awre-def14a_20220615.htm

DEF 14A 1 awre-def14a_20220615.htm DEF 14A awre-def14a_20220615.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 Rule 14a-12

AWARE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
☒		No fee required.
☐		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required b item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0.11

* * * * *

April 15, 2022

Dear Fellow Stockholder:

You are cordially invited to attend the 2022 Annual Meeting of Shareholders of Aware, Inc. (Aware) to be held at Aware’s corporate office, located at 40 Middlesex Turnpike in Bedford, Massachusetts 01730 on Wednesday, June 15, 2022 at 10:00 a.m. local time. The attached notice and proxy statement describe the formal business to be transacted at the meeting.

We are furnishing proxy materials to our shareholders over the Internet. You may read, print and download our 2021 Annual Report to Stockholders and our Proxy Statement at www.proxydocs.com/AWRE. On April 15, 2022, we mailed our shareholders a notice containing instructions on how to access these materials and how to vote their shares. The notice provides instructions on how you can request a paper copy of these materials by mail, by telephone or by email. If you requested your materials via email, the email contains voting instructions and links to the materials on the Internet.

You may vote your shares by proxy or in person at the Annual Meeting. The Annual Meeting is being held so that stockholders may consider the election of directors, the ratification of the appointment of RSM US LLP as Aware’s independent registered public accounting firm for the year ending December 31, 2022, and the consideration of an advisory, non-binding resolution with respect to the executive compensation described in this Proxy Statement.

The Board of Directors of Aware has determined that the matters to be considered at the Annual Meeting are in the best interests of Aware and its shareholders. For the reasons set forth in the Proxy Statement, the Board of Directors unanimously recommends a vote “FOR” each matter to be considered.

On behalf of the Board of Directors and the officers and employees of Aware, I would like to take this opportunity to thank our shareholders for their continued support of Aware. We look forward to seeing you at the meeting.

	Sincerely,

	/s/ Robert A. Eckel
	Robert A Eckel Chief Executive Officer and President

Aware, Inc.

Notice of Annual Meeting of Stockholders

to be held on June 15, 2022

Aware, Inc. hereby gives notice that it will hold its annual meeting of stockholders at the offices of Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts on Wednesday, June 15, 2022, beginning at 10:00 a.m., local time, for the following purposes:

To consider and vote upon the re-election of Brent P. Johnstone and John S. Stafford, III as our Class II directors;

To conduct an advisory vote to approve the compensation of our named executive officers;

To ratify the appointment by our audit committee of RSM US LLP as our independent registered public accounting firm for our fiscal year ended December 31, 2022; and

To transact such other business as may properly come before the annual meeting or any adjournment thereof.

The board of directors has fixed the close of business on April 8, 2022 as the record date for the determination of the stockholders of Aware entitled to receive notice of the annual meeting and to vote at the meeting. Only stockholders of record on that date are entitled to receive notice of the annual meeting and to vote at the meeting or any adjournment thereof.

By order of the board of directors,

Robert A. Eckel

Chief Executive Officer and President

April 15, 2022

Bedford, Massachusetts

YOUR VOTE IS IMPORTANT

Please sign and return the enclosed proxy or vote your proxy over the Internet or by telephone,

whether or not you plan to attend the meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on June 15, 2022. The Proxy Statement and our 2021 Annual Report to Stockholders are available on the following web site: www.proxydocs.com/AWRE.

This website does not use “cookies” to track or identify visitors.

Aware, Inc.

40 Middlesex Turnpike

Bedford, Massachusetts 01730

(781) 276-4000

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

to be held on June 15, 2022

This proxy statement relates to the 2021 annual meeting of stockholders of Aware, Inc. (“Aware”). The annual meeting will take place as follows:

Date:June 15, 2022

Time:10:00 a.m.

Place:Aware, Inc.

40 Middlesex Turnpike

Bedford, Massachusetts

Our board of directors is soliciting proxies for the annual meeting and adjournments of the annual meeting. If a stockholder returns a properly executed proxy or votes his or her proxy over the Internet or by telephone, the shares represented by the proxy will be voted in accordance with the stockholder’s directions. If a stockholder does not specify a vote on any proposal, the shares covered by his or her proxy will be voted on that proposal as management recommends. We encourage stockholders to vote on all proposals. A stockholder may revoke his, her or its proxy at any time before it has been exercised.

