.(8)
722,532
5.3%
*
The Vanguard Group(9)
625,750
4.6%
*
Executive Officers and Directors:
 
 
 
 
 
Michael R. Cote(10)
2,473,056
17.1%
*
Pamela Daley(11)
209,234
1.5%
*
Michael S. Dell(2)
70,000,000
83.8%
70,000,000
100%
98.1%
Mark J. Hawkins(12)
164,591
1.2%
*
Paul M. Parrish
72,767
*
*
Wendy Thomas(13)
178,024
1.3%
*
Kyle Paster
Yagyensh C. (Buno) Pati(14)
117,263
*
*
All executive officers and directors as a group (8 persons)(15)
73,214,935
86.5%
70,000,000
100%
98.4%
*
Less than 1%.
(1)
Represents the percentage of Class A common stock and Class B common stock beneficially owned by each stockholder included in the table based on the number of shares of each such class outstanding as of April 26, 2021 and, except as stated below, without giving effect to the conversion of any shares of Class B common stock into shares of Class A common stock, as described in the introduction to this table.
(2)
Represents shares of Class B common stock held directly by Dell Marketing L.P. Mr. Dell is the Chairman of the Board and Chief Executive Officer of Dell Technologies and, as of April 26, 2021, was the beneficial owner of Dell Technologies common stock representing a majority of the total voting power of the outstanding shares of all outstanding classes of common stock of Dell Technologies. As a result of the foregoing, Mr. Dell may be deemed to be the beneficial owner of all of the shares of our common stock beneficially owned by Dell Technologies. Shares of Class A common stock shown as beneficially owned by Mr. Dell are issuable upon conversion of the same number of shares of Class B common stock deemed to be beneficially owned by Mr. Dell. Mr. Dell’s address is c/o Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682.
(3)
Dell Marketing L.P. is the direct owner and holder of record of all of our outstanding Class B common stock. Dell Marketing L.P. is indirectly wholly owned by Dell Technologies through directly and indirectly held wholly-owned subsidiaries of Dell Technologies, consisting of Denali Intermediate Inc., Dell Inc., Dell International L.L.C. and Dell Marketing Corp. Dell Marketing Corp. directly owns all of the outstanding membership interests of each of Dell Marketing GP L.L.C. and Dell Marketing LP L.L.C. Dell Marketing GP L.L.C. is the sole general partner of, and owns a 1% general partnership interest in, Dell Marketing L.P. Dell Marketing LP L.L.C. is the sole limited partner of, and owns a 99% limited partnership interest in, Dell Marketing L.P. The shares of our common stock beneficially owned by Dell Technologies and directly owned and held of record by Dell Marketing L.P. may be deemed to be beneficially owned by each other direct or indirect wholly-owned subsidiary of Dell Technologies described above in addition to Dell Marketing L.P. Shares of Class A common stock shown as beneficially owned by Dell Technologies and Dell Marketing L.P. are issuable upon conversion of the same number of shares of Class B common stock beneficially owned by such stockholders. The address of each of the foregoing entities is One Dell Way, Round Rock, Texas 78682.
(4)
The information concerning the Centerview Entities is based on a Schedule 13G filed with the SEC on February 13, 2017. The shares of Class A common stock shown as beneficially owned by the Centerview Entities are beneficially owned by Centerview Capital Technology Fund (Delaware), L.P., or CCTF, Centerview Capital Technology Fund-A (Delaware), L.P., or CCTFA, Centerview Capital Technology Employee Fund, L.P., or CCTE, and together with CCTF and CCTFA, referred to as the CCT Funds, Centerview Capital Technology Fund GP (Delaware), L.P., or CCTF GP, and Centerview Capital Technology Ltd., or CCT, referred to collectively as the Centerview Entities. The Centerview Entities are investment funds associated with Centerview Capital Technology, a private investment firm of which Mr. Pati serves as
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a partner. CCTF reports that, as of December 31, 2016, it had shared voting power and shared dispositive power over 1,216,481 shares of Class A common stock. CCTFA reports that, as of December 31, 2016, it had shared voting power and shared dispositive power over 437,536 shares of Class A common stock. CCTE reports that, as of December 31, 2016, it had shared voting power and shared dispositive power over 87,053 shares of Class A common stock. Each of CCTF GP and CCT reports that, as of December 31, 2016, it had shared voting power and shared dispositive power over 1,741,070 shares of Class A common stock. The Centerview Entities report that CCTF GP, in its capacity as the general partner of the CCT Funds, has the ability to direct the decisions regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCTF