SecureWorks Corp.
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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 all boxes that apply):

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT
May 15, 2024
To My Fellow Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to SecureWorks Corp.’s 2024 Annual Meeting of Stockholders. The meeting will be held virtually on Tuesday, June 25, 2024, at 11:00 a.m., Eastern Time. The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2024, where you may listen to the meeting live, submit questions, and vote online.
Within the accompanying Notice of Annual Meeting to Stockholders and the proxy statement, you will find information regarding the matters to be voted on at the annual meeting. 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 February 2, 2024, 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 proxy statement or in 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 this proxy statement. Submitting your proxy or voting instructions by any of these methods will not impact 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 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, please contact your nominee for additional information.
Sincerely,
Michael S. Dell
Chairman of the Board of Directors
SecureWorks Corp.

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of SecureWorks Corp.:
NOTICE IS HEREBY GIVEN that the 2024 Annual Meeting of Stockholders of SecureWorks Corp., or Secureworks, will be held virtually on Tuesday, June 25, 2024, at 11:00 a.m., Eastern Time. The annual meeting will be accessible by visiting www.virtualshareholdermeeting.com/SCWX2024, 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 2027 Annual Meeting of Stockholders and until such director’s successor is duly elected and qualified
2.
To ratify the appointment of PricewaterhouseCoopers LLP as Secureworks’s independent registered public accounting firm for the fiscal year ending January 31, 2025
3.
To approve, on a non-binding, advisory basis, the compensation of the named executive officers of Secureworks as disclosed in the accompanying proxy statement
4.
To approve an amendment to increase the number of shares of Class A common stock issuable under the SecureWorks Corp. 2016 Long-Term Incentive Plan
Stockholders also will consider and act upon any other business that may properly come before the annual meeting or any adjournment or postponement thereof.
The holders of record of the outstanding Class A common stock and Class B common stock of Secureworks as of the close of business on April 29, 2024, 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 25, 2024. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on June 25, 2024. A complete list of stockholders entitled to vote at the meeting will be available during ordinary business hours at our headquarters, located at One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328, for examination by any stockholder for at least ten days before the meeting. The list also will be available to stockholders during the annual meeting at the website listed above using the 16-digit control number shown 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, our 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 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’s annual report on Form 10-K for the fiscal year ended February 2, 2024, which is our annual report to stockholders for our fiscal year 2024.
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, please contact your nominee for additional information.
By Order of the Board of Directors
George B. Hanna
Corporate Secretary
SecureWorks Corp.
May 15, 2024

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YOUR VOTE IS IMPORTANT
  Whether or not you plan to attend Secureworks’s 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), Proposal 3 (advisory vote to approve named executive officer compensation as disclosed in the accompanying proxy statement) or Proposal 4 (approval of the 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. 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 74 of the accompanying proxy statement.
 

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2024 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
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SECUREWORKS CORP.
PROXY STATEMENT
SUMMARY INFORMATION
This summary highlights information contained elsewhere in this proxy statement. For more details, we encourage you to review the entire proxy statement and the annual report of Secureworks on Form 10-K for the fiscal year ended February 2, 2024. In this section, fiscal year ending January 31, 2025, fiscal year ended February 2, 2024, and fiscal year ended February 3, 2023 shall be referred to as Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively.
The Notice of Internet Availability of Proxy Materials is first being distributed to stockholders on or about May 15, 2024. On or about May 15, 2024, 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:
Tuesday, June 25, 2024
Time:
11:00 a.m., Eastern Time
Record Date:
April 29, 2024
Webcast:
The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2024, 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 the most convenient, environmentally friendly, and cost-effective way to submit your vote.
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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 31, 2025
FOR
 
 
 
Non-binding, advisory vote to approve named executive officer compensation as disclosed in this proxy statement, or Say-on-Pay
FOR
 
 
 
Vote to approve the 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 together as a single class on these proposals and any other business that is properly brought 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” the election of each of the director nominees listed below to serve as Class II directors, as described under “Proposal 1—Election of Directors” beginning on page 5. Each nominee will be elected to serve for a three-year term expiring at the 2027 Annual Meeting of Stockholders and 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 Name and
Principal Occupation
Age
Director
Since
Director
Class
Independent
Current Committee
Membership
Pamela Daley
Retired
71
2016
II
Audit Committee
Nominating and Governance
Committee (Chair)
Kyle Paster
Managing Director of Silver Lake
37
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 31, 2025, or Fiscal 2025. All PwC fees incurred in connection with professional services rendered to Secureworks during fiscal year ended February 2, 2024, or Fiscal 2024, and fiscal year ended February 3, 2023, or Fiscal 2023, are summarized under “Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm” on page 23.
Say-on-Pay (Proposal 3)
The Board of Directors is asking you to vote, on a non-binding, advisory basis, “FOR” the approval of the compensation of our named executive officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosures beginning on page 38. The Compensation Committee and the Board of Directors value the views of our stockholders and will carefully review the results of the advisory vote when considering future executive compensation matters.
Share Increase Amendment Under the SecureWorks Corp. 2016 Long-Term Incentive Plan (Proposal 4)
The Board of Directors is asking you to vote “FOR” the 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 4—Approval of Share Increase Amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan” beginning on page 25.
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Stockholder Proposals for 2025 Annual Meeting of Stockholders
Deadline for stockholder proposals to be included in our 2025 proxy statement: January 15, 2025
Deadline for proposed business and nominations for a director that will not be included in our 2025 proxy statement: February 25, 2025 – March 27, 2025
Deadline for notice under the SEC’s universal proxy rules for solicitation of proxies in connection with our 2025 annual meeting in support of director nominees other than the Company’s nominees: April 26, 2025
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to Be Held on Tuesday, June 25, 2024:

The accompanying notice of the 2024 Annual Meeting of Stockholders, proxy
statement, form of proxy card, and Secureworks annual report on Form 10-K for
the fiscal year ended February 2, 2024 are available electronically on our website
at investors.secureworks.com and at www.proxyvote.com.
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CORPORATE RESPONSIBILITY
We strive to create a positive and lasting impact in our communities and within our society at large by advancing sustainability, cultivating and advancing inclusion and community involvement, and maintaining a strong commitment to ethical governance practices.
Advancing Sustainability – We acknowledge our responsibility to contribute to the health and prosperity of our teammates, our society and local communities, and our customers and partners. We reduced our carbon footprint by migrating our workloads to more efficient and sustainable public cloud environments and evolving our business solutions through Software-as-a-Service, or SaaS, delivery. After completing the migration to our public cloud model, we engaged in optimization activities for the cloud environments we deploy to ensure our usage is both efficient and effective. We also utilize a remote-friendly work environment, which allows us to further reduce our carbon footprint and gives our global teammates more flexibility and a better work-life balance. We have taken, and plan to continue taking, steps to reduce our facility footprint to further minimize our energy usage.
Upholding Ethics – We believe that ethics and integrity are foundational for us to continue having a positive social impact. We maintain internal company policies that reflect our commitment to acting with high ethics and integrity in our operations and in every business relationship we make. We endeavor to embed ethical practices into all we do and to take responsibility for our actions, while continuing to enhance our governance practices whenever possible.
Cultivating Inclusion – We strive for our culture to be grounded in honesty and respect, which allows us to learn from one another and permits teammates to be their true selves. We are committed to ensuring a respectful and inclusive work environment for our teammates. We encourage teammates to participate in a variety of employee resource groups, which help foster inclusion by facilitating dialogue and creating opportunities to learn and engage with those who can provide unique insights, experiences, and perspectives. We are an equal opportunity employer fully committed to supporting our culturally diverse workplace at all levels. As we continue to evolve our company and fortify our technology, we remain committed to furthering our inclusive employment policies that support diverse teammates, which we believe will foster creativity, increase collaboration, and enhance innovation.
Community Involvement – We aim to give back to the communities where we live and work, and we believe that such actions assist us with attracting and retaining teammates. We partner with a variety of universities and inclusion-focused programs in the United States and internationally to promote STEM education for all. When humanitarian crises or other natural disasters have occurred, we have supplemented donations made by our teammates to support affected communities. Beyond financial contributions, we encourage teammates to participate in local events and provide volunteer services. We believe that our contributions make a meaningful difference in our communities throughout the year.
Governance – In furtherance of our commitment to govern with integrity, equity, and honesty, we have established standards and practices that apply to our Board, executives, and teammates alike. The Board is tasked with overseeing the establishment and maintenance of our governance, compliance, and risk oversight processes and procedures to ensure we conduct our business with the highest standards of responsibility, ethics, and integrity. To promote excellence powered by integrity and ethical and responsible actions, each of the Board’s Audit Committee, Compensation Committee, and Nominating and Governance Committee support the oversight, development, implementation, and performance of our policies and management systems to achieve compliance with applicable laws, promote best practices, and accurately assess the Company’s performance against its objectives.
Additional information about our commitment to corporate responsibility may be found in our annual report on Form 10-K for Fiscal 2024.
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PROPOSAL 1—ELECTION OF DIRECTORS
In Proposal 1, our stockholders are being asked to vote for the election of the two nominees to the Board of Directors, or the Board. Upon the recommendation of our Nominating and Governance Committee, consisting exclusively of independent directors, the Board has nominated Pamela Daley and Kyle Paster for election to the Board as Class II directors at this annual meeting. Each nominee is currently serving as a Class II director. Each director to be elected at this annual meeting will serve a three-year term until the 2027 Annual Meeting of Stockholders and until their successors are elected and qualified.
Director Classes
As of the date of this proxy statement, our Board is composed of seven members. Our certificate of incorporation provides that the number of directors will be fixed by resolution of the Board; however, the Board may not have fewer than three directors and no more than 15 directors.
The Board of Directors is divided into the following three classes that serve staggered three-year terms:
The term for each of the Class I directors will expire at the 2026 Annual Meeting of Stockholders. The Class I directors currently serving on the Board consist of Yagyensh (Buno) C. Pati and Wendy K. Thomas.
The term for each of the Class II directors will expire at this 2024 Annual Meeting of Stockholders. The Class II directors currently serving on the Board are Pamela Daley and Kyle Paster.
The term for each of the Class III directors will expire at the 2025 Annual Meeting of Stockholders. The Class II directors currently serving on the Board are Michael S. Dell, Mark J. Hawkins, and William (Bill) H. Cary.
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 a director’s prior death, resignation, retirement, disqualification, or removal from office. The number of directors in each class may only be changed by resolution adopted by the affirmative vote of a majority of the authorized number of directors. Any additional directorships resulting from an increase to the number of directors are required to be distributed among the three classes to ensure 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 serving as a nominee, being named in this proxy statement and, if elected, serving on the Board. 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, unless the Board of Directors chooses to leave the resulting vacancy unfilled or reduce the number of directors on the Board in accordance with our certificate of incorporation.
Please see the section entitled “—Directors Standing for Election” beginning on page 8 for additional information on the director nominees. The Board’s recommendation of each of its director nominees is based on its carefully considered judgment that the qualifications and experiences of each nominee, particularly in areas relevant to the Company’s strategy and operations, make each nominee suitable to serve on the Board.
The Board of Directors unanimously recommends a vote “FOR” each of the Board’s nominees to serve as Class II directors.
Director Qualifications and Information
Director Qualifications – As established in our Corporate Governance Principles, the Board of Directors believes that each Board member should have demonstrated notable or significant achievements in business, education, or public service; should have the requisite intelligence, education, experience, and judgment to make a significant contribution to the Board by bringing a variety of skills and diverse perspectives and backgrounds to the Board’s deliberations; and should possess the highest standards of ethics and integrity, a strong sense of professionalism, and an intense dedication to serving the interests of our stockholders.
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The following are qualifications, experiences, and skills we expect from Board members, which are important to our business and our future:
Leadership Experience – We seek directors who demonstrate extraordinary leadership qualities. Strong leadership from directors brings vision, strategic agility, diverse and global perspectives, and broad business insight to our Company. They demonstrate practical management experience, skills for managing change, deep knowledge of industries and geographies, and risk management strategies relevant to the Company. We believe that directors with these capabilities will be able to identify and develop our current and future leaders.
Industry Experience – Given the nature of the cybersecurity industry, we desire directors who have relevant industry experience. We value experience in our high-priority areas, including (1) new or expanding cybersecurity solutions and other offerings, customer segments or geographies, organic and inorganic growth strategies, and existing and new technologies; (2) deep or unique understanding of our business environments; and (3) experience with, exposure to, or reputation among, a broad subset of our customer base.
Financial Experience – We believe that all directors must possess an understanding of finance and related corporate reporting processes. To that end, we seek independent directors who may qualify as an “audit committee financial expert,” as defined by the SEC in Regulation S-K, for service on the Board’s Audit Committee.
International Experience – As a global provider of cybersecurity solutions with teammates based worldwide, we seek directors who possess a global mindset and have experience in emerging markets to navigate growth opportunities. We seek directors with international operational experience to understand the competitive landscape so we can achieve our strategic objectives and successfully operate our business.
Diversity of Background – Our Board’s current strength stems from its collegiality and from the diverse perspectives and experiences held by our Board members, which stimulates discussions and nurtures creative and effective strategic decision-making. While the Board has not established any formal diversity policy for identifying director nominees, the Nominating and Governance Committee considers a broad range of factors, including a candidate’s gender, age, race, and ethnicity, when assessing a candidate’s background and experience. In compliance with board diversity rules applicable to companies listed on the Nasdaq Global Select Market of the Nasdaq Stock Market, or Nasdaq, we have obtained self-identifying information from our Board of Directors and have determined that three of our seven directors qualify as “Diverse” under the rule, as discussed below under “—Board Diversity Matrix.”
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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, which enables the Nominating and Governance Committee to determine areas of expertise and experience that may benefit the Board in the future and identify gaps that may arise as directors retire. The matrix below shows how the current directors (including the nominees for election at this annual meeting) contribute their various skills, experiences, and perspectives that the Board and the Nominating and Governance Committee consider important. The matrix is intended to depict notable areas of focus for each director; however, not having a mark does not mean that a particular director or director nominee does not possess that qualification or skill. This matrix is based on voluntary self-identification by each director, including the nominees for election at this annual meeting, except that the Board has determined which directors qualify as “audit committee financial experts.” Additional biographical information on each director and director nominee may be found beginning on page 8.
 