We are mailing this proxy statement and the enclosed form of proxy to stockholders on or about April 15, 2022.

PROXY STATEMENT

table of contents

Annual Meeting of Stockholders	2

Purpose of the annual meeting	2
Record date	2
Shares Held by Brokers or Nominees	3
Quorum	4
Vote required; tabulation of votes	4
Revocation of proxies	4
Solicitation of proxies	5

Matters To Be Considered At The Annual Meeting	6

Proposal One—Re-Election of Class II Directors	6

Proposal Two—Advisory Vote on Executive Compensation	6

Proposal Three— Ratification of the Selection of our Independent Registered Public Accounting Firm	7

Corporate Governance	8

Directors and Executive Officers	10
Directors and executive officers	10
Board leadership structure and role in risk oversight	13
Certain relationships and related transactions	14
Committees and meetings of the board	14
Policy regarding board attendance	16
Communications with our board of directors	16
Code of ethics	16
Compensation committee interlocks and insider participation	17

Compensation of Executive Officers and Directors	18

DIRECTOR COMPENSATION	22

Report of the Audit Committee	23

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	24
Principal stockholders	24
Equity compensation plan information	26

Delinquent Section 16(a) Reports	27

Independent Registered Public Accounting Firm	28
Fees for professional services	28
Attendance at annual meeting	28
Pre-approval policies and procedures	28

Stockholder Proposals	29

Available Information	29

Annual Meeting of Stockholders

Purpose of the annual meeting

At the annual meeting, we will submit four proposals to our stockholders:

Proposal One:

To re-elect Brent P. Johnstone and John S. Stafford, III as our Class II directors for three-year terms; and

Proposal Two: An advisory vote to approve the compensation of our named executive officers;

Proposal Three: Ratification of the appointment by our audit committee of RSM US LLP as our independent registered public accounting firm for our fiscal year ended December 31, 2022. We do not intend to submit any other proposals to the stockholders at the annual meeting. Our board of directors was not aware, a reasonable time before mailing this proxy statement to stockholders, of any other business that may be properly presented for action at the annual meeting. If any other business properly comes before the annual meeting, the persons present will have discretionary authority to vote the shares they own or represent by proxy in accordance with their judgment, to the extent authorized by applicable regulations.

Record date

Our board of directors has fixed the close of business on April 8, 2022 as the record date for the annual meeting. Only stockholders of record at the close of business on that date are entitled to receive notice of the meeting and to vote at the meeting or any adjournment of the meeting. At the close of business on the record date, there were issued and outstanding 21,642,260 shares of our common stock, each of which is entitled to cast one vote. A list of stockholders entitled to notice of the 2022 annual meeting is available for inspection by any stockholder at our principal office at 40 Middlesex Turnpike, Bedford, MA.

Methods of voting

The shares represented by your properly signed proxy card will be voted in accordance with your directions. If you do not specify a choice with respect to a proposal for which our board of directors has made a recommendation, the shares covered by your signed proxy card will be voted as recommended in this proxy statement. We encourage you to vote on all matters to be considered.

Voting by mail:

By signing and returning the proxy card in the enclosed envelope, you are enabling the individuals named on the proxy card (known as “proxies”) to vote your shares at the meeting in the manner you indicate. We encourage you to sign and return the proxy card even if you plan to attend the meeting. In this way, your shares will be voted even if you are unable to attend the meeting. If you received more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

Voting by telephone:

To vote by telephone, please follow the instructions included on your proxy card. If you vote by telephone, you do not need to complete and mail your proxy card.

Voting on the Internet:

To vote on the Internet, please follow the instructions included on your proxy card. If you vote on the Internet, you do not need to complete and mail your proxy card.

Voting in person at the meeting:

If you plan to attend the meeting and vote in person, we will provide you with a ballot at the meeting. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote in person at the meeting. If your shares are held in the name of your broker or other nominee, you are considered the beneficial owner of the shares held in street name. If you wish to vote shares held in street name at the meeting, you will need to bring with you to the meeting a legal proxy from your broker or other nominee authorizing you to vote your shares.