GP may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The Centerview Entities further report that CCT, in its capacity as the general partner of CCTF GP, has the power to direct the decisions of CCTF GP regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCT may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The Centerview Entities also report that CCT must consult with and obtain the consent of the investment committee for the CCT Funds (composed of David Dorman, David Handler, Edwin B. Hooper III, Yagyensh C. (Buno) Pati, Robert Pruzan and David St. Jean) with respect to all matters and decisions related to the investments of the CCT Funds. The address of each of the Centerview Entities is 600 Ramona Street, 2nd Floor, Palo Alto, California 94301.
(5)
The beneficial ownership information concerning ETF Managers Group LLC, or ETF Managers Group, is based on a Schedule 13G/A filed with the SEC on April 9, 2021. ETF Managers Group reports that, as of April 6, 2021, it had sole voting power and sole dispositive power over all of the 1,386,211 shares of Class A common stock shown as beneficially owned. ETF Managers Group also reports that the ETFMG Cyber Security ETF, a series of the ETF Managers Trust, which is managed on a discretionary basis by ETF Managers Group, has the right or power to direct the receipt of dividends on, or the proceeds from the sale of, the shares shown. The address of ETF Managers Group is 30 Maple Street, Suite 2, Summit, New Jersey 07091.
(6)
The beneficial ownership information concerning Neil Gagnon and related entities is based on a Schedule 13G/A filed with the SEC on February 9, 2021. Mr. Gagnon reports that, as of December 31, 2020, of the shares of Class A common stock shown as beneficially owned, he had sole voting power over 109,862 shares, shared voting power over 926,687 shares, sole dispositive power over 109,862 shares and shared dispositive power over 944,603 shares. Mr. Gagnon reports that he is the managing member and principal owner of Gagnon Securities LLC, or Gagnon Securities, which is registered with the SEC as an investment adviser and a registered broker-dealer, in its role as investment manager to customer accounts, foundations, partnerships and trusts (collectively referred to as the accounts), to which it furnishes investment advice. Mr. Gagnon reports that he and Gagnon Securities may be deemed to share voting power with respect to 518,971 shares of Class A common stock held in the accounts and dispositive power with respect to 532,273 shares of Class A common stock held in the accounts. Gagnon Securities and Mr. Gagnon disclaim beneficial ownership of all securities held in the accounts. Mr. Gagnon also reports that he is the Chief Executive Officer of Gagnon Advisors, LLC, or Gagnon Advisors, which is registered with the SEC as an investment adviser. Mr. Gagnon reports that he and Gagnon Advisors, in its role as investment manager to Gagnon Investment Associates, LLC, or GIA, which is a private investment fund, may be deemed to share voting and dispositive power with respect to the 350,335 shares of Class A common stock held by GIA. Gagnon Advisors and Mr. Gagnon disclaim beneficial ownership of all securities held by GIA. The address of Mr. Gagnon is 1370 Avenue of the Americas, 24th Floor, New York, New York 10019.
(7)
The beneficial ownership information concerning Royce & Associates, LP, or Royce & Associates, is based on a Schedule 13G/A filed with the SEC on January 27, 2021. Royce & Associates reports that, as of December 31, 2020, it had sole voting power and sole dispositive power over all of the 921,432 shares of Class A common stock shown as beneficially owned. Royce & Associates reports that the shares shown as beneficially owned by it are beneficially owned by one or more registered investment companies or other managed accounts that are investment management clients of Royce & Associates, which is an indirect majority-owned subsidiary of Franklin Resources, Inc. Royce & Associates disclaims beneficial ownership of all of the securities reported in the Schedule 13G/A. The address of Royce & Associates is 745 Fifth Avenue, New York, New York 10151.
(8)
The beneficial ownership information concerning BlackRock, Inc., or BlackRock, is based on a Schedule 13G/A filed with the SEC on February 1, 2021. BlackRock reports that, as of December 31, 2020, of the shares of Class A common stock shown as beneficially owned, it had sole voting power over 691,604 shares
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and sole dispositive power over 722,532 shares. BlackRock reports that it is the parent holding company of subsidiaries identified in the Schedule 13G/A that hold shares of the Class A common stock reported in the Schedule 13G/A. The address of BlackRock is 55 East 52nd Street, New York, New York 10055.