Leadership
Financial
International
Name
Security
Industry
Experience
Chief
Executive
Officer
Experience
Financial
Literacy
Audit
Committee
Financial
Expert
Chief
Financial
Officer
Experience
Global
Mindset,
Emerging
Markets,
Operational
Experience
Pamela Daley
 
 
 
Michael S. Dell
 
 
Kyle Paster
 
 
 
 
Mark J. Hawkins
 
 
Yagyensh (Buno) C. Pati
 
 
Wendy K. Thomas
 
William (Bill) H. Cary
 
 
Board Diversity Matrix – To qualify as “Diverse” under the Nasdaq board diversity rule, a director must self-identify as “Female,” as an “Underrepresented Minority,” or as “LGBTQ+,” as those terms are defined in the rule. The Board Diversity Matrix below shows the voluntary, self-identifying characteristics provided by members of the Board and for the director nominees as of April 29, 2024. The proxy statement for fiscal year ended February 3, 2023 shows the voluntary, self-identifying characteristics provided by individuals then serving as members of the Board of Directors and for the individuals nominated for election at the 2023 Annual Meeting of Stockholders, which occurred on June 27, 2023.
Board Diversity Matrix (As of April 29, 2024)
 
Female
Male
 
Non-Binary
Did Not
Disclose
Gender
Total Number of Directors
7
Part 1: Gender Identity
 
 
 
 
 
Directors
2
5
 
Part II: Demographic Background
 
 
 
 
 
African American or Black
 
Alaskan Native or Native American
 
Asian
1
 
Hispanic or Latinx
 
Native Hawaiian or Pacific Islander
 
White
2
4
 
Two or More Races or Ethnicities
 
LGBTQ+
 
 
Did Not Disclose Demographic Background
 
 
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Below is the biographical information, as of April 29, 2024, for the individuals nominated by the Board for election at this annual meeting and for each of the continuing directors, including the qualifications, experiences, and skills the Board considered to determine that each such person should serve as a director.
Directors Standing for Election

  
Pamela Daley
Class II Director
Term Expires: 2024 Annual Meeting
Age: 71
Director since April 2016
Committee Service:
 •  Audit
 •  Nominating and Governance (Chair)
Before her retirement on January 1, 2014 from 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, one of the five integrated supermajors in oil and gas and energy. She was a director of BG Group plc, an international gas and oil company traded on the London Stock Exchange, until BG Group plc 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 considerations for Board membership.
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Kyle Paster
Class II Director
Term Expires: 2024 Annual Meeting
Age: 37
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 Entrata, Inc., a provider of comprehensive property management software, and Qualtrics, LLC, a provider of experience management software. He served on the board of directors of ServiceMax, Inc., a cloud-based field service management software company, until January 2023.

Director Qualifications

Industry and Finance Experience – Experience in technology and finance
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Continuing Directors


Michael S. Dell
Class III Director
Term Expires: 2025 Annual Meeting
Age: 60
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 Inc., or Dell Technologies. Mr. Dell also 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., now DFO Management, LLC, a private investment firm, 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.

Mr. Dell is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. He is 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 was Chairman of the board of directors of VMware, Inc., a cloud infrastructure and digital workspace technology company that formerly was a public majority-owned subsidiary of Dell Technologies, from September 2016 until it was acquired by Broadcom Inc. in November 2023 and was a director of Pivotal Software, Inc., formerly a public majority-owned subsidiary of Dell Technologies that provided a cloud-native platform, from September 2016 until it was acquired by 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: 2025 Annual Meeting
Age: 65
Director since April 2016
Committee Service:
 •  Audit
 •  Compensation (Chair)
Mr. Hawkins served as President and CFO Emeritus for Salesforce.com, Inc., a provider of enterprise cloud computing solutions, from February 2021 to November 2021. Prior to that, Mr. Hawkins served as President and Chief Financial Officer of Salesforce.com, from August 2017 to January 2021, and as the Chief Financial Officer and Executive Vice President from August 2014 to August 2017.

Prior to his time at Salesforce, Mr. Hawkins served as Chief Financial Officer and Executive Vice President at Autodesk, Inc., a provider of three-dimensional design, engineering, and entertainment software, from April 2009 to July 2014. He served as Chief Financial Officer and Senior Vice President of Finance and Information Technology at Logitech International SA, a global provider of personal computer and tablet accessories, from April 2006 to April 2009 and served as Vice President of Finance at Dell Inc. from January 2000 to March 2006.

Before joining Dell Inc., he spent over 18 years at Hewlett-Packard Company, a global IT company, where he held a variety of finance and business management roles.

Mr. Hawkins currently serves as a member of the board of directors of Workday, Inc., an enterprise cloud applications company, Toast Inc., a cloud-based restaurant software company, and Cloudflare, Inc., a global cloud services provider. In addition, Mr. Hawkins served during 2021 as a director for Fidelity National Information Services, Inc., a provider of technology solutions for merchants, banks, and capital markets firms, before stepping down from the role.

Mr. Hawkins also serves as an Operating Partner for BDT & MSD Partners, LLC, a merchant bank with an advisory and investment platform built to serve the distinct needs of business owners and strategic, long-term investors, and as a Venture Partner of New Enterprise Associates, Inc., a global venture capital firm. Mr. Hawkins is a founding member of the USA Chapter of His Majesty King Charles III's sponsored Accounting for Sustainability CFO Leadership Network and serves as Chair of the A4S Global Advisory Council.

Director Qualifications

Finance Experience – Over 35 years 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, information technology, global operations, and global capital markets

Industry Experience – Extensive experience serving in top positions with leading global software and technology companies
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William (Bill) H. Cary
Class III Director
Term Expires: 2025 Annual Meeting
Age: 65
Director since March 2024
Committee Service:
 •  Audit Committee (Chair)
Mr. Cary served as an executive of General Electric Company, or GE, one of the world’s largest infrastructure and financial services companies. Before his retirement in January 2015, Mr. Cary spent 29 years at GE, holding several leadership positions in consumer and wholesale finance, as well as in areas of finance, risk, and capital markets. His roles included the President and Chief Operating Officer for GE Capital Corp., the financial services unit of GE, from November 2008 until December 2014, and the President and Chief Executive Officer of GE Money (Global), a subsidiary of GE Capital in London, from February 2008 to November 2008. Mr. Cary began his career at Clorox Company.

Mr. Cary currently serves on the board of directors of Ally Financial Inc., the largest all-digital bank in the United States and an industry-leading automative financing and insurance business, and Rush Enterprises, Inc., an international, full-service retailer of commercial vehicles and related services. He is also a member of the board of directors of Lendmark Financial Services, LLC, a privately-held, U.S.-based personal lending company that serves customers who are underserved by traditional banks. Mr. Cary previously served as a director of BRP, Inc. from September 2015 through May 2019.

Director Qualifications

Financial Leadership Experience – Nearly 30 years of experience leading financial and operations organizations at multi-national financial companies, including as President, Chief Operating Officer, and Chief Executive Officer

The Secureworks Board of Directors selected Mr. Cary to serve as a director and as the Audit Committee Chair because of his extensive experience leading financial organizations, as well as his expertise in the areas of leadership development, global operations, risk, and capital markets.
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Yagyensh (Buno) C. Pati
Class I Director
Term Expires: 2026 Annual Meeting
Age: 60
Director since September 2016
Committee Service:
 •  Audit
 •  Compensation
 •  Nominating and Governance
Mr. Pati is currently the Chief Executive Officer of Infoworks.io, an enterprise software company, and has served as its Chairman from its inception in 2014, 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, serving as its Chief Executive Officer and as 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 in the 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 considerations for Board membership.
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Wendy K. Thomas
Class I Director
Term expires: 2026 Annual Meeting
Age: 52
Director since July 2021
Ms. Thomas has served as our Chief Executive Officer since September 2021. Prior to this appointment, Ms. Thomas served in a number of critical positions at Secureworks, including as President and Chief Executive Officer from September 2021 to February 2023, as President, Customer Success from April 2020 to September 2021, as Chief Product Officer from June 2019 to April 2020, as Senior Vice President, Business and Product Strategy, from March 2018 to June 2019, as Vice President, Strategic and Financial Planning, from March 2017 to March 2018, and as Vice President, Financial Planning and Analysis from July 2015 to March 2017 and from June 2008 to June 2011. In addition, Ms. Thomas served as Chief Financial Officer of Bridgevine, Inc. (currently known as Updater Inc.), a marketing software company, from November 2013 to July 2015, and as Vice President, Financial Planning and Analysis, at First Data Corporation (currently known as Fiserv, Inc.), a payment processing and financial services technology company, from July 2011 to October 2013. Earlier in her career, Ms. Thomas held other positions, including multiple finance roles at BellSouth Corporation, a telecommunications company, culminating in the position of Director, Finance.

Ms. Thomas currently serves as a member of the board of directors of IonQ, Inc., a quantum computing company.

Director Qualifications

Leadership Experience – Principal executive officer of Secureworks since 2021

Finance Experience – Experience as former chief financial officer and with strategic acquisitions within the software and technology industries

Industry Experience – Over 25 years of experience in strategic and functional leadership roles across multiple technology-driven companies
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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 ethical standards. The Board maintains the Company’s Corporate Governance Principles to provide a governance framework for the Company. The Corporate Governance Principles reflect a set of core values that serve as the foundation for our governance, our 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 Company’s Class A common stock is listed on the Nasdaq Global Select Market of the Nasdaq Stock Market, or Nasdaq, under the ticker symbol “SCWX.” Accordingly, Secureworks is subject to corporate governance requirements under Nasdaq rules. However, Secureworks is a “controlled company” under Nasdaq corporate governance standards.
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 this 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 the record date, represented approximately 79.2% of our total outstanding shares of common stock and approximately 97.4% of the combined voting power of both classes of our outstanding common stock.
As a result of its “controlled company” status, Secureworks qualifies for an exemption from, and is entitled to elect not to comply with, certain corporate governance requirements under Nasdaq rules, including the requirements that Secureworks (1) has a board of directors that is composed of a majority of “independent directors,” as defined under Nasdaq rules, and (2) maintains a compensation committee and a nominating committee that are each composed solely of independent directors. While Secureworks is a controlled company, we are required to comply with SEC and Nasdaq rules relating to the membership, qualifications, and operations of its Audit Committee, as discussed below. Notwithstanding our eligibility to rely on the controlled company exemption, Secureworks has a majority of independent directors on the Board.
In addition, notwithstanding our eligibility for the exemption from these requirements, our Compensation Committee and our Nominating and Governance Committee are each currently composed exclusively with independent directors. We are not required to maintain compliance with Nasdaq’s composition requirements for these committees, which apply to listed companies that are not controlled companies. We may choose to change our committee composition or make 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 Mr. Cary, Ms. Daley, Mr. Hawkins, and Mr. Pati, constituting four of our seven directors, are independent under Nasdaq rules and the standards for independent directors established in our Corporate Governance Principles, which incorporate the director independence requirements of Nasdaq rules. Nasdaq rules provide that, to determine that a director is independent, the Board must determine that the director has no relationship which, in its 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 Ms. Thomas. The Chairman of the Board presides over Board meetings, while the Chief Executive Officer has managerial responsibility for the business and affairs of the Company. The Board has determined that this separation is appropriate for Secureworks and its stockholders under current circumstances because it allows for the division of responsibilities and sharing of ideas between directors with different perspectives.
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As reflected in our Corporate Governance Principles, the Board has implemented practices to maintain independent oversight of management, including, but not limited to, 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 principally focuses on whether management is performing its responsibilities in a manner consistent with the Board’s direction;
all committee members on the Board’s standing committees are independent directors; and
each Chair for the Board’s standing committees has authority to hold executive sessions without management and non-independent directors present.
Board Committees – The Board maintains three standing committees, each of which is composed solely of independent directors. The Board’s three standing committees are the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee. These committees assist the Board with discharging its oversight and governance responsibilities. The Board has adopted a written charter for each of the committees, and these charters form an integral part of our Corporate Governance Principles.
A copy of each charter can be found on our website at investors.secureworks.com in the Governance under Documents & Charters. In addition to its standing committees, the Board may form additional committees from time to time for specific purposes.
The following table shows, as of April 29, 2024, the members of the Board of Directors and each of the Board’s standing committees on which they serve. The table also identifies the directors determined by the Board to be independent under Nasdaq rules and our Corporate Governance Principles, which incorporate the director independence requirements of Nasdaq rules.
Name
Independent
Audit
Committee
Compensation
Committee
Nominating and
Governance Committee
William (Bill) H. Cary
Chair
 
 
Pamela Daley
 
Chair
Michael S. Dell
 
 
 
 
Kyle Paster
 
 
 
 
Mark J. Hawkins(1)
 
Chair
Yagyensh (Buno) C. Pati
Wendy K. Thomas
 
 
 