Shares Held by Brokers or Nominees

If the shares you own are held in “street name” by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of providing voting instructions to them over the Internet or by telephone, directions for which would be provided by your brokerage firm on your vote instruction form.

Under stock exchange rules applicable to most brokerage firms, if you do not give instructions to your broker, your broker will be permitted to vote any shares it holds for your account in its discretion with respect to “routine” proposals, but will not be allowed to vote your shares with respect to “non-routine” proposals. Proposal 1, regarding the re-election of Brent P. Johnstone and John S. Stafford, III as our Class II directors and Proposal 2, regarding the approval, on an advisory, non-binding basis, of the Company’s executive compensation are “non-routine” proposals. If you do not instruct your broker how to vote with respect to these proposals, your broker will not vote your shares on them and your shares will be recorded as “broker non-votes” and will not affect the outcome of the vote on those proposals. “Broker non-votes” are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that, while voting in its discretion on one matter, it does not have or did not exercise discretionary authority to vote on another matter.

Proposal 3, regarding the ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022, is considered to be a routine item under the applicable rules and your broker will be able to vote on this item even if it does not receive instructions from you, so long as your broker holds your shares in its name.

If a broker or nominee holds shares of common stock in “street name” for your account, then this proxy statement may have been forwarded to you with a voting instruction card, which allows you to instruct the broker or nominee how to vote your shares on the proposals described herein. To vote by proxy or instruct your broker how to vote, you should follow the directions provided with the voting instruction card. In order to have your vote counted on Proposal 1 and Proposal 2, you must either provide timely voting instructions to your broker or obtain a properly executed proxy from the broker or other record holder of the shares that authorizes you to act on behalf of the record holder with respect to the shares held for your account.

Quorum

Our by-laws provide that a quorum at the annual meeting will be a majority in interest of all stock issued, outstanding and entitled to vote at the meeting. We will treat shares of common stock represented by a properly signed and returned proxy or a proxy properly delivered over the Internet or by telephone as present at the meeting for purposes of determining the existence of a quorum at the meeting. In general, Aware will count votes withheld from any nominee for election as director, abstentions and broker “non-votes” as present or represented for purposes of determining the existence of a quorum at the meeting.

Vote required; tabulation of votes

A plurality of the votes properly cast at the annual meeting will be necessary to re-elect each of the two Class II directors to a three-year term. A majority of the votes properly cast at the annual meeting will be necessary to approve, on an advisory basis, the compensation paid to our named executive officers, and to ratify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Abstentions will not count as votes cast for or withheld from either nominee for re-election as a Class II director and accordingly will not affect the outcome of the vote on Proposal 1. Abstentions will have no effect on the outcome of Proposal 2 or Proposal 3. Broker non-votes will have no effect on the outcome of the vote on any proposal.

An automated system administrated by Mediant, Inc. will tabulate the votes at the annual meeting. Mediant, Inc. will tabulate separately the vote on each matter submitted to stockholders.

Revocation of proxies

A stockholder who has executed a proxy may revoke the proxy at any time before it is exercised at the annual meeting in three ways:

•

by giving written notice of revocation to the Secretary of Aware at the following address:

Aware, Inc.
40 Middlesex Turnpike
Bedford, Massachusetts 01730
Attention: Secretary

•

by signing and returning another proxy with a later date; or

•

by attending the annual meeting and informing the Secretary of Aware in writing that he or she wishes to vote in person.

Mere attendance at the annual meeting will not in and of itself revoke the proxy. Accordingly, stockholders who have delivered proxies in advance of the annual meeting may change their votes at any time before or at the annual meeting.

Solicitation of proxies

We will bear all costs incurred in connection with the solicitation of proxies for the annual meeting. We will reimburse brokers, banks, fiduciaries, nominees and others for the out-of-pocket expenses and other reasonable clerical expenses they incur in forwarding proxy materials to beneficial owners of common stock held in their names. In addition to this solicitation by mail, our directors, officers and employees may solicit proxies, without additional remuneration, by telephone, facsimile, electronic mail, telegraph and in person. We expect that the expenses of any special solicitation will be nominal. At present, we do not expect to pay any compensation to any other person or firm for the solicitation of proxies.