(9)
The beneficial ownership information concerning The Vanguard Group is based on a Schedule 13G/A filed with the SEC on February 10, 2021. The Vanguard Group reports that, as of December 31, 2020, of the shares of Class A common stock shown as beneficially owned, it had shared voting power over 7,504 shares, sole dispositive power over 615,086 shares and shared dispositive power over 10,664 shares. The Vanguard Group reports that it is the parent holding company of subsidiaries identified in the Schedule 13G/A that hold shares of the Class A common stock reported in the Schedule 13G/A. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(10)
The shares of Class A common stock shown as beneficially owned by Mr. Cote include 889,183 shares of Class A common stock that Mr. Cote either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021 and 840,126 restricted shares of Class A common stock which are subject to vesting. Mr. Cote’s address is c/o SecureWorks Corp., One Concourse Parkway NE Suite 500, Atlanta, Georgia 30328.
(11)
The shares of Class A common stock shown as beneficially owned by Ms. Daley include 48,143 shares of Class A common stock that Ms. Daley either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021 and 15,100 shares of Class A common stock issuable pursuant to RSUs vesting as of or within 60 days after April 26, 2021. Ms. Daley shares with her spouse voting power and investment power over the shares of Class A common stock shown as beneficially owned by Ms. Daley.
(12)
The shares of Class A common stock shown as beneficially owned by Mr. Hawkins include 48,143 shares of Class A common stock that Mr. Hawkins either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021 and 15,100 shares of Class A common stock issuable pursuant to RSUs vesting as of or within 60 days after April 26, 2021.
(13)
The shares of Class A common stock shown as beneficially owned by Ms. Thomas include 55,030 shares of Class A common stock that Ms. Thomas either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021.
(14)
The shares of Class A common stock shown as beneficially owned by Mr. Pati include 49,916 shares of Class A common stock that Mr. Pati either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021 and 15,100 shares of Class A common stock issuable pursuant to RSUs vesting as of or within 60 days after April 26, 2021.
(15)
The shares shown as beneficially owned by all executive officers and directors as a group include 1,090,415 shares of Class A common stock that executive officers and directors either may acquire upon the exercise of vested stock options or will be able to acquire upon the exercise of stock options vesting as of or within 60 days after April 26, 2021, 840,126 restricted shares of Class A common stock beneficially owned by executive officers which are subject to vesting, 45,300 shares of Class A common stock issuable pursuant to RSUs vesting as of or within 60 days after April 26, 2021 and all of the shares of our outstanding common stock beneficially owned by Mr. Dell. Excluding the shares of our common stock beneficially owned by Mr. Dell, the percentage of shares of Class A common stock beneficially owned by all executive officers and directors as a group is 21.9%, and the percentage of the combined voting power of both classes of our outstanding common stock represented by the shares of Class A common stock beneficially owned by all executive officers and directors as a group is less than 1.0%.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in its oversight of the financial reporting process of SecureWorks Corp. (the “Company”). The Audit Committee’s responsibilities are more fully described in its charter, which is accessible on the Company’s website at investors.secureworks.com in the Governance section under Documents & Charters.
Management has the primary responsibility for the preparation and integrity of the Company’s financial statements, accounting and financial reporting principles and internal controls and procedures. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion thereon.
The Audit Committee reports that it has:
reviewed and discussed with the Company’s management the audited consolidated financial statements for the fiscal year ended January 29, 2021;
discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC;
received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence from the Company; and
based on the review and discussions referred to herein, recommended to the Board of Directors, and the Board of Directors has approved, that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2021 for filing with the Securities and Exchange Commission.
 