 
(1)
Effective September 27, 2023, Mark J. Hawkins became an Adviser to the Board's Audit Committee for a period of one year from the effective date of the Committee Adviser Agreement signed by and between SecureWorks Corp. and Mr. Hawkins (the “Agreement”). The Agreement sets forth the terms of the advisory contract with Mr. Hawkins and expressly states that Mr. Hawkins cannot vote as an Audit Committee member and is not entitled to consent or withhold consent on Audit Committee actions by unanimous written consent. The Agreement shall auto renew in successive one-year terms unless either party provides written notice of non-renewal.
Descriptions of the primary responsibilities of each standing committee are set forth below. Additional information about the responsibilities of each of these committees can be found in each committee’s charter.
Audit Committee
The Audit Committee is composed entirely of independent directors who satisfy Nasdaq’s general rules on independence in addition to specific independence standards for audit committee membership under both Nasdaq rules and Rule 10A-3 of the Securities Exchange Act of 1934, or the Exchange Act. The Board has further determined that each of Mr. Cary, Ms. Daley, and Mr. Pati meets the financial sophistication requirement for audit committee service under Nasdaq rules and that each is an “audit committee financial expert” as defined under applicable 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.
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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 the policies and guidelines that govern the processes through which risk assessment and risk management are taken, which include, but is not limited to, the following risk types: legal, regulatory, enterprise, and vendor;
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, including any analysis prepared by management and/or the independent audit firm to address any significant issues;
reviewing with our management the scope and results of management’s evaluation of our disclosure controls and procedures in addition to 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;
reviewing and assessing the Company’s major information technology, security and related risk exposures, the manner in which those risks are being controlled, and management’s processes and procedures to ensure compliance with the SEC’s cybersecurity disclosure rules;
establishing adequate procedures for the confidential or 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 (1) appoints, retains, oversees, and approves the compensation of the Company’s independent registered public accounting firm, and (2) pre-approves all audit and permissible non-audit services to be performed by that firm, which must 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 the partner responsible for reviewing the audit, the Audit Committee and its Chair oversee the selection and evaluation of the independent registered public accounting firm’s lead engagement partner.
Compensation Committee
We are not required to maintain a compensation committee composed solely of independent directors due to our status as a controlled company under Nasdaq rules; however, the Board has determined that each member of our Compensation Committee is independent in accordance with the independence standards under applicable Nasdaq rules and pursuant to the SEC’s independence standards applicable to compensation committee members.
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 to 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;
reviewing and (except in the case of our Chief Executive Officer) 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;
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administering the Company’s recoupment policy applicable to certain performance-based incentive awards, or any successor recoupment or “clawback” policy adopted by the Company in accordance with applicable laws, rules, or regulations; and
monitoring summary data concerning teammates of the Company and its subsidiaries and overseeing the Company’s policies and practices with respect to human capital management and diversity, equity, and inclusion.
Where legally permissible, the Compensation Committee may delegate authority to undertake any of its responsibilities to a subcommittee consisting of one or more of its members; however, the Compensation Committee did not delegate such authority in Fiscal 2024.
The Compensation Committee also may delegate certain portions of its authority to make awards under the SecureWorks Corp. 2016 Long-Term Incentive Plan to the Chief Executive Officer or any other officer of the Company as permitted by applicable law. However, applicable law provides that, among other matters, 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 delegated authority to the Chief Executive Officer to extend offers of equity-based awards under the SecureWorks Corp. 2016 Long-Term Incentive Plan to individuals who are not executive officers or senior vice presidents who report to the Chief Executive Officer, up to a specified number of shares annually. Such awards only become effective upon subsequent approval by the Compensation Committee. In addition, the Compensation Committee has authorized the Chief Executive Officer to further delegate any or all of the authority to make offers of equity-based awards as described above to the Company’s Chief Legal and Administrative Officer, subject to compliance by the Chief Legal and Administrative Officer with the Compensation Committee’s established requirements.
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 certain management-level teammates, except with respect to determinations regarding our executive officers or senior vice presidents who report to the Chief Executive Officer. Determinations under the Incentive Bonus Plan regarding our Chief Executive Officer are made by the Board upon the recommendation of the Compensation Committee. Decisions under the Incentive Bonus Plan regarding our other executive officers and other senior vice presidents who report to the Chief Executive Officer are made by the Compensation Committee. For Fiscal 2024 Incentive Bonus Plan determinations relating to other eligible employees, the Compensation Committee delegated certain aspects of its authority to our Chief Executive Officer and our Chief Legal and Administrative Officer. Additional information about the Incentive Bonus Plan and the SecureWorks Corp. 2016 Long-Term Incentive Plan can be found at “Compensation Discussion and Analysis — Individual Compensation Components — Annual Bonus Plan — Amended and Restated Incentive Bonus Plan” and “Compensation of Executive Officers — Equity Incentives.”
In Fiscal 2024, the Compensation Committee engaged Frederic W. Cook & Co., Inc., or FW Cook, an independent consultant, to perform services for the Compensation Committee, which included advising on the amount and form of director and executive compensation and providing market and peer company compensation data and analysis. FW Cook was directly engaged by the Compensation Committee and does not provide these or other services to our management team or to the Company.
Total compensation opportunities for our executive officers (except for total compensation opportunities for our Chief Executive Officer) and other senior vice presidents who report directly to the Chief Executive Officer are determined by the Compensation Committee upon recommendations provided by our Chief Executive Officer. The Board determines the total compensation opportunities for our Chief Executive Officer upon the recommendation of the Compensation Committee. The Compensation Committee considers the Chief Executive Officer’s recommendations regarding (1) individual performance of such individuals to determine the 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 each program.
Nominating and Governance Committee
Under Nasdaq rules applicable to controlled companies, we are not required to maintain a nominating committee composed solely of independent directors; however, the Board has determined that each member of our Nominating and Governance Committee is independent in accordance with independence standards under applicable Nasdaq rules.
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The Nominating and Governance Committee’s primary responsibilities include, among other matters:
identifying and evaluating potential candidates to be considered by the Board for appointment or election, including consideration and inclusion of diverse candidates;
making recommendations to the Board regarding the selection and approval 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 potential conflicts of interest that may affect these directors;
reviewing the Board’s committee structure and composition and annually recommending such structure and composition of the Board’s standing committees for Board approval;
reviewing our Corporate Governance Principles at least annually and recommending any changes to the Board;
reviewing, overseeing, approving, ratifying, or disapproving any related person transactions in accordance with the Company’s applicable policy;
periodically reviewing and approving changes to our Code of Conduct and other corporate policies, including, but not limited to, legal and regulatory compliance, conflicts of interest, and ethical conduct; and
overseeing management’s development and implementation of policies and systems relating to environmental, social and governance issues to ensure compliance with applicable law and best practices.
The Nominating and Governance Committee’s policies and processes for identifying, evaluating, and recommending director candidates for approval by the Board, including candidates recommended by stockholders, are described in “Additional Information — Director Nomination Process.”
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 a 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 our Board or Compensation Committee during Fiscal 2024.
Board and Committee Oversight of Risk Management – The Board oversees and maintains the Company’s governance and compliance processes and procedures to promote the conduct of our business in accordance with applicable laws and regulations and with the highest standards of responsibility, ethics, and integrity. The Company and the Board believe that this oversight ensures that our business strategy is effectively designed and executed, ultimately creating long-term stockholder value. The Board, directly and through its standing committees, oversees, assesses, manages, and mitigates risks facing the Company. Our Chief Executive Officer, Chief Financial Officer, Chief Legal and Administrative Officer, and the Chair of each of the Board’s standing committees regularly report to the Board the strategic and operations risks faced by the Company. Each member of the Board has complete access to all Secureworks teammates and is free to communicate, and does communicate, directly with management.
The Board discharges its risk oversight responsibilities in part through its standing committees, including, but not limited to, the following risk areas:
The Audit Committee is responsible for the oversight of the Company’s risk policies and risk assessment monitoring and mitigation measures relating to our financial statements and financial reporting, major information technology risk exposures (including, without limitation, cybersecurity risks), financial risk, and risks relating to ethics and compliance. The Audit Committee reviews and discusses significant risks to the Company with our senior management and independent registered public accounting firm. The Audit Committee also will discuss the steps management has taken or plans to take to minimize or manage such risks. Quarterly, the Audit Committee receives from, or participates in updates by:
the Chief Audit Executive regarding audit status, industry insights and key audit findings, as well as other issues or concerns;
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the Chief Information Security Officer or other members of the Company’s security team regarding cybersecurity and other data and physical security risks;
members of the Company’s risk, ethics and compliance team who report to the Chief Legal and Administrative Officer relating to ethics investigations, compliance programs, enterprise, and vendor risk management, and other related matters; and
the Chief Legal and Administrative Officer or other members of the Company’s legal team regarding legal or regulatory matters.
Additionally, it is customary for the Audit Committee to meet in executive session with certain members of management, when appropriate, and with the Company’s independent registered public accounting firm at Audit Committee meetings.
The Compensation Committee oversees the assessment and management of risks associated with succession planning and leadership development in addition to the Company’s incentive compensation programs, plans, and arrangements. The Compensation Committee evaluates how the Company’s incentive compensation arrangements may affect risk decisions, and it reviews the relationship between risk management practices and compensation.
The Nominating and Governance Committee oversees the assessment and management of risks related to the Company’s governance structure and process.
These standing committees report regularly to the full Board of Directors on matters discussed during each of the committee meetings, including significant issues discussed and the actions taken by the committee or by management.
Although the Board is responsible for risk oversight, management is responsible for designing processes and procedures to identify, assess, and manage risks posed to the Company. To fulfill these responsibilities, management has established an enterprise risk management, or ERM, program, that is designed to work cross-functionally across the business to identify, assess, govern, and manage the Company’s strategic, operational, financial and compliance risks, which includes, among other things, risk management and governance of the Company’s use of artificial intelligence. The Company’s Risk and Compliance team completes an annual risk assessment informed by Company data, industry analysis, insights from third-party risk reporting companies, peer benchmarking, and interviews with the Company’s senior management team. We also maintain a Code of Ethics for Senior Financial Officers, a Code of Conduct, and a company-wide ethics and compliance program.
The Company’s Risk and Compliance team annually presents the results of the annual risk assessment and quarterly reviews the key risks identified by the ERM program with the Audit Committee. Further, the Board receives updates from management on risk topics at the Board’s regularly scheduled meetings and at more frequent intervals on an as-needed basis.
Since the Company is considered a Technology Service Provider to U.S. customers who are considered financial institutions, the Federal Financial Institutions Examination Council, or FFIEC, oversees and supervises the Company through recurring FFIEC examinations that focus on the following risk categories: technology management, data integrity, confidentiality, availability, compliance, and financial stability. After each FFIEC examination, the Board’s Audit Committee receives a report regarding the examination results and any required action items from the Company’s management team as a part of the Company’s risk oversight responsibilities.
The Board, directly and indirectly through its standing committees, also considers the input from third-party advisors and experts in addition to reports made by management to evaluate the current and anticipated risks to our business and strategy.
Chief Executive Officer Succession Planning; Leadership Development – The Board has the responsibility to ensure the Company’s leadership meets our needs now and in the future. At least annually, the Board reviews Chief Executive Officer, or CEO, succession planning and, upon the recommendation of the Compensation Committee, where applicable:
maintains plans for any unexpected short-term absence of the CEO and identifies candidates who could act as interim CEO in case of any such event; and
identifies potential CEO successors and, for internal candidates, reviews such candidate’s performance and development plans against the criteria and profile for the CEO role.
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The Compensation Committee is tasked with reviewing and, except for the CEO, approving the Company’s management succession plans and leadership development strategies. In Fiscal 2024, the Board also reviewed and approved the Company’s leadership development strategies and management succession plans for the CEO and for the executive officer, and each of the Company’s senior vice presidents. The CEO also reviews the annual performance of each executive officer, the President and each of the Company’s senior vice presidents with the Compensation Committee, and the committee further engages in a discussion with the CEO and the Chief Legal and Administrative Officer regarding each team member’s development.
Meetings and Attendance – During Fiscal 2024, the full Board of Directors met four times, the Audit Committee met eight times, the Compensation Committee met three times, and the Nominating and Governance Committee met three times. In Fiscal 2024, each member of the Board who served as a director during Fiscal 2024 attended at least 75% of the total number of the meetings of the Board and each of the Board’s standing committees 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. All six directors then serving on the Board attended last year’s annual meeting held on June 27, 2023.
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 individual who has a concern about the Company’s conduct, accounting matters (including accounting 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 or to the Corporate Secretary at 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 under our guidelines and will be simultaneously reviewed and addressed by the Company’s Global Ethics and Compliance Office.
The status of all outstanding concerns addressed to the independent directors or to 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 brought to their attention. Our Code of Conduct prohibits any teammate from retaliating against any person who, with a reasonable basis, raises concerns or participates in the Company’s ethics investigations process.
Director Compensation
Our Board of Directors has adopted a compensation policy for our non-employee, independent directors, which the Board believes will enable Secureworks to attract and retain qualified directors, provide such directors with compensation that is consistent with our objectives, and encourage their ownership of our Class A common stock to further align their interests with those of our stockholders.
In accordance with the independent director compensation policy in effect for Fiscal 2024, our compensation program for independent directors included the following elements:
an annual cash retainer of $50,000;
an additional annual cash retainer for service as a member (but not Chair) of the Audit Committee, Compensation Committee or Nominating and Governance Committee of $15,000, $10,000 or $8,000, respectively;
an additional annual cash retainer for service as Chair of the Audit Committee, Compensation Committee or Nominating and Governance Committee of $30,000, $20,000 or $15,000, 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 as described below; and
an annual equity retainer with a value of $200,000 in each year of service, in the form of an RSU award that will vest as described below.
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Independent directors may elect to receive all or a certain portion of each of the annual cash retainer and any additional annual cash retainer in the form of deferred stock unit, or DSU, awards that settle in shares of Class A common stock in the manner described below, shares of Class A common stock, cash, or a combination thereof. Independent directors also may elect to receive all or a certain portion of their annual equity retainer in the form of a DSU award, an RSU award, or a combination thereof.
All the equity-based awards to our independent directors are granted under the SecureWorks Corp. 2016 Long-Term Incentive Plan, which is described in Proposal 4. Each equity-based award vests in full on the first anniversary of the grant date, subject to the director’s continued service, except that the initial equity retainer award of RSUs vests, subject to the director’s continued service, in three equal annual installments beginning with the first anniversary of the grant date. DSU awards will settle on the earlier of the termination of the applicable director’s Board service for any reason or a change in control of SecureWorks Corp.
An independent director elected to the Board, 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), at the discretion of the Board of Directors, (2) a pro-rated annual equity retainer, and (3) the full amount of the initial equity retainer.
The Board also determines fees payable to our independent directors for service on ad hoc committees formed by the Board. In addition, we reimburse our directors for their reasonable expenses incurred to attend meetings of our Board or of its standing committees.
The retainers, fees, and grants payable under our non-employee, independent director compensation policy may be periodically modified or adjusted as determined by the Board upon the Compensation Committee’s recommendation.
We also provide our directors with liability insurance coverage for their activities as directors. Our bylaws provide that all directors are entitled to indemnification and expense advancement from the Company to the fullest extent permitted by Delaware law. We have entered into indemnification agreements with our directors to give them contractual assurances regarding the scope of their indemnification and to clearly establish procedures for determining whether a director has the right to receive indemnification.
The following table sets forth the compensation earned by or paid to our independent directors for Fiscal 2024.
Name
Fees Earned
or Paid in
Cash(1)
($)
Cash Fees Elected
to be Paid
in Stock(2)
($)
Stock
Awards(3)(4)
($)
Total
($)
Pamela Daley
80,000
199,995
279,995
Mark J. Hawkins(5)
85,000
199,995
284,995
Yagyensh (Buno) C. Pati
97,999
199,995
297,994
(1)
Amounts reported in this column include compensation for committee membership and committee Chair service during Fiscal 2024.
(2)
Directors were entitled to elect to receive up to 100% of the annual cash retainer and, if applicable, cash committee Chair retainer fees and cash committee membership fees in the form of vested shares of Class A common stock or deferred stock units that settle in shares of Class A common stock, in each case determined by dividing the applicable portion of the aggregate retainer amount by the closing price of the Class A common stock as reported on Nasdaq on June 27, 2023. For service in Fiscal 2024, Mr. Pati received 14,244 vested shares of Class A common stock.
(3)
Stock awards were made in the form of restricted stock units that settle in shares of Class A common stock, subject to each director’s right to elect to receive a specified portion in deferred stock units that settle in shares of Class A common stock. Restricted stock units and deferred stock units, if elected, will vest on June 27, 2024. For service in Fiscal 2024, each of Ms. Daley, Mr. Hawkins and Mr. Pati received 29,069 restricted stock units. The aggregate grant date fair value, computed in accordance with U.S. generally accepted accounting principles, of the restricted stock units awarded to each of Ms. Daley, Mr. Hawkins and Mr. Pati was $199,995, in each case determined by dividing the applicable portion of the aggregate retainer amount by the closing price of Class A common stock as reported on Nasdaq on June 27, 2023. As of February 2, 2024, each of Ms. Daley, Mr. Hawkins and Mr. Pati held an aggregate of 29,069 outstanding restricted stock units.
(4)
As of February 2, 2024, each of Ms. Daley and Mr. Hawkins held an aggregate of 48,143 outstanding options, and Mr. Pati held an aggregate of 49,916 outstanding options.
(5)
Effective September 6, 2023, Mr. Hawkins resigned as a member of the Audit Committee of the Board. However, on September 27, 2023, the Board retained Mr. Hawkins to serve as an Adviser to the Audit Committee for a period of one year from the effective date of the Committee Adviser Agreement entered into by and between SecureWorks Corp. and Mr. Hawkins. Considering his service as an Adviser to the Audit Committee, beginning on September 27, 2023, the Board elected not to recover any portion of the fees paid to Mr. Hawkins in connection with his prior service as a member of the Audit Committee during Fiscal 2024. Such fees previously paid to Mr. Hawkins for the period on or after the effective date of his resignation from the Audit Committee are deemed to be fees paid for services rendered as an Adviser to the Audit Committee.
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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In this Proposal 2, the Board of Directors is asking stockholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP, or PwC, as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2025, or Fiscal 2025.
PwC is a registered independent public accounting firm and has served as our independent registered public accounting firm since 2014. Although current law, rules, and regulations, as well as the Audit Committee’s charter, require the Company’s 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 the selection to be an opportunity for stockholders to provide direct feedback to the Company on an important corporate governance issue.
If stockholders do not ratify the selection of PwC, the Audit Committee will take the results of the stockholder vote into consideration to determine whether to retain PwC and whether to engage the firm in future years; however, the Audit Committee may choose to continue retaining PwC. Even if the appointment of PwC is ratified by our stockholders, the Audit Committee in its discretion may change the appointment at any time during the current fiscal year if it determines that such 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 they 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’s independent registered public accounting firm for Fiscal 2025.