Internet access to proxy materials

The notice of annual meeting, this proxy statement and our 2021 Annual Report to Stockholders are available on the Internet at www.proxydocs.com/AWRE.

Directions to annual meeting

If you are planning to attend our 2022 annual meeting of stockholders, below are directions to Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts:

From Boston
Take I-93 North to Exit 37B (I-95/Route 128 South). Follow I-95/Route 128 South to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at bottom of the ramp onto Route 62. Follow approximately one-half mile to the second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Manchester
New Hampshire Route 3 South to Exit 26 (Route 62/Bedford-Burlington). Turn left at the bottom of the ramp onto Route 62. Follow to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Bedford/ Laurence G Hanscom Field, Massachusetts
Take I-95/Route 128 North to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at the bottom of the ramp onto Route 62. Follow approximately one-half mile to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Worcester
Take I-290 E toward Marlboro/I-190. Merge onto I-495 N via Exit 26B on the left toward

Lowell. Merge onto US-3 S via Exit 35A toward Burlington. Take the Route 62 exit (Exit 26) toward Bedford/Burlington. Turn left at the bottom of the ramp onto Route 62. Follow to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Boston/Cambridge
Take Route 2 West to I-95/Route 128 North. Follow I-95/Route 128 North to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at the bottom of the ramp onto Route 62. Follow approximately one-half mile to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

Matters To Be Considered At The Annual Meeting

Proposal One—Re-Election of Class II Directors

Our board of directors, upon the recommendation of the nominating and corporate governance committee, has nominated for re-election as Class II directors Brent P. Johnstone and John S. Stafford, III, each of whom is currently a Class II director of Aware. The Class II directors elected at the annual meeting will hold office until the annual meeting of stockholders in 2025 and until their successors are duly elected and qualified.

Each nominee has agreed to serve if elected, and we have no reason to believe that a nominee will be unable to serve. If a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for another nominee that our board’s nominating and corporate governance committee will designate at that time. Proxies cannot be voted more than once for a nominee.

Our board of directors recommends that you vote FOR the re-election of Brent P. Johnstone and John S. Stafford, III as Class II directors of Aware.

Proposal Two—Advisory Vote on Executive Compensation

We are asking our stockholders to provide advisory approval of the compensation of our named executive officers, as we have described it in the “Executive Compensation” section of this proxy statement, beginning on page 17. While this vote is advisory, and not binding, it will provide information to our board of directors and compensation committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the committee will be able to consider when determining executive compensation for the remainder of fiscal 2022 and beyond.

At our 2017 annual meeting of stockholders, our stockholders voted to approve, on an advisory basis, every two years as the preferred frequency of our holding advisory stockholder votes to approve the compensation paid to our named executive officers. Although our stockholders approved holding advisory stockholder votes every two years, our board of directors has decided to hold advisory stockholder votes to approve the compensation paid to our named executive officers every year. The board believes that it is a good corporate governance practice and is in the best interests of our stockholders to give our stockholders the right to cast an advisory vote every year on their approval of the compensation arrangements of our named

executive officers, allowing them to provide us on an annual basis with their input on our executive compensation philosophy, policies and practices as disclosed in our proxy statement.

Your vote is requested. We believe that the information we have provided above and within the Executive Compensation section of this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, our board of directors recommends that stockholders approve the executive compensation program by approving the following advisory resolution:

RESOLVED, that the stockholders of Aware, Inc. approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the Aware, Inc. 2022 proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the compensation tables and the accompanying footnotes and narratives within the Executive Compensation section of this proxy statement).

Our Board of Directors recommends that you vote “FOR” the Advisory Vote approving our Named Executive Officer Compensation.

Proposal THREE – Ratification of the Selection of our Independent Registered Public Accounting Firm

The audit committee of our board of directors has selected RSM US LLP, independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2022. RSM US LLP audited our financial statements for the fiscal year ended December 31, 2021. Although stockholder approval of the selection of RSM US LLP is not required by law, our Board of Directors believes that it is advisable to give stockholders the opportunity to ratify this selection. We expect that representatives of RSM US LLP will be present at the Annual Meeting, with the opportunity to make a statement if they so desire and will be available to respond to appropriate questions from stockholders.