AUDIT COMMITTEE
 
 
 
Mark J. Hawkins, Chair
 
Pamela Daley
 
Yagyensh C. (Buno) Pati
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ADDITIONAL INFORMATION
Director Nomination Process
Director Qualifications – The Board of Directors has adopted guidelines for qualifications of director candidates, which are described above under “Proposal 1 – Election of Directors – Director Qualifications and Information.” In addition, all candidates must possess the aptitude or experience to understand fully the legal responsibilities of a director and the governance processes of a public company, as well as the personal qualities to be able to make a substantial active contribution to Board deliberations. Further, each candidate must be willing to commit sufficient time to discharge the duties of Board membership and should have sufficient years available for service to make a significant contribution to Secureworks over time.
Selection and Nomination Process – Whenever a vacancy occurs on the Board of Directors (either because of a newly created director position or a serving director’s death, resignation, retirement, disqualification or removal), and the Board of Directors does not eliminate the vacancy by reducing the size of the Board, the vacancy may be filled by the affirmative vote of the remaining directors then in office. The new director will serve as a director until the annual meeting of stockholders at which the director’s term expires and until the director’s successor is duly elected and qualified or until the director’s earlier death, resignation, retirement, disqualification or removal. The Nominating and Governance Committee will be responsible for identifying one or more candidates to fill the vacancy, evaluating the candidate’s suitability for service on the Board, and, if the candidate is considered suitable, recommending the candidate to the full Board of Directors for appointment. In addition, the Nominating and Governance Committee is responsible for recommending nominees for election or re-election to the Board at each annual meeting of stockholders.
The Nominating and Governance Committee may use any methods it deems appropriate to identify candidates for Board membership, including recommendations from current Board members and recommendations from stockholders. The committee also may engage outside search firms to identify suitable candidates
The Nominating and Governance Committee may engage in whatever investigation and evaluation processes it deems appropriate, including, in addition to a review of a candidate’s background, characteristics, qualities and qualifications, personal interviews with the candidate.
In formulating its recommendation of a candidate to the Board of Directors, the Nominating and Governance Committee will consider not only the findings and conclusions of its investigation and evaluation process, but also the current composition of the Board, the attributes and qualifications of serving Board members, additional attributes, capabilities or qualifications that should be represented on the Board of Directors, and whether the candidate could provide those additional attributes, capabilities or qualifications. The committee will not recommend any candidate unless that candidate has indicated a willingness to serve as a director and has agreed to comply, if elected, with the expectations and requirements of Board service.
Stockholder Recommendations to the Nominating and Governance Committee – Stockholders of Secureworks may recommend individuals to the Board of Directors for consideration as director candidates by submitting candidates’ names and appropriate background and biographical information to the Nominating and Governance Committee, c/o Board Liaison, SecureWorks Corp., One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328. If the appropriate information is provided in a timely manner, the Nominating and Governance Committee, in accordance with the policy set forth in our Corporate Governance Principles, generally will consider these candidates in substantially the same manner as it considers other Board candidates.
Stockholder Nominations – Stockholders who wish to nominate an individual for election as a director, rather than re