In addition to retaining PwC to conduct an independent audit of our consolidated financial statements, Secureworks periodically engages PwC to perform other permissible services. The following table sets forth all fees incurred in connection with professional services rendered by PwC to Secureworks for Fiscal 2024, and the fiscal year ended February 3, 2023, or Fiscal 2023.
Independent Registered Public Accounting Firm Fees
Fee Type
Fiscal 2024
($)
Fiscal 2023
($)
Audit Fees(a)
2,041,330
2,354,500
Audit-Related Fees(b)
50,000
Tax Fees
All Other Fees(c)
4,150
4,150
Total
2,045,480
2,408,650
(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. This category also includes fee estimates obtained from PwC in relation to statutory audits conducted for Fiscal 2024 that will be conducted in Fiscal 2025.
(b)
This category includes fees incurred for professional services rendered by PwC to Secureworks in connection with preimplementation insights provided.
(c)
This category consists of fees for all services other than the services reported in notes (a) through (b) above, and it primarily includes fees incurred for licenses to information and research services. These services were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the independent registered public accounting firm.
The Audit Committee pre-approves services performed by PwC as required under SEC rules. The Audit Committee has adopted a policy requiring pre-approval by the Audit Committee of all audit and non-audit services to be provided by our independent registered public accounting firm, other than those provided pursuant to a limited exception in compliance with applicable SEC rules. In accordance with that policy, the Audit Committee has approved for PwC to provide audit services for Secureworks during Fiscal 2025, including audit fees, and has approved in advance for up to one year for PwC to provide certain categories or types of audit-related, tax and other permitted non-audit services. If a certain service is not covered by one of those approvals, the Audit Committee has delegated authority to the Chair of the Audit Committee or another designated Audit Committee member 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—ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
In this Proposal 3, in accordance with Section 14A of the Exchange Act and SEC rules thereunder, the Board of Directors is requesting for stockholders to approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement within the Compensation Discussion and Analysis and in the accompanying compensation tables and narrative disclosures beginning on page 38, other than under “Compensation of Executive Officers—Pay Versus Performance Disclosure.”
The Board of Directors unanimously recommends a vote “FOR” approval of the compensation of the named executive officers of Secureworks as disclosed in this proxy statement.
As described below in the sections of this proxy statement under “Compensation Discussion and Analysis” and “Compensation of Executive Officers,” the Compensation Committee has structured the Company’s executive compensation program to emphasize long-term, performance-dependent compensation to incentivize and reward long-term value creation for its stockholders. The Company’s executive compensation program has a number of features designed to ensure the program adheres to our pay-for-performance philosophy.
The Board encourages stockholders to read the Compensation Discussion and Analysis section below, which details how the Company’s executive compensation practices operate and how they are designed to achieve core executive compensation objectives. The Board also encourages stockholders to review the Fiscal 2024 Summary Compensation Table, and the accompanying compensation tables and the narrative disclosures appearing under “Compensation of Executive Officers,” which provide detailed information about the compensation of our named executive officers. The Board and its Compensation Committee believe that the compensation practices described in the Compensation Discussion and Analysis are effective in achieving the Company’s core executive compensation objectives and that the named executive officers’ compensation as disclosed in this proxy statement reflect and support the appropriateness of our executive compensation philosophy and practices.
In accordance with Section 14A of the Exchange Act and related SEC’s rules thereunder, Secureworks is asking stockholders to approve this proposal by approving the following non-binding resolution:
RESOLVED, that the compensation paid to Secureworks’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussions, is hereby approved.
A vote on this resolution, commonly referred to as a “Say-on-Pay” resolution, is not binding on the Compensation Committee or the Board; however, the Compensation Committee and the Board value the views of the Company’s stockholders and will consider the results of the advisory vote when determining future executive compensation matters.
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PROPOSAL 4—APPROVAL OF SHARE INCREASE AMENDMENT UNDER THE SECUREWORKS CORP. 2016 LONG-TERM INCENTIVE PLAN
In this Proposal 4, 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 7,500,000 shares the total number of shares of Class A common stock authorized and available for issuance under the plan. We refer to the amendment as the share increase amendment.
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. On May 14, 2024, 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. If approved by the stockholders at the annual meeting, the share increase amendment will be effective at the time of stockholder approval.
As of April 29, 2024, 4,089,077 shares remained available for issuance pursuant to future awards under the plan. The Board believes that approval of the share increase amendment is necessary and in the best interests of Secureworks and its stockholders because it will enable us to recruit and retain key teammates who are critical to our success and will align management’s interests with those 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 18, 2024, in connection with annual compensation determinations, the Compensation Committee awarded certain executive officers and other eligible employees of the Company time-based restricted stock units, or RSUs, and performance stock units, or PSUs, that were granted subject to stockholder approval of the share increase amendment. On March 18, 2024, the Board also awarded our Chief Executive Officer RSUs and 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 4 is not obtained, each of the RSUs and PSUs will be cancelled, and no shares of Class A common stock will be issued in connection with these awards. For information about these awards and other awards previously granted under the plan to our directors, executive officers, and other eligible employees, see “—Plan Benefits” below.
Stockholders are encouraged 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 made effective upon stockholder approval of the share increase amendment.
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:
No “evergreen” provision: The plan does not permit an automatic increase in the number of shares available for issuance without stockholder approval.
No “reload” stock options: The plan terms, upon an exercise of a stock option, do not create an automatic trigger granting a new stock option with respect to the number of shares used to pay for the exercise of the initial stock option.
Maximum term of stock options and Stock Appreciate Rights: The maximum term of nonqualified stock options and stock appreciation rights, or SARs, 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 discounting: Stock options and stock appreciation rights granted under the plan generally must have an exercise price no lower than the fair market value of the underlying shares of Class A common stock on the grant date.
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Performance-based vesting of dividends and dividend equivalent rights: Dividends and dividend equivalent rights granted as a component of awards that 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 the mandatory repayment of any award to the extent necessary to comply with the Company’s recoupment policy, which was adopted by the Board, effective October 2, 2023, or to comply with applicable law.
Forfeiture provisions: The Compensation Committee has authority to cancel any plan participant’s outstanding award if that participant is terminated for “cause.”
Share Authorization and Dilution
As of April 29, 2024, approximately 4,089,077 shares of Class A common stock remained available for issuance for future awards under the plan.
The following table illustrates the potential dilutive impact on 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)
11.6
13.1%
(1)
Reflects shares of Class A common stock that remain available for issuance for future awards under the plan as of April 29, 2024 and additional shares that will be available for future awards if stockholders approve this proposal (but it does not reflect the impact of awards of RSUs and PSUs to certain executive officers and teammates 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 the number of shares of Class A common stock available for future awards as of the end of Fiscal 2024, see “—Equity Compensation Plan Information” below.
(2)
As of April 29, 2024, Secureworks had issued and outstanding 88,362,846 shares of common stock, consisting of 18,362,846 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 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 complete text of such form is attached to this proxy statement as Annex A and is incorporated by reference into this proposal. We urge you to read this proposal and the complete text of the plan in their entirety.
Effective Date and Term. The plan became effective on April 18, 2016, and it will terminate on April 18, 2026, unless terminated earlier by the Board or resulting from a change in control of Secureworks.
Purpose and Types of Awards. We believe that maintaining the plan assists us in recruiting, rewarding, and retaining teammates, officers, non-employee directors, and other service providers. We also believe that granting awards under the plan incentivizes participants to contribute to our success and to operate and manage Secureworks in a manner that will provide long-term growth and profitability that will benefit our stockholders and other important stakeholders, including our teammates and customers. We believe that the plan will ensure that key personnel act in our best interests during and after their service with Secureworks 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 Compensation Committee is tasked with administering the plan. During any period of time in which we do not have a Compensation Committee, the plan will be administered by the Board of
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Directors or by another committee appointed by the Board. With certain exceptions and if permitted by applicable law, the Compensation Committee may delegate a portion 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 by 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 upon the Compensation Committee’s recommendation.
Eligibility. Awards under the plan may be granted 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 our affiliates, and any other individual whose participation in the plan is determined by the Compensation Committee to be in the best interests of Secureworks in connection with our incentive and compensation programs. As of April 29, 2024, approximately 1,381 individuals were eligible to participate in the plan, consisting of the following: four executive officers (including our Chief Executive Officer, who is also a director); four non-employee directors; and the balance of approximately 1,373 eligible participants who are employees of Secureworks and its subsidiaries (excluding our employee director and our executive officers). No consultants or advisors who perform services for us or our affiliates currently participate in the plan.
Share Authorization and Usage.
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:
7,500,000 shares of Class A common stock authorized by the share increase amendment, plus
any shares of Class A common stock remaining available for issuance for future awards under the plan as of the date of stockholder approval of the share increase amendment.
As of April 29, 2024, 4,089,077 shares remained available for issuance pursuant to future awards.
The foregoing number of shares of Class A common stock shown as available for issuance pursuant to future awards does not reflect shares issuable in connection with RSUs and PSUs awards made on March 18, 2024, to certain executive officers and teammates that were granted subject to stockholder approval of the share increase amendment, as described below under “—Plan Benefits.” If this Proposal 4 is not approved, such RSU and PSU awards will be cancelled. 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.
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 which are surrendered in connection with the purchase of shares of Class A common stock upon the exercise of an option;
not issued upon the net settlement or net exercise of a stock appreciation right granted under the plan that 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.
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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 as unissued shares of Class A common stock, treasury shares, or any combination of the foregoing.
Limits on Awards. Upon stockholder approval of the proposal to amend the SecureWorks Corp. 2016 Long-Term Incentive Plan, as amended and restated, 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 and 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 either settle in stock or cash during any single calendar year shall increase to 2,500,000 shares and 2,500,000 shares, respectively. 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 to 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 the Code.
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 shares of Class A common stock reserved for issuance under the plan are available for issuance pursuant to incentive stock options; however, incentive stock options may be granted only to our employees and employees of our subsidiaries. The Compensation Committee will determine each option’s exercise price, provided that, the exercise price may not be less than 100% (or, to any person who owns more than 10% of the total combined voting power of all classes of our voting stock, 110%) of the Class A common stock’s fair market value on the date 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.
Option terms may not exceed ten years (or five years for incentive stock options granted to any greater than 10% stockholder as described above) from the date of grant. The Compensation Committee determines the time or times at which each option may be exercised and the time period, if any, during which options may be exercised after retirement, death, disability, or termination of employment. Options may be made exercisable in
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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 that is 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. Each stock appreciation right’s exercise price 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 thereof.
Stock appreciation rights awards 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, 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 the Compensation Committee determines in its sole discretion on the date of grant. These restrictions, if any, may lapse over a specified time period 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 a restricted stock award will have all stockholder rights 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 upon 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 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, where the Compensation Committee’s vesting criteria or other terms and conditions 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 thereof. 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 thereof after the vesting date, consistent with the terms of Section 409A of the Code. A participant who receives restricted stock units or deferred stock units will have no stockholder rights as to the shares of Class A common stock on which the restricted stock unit or deferred stock unit is based, provided however, that 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
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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 Compensation Committee determines the terms and conditions that apply to other equity-based awards.
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, as 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, which 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;
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.
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Performance Measures. Under the plan, the performance measures presented below are examples of the types of goals that the Compensation Committee may select:
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; and 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; leveraged 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;
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 such performance goals may be in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices.
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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.
For purposes of the plan, a “change in control” of the Company means the occurrence of any of the following events:
a transaction or series of related transactions pursuant to which any person or group within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act (other than one or more of Dell Technologies Inc. and its affiliates, Michael S. Dell, his affiliates and other related persons, the Company, or any affiliate of the Company) becomes the beneficial owner of more than 50% of the total voting power of the voting stock of the Company, on a fully diluted basis;
individuals who, as of April 28, 2016, constitute the Board, referred to as the Incumbent Board (together with any new directors whose election by such Incumbent Board or whose nomination by such Incumbent Board for election by the stockholders of the Company was approved by a vote of at least a majority of the members of such Incumbent Board then in office who either were members of such Incumbent Board or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of such Board then in office;
the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company (regardless of whether the Company is the surviving person), other than any such transaction in which the holders of 100% of the voting power of the Company immediately prior to such transaction own directly or indirectly at least a majority of the voting power of the voting stock of the surviving person in such merger or consolidation immediately after such transaction;
the consummation of any direct or indirect sale, lease, transfer, conveyance, or other disposition (other than by way of reorganization, merger, or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person or group within the meaning of Section 13(d) and 14(d)(2) of the Exchange Act (other than the Company or any affiliate thereof), except any such transaction or series of transactions
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in which the holders of 100% of the voting power of the Company immediately prior to such transaction own directly or indirectly at least a majority of the voting power of the voting stock of such person or group immediately after such transaction or series of transactions; or
the stockholders of the Company adopt a plan or proposal for the liquidation, winding up, or dissolution of the Company.
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 surrendering 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 of the exercise price or purchase price on the date of the surrender;
if permissible by applicable law and if the award agreement so provides, by payment through a broker in accordance with the 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.
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 or where 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, which varies 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 realized gain exceeding 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, a participant generally will not recognize taxable income upon the exercise of an incentive stock option. However, unless the participant sells the shares received in the calendar year of exercise, 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
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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 taxable 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 treated as a long-term or short-term capital gain, depending upon whether 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 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 realized gain exceeding 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 amounts 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
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Section 162(m) of the Code. Section 162(m) of the Code generally limits the federal tax deductibility to $1 million for compensation paid in one year to individuals who have been the chief executive officer, the chief financial officer, or 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 deemed contingent on a change in control of our company are determined to exceed certain limitations set forth in Section 280G of 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 other eligible employees of the Company by the Compensation Committee or, in the case of the Chief Executive Officer, awards granted by the Board, on March 18, 2024, in connection with annual compensation determinations, 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 non-employee, independent director compensation policy, each of our independent directors receives annual equity awards with a value of $200,000 under the plan in the form of restricted stock units or deferred stock units that settle in shares of Class A common stock. For additional information about the compensation of our independent directors, see “Proposal 1—Election of Directors—Director Compensation.”
The following table sets forth the number of RSUs and PSUs awarded by the Compensation Committee subject to stockholder approval of the share increase amendment, as of May 15, 2024. In accordance with the terms of these awards, if stockholder approval of this Proposal 4 is not obtained, each of the RSUs and PSUs will be canceled, and no shares of Class A common stock will be issued in connection with these awards.
Name and Position
Dollar Value(1)
($)
Number of Units
Wendy Thomas
Chief Executive Officer
6,369,114
1,044,117(2)
Alpana Wegner
Chief Financial Officer
3,363,967
551,470(3)
Steve Fulton
President
3,363,967
551,470(4)
George Hanna
Chief Legal and Administrative Officer
2,915,440
477,941(5)
All current executive officers, as a group
16,012,488
2,624,998
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
28,551,404
4,680,558
(1)
Based on the closing price per share of Class A common stock of $6.10 on March 18, 2024, as reported on Nasdaq.
(2)
Amount reflects (a) 522,059 time-based RSUs and (b) 522,058 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 1,044,116 PSUs may be earned in connection with this award).
(3)
Amount reflects (a) 275,735 time-based RSUs and (b) 275,735 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 551,470 PSUs may be earned in connection with this award).
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(4)
Amount reflects (a) 275,735 time-based RSUs and (b) 275,735 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 551,470 PSUs may be earned in connection with this award).
(5)
Amount reflects (a) 238,971 time-based RSUs and (b) 238,970 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 477,940 PSUs may be earned in connection with this award).
We granted stock options under the plan from April 18, 2016, which was the effective date of the plan, through April 29, 2024 to the following persons: Ms. Thomas, 55,030; Mr. Hanna, 117,921; Mr. Fulton, 0; all current executive officers, as a group, 172,951; all current directors who are not executive officers, as a group, 146,202; each nominee for election as a director who is not an executive officer: Ms. Daley, 48,103; and all employees of Secureworks and our subsidiaries, including all current officers who are not executive officers, as a group, 2,496,837. 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 2024.”
On April 29, 2024, the closing price per share of our Class A common stock as reported on Nasdaq was $5.87.
Equity Compensation Plan Information
The following table sets forth certain information about our equity compensation plans as of the end of Fiscal 2024.
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
the first column)
Equity compensation plans approved by security holders
9,041,700(1)
$14.00(2)
3,887,644(3)
Equity compensation plans not approved by security holders
Total
9,041,700
$14.00
3,887,644
(1)
Represents, as of the end of Fiscal 2024, the aggregate number of shares of Class A common stock that were issuable upon the exercise or settlement of 146,202 outstanding options and 8,895,498 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 2024, 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 COMMITTEE REPORT
The Compensation Committee of the Board of Directors of SecureWorks Corp. for the fiscal year ended February 2, 2024, has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into SecureWorks Corp.’s annual report on Form 10-K for the fiscal year ended February 2, 2024.
 