Our board of directors recommends that you vote “FOR” the ratification of the selection of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.

Corporate Governance

In designing our corporate governance structure, we seek to identify and implement the best practices that will serve the interests of our business and stockholders, including practices mandated by the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission and the Nasdaq Stock Market. You can find our current corporate governance principles, including our code of ethics and the charters for the standing committees of our board of directors, on our website at www.aware.com. The code of ethics applies to not only our principal executive officer, principal financial officer and principal accounting officer, but also all of our other employees, executive officers and directors. The code of ethics includes, among other things, provisions covering compliance with laws and regulations, conflicts of interest, insider trading, proper use of our assets, confidentiality, discrimination and harassment, accounting and record keeping, the reporting of illegal or unethical behavior, enforcement of the code of ethics and discipline for violations of the code of ethics. We intend to continue to modify our policies and practices to address ongoing developments in the area of corporate governance. Many features of our corporate governance principles are discussed in other sections of this proxy statement. Some of the highlights of our corporate governance principles are:

•

Director and committee independence. A majority of our directors are independent directors under the rules of the Nasdaq Stock Market. The board of directors has determined that our independent directors are Brian D. Connolly, Gary Evee, Peter R. Faubert, Brent P. Johnstone, and John S. Stafford, III. Mr. Connolly is the co-founder of Millstreet Capital Management (“Millstreet”), an investment firm, under which a significant amount of funds were placed by Ronin Capital, LLC (“Ronin”), where Mr. Stafford, III serves as chief executive officer. The amount of funds placed by Ronin with Millstreet represents a material portion of the total assets under management by Millstreet. As a result of Millstreet’s managing the funds placed by Ronin, Ronin pays fees to Millstreet. Mr. Eckel is a member of the strategic advisory board of Evolv Technology, Inc. (“Evolv”), where Mr. Faubert serves as the senior vice president of finance. As a member of the strategic advisory board, Mr. Eckel provides subject matter expertise in the security field to Evolv’s board of directors and management, but is not himself a member of Evolv’s management or board of directors and does not supervise Mr. Faubert or any other member of Evolv’s management. The board of directors considered these factors and concluded that each of Mr. Connolly and Mr. Faubert met the independence requirements under the rules of the Nasdaq Stock Market and the Securities and Exchange Commission. Each member of the audit committee, nominating and corporate governance committee, and compensation committee meets the independence requirements of the Nasdaq Stock Market for membership on the committees on which he serves.

•

Audit committee. Our audit committee is directly responsible for appointing, compensating, overseeing, and, when necessary, terminating the engagement of independent auditors. Our independent auditors report directly to the audit committee. The board of directors has determined that Mr. Faubert is an audit committee financial expert under the rules of the Securities and Exchange Commission. Prior

approval from the audit committee is required for all audit services and non-audit services to be provided by our independent auditors.

•

Committee authority. Our audit committee, nominating and corporate governance committee, and compensation committee each have the authority to retain independent advisors and consultants, with all fees and expenses to be paid by us.

•

Whistleblower procedures. Our audit committee has adopted procedures for the treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission by our directors, officers and employees of concerns regarding questionable accounting, internal accounting controls or auditing matters.

Directors and Executive Officers

Directors and executive officers

The following table provides information regarding Aware’s directors and executive officers as of March 22, 2021:


Name	Age	Position
Brent P. Johnstone (1)(2)(3)(4)	51	Chairman and director
David B. Barcelo	43	Chief financial officer
Brian D. Connolly (2)(3)(4)	52	Director
Robert A. Eckel (1)	63	Chief executive officer, president and director
Gary Evee (4)	50	Director
Peter R. Faubert (2) (4)	51	Director
Mohamed Lazzouni	62	Chief technology Officer
Robert M. Mungovan	59	Chief commercial Officer
John S. Stafford, III (1)(3) (4)	52	Director