COMPENSATION COMMITTEE
 
 
 
Mark J. Hawkins, Chair
 
Yagyensh (Buno) C. Pati
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis is intended to provide our stockholders with an understanding of our compensation philosophy and principles and the compensation paid to our Fiscal 2024 named executive officers.
We have designed our compensation structure to attract, retain and reward high-performing executives who can achieve our long-term financial goals and strategic objectives. Our compensation program is focused on long-term incentive awards and performance-based compensation to ensure each of our executive officers is focused on both Company and individual performance. Secureworks believes that its compensation philosophy, strategy, and structure align the interests of our named executive officers with the interests of our stockholders.
Named Executive Officers
Our named executive officers in Fiscal 2024 were:
Name
Title
Wendy K. Thomas
Chief Executive Officer
Stephen Fulton(1)
President
Alpana Wegner(2)
Chief Financial Officer
George B. Hanna
Chief Legal & Administrative Officer
Paul M. Parrish(3)
Former Chief Financial Officer
Christian Grant(4)
Former Interim Chief Financial Officer
(1)
On March 18, 2024, Mr. Fulton’s title was changed by the SecureWorks Corp. Board of Directors from “President, Customer Success” to “President.”
(2)
Effective June 9, 2023, the Board appointed Ms. Wegner as the Company’s Chief Financial Officer.
(3)
Mr. Parrish retired as the Company’s Chief Financial Officer, effective May 5, 2023.
(4)
From May 5, 2023 until June 9, 2023, Mr. Grant served as the Company’s Interim Chief Financial Officer in addition to his role as Chief Accounting Officer.
Fiscal 2024 Business Highlights
We achieved our strategic priorities in Fiscal 2024 by delivering new ways to enable our partners to deliver high margin and effective MDR powered by Taegis XDR, expanding our reach and addressable market by adding key partners globally and adding new features and functionality to our platform. We also reached an important milestone, achieving adjusted EBITDA profitability driven by operational execution and the scalability of our Taegis platform, while substantially completing our business model transformation. Highlights from the year include:
We made substantial progress in completing the strategic business transition to the higher value, higher margin Taegis security solutions resulting in Taegis revenue growth of 41% year-over-year and Taegis annual recurring revenue, or Taegis ARR growth of 9% year-over-year to $285 million.
We increased the scale and efficiency in our business through automation, use of AI and optimization of our cloud architecture resulting in Taegis GAAP gross margin and non-GAAP gross margin continued expansion in Fiscal 2024, reaching 69.6% and 71.7%, respectively, compared with 65.9% and 67.9%, respectively, in Fiscal 2023, underscoring the scalability of our Taegis security platform.
Through the acceleration of the sunset of our legacy managed services business and managing our cost structure to increase operating leverage, we achieved significantly improved adjusted EBITDA from a loss of $27.8 million, compared with adjusted EBITDA loss of $59.0 million in Fiscal 2023, resulting in adjusted EBITDA margin expansion of 500 basis points year-over-year, and inclusive of our business’s inflection to positive adjusted EBITDA in fourth quarter of Fiscal 2024.
We accelerated the expansion of our Partner ecosystem over the last year. We now work with more than 400 partners across Tech Alliances, Solution Providers, Managed Services Providers and Cyber-insurers, including leading providers in each category. Our “better together” go-to-market motion led to an increase in Partner-led opportunities and win rates, and improved sales productivity, driving growth in our Taegis business.
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We delivered on the expansion of our platform capabilities to better support partners and customers, including expanding attack surface coverage with new out-of-the-box integrations, reducing mean time to response leveraging AI-based threat prioritization, orchestration, and Large Language Model-enabled analyst assistance, delivering comprehensive IT and OT security coverage with Taegis for OT, and enabling MSSPs to deliver differentiated services on top of the platform by adding their own integrations, detectors, and playbooks. Additionally, new experiences allow them to efficiently triage and hunt for security attacks across their customer base.
We were recognized by Forrester as a leader in their Managed Detection and Response Wave Report and by Frost & Sullivan with the Competitive Strategy Leadership Award in the Global XDR Industry, a testament to our strategy effectiveness and execution, competitive differentiation, and exception SecOps experience for our customers and partners.
We strengthened our leadership team with the additions of Alpana Wegner as our Chief Financial Officer and Allan Peters as our Chief Revenue Officer, each bringing more than 20 years of business experience in their respective fields at public companies and cybersecurity industries.
We are delivering, and remain committed to driving, sustained growth, while improving the scale, productivity, and operational efficiencies of our business.
Non-GAAP Taegis gross margin and adjusted EBITDA are non-GAAP financial measures provided as a supplement to the results presented in our financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP. Reconciliations of the foregoing non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP are set forth in Annex B to this proxy statement.
Fiscal 2024 Executive Compensation Highlights
Effective June 9, 2023, Ms. Wegner was appointed as the Company’s Chief Financial Officer. In connection with this appointment, Ms. Wegner received an award of time-based restricted stock units that settle in the Company’s Class A common stock under the terms of the Company’s 2016 Long-Term Incentive Plan with an aggregate grant date value equal to $4,000,000. These restricted stock units vest in three equal annual installments beginning on the first anniversary of the date of approval by the Compensation Committee. In addition, Ms. Wegner received an annual base salary of $450,000 and a target cash bonus opportunity under the Company’s Amended and Restated Incentive Bonus Plan for Fiscal 2024 equal to 60% of her annualized base salary, subject to performance conditions established by the Compensation Committee of the Board of Directors.
Mr. Parrish retired from his position as the Company’s Chief Financial Officer, effective May 5, 2023. In connection with his retirement, we entered into a separation agreement and release with Mr. Parrish whereby he received benefits substantially equivalent to those that would be payable under the Company’s Amended and Restated Severance Pay Plan for Executive Employees as if his departure were a qualifying termination under that plan.
From May 5, 2023 until June 9, 2023, Mr. Grant served as the Company’s Interim Chief Financial Officer in addition to his role as Chief Accounting Officer. He did not receive a compensation adjustment in connection with this interim appointment.
Executive Compensation Philosophy, Core Objectives and Practices
For Fiscal 2024, the Compensation Committee of the Board of Directors was composed of Buno Pati and Mark Hawkins. Upon the recommendation of the Board’s Nominating and Governance Committee, the Board appointed Mr. Hawkins as the Chair of the Compensation Committee, effective March 20, 2023. Prior to Mr. Hawkins’s appointment, Mr. Pati served as the Compensation Committee’s Chair. References to the “Committee” in this Compensation Discussion and Analysis and in the “Compensation of Executive Officers” section below refer to the Compensation Committee of the Board.
We have designed our executive compensation programs to align our executive officers’ interests with those of our stockholders and to advance our long-term business strategy as a leading global cybersecurity provider of technology-driven solutions. Our executive compensation program is structured to incentivize our executive
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officers to perform to the best of their individual abilities and promote our Company’s success. Secureworks maintains effective controls and governance policies to manage the risks associated with our executive compensation programs, as outlined below:
Things We Do
structure our executive compensation to drive the Company’s strategic revenue growth and long-term value;
balance short-term and long-term strategic objectives through a mix of cash- and equity-based incentives that are competitive with those offered by companies with whom Secureworks competes for executive talent;
link Company and individual performance through compensation based on achievement of our financial goals and strategic objectives;
cap cash- and equity-based incentive awards at 150% of target for the individual performance of each of our executive officers;
cap the grant of performance-based equity awards to executive officers based on the Company’s performance relating to the Corporate Performance Goals set by the Board and the Committee at 200% of the initial aggregate grant date value;
annually review and assess compensation risks to ensure that our executive compensation strategy aligns individual performance with the Company’s long-term business strategy, while discouraging excessive risk-taking that may impact long-term results;
work with the independent compensation consultant engaged by the Committee as it makes its executive compensation determinations;
adopt compensation recoupment policies for our former and current executive officers in compliance with Rule 10b-1 of the Securities Exchange Act of 1934, or the Exchange Act, and the applicable listing standards enacted by the Nasdaq Stock Market, or Nasdaq; and
maintain a Compensation Committee solely composed of independent directors with industry knowledge and experience, even though we are not required to do so under Nasdaq rules given our status as a controlled company.
Things We Do Not Do
guarantee annual base salary increases or annual bonuses;
provide for single-trigger vesting of equity or other payments in connection with a change-in-control event;
permit hedging or pledging of our stock by any directors, officers, or teammates of the Company;
permit short-selling of our stock; or
provide dividends or dividend equivalents on unvested equity awards.
Stockholder Engagement and Consideration of Last Year’s Say-on-Pay Vote
We are committed to maintaining an active dialogue to understand the priorities and concerns of our stockholders on the topic of executive compensation and corporate governance, and we value the feedback we have received from stockholders. We believe ongoing engagement and communication builds mutual trust and understanding.
At our 2023 Annual Meeting of Stockholders, over 99% of the shares of common stock voted in favor of our compensation program for the Company’s executive officers. The Committee considered the feedback received from stockholders when establishing the Company’s executive compensation program for Fiscal 2024.
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Executive Compensation Overview
Elements of Total Compensation Package – Our compensation program for named executive officers primarily consists of base salary, annual incentive bonuses, equity incentives that are both time-based and performance-based, and limited benefits and perquisites. We align executive compensation practices with the competitive market and evaluates each executive officer individually by considering such factors as each officer’s individual level of responsibility and internal pay equity considerations.
Compensation Consultants – Under its charter, the Committee has the authority to select, retain and obtain the advice of compensation consultants and such other advisers as it considers necessary or appropriate to fulfill its duties and responsibilities. For Fiscal 2024, the Committee engaged a compensation consultant, Frederic W. Cook & Co., Inc., or FW Cook, to provide independent analysis and make recommendations on executive compensation matters, including by informing the Committee of competitive market practices and trends and advising on our executive compensation programs’ design and structure. FW Cook regularly attends the Committee meetings and presents on compensation best practices, regulatory issues, and industry developments. FW Cook also communicates on an as-needed basis with the Committee Chair outside of regular meetings.
The Committee has evaluated the independence of FW Cook in accordance with requirements adopted by Nasdaq and the SEC, and it has determined that FW Cook is independent, and its work is free of any conflicts of interest. As a part of that evaluation and determination process, FW Cook supplied the Committee with written confirmation of FW Cook’s assessment of its independence and disclosed whether it had any existing or potentially existing conflicts of interests pursuant to applicable Nasdaq and SEC rules.
Process for Evaluating and Determining Named Executive Officer Compensation – We annually conduct a thorough evaluation of the performance of each named executive officer based on objective and subjective factors, and the Company’s Chief Executive Officer, or CEO, makes a recommendation to the Committee regarding each such executive officer’s compensation, other than with respect to the CEO’s own compensation. Following input from management, including the human resources team and the Company’s CEO, and from FW Cook, the Committee determines the individual cash compensation elements and associated amounts and the equity award value for each named executive officer other than the Chief Executive Officer. For the compensation package of the Chief Executive Officer, after obtaining relevant information from FW Cook, the Committee makes a recommendation to the Board of Directors, who determines the compensation of the Chief Executive Officer. When making individual compensation decisions for an executive officer (including the compensation recommendations for the Chief Executive Officer to the Board), the Committee considers a variety of factors, including:
the annual performance of Secureworks;
the performance of each of the executive officer’s functional area(s);
each executive officer’s performance, experience, and ability to continue contributing to the Company’s long-term strategic goals;
the historical compensation for each executive officer;
internal pay equity;
retention considerations; and
market-competitive compensation practices and amounts.
The Committee also considers these factors, among others, as it evaluates and recommends the Chief Executive Officer’s compensation for approval by the Board of Directors. The Board has full authority and responsibility for reviewing and approving the compensation of the Company’s Chief Executive Officer upon obtaining the Committee’s recommendation for such compensation.
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Use of Competitive Market Compensation Data – The Committee believes that it is important to be informed about current market practices utilized by comparable public companies to properly assess executive compensation packages, policies, and best practices utilized by similarly-situated organizations. During Fiscal 2023, FW Cook proposed, and the Committee approved, a group of companies that would be appropriate compensation peers based on the Company’s industry, focus, and size. Based on input received from the Committee, FW Cook compiled a list of software companies that have similar size and complexity to the Company. The resulting peer group was used by the Committee in making executive pay decisions for Fiscal 2024 and consists of the following companies:
A10 Networks, Inc.
Mandiant, Inc.
Rapid7, Inc.
ACI Worldwide, Inc.
New Relic, Inc.
SailPoint Technologies Holdings, Inc.
Blackbaud, Inc.
OneSpan, Inc.
Tenable Holdings, Inc.
Commvault Systems, Inc.
Progress Software Corporation
Varonis Systems, Inc.
Guidewire Software, Inc.
Qualys, Inc.
Verint Systems, Inc.
FW Cook analyzed the Company’s executive compensation program using the market data compiled by FW Cook from peer companies. The Committee used this information to inform its determination of Fiscal 2024 executive compensation. The market data provided by FW Cook included reference points with respect to base salary, annual performance bonuses and performance metrics, equity awards and structure/performance metrics, total cash compensation, and target total direct compensation. The Committee also considered other factors as described above in “—Process for Evaluating and Determining Named Executive Officer Compensation.”
Compensation Risk Oversight – The Committee annually reviews with management the Company’s material compensation processes, policies, and programs for all teammates across the following categories: compensation mix; short-term and long-term incentive plan design; performance measures; recoupment policies; and severance and change-in-control policies applicable to executive compensation programs. Based on its review with management, the Committee has determined that these processes, policies, and programs do not encourage unnecessary or excessive risk-taking, manipulation of financial measures to impact personal financial rewards, or behaviors that drive short-term results at the expense of long-term value creation.
Individual Compensation Components
Base Salary
We use base salary to attract and retain talented executive officers needed to successfully manage the business and execute its strategy. Base salaries for each named executive officer (other than the Chief Executive Officer) are determined annually by the Committee, and increases are not guaranteed to any named executive officer. The base salaries of our named executive officers vary based on each named executive officer’s level of responsibility, performance, experience, retention considerations, historical compensation, industry practice among our peers, and internal pay equity considerations.
Ms. Thomas’s base salary remained unchanged in Fiscal 2024 from the amount set at the commencement of her appointment as Chief Executive Officer, effective June 3, 2021. Ms. Thomas’s base salary is subject to annual review by the Committee and must be approved by the Board of Directors.
Mr. Fulton first served as a named executive officer following his promotion to President, Customer Success, on February 6, 2023. At the time of his promotion, Mr. Fulton’s base salary was $437,570, and was increased to $450,000 in Fiscal 2024, effective April 29, 2023, due to his promotion. Ms. Wegner was appointed by the Board of Directors as the Company’s Chief Financial Officer on June 9, 2024, and her base salary was established at an annual rate of $450,000. Mr. Hanna’s salary did not increase in Fiscal 2024, and remained at an annual rate of $425,000, effective April 30, 2022. Due to his retirement from the Company on May 5, 2023, Mr. Parrish did not receive an increase to his base salary in Fiscal 2024, and remained at an annual rate of $463,500, effective April 30, 2022. The Board appointed Mr. Grant to serve as Interim Chief Financial Officer from May 5, 2023, until June 9, 2023, in addition to his duties as Chief Accounting Officer. Mr. Grant did not receive a compensation increase in connection with this appointment, and his base salary was established at an annual rate of $300,000. All base salaries paid to our executive officers (other than the Chief Executive Officer) are subject to annual review and approval by the Committee.
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The table below summarizes the annual base salary rate of each named executive officer at the end of Fiscal 2024.
Name
Fiscal 2024 Salary
($)
Wendy K. Thomas
500,000
Stephen Fulton
450,000
Alpana Wegner
450,000
George B. Hanna
425,000
Paul M. Parrish
463,500
Christian Grant
300,000
Amended and Restated Incentive Bonus Plan
In Fiscal 2024, each named executive officer, except for Mr. Parrish, who retired from the Company on May 5, 2023, was eligible to receive a payment under our Amended and Restated Incentive Bonus Plan, or IBP.
The IBP provides a mechanism by which we reward our named executive officers and other eligible employees for helping us execute against our pre-determined 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.
The IBP is designed to align each executive officer’s compensation with the Company’s short-term financial and strategic performance, while also serving to attract, retain, and motivate our executive officers. The Committee has responsibility for administering the IBP, while IBP decisions regarding our Chief Executive Officer are made by the Board of Directors after considering the recommendations made by the Committee.
Annual bonuses are awarded to certain eligible employees selected to participate during our fiscal year, so long as our corporate performance goals are achieved at a level sufficient to fund the bonus pool and the eligible employee’s individual performance goals are satisfied. Eligible employees received their applicable bonuses under the IBP for Fiscal 2024.
IBP Formula
The following formula illustrates how the IBP payout is calculated based on the eligible earnings of each participant, the target incentive opportunity as a percentage of eligible earnings and the corporate and individual performance modifiers.