(1)	Member of the executive committee

(2)	Member of the audit committee

(3)	Member of the compensation committee

(4)	Member of the nominating and corporate governance committee

Brent P. Johnstone has been a director of Aware since May 2012 and as chairman since March 2019. Mr. Johnstone serves as a managing director for Quarry Capital Management LLC, a private investment firm which he co-founded in 2005. Mr. Johnstone also serves as Managing Director of ActVantage, L.P. an analytics software and advisory firm he co-founded in 2019. Mr. Johnstone served as CEO of Royal Pet Supplies, a portfolio company of Quarry Capital Management, from June 2010 to June 2012. Mr. Johnstone has also served as a board member of Royal Pet Supplies, Inc. since March 2009. Prior to Quarry Capital Management LLC, Mr. Johnstone served as a vice president in the investment management division at Thomson Financial from 2003 to 2005. From 2002 to 2003, Mr. Johnstone served as general manager of TheMarketsPro at TheMarkets.com. Prior to TheMarkets.com, Mr. Johnstone co-founded and launched BulldogResearch.com, a financial website. Prior to co-founding BulldogResearch.com, Mr. Johnstone worked in private client services at Lehman Brothers from 1998 to 1999 and worked as a strategic marketing associate at SystemSoft Corporation from 1995 to 1996. Prior to SystemSoft, Mr. Johnstone worked in investment banking in Morgan Stanley’s real estate and technology corporate finance teams from 1993 to 1995. Mr. Johnstone received a B.A. from Harvard College and an M.B.A. from the Harvard Business School. Our board benefits from Mr. Johnstone’s over 25 years’ experience in the investment and financial services industries and his expertise in finance.

David B. Barcelo has served as chief financial officer of Aware since May 2020. Mr. Barcelo previously served as Vice President of Strategic Marketing and Partnerships, Digital Identity of IDEMIA Identity and Security USA LLC from December 2017 to May 2020. Prior to that, from August 2011 to December 2017 Mr. Barcelo served as Vice President of Strategy

and Corporate Development of Idemia. Mr. Barcelo received a B.A. from Yale University and a M.B.A. from Boston University.

Brian D. Connolly has served as a director of Aware since January 2012. Mr. Connolly is currently a portfolio manager for Millstreet Capital Management LLC, an investment firm which he co-founded in 2010. Prior to Millstreet Capital Management LLC, Mr. Connolly served as a senior analyst at Regiment Capital Advisors, LP from 2005 to 2008. From 2000 to 2005, Mr. Connolly served as a research analyst at Fidelity Management & Research Company. Mr. Connolly received a B.A. from Harvard University and an M.B.A. from the Massachusetts Institute of Technology Sloan School of Management. Our board benefits from Mr. Connolly’s over 20 years of experience in the financial services and investing field and his expertise in finance.

Robert A. Eckel has served as a director of Aware since September 2019, when he was also appointed as Aware’s chief executive officer and president. Mr. Eckel currently serves as a strategic advisory board member of Evolv Technology, Inc. (“Evolv”). Prior to his advisory and consulting work, Mr. Eckel served in an executive capacity at Digimarc Corporation and subsequent acquiring organizations with increased levels of responsibility from 2005 to2018. His roles in each of the organizations was as follows: president of the Identity Systems division of Digimarc Corporation from 2005 to 2008; executive vice president and president in the Secure Credentialing Division of L-1 Identity Solutions Company from 2008 to 2011; president and chief executive officer at MorphoTrust USA LLC from 2011 to 2017; and regional president, chief executive officer of NORAM Identity & Security division of Idemia from 2017 to 2018. Mr. Eckel received a Bachelor’s Degree in Electrical Engineering from the University of Connecticut and a Master’s Degree in Electrical Engineering from the University of California Los Angeles. Our board benefits from Mr. Eckel’s over 30 years’ experience working with technology companies.