The Committee may consider the potential payout produced by the formula and such other factors as it deems appropriate, including significant business considerations and macroeconomic conditions, to ensure that the actual bonus payout appropriately accounts for those factors.
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IBP Target Incentive Opportunity
The Committee establishes a target incentive opportunity annually for each named executive officer expressed as a percentage of eligible earnings for that fiscal year. For Fiscal 2024, the target annual incentives for our named executive officers were as follows:
Name
Target Annual Incentive
Opportunity as % of
Eligible Earnings
Wendy K. Thomas
100%
Stephen Fulton
60%
Alpana Wegner
60%(1)
George B. Hanna
60%
Paul M. Parrish
60%(2)
Christian Grant
40%
(1)
Ms. Wegner was eligible for the full year of annual IBP opportunity. She joined the Company in June 2023.
(2)
Mr. Parrish’s incentive bonus opportunity for Fiscal 2024 was not realized due to his retirement, effective May 5, 2023; however, Mr. Parrish’s severance arrangements included cash compensation commensurate with a portion of this opportunity. Please see “—Other Compensation Matters—Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Severance Agreement with Paul M. Parrish” below for a discussion of Mr. Parrish’s severance arrangements.
IBP Corporate Performance Modifier
The Committee establishes corporate performance modifiers and target goals annually. For Fiscal 2024, the selected performance goals were designed to accelerate the growth and adoption of our Taegis security solutions, while taking deliberate action towards profitability. The Committee approved performance measures for Fiscal 2024 consisting of Taegis Annual Recurring Revenue, Adjusted EBITDA, and Professional Services Revenue. These performance measures are defined below.
For Fiscal 2024, “Taegis Annual Recurring Revenue,” or “Taegis ARR,” was defined as the annualized value of our Taegis subscription contracts as of a particular date. Taegis ARR was weighted at 50% of the corporate performance modifier.
Adjusted EBITDA for Fiscal 2024 was defined as earnings (loss) excluding the impact of interest, taxes, depreciation, amortization, and specific measures identified by management as non-recurring, infrequent, or unusual. Adjusted EBITDA was weighted at 50% of the corporate performance modifier.
Professional Services Revenue for Fiscal 2024 was defined as revenue generated from professional services contracts, which primarily consisted of incident response solutions, adversarial testing services, and other security or risk consulting services, provided however, that non-strategic professional services revenue was excluded. Non-strategic professional services revenue is any revenue generated from contracts for professional services that the Company has determined to no longer provide as the Company continues its transition to the higher value, higher margin Taegis security solutions. We view Professional Services Revenue as a representation of our success in leveraging the use of these services to drive further adoption of our Taegis security solutions. As a supplement, this measure is intended to be additive to overall achievement for the full-year performance period and increases, or “boosts,” the modifier by 1% (not to exceed 5%) for every one million dollars by which Secureworks exceeds the threshold amount set by the Committee. The Committee sets the threshold and target amounts for each performance measure at levels expected to challenge the executive officers of Secureworks.
The Committee retains the discretion to adjust IBP measures as it deems appropriate, including in situations where unanticipated or unplanned developments or emerging market realities occur during the performance period that, in the Committee’s judgment, warrant an adjustment. Such adjustments may be an increase in performance compensation over what would have been payable absent an adjustment or a decrease.
During Fiscal 2024, the Board and management made strategic decisions to prioritize achieving significant progress towards profitability. These decisive actions improved the Company’s Adjusted EBITDA, which markedly exceeded the Committee’s established threshold and target amounts. In light of the Company’s
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achievement in improving Adjusted EBITDA and considering the advice obtained from FW Cook, the Committee exercised its discretion under the IBP and set the corporate performance modifier for Fiscal 2024 at 75% for the Company’s named executive officers who were in their respective roles at the end of Fiscal 2024.
For Fiscal 2024, Secureworks ended the period with $264.3 million in Taegis ARR, below both the threshold and target amounts set by the Committee. For Fiscal 2024, Secureworks ended the period with an Adjusted EBITDA loss of $27.8 million, significantly exceeding the Committee’s established threshold and target amounts of a loss of $39 million and a loss of $36.4 million, respectively. The threshold and target amounts set by the Committee for the Professional Services Revenue supplemental “booster” were not achieved in Fiscal 2024. We do not disclose the threshold or target amounts for Taegis ARR, or the threshold, target, or actual amounts for Professional Services Revenue, because these amounts represent confidential financial information, the disclosure of which would result in competitive harm by, among other matters, providing our competitors with insight into sensitive aspects of our financial modeling, short-term and long-term forecasts, and sales strategies. As a result of the performance described above and the relative weighting of Taegis ARR and Adjusted EBITDA previously set by the Committee, the corporate performance modifier would have been 65%.
IBP Individual Performance Modifier
Given the potential for the executive officers to influence corporate performance, the Committee (or, with regard to our Chief Executive Officer, the Board of Directors) takes into account personal performance in determining each executive officer’s bonus amount under the IBP, assigning each an individual modifier from 0% to 150% following the end of the preceding fiscal year.
In determining individual performance modifiers, the Committee (or, with respect to our Chief Executive Officer, the Board) considered such factors as achievement of financial targets for the business, cost management, strategic and transformational objectives relating to each executive officer’s business unit or function, and ethics and compliance. The Committee does not place specific weightings on any such objective, but it assigns each individual executive officer an individual performance modifier based on a holistic and subjective assessment of the officer’s performance, taking into account the Chief Executive Officer’s recommendations for each of the executive officers reporting to her. The individual performance modifiers for the named executive officers are as follows:
IBP Payouts for Fiscal 2024
Name
Target
IBP
($)
Corporate
Modifier
(%)
Individual
Modifier
(%)
Bonus
Payment
($)
Wendy K. Thomas
500,000
75
115
431,250
Stephen Fulton(1)
268,307
75
110
221,353
Alpana Wegner(2)
270,000
75
120
243,000
George B. Hanna
255,000
75
115
219,937
Paul M. Parrish(3)
Christian Grant(4)
115,805
83
100
96,118
(1)
Mr. Fulton’s base salary was increased to $450,000, effective April 29, 2023. As a result, Mr. Fulton’s eligible earnings represent a combination of his salary in Fiscal 2024 from the date of Mr. Fulton’s service as the Company’s President, Customer Success on February 6, 2023 until April 29, 2023, when his title changed to President.
(2)
Ms. Wegner was eligible for the full year of annual IBP opportunity. She joined the Company in June 2023.
(3)
Mr. Parrish’s incentive bonus opportunity for Fiscal 2024 was not realized due to his retirement, effective May 5, 2023; however, Mr. Parrish’s severance arrangements included cash compensation commensurate with a portion of this opportunity. Please see “—Other Compensation Matters—Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Severance Agreement with Paul M. Parrish” below for a discussion of Mr. Parrish’s severance arrangements.
(4)
Mr. Grant’s base salary was increased to $300,000 in early Fiscal 2024 and his annual compensation was $289,513 for Fiscal 2024. The Compensation Committee considered the Company’s achievement against its adjusted EBITDA goals and advice obtained from FW Cook and exercised its discretion to approve a corporate modifier of 83% for all eligible employees who were not serving as an executive officer or as a Senior Vice President of the Company at the end of Fiscal 2024.
Equity Incentives
Equity incentive opportunities are the most significant component of total target compensation for executive officers. The provision of equity incentive opportunities is consistent with our compensation philosophy and
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reflects our core compensation objectives by aligning compensation with stockholders’ interests, creating a culture of meritocracy, and enhancing our ability to attract and retain executive talent.
For Fiscal 2023 and Fiscal 2024, our named executive officers and other senior vice presidents received a combination of time-based restricted stock units, or RSUs, and performance-based restricted stock units, or PSUs. The allocation of the annual grants for Fiscal 2024 consisted of 50% in the form of performance-based PSUs and 50% in the form of time-based RSUs. Ms. Thomas, Mr. Fulton, and Mr. Hanna received their annual grants for Fiscal 2024 in March 2023.
Ms. Wegner received a grant in June 2023 following the beginning of her employment with the Company as Chief Financial Officer. This grant was approved by the Compensation Committee, which included consideration of market compensation practices for the chief financial officer role. The June 2023 grant to Ms. Wegner consisted entirely of restricted stock units, which is consistent with our practices for newly-hired executives.
Due to Mr. Parrish’s notice of retirement to the Company in February 2023, Mr. Parrish did not receive an equity grant for Fiscal 2024 prior to his retirement on May 5, 2023.
Time-based RSUs and performance-based PSUs vest ratably over a three-year period. The number of earned PSUs, if any, are based on the levels of financial performance achieved during the Fiscal Year 2024 performance period. The financial measures for Fiscal 2024 correspond to the financial measures used for our IBP awards for Fiscal 2024. PSUs have a maximum vesting opportunity of up to 200% of the target number of shares. If target is not achieved, then the vesting opportunity could be 0% and all PSUs could be forfeited. We believe our use of a full-year performance period for financial performance measures effectively aligns our executive officers with the Company’s short-term and long-term financial goals, allowing us to adjust for factors outside of the Company’s control.
Taking into consideration the significant achievement towards Adjusted EBITDA and the advice obtained from FW Cook, the Committee exercised its discretion and set the Fiscal 2024 corporate performance modifier at 75% for the Company’s named executive officers who were in their respective roles at the end of Fiscal 2024. Consistent with the performance described above and the relative weighting of Taegis ARR and Adjusted EBITDA previously set by the Committee, the corporate performance modifier would have been 65%. The Committee has discretion to adjust equity incentive performance measures as it deems appropriate, including in situations discussed above and in connection with the adjustment of IBP measures.
A corresponding number of the PSUs awarded in Fiscal 2024, after the resulting forfeiture described above, are eligible to vest ratably over a three-year period for Ms. Thomas, Mr. Fulton, and Mr. Hanna. Accordingly, Ms. Thomas’s PSUs in the amount of 376,059 units vest in three equal installments on each of the first, second and third anniversaries of the grant date beginning on March 13, 2023. Mr. Fulton’s PSUs in the amount of 198,622 units vest in three equal installments on each of the first, second and third anniversaries of the grant date beginning on March 13, 2023. Mr. Hanna’s PSUs in the amount of 132,414 units vest in three equal installments on each of the first, second and third anniversaries of the grant date beginning on March 13, 2023.
Other Compensation Components
Benefits and Perquisites
Secureworks provides limited benefits and perquisites to its executive officers. While such benefits and perquisites are not a significant part of Secureworks’s executive officer compensation on a dollar-value basis, the Committee (or, with respect to the Chief Executive Officer, the Board of Directors) believes that these elements of compensation are important to delivering a competitive package that allows us to attract and retain qualified executive officers. Benefits and perquisites include those described below.
Annual Physical – Secureworks pays for a comprehensive annual physical for each executive officer and each such executive officer’s spouse or domestic partner, and it reimburses the executive officer’s related travel and lodging costs, each subject to an annual maximum payment of $5,000 per person.
Other – The executive officers participate in Secureworks’s other benefit plans on the same terms as other teammates. These plans include medical, dental and life insurance benefits, and the Secureworks 401(k) Plan. For additional information, please see “Compensation of Executive Officers—Other Benefit Plans.”
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Other Compensation Matters
Stock Ownership Guidelines
The Board of Directors has not adopted stock ownership requirements for our directors or executive officers. The Board and the Committee believe that the design of Secureworks’s equity compensation strategy and structure for its executive officers, including named executive officers, links the long-term interests of Company executive officers with that of its stockholders.
Policy on Hedging Transactions and Pledging of Securities
Secureworks maintains a securities trading policy that applies to our directors and teammates, including our named executive officers and other officers. This policy prohibits certain activities relating to specified securities, as described below. The policy also generally applies to family members who reside with any director or teammate, any other person who lives in the director or teammate’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 teammate, as well as entities, such as a corporation, partnership or trust, that is controlled by the director or teammate.
The activities prohibited by the policy include hedging and monetization transactions that would permit any such person to continue to own the securities without the full risks and rewards of ownership; transactions in put options, call options, or other derivative securities on an exchange or in any other organized market; and the holding of the securities in a margin account or other pledging of the securities as collateral for a loan. The policy prohibits hedging and monetization transactions without considering how they are accomplished, whether through financial instruments such as prepaid variable forwards, equity swaps, collars, exchange funds. or otherwise, including short sales, option positions and pledges that arise from certain types of hedging transactions.
The foregoing provisions of the securities trading policy apply to transactions in all securities, including equity securities, that are, or may be, 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 the Company’s securities.
The administrator of the policy has the discretion to, on a case-by-case basis and in appropriate circumstances, waive or modify the restrictions and prohibitions on the hedging and other transactions described above.
Recoupment Policy for Performance-Based Compensation
In November 2023, the Board of Directors adopted an Excess Incentive-Based Compensation Recoupment Policy, or the “Recoupment Policy,” that applies to incentive-based compensation paid by Secureworks to certain teammates on or after October 2, 2023, which is intended to comply with Nasdaq listing standards. Pursuant to the Recoupment Policy, in the event we are required to prepare an accounting restatement of our financial statements due to material non-compliance with any financial reporting requirement under the federal securities laws, we will seek to recover the excess incentive-based compensation received by any current or former executive officer or any other individual deemed to be a “Covered Executive” as defined in the Recoupment Policy, during the prior three fiscal years that is in excess of the amount the current or former executive officer otherwise would have received had the incentive-based compensation been determined based on the restated financial statements. A copy of the Recoupment Policy is filed as Exhibit 97.1 to our Form 10-K for Fiscal 2024.
Severance and Change-in-Control Arrangements Applicable to Named Executive Officers
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 current named executive officers equal to twelve months of base salary, twelve 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 without cause and are offset by other severance payments.
Severance Agreement with Paul M. Parrish
As reported in February 2023, Mr. Parrish notified Secureworks of his intent to retire from his position as our Chief Financial Officer, effective May 5, 2023. On March 21, 2023, we entered into a severance agreement
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and release with Mr. Parrish, which is described below under “Compensation of Executive Officers—Potential Payments Upon Termination of Employment or Change in Control—Separation Agreement with Mr. Parrish.”
Non-Solicitation and Non-Competition Agreements Applicable to Named Executive Officers
Each named executive officer has entered into a Protection of Sensitive Information, Noncompetition and Nonsolicitation Agreement with the Company, which we refer to below as the Agreement, with us.
Under the terms of the Agreement, the foregoing named executive officers shall be entitled to severance pay, which equals twelve months of his or her current base salary, payable in four substantially equal quarterly installments if the named executive officer is not terminated for Cause (as defined in the Agreement), the severance agreement is not terminated during the revocation period and the named executive officer does not resign.
Under the Agreement, “Cause” means:
a violation of obligations regarding confidentiality or protection of sensitive, confidential, or proprietary information, or trade secrets;
an act or omission resulting in the named executive officer being charged with a criminal offense which constitutes a felony or involves moral turpitude or dishonesty;
conduct which constitutes poor performance, gross neglect, insubordination, willful misconduct, or a breach of the Company’s Code of Conduct or a fiduciary duty to the Company or its shareholders; or
the Company determined that the named executive officer violated state or federal law relating to the workplace environment, including, without limitation, laws relating to sexual harassment or age, sex, race, or other prohibited discrimination.
Each named executive officer’s Agreement with the Company also includes non-competition and non-solicitation obligations, which requires each named executive officer to comply with these obligations for a period of twelve months following the termination of such executive officer’s employment. During this twelve-month period, the named executive officer may not work in a specified geographic region or for a Direct Competitor (as defined in the Agreement) with duties or services substantially similar to those that such named executive officer performed for Secureworks during the prior twenty-four months.
Additionally, for a twelve-month period, the Company’s named executive officers may not solicit business from the Company’s customers for the purpose of providing competing products or services or attempt to solicit any of our teammates, contractors, consultants, or any person employed, contracted, or consulted with Secureworks within the last twenty-four months, to cause such person’s employment or relationship with the Company to end.
We believe that the terms of the Agreement, specifically the non-solicitation and non-competition provisions, are reasonable and necessary to protect Secureworks’s sensitive information, goodwill, and legitimate business interests.
Change-in-Control Terms Applicable to Named Executive Officers
None of the named executive officers’ Agreements have a change-in-control severance provision; however, each of the named executive officers has entered into a Performance Stock Unit Agreement for Executives, or PSU Agreement, and/or Restricted Stock Unit Agreement for Executives, or RSU Agreement, which do include a change-in-control provision. Both the PSU Agreement and the RSU Agreement describe what will constitute a change-in-control event. Under each PSU Agreement, the PSUs become earned based upon the greater of (1) the deemed attainment of the performance goals at target or (2) the actual attainment of the performance goals as of the change-in-control event. These PSUs become 100% vested as of the date of an involuntary termination where such occurrence happens within twelve months of the change-in-control event. An “involuntary termination” is a defined term in the PSU Agreement. The change-in-control provision applicable to the RSU Agreement of the Company’s named executive officers also provides that the RSUs vest upon an involuntary termination within twelve months following a change-in-control event, with “involuntary termination” being a defined term within the RSU Agreement. An involuntary termination event under the PSU Agreement and RSU Agreement includes involuntary dismissal for reasons other than “Cause” (as defined for purposes of the Agreement) and voluntary resignation for a “good reason” (as defined in the applicable RSU Agreement or PSU Agreement), examples of which are listed below.
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Under the PSU Agreement and RSU Agreement, “good reason” generally is defined as any of the following events if, in each case, not timely cured by the Company:
a material reduction in compensation (base salary, target annual compensation or long-term incentive compensation) or health or welfare benefits (unless such reduction is for all teammates of the same pay grade);
a demotion of more than one pay grade; and
a relocation of the named executive officer’s work location by more than 50 miles.
In addition to the above, we had 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.
For more information about potential payments to the Company’s named executive officers, see “Compensation of Executive Officers—Potential Payments Upon Termination of Employment or Change in Control.”
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COMPENSATION OF EXECUTIVE OFFICERS
Fiscal 2024 Summary Compensation Table
The following table shows the total compensation paid for the fiscal years indicated by Secureworks to the following persons, each of whom was an executive officer of Secureworks for at least a portion of Fiscal 2024:
Wendy K. Thomas, who served as our Chief Executive Officer
Stephen Fulton, who served as our President
Alpana Wegner, who was appointed by the Board as our Chief Financial Officer, effective June 9, 2023
George B. Hanna, who served as our Chief Legal & Administrative Officer
Paul M. Parrish, who served as our Chief Financial Officer until his retirement on May 5, 2023
Christian Grant, who served as our Interim Chief Financial Officer from Mr. Parrish’s retirement on May 5, 2023, until Ms. Wegner’s appointment on June 9, 2023, as the Company’s Chief Financial Officer
We refer to these executive officers as our named executive officers.
Name and Principal Position
Year
Salary
($)
Bonus(1)
($)
Stock
Awards(2)
($)
Non-Equity
Incentive Plan
Compensation(3)
($)
All Other
Compensation
($)
Total
($)
Wendy K. Thomas(4)
Chief Executive Officer
2024
500,000
71,875
7,243,375
359,375
​13,171
8,187,796
2023
519,230
5,521,546
542,596
14,538
6,597,910
2022
473,173(4)
9,538,959
337,345
9,963
10,359,440
Stephen Fulton(5)
President
2024
447,178
36,892
​3,833,421
184,461
3,528
​4,505,480
2023
2022
Alpana Wegner(6)
Chief Financial Officer
2024
296,461
110,039
3,241,457
132,960
2,033
3,782,950
2023
2022
George B. Hanna
Chief Legal &
Administrative Officer
2024
425,000
36,656
2,555,609
183,281
6,952
3,207,498
2023
434,615
2,178,734
272,504
15,352
2,901,205
2022
Paul M. Parrish(7)
Former Chief Financial Officer
2024
124,788
378,799
503,587
2023
477,692
2,614,492
272,285
18,759
3,383,228
2022
450,000
3,442,492
219,834
14,632
4,126,958
Christian Grant(8)
Interim Chief Financial
Officer and Chief Accounting Officer
2024
289,513
23,740
489,705
72,378
9,046
884,382
2023
2022
(1)
Consistent with our philosophy of rewarding performance while accounting for current business conditions, and consistent with the Company exceeding its Adjusted EBITDA Target after the Committee’s shift in strategic focus to Adjusted EBITDA improvement, the Committee exercised discretion to set the final Fiscal 2024 corporate performance modifier under the SecureWorks Corp. Amended and Restated Incentive Bonus Program, or IBP, and for PSU grants under the SecureWorks Corp. 2016 Long-Term Incentive Plan at 75% of target. Mr. Grant’s Corporate Modifier was set at 83%, consistent with other teammates since he was no longer a named executive officer at the end of Fiscal 2024. Ms. Wegner was eligible for the full-year IBP payout.
(2)
The fair value for restricted stock awards and restricted stock unit awards under the Company’s plan are generally based on the closing price of the Company’s Class A common stock as reported on the Nasdaq Global Select Market, or Nasdaq, on the grant date. Amounts reported for Fiscal 2024 represent the value of restricted stock units granted on March 13, 2023, to Ms. Thomas, Mr. Fulton, Mr. Hanna, and Mr. Grant and on June 14, 2023, to Ms. Wegner. Amounts for Ms. Thomas, Mr. Fulton, Ms. Wegner, Mr. Hanna, and Mr. Grant were contingent upon shareholder approval of a new share amendment. Fair value was determined after the shareholder approval contingency was lifted by obtaining shareholder approval on June 27, 2023, and in accordance with FASB ASC Topic 718. Additionally, amounts reported represent adjustments to the PSU awards for relative performance under the Plan, with additional adjustments for modifications to the awards based on Board action to increase the relative attainment level. The modifications represent share prices ranging from $6.87 per share to $7.15 per share, depending on the date of the modification. Amounts reported for Fiscal 2023 represent restricted stock units granted on March 13, 2022, to Mr. Parrish and Mr. Hanna and on March 15, 2022, to Ms. Thomas. Amounts reported for Fiscal 2022 represent restricted stock units granted on March 9, 2021, and June 3, 2021, to Ms. Thomas, and restricted stock units granted on March 9, 2021, and July 26, 2021, to Mr. Parrish and Mr. Hanna. In accordance with
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FASB ASC Topic 718, the time-based restricted stock unit awards granted on March 9, 2021, are valued as of June 21, 2021, the date stockholders approved the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan. Amounts reflected for Ms. Thomas, Mr.  Parrish, and Mr. Hanna were contingent upon shareholder approval. Fair value was determined after shareholder approval was obtained on June 21, 2021.
(3)
Amounts reported represent awards earned under the SecureWorks Corp. Amended and Restated Incentive Bonus Plan.
(4)
Ms. Thomas was appointed as President and Chief Executive Officer, effective September 3, 2021. On February 6, 2023, Ms. Thomas relinquished her title as President to Mr. Fulton, who became President, Customer Success as of the same date.
(5)
Mr. Fulton was appointed by the Board of Directors as the President of Customer Success, effective February 6, 2023, and his title was changed to President in March 2024.
(6)
Ms. Wegner was appointed as Chief Financial Officer, effective June 9, 2023.
(7)
Mr. Parrish’s employment with Secureworks ended upon his retirement on May 5, 2023.
(8)
Mr. Grant was appointed as the Company’s Interim Chief Financial Officer from May 5, 2023, upon Mr. Parrish’s retirement from the Company, until June 9, 2023, the effective date for Ms. Wegner’s appointment as the Chief Financial Officer.
All Other Compensation Table
The following table summarizes the information included in the All Other Compensation column for Fiscal 2024 in the Fiscal 2024 Summary Compensation Table.
Name
401(k) Plan
Matching
Contribution
($)
Benefit Plans(1)
($)
Severance
Benefits(2)
($)
Consulting
Fees
($)
Total
($)
Wendy K. Thomas
7,500
5,671
13,171
Stephen Fulton
7,500
3,528
11,028
Alpana Wegner
7,500
2,033
18,759
George B. Hanna
7,500
6,952
15,352
Paul Parrish
7,500
23,071
376,427
406,998
Christian Grant
7,500
1,546
9,046
(1)
Represents fitness benefits available to all teammates, Company-provided long-term disability benefits and/or travel for purposes of the Champions Club sales conference.
(2)
Mr. Parrish retired from the Company, effective May 5, 2023. Mr. Parrish’s severance benefits represent amounts due under his Separation and Release Agreement. For more information about Mr. Parrish’s Separation and Release Agreement, see “Compensation of Executive Officers—Potential Payments Upon Termination of Employment or Change in Control—Separation Agreement with Paul Parrish.”
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Grants of Plan-Based Awards in Fiscal 2024
The following table sets forth certain information about grants of plan-based awards that Secureworks made to the named executive officers in Fiscal 2024. For more information about the plans under which these awards were granted, see “Compensation Discussion and Analysis—Individual Compensation Components—Annual Bonus Plans—Incentive Bonus Plan” and “—Equity Incentives.”
Name
Type of
award(1)
Grant
date
Estimated future payouts
under non-equity incentive
plan awards(2)
Estimated future payouts
under equity incentive
plan awards(3)
All other
stock
awards:
Number
of shares
of stock
or units
(#)
Grant
date fair
value of
stock and
option
awards
($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Wendy K. Thomas
IBP
250,000
500,000
PSU(4)
3/13/2023
250,706
501,412
1,002,824
3,794,190
RSU(5)
3/13/2023
501,412
3,449,715
Stephen Fulton
IBP
134,154
268,307
PSU(4)
3/13/2023
132,415
264,830
529,660
2,011,384
RSU(5)
3/13/2023
264,831
1,822,037
Alpana Wegner
IBP
135,000
270,000
RSU(5)
6/14/2023
471,142
3,241,457
George Hanna
IBP
127,500
255,000
PSU(4)
3/13/2023
88,277
176,553
353,106
1,340,918
RSU(5)
3/13/2023
176,554
1,214,692
Paul M. Parrish(6)
IBP
PSUs
RSUs
Christian Grant
IBP
57,903
115,805
 