Gary Evee has been a director of Aware since February 2021. Since January 2018, Mr. Evee has served as chief executive officer of Evee Consulting Group, a technology and digital transformation advisory services partner that assists clients in reducing risk by taking control of their security and accelerating business growth through digital transformation. From June 2015 to January 2017 he was Director of Worldwide Mobile Security and Director, IBM Security Worldwide Customer Success and Sales Operations from September 1995 to January 2017. He has over 25 years of information technology experience. Over his 22-year career at IBM, Mr. Evee established a proven leadership track record of managing and scaling, new enterprises globally. He has been a technology and cybersecurity advisor to a number of institutions of higher learning and was responsible for holding the first Cybersecurity and Technology Diversity Conference in the Commonwealth of Massachusetts. He holds a B.A. in Political Science from Hampton University and is a current member of the board of trustees for a number of organizations including Dedham Savings Bank and Mass Insight. Our board benefits from Mr. Evee’s deep experience in the cybersecurity field.

Peter R. Faubert has been a director of Aware since March 2020. Mr. Faubert currently serves as the Senior Vice President of Finance of Evolv, a leader in free-flow threat detection technology. He has held this position at Evolv since November 2021. Previously Mr. Faubert served as Chief Financial Officer, Treasurer and Secretary of Evolv from October 2019 to

November 2021. He brings over 20 years of extensive finance leadership for public and private software companies that focused on security technology, video service providers, mobility, gaming and enterprise computing. Prior to Evolv, Mr. Faubert served as Chief Financial Officer, Senior Vice President and Treasurer of SeaChange International, Inc. from July 2016 to October 8, 2019, and from February 2019 to April 2019, served in the Office of the CEO. Mr. Faubert served as Chief Financial Officer of This Technology, Inc. from December 2013 to August 2015 when This Technology was acquired by Comcast Corporation (“Comcast”). Mr. Faubert provided consulting services to Comcast until June 2016. Prior to This Technology, Mr. Faubert served as Chief Financial Officer and Treasurer of Vision Government Solutions, Inc. from October 2012 to December 2013, Chief Financial Officer of JNJ Mobile (MocoSpace) from February 2009 to July 2012 and Chief Financial Officer and Treasurer at Turbine, Inc. from August 2005 to January 2009. Prior to that Mr. Faubert held various senior finance positions with Viisage Technology Inc., Burntsand Inc. and Ariba Inc. Mr. Faubert is also a Certified Public Accountant. Mr. Faubert received a Bachelor’s Degree in accounting from Northeastern University. Our board benefits from Mr. Faubert’s over 15 years as a chief financial officer and senior finance professional in addition to his experience with several high technology companies.

Mohamed Lazzouni, Ph. D. has served as chief technical officer of Aware since November 2019. Mr. Lazzouni previously served as Chief Executive Officer of Epochal Technologies from August 2018 to November 2019. Prior to that, from May 2013 to July 2018 Mr. Lazzouni served as President and General Manager of Authentic, Inc. Mr. Lazzouni received a B.S. and M.S. from the University of London and a Ph. D. from the University of Oxford. He is currently a member of the board of directors of Epochal Technologies.

Robert M. Mungovan has served as chief commercial officer of Aware since October 2019. Mr. Mungovan previously served as Aware’s Vice President of Biometrics from August 2000 to September 2019. Mr. Mungovan received a B.A. and M.BA, from Boston College and Master’s Degree in Engineering from Worcester Polytechnic Institute.

John S. Stafford, III has served as a director of Aware since January 2011. Since 2001, Mr. Stafford has served as Chief Executive Officer of Ronin Capital, LLC, a registered broker dealer with proprietary trading operations encompassing equity, fixed income and derivative securities. Since 2012, Mr. Stafford has served as Chief Executive Officer of Ronin Trading LLC, a non-registered entity with proprietary trading operations in various financial instruments. Mr. Stafford has also previously served as a board member of Xencor, Inc. Mr. Stafford has also made investments in over 40 private companies and has served as a board member on several of these companies. Our board benefits from Mr. Stafford’s investing experience, his experience as a member of other boards of directors, and the fact that, as one of our significant stockholders, his and our stockholders’ interests in the success of Aware are aligned.