RSU(5)
2/22/2023
35,868
246,772
 
RSU(5)
3/13/2023
35,310
242,933
(1)
Of the awards shown in the table:
“IBP” refers to the SecureWorks Corp. Amended and Restated Incentive Bonus Plan.
“PSU” refers to Fiscal 2024 performance-based stock units eligible to vest based on achievement measured against financial performance goals for Fiscal 2024. See note 4 below.
“RSU” refers to time-based restricted stock units.
(2)
Except for Mr. Parrish, who retired in May 2023, each of the named executive officers participated in the IBP for Fiscal 2024. In accordance with the Company’s performance and the Committee’s exercise of discretion, accounting for the advice received from FW Cook, the Committee’s independent compensation consultant, awards under the IBP were funded at: (1) 75.0% for Ms. Thomas, Mr. Fulton, Ms. Wegner, and Mr. Hanna, and (2) 83% for Mr. Grant. An individual modifier was applied for Ms. Thomas, Mr. Fulton, Ms. Wegner, Mr. Hanna, and Mr. Grant.
(3)
The amounts shown in the Threshold, Target and Maximum columns reflect the minimum, target, and maximum number, respectively, of Fiscal 2024 performance-based stock units that are eligible to vest subject to the achievement of Fiscal 2024 performance goals. Plan participants must exceed the threshold goal in order to earn an award; however, the Committee may exercise its discretion in determining the Company’s achievement under the corporate performance measures established for the Fiscal 2024 performance-based stock units eligible to vest. The maximum number of shares is 200% of the target number of shares. If any of these units become eligible to vest, one-third of the restricted stock units would vest on the first anniversary of the grant date and the remaining two-thirds would vest in equal installments on the second and third anniversaries of the grant date. Mr. Parrish did not receive an equity grant in Fiscal 2024 and Mr. Grant did not receive PSUs in Fiscal 2024. For more information about these performance-based stock units, see “Compensation Discussion and Analysis—Individual Compensation Components—Equity Incentives.”
(4)
The amounts shown represent the shares subject to restricted stock unit awards that may be eligible to vest upon achievement of the financial performance goals for Fiscal 2024, which were Taegis annual recurring revenue, or Taegis ARR, adjusted EBITDA, and Professional Services Revenue. For more information about these performance-based stock units, see “Compensation Discussion and Analysis—Individual Compensation Components—Equity Incentives.” The grant date fair value is based on the closing price of the Company’s Class A common stock as reported on the Nasdaq Global Select Market, or Nasdaq, of $6.88 for awards granted based on the share price when the grant condition was lifted by obtaining shareholder approval, which was adjusted for (a) forfeitures based on the Committee’s approval of the corporate performance modifier based on actual performance against these financial performance goals, and (b) modifications to the corporate modifier based on the Committee’s approval (or, in the case of the CEO, the Board’s approval upon the Committee’s recommendation) above actual performance against the financial performance goals, at a share price of $6.87 per share to $7.15 per share at the time of these modifications.
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(5)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the grant date.
(6)
Mr. Parrish retired from his position as the Company’s Chief Financial Officer, effective May 5, 2023. Due to Mr. Parrish’s retirement, in Fiscal 2024, he did not participate in the IBP and did not receive grants of RSUs or PSUs.
Outstanding Equity Awards at End of Fiscal 2024
The following table sets forth information with respect to our named executive officers’ outstanding equity awards as of the end of Fiscal 2024.
 
Stock Awards
Name
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
(#)
Wendy K. Thomas
39,231(2)
300,117
27,775(3)
212,478
42,517(4)
325,255
30,102(5)
230,280
161,766(6)
1,237,509
153,679(7)
1,175,644
501,412(8)
3,835,801
376,059(9)
2,876,851
Stephen Fulton
12,037(2)
92,083
11,254(10)
86,093
66,666(11)
509,994
45,568(12)
348,595
43,289(13)
331,160
264,831(14)
2,025,957
198,622(15)
1,519,458
Alpana Wegner
471,142(16)
3,604,236
George Hanna
24,074(17)
184,166
22,510(18)
172,201
7,737(19)
59,188
7,234(20)
55,340
56,960(21)
435,744
54,112(22)
413,956
176,554(23)
1,350,638
132,414(24)
1,012,967
Paul M. Parrish(25)
Christian Grant
3,829(26)
29,291
14,809(27)
113,288
35,868(28)
274,390
35,310(29)
270,121
(1)
Based on the closing price per share of Class A common stock of $7.65 as of February 2, 2024, as reported on Nasdaq.
(2)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2021 grant date.
(3)
Reflects award of performance-based restricted stock units granted on March 9, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2022. Based on the certification by the Committee, 93.5% of the 117,695 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.
(4)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the June 3, 2021 grant date.
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(5)
Reflects award of performance-based restricted stock units granted on June 3, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2022. Based on the certification by the Committee, 70.8% of the 127,555 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.
(6)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 15, 2022 grant date.
(7)
Reflects award of performance-based restricted stock units granted on March 15, 2022. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2023. Based on the certification by the Committee, 95% of the 242,652 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.
(8)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 13, 2023 grant date.
(9)
Reflects award of performance-based restricted stock units granted on March 13, 2023. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee and additional in February 2024. Based on the certification by the Committee, 75% of the 501,412 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.
(10)
Reflects award of performance-based restricted stock units granted on March 9, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2022. Based on the certification by the Committee, 93.5% of the 36,112 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.
(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 December 16, 2021 grant date.
(12)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2022 grant date.
(13)
Reflects award of performance-based restricted stock units granted on March 9, 2022. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2023. Based on the certification by the Committee, 95% of the 68,352 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.
(14)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 13, 2023 grant date.
(15)
Reflects award of performance-based restricted stock units granted on March 13, 2023. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2024. Based on the certification by the Committee, 75% of the 264,830 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.
(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 June 14, 2023 grant date.
(17)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2021 grant date.
(18)
Reflects award of performance-based restricted stock units granted on March 9, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2022. Based on the certification by the Committee, 93.5% of the 72,225 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.
(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 July 26, 2021 grant date.
(20)
Reflects award of performance-based restricted stock units granted on July 26, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2022. Based on the certification of achievement of the applicable performance goals by the Committee, 93.5% of the 23,213 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.
(21)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2022 grant date.
(22)
Reflects award of performance-based restricted stock units granted on March 9, 2022. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee in February 2023. Based on the certification of achievement of the applicable performance goals by the Committee, 95% of the 85,444 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.
(23)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 13, 2023 grant date.
(24)
Reflects award of performance-based restricted stock units granted on March 13, 2023. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the
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Committee in February 2024. Based on the certification by the Committee, 75% of the 176,553 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.
(25)
Mr. Parrish notified the Company on February 3, 2023 that he intended to retire from his position as the Company’s Chief Financial Officer, effective May 5, 2023. Due to Mr. Parrish’s retirement and pursuant to his Separation Agreement and Release, Mr. Parrish forfeited all shares or units of stock outstanding that were not due to vest within 90 calendar days from the date of his retirement.
(26)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2021, grant date.
(27)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2022, grant date.
(28)
Reflects award of time-based restricted stock units. 100% percent of the grant vests on the third anniversary after the February 22, 2023, grant date.
(29)
Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 13, 2023, grant date.
Option Exercises and Stock Vested
The following table sets forth certain information about option exercises and vesting of restricted stock or restricted stock units during Fiscal 2024 for each of the named executive officers on an aggregate basis.
 
Stock Options
Stock Awards
Name
Number of shares
acquired on exercise
(#)
Value realized on
exercise(1)
($)
Number of shares
acquired on vesting
(#)
Value realized on
vesting(2)
($)
Wendy K. Thomas
374,623
2,981,224
Stephen Fulton
179,902
1,277,712
Alpana Wegner
George Hanna
178,911
1,437,690
Paul M. Parrish