The board of directors is divided into three classes, referred to as Class I, Class II and Class III, each consisting of approximately one-third of the directors. One class is elected each year at the annual meeting of stockholders to hold office for a term of three years and until their respective successors have been duly elected and qualified. The number of directors has been fixed at seven. The current terms of Mr. Connolly and Mr. Evee, our Class I directors, will expire at our 2024 annual meeting. The current terms of Messrs. Johnstone and Stafford, III, our

Class II directors, will expire at our 2022 annual meeting. The current terms of Messrs. Eckel and Faubert, our Class III directors, will expire at our 2023 annual meeting.

Executive officers are elected annually by the board of directors and serve at the discretion of the board or until their respective successors have been duly elected and qualified. There are currently no family relationships among any of our directors and executive officers.

We require that each nominee for director be an individual of the highest character and integrity, have substantial experience that is of particular relevance to the Company, have sufficient time available to devote to our affairs, and represent the best interests of all our stakeholders, including our shareholders. The Nominating and Corporate Governance Committee has discretion as to the determination of which individuals will best fit these criteria. We believe that all of the nominees for election to the Board at the 2022 Annual Meeting possess these characteristics. Although the Nominating and Corporate Governance Committee considers the diversity of Board members, including diversity of experience, gender and ethnicity, when considering candidates, we have not adopted any diversity policies relating to the nomination of candidates for director. We believe our current Board members reflect our commitment to diversity.

Board Diversity Matrix (as of March 31, 2022)

Total Number of Directors	6
	Female	Male	Non-Binary	Did Not Disclose Gender
Directors	-	6	-	-
Number of Directors who identify in Any of the Categories Below:
African American or Black	-	1	-	-
Alaskan Native or Native American	-	-	-	-
Asian	-	-	-	-
Hispanic or Latinx	-	-	-	-
Native Hawaiian or Pacific Islander	-	-	-	-
White	-	5	-	-
Two or More Races or Ethnicities	-	-	-	-
LGBTQ+	-	-	-	-
Did Not Disclose Demographic Background	-	-	-	-

Board leadership structure and role in risk oversight

Our board of directors believes that Aware and its stockholders are best served at this time by having Mr. Johnstone serve as our chairman and Mr. Eckel serve as chief executive officer and president. In his role as chairman, Mr. Johnstone oversees key strategic, corporate and governance activities. In his position as chief executive officer and president, Mr. Eckel, oversees the day-to-day operations of Aware. The board of directors believes that having a non-employee, independent director as chairman is an important aspect of effective corporate governance. In his role as chairman, Mr. Johnstone’s responsibilities include the following:

•

Acting as a liaison between the independent directors and the chief executive officer and president;

•

Presiding at executive sessions of the independent directors;

•

Facilitating discussions among the independent directors on key issues and concerns outside of board meetings;

•

In collaboration with the chief executive officer and president, preparing agendas for board meetings; and

•

Working with the board’s committees.

Our management is responsible for the day-to-day management of the risks that we face, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board is responsible for satisfying itself that the risk management processes are adequate and functioning as designed. The board’s involvement in risk oversight includes receiving regular reports from members of senior management and evaluating areas of material risk to Aware, including operational, financial, legal, regulatory, strategic and reputational risks.

Certain relationships and related transactions

In March 2007, our board of directors formally adopted a written policy with respect to related person transactions to document procedures pursuant to which such transactions are reviewed and approved. The policy applies to any transaction in which (1) we are a participant, (2) any related person has a direct or indirect material interest and (3) the amount involved exceeds $120,000, but excludes any transactions available to all employees or stockholders of Aware on the same terms. The audit committee, is responsible for reviewing and approving any related person transaction. The policy requires that the audit committee must approve any related person transaction subject to the policy before commencement of the related person transaction. The policy states that the audit committee will approve only those related person transactions that the audit committee determines are beneficial to us and the terms of which are fair to us.

In 2021 and the portion of 2022 through the date of this proxy statement, we did not have any transactions with a related person.

Committees and meetings of the board

During 2021, our board of directors met eight times and took four actions by written consent. No incumbent director attended fewer than 75% of the total number of meetings held by the board and committees of the board on which he served. We have a compensation committee, an audit committee, an executive committee, and a nominating and corporate governance committee.

Executive Committee. Our executive committee is currently composed of Robert A. Eckel, Brent P. Johnstone and John S. Stafford, III. The executive committee has all of the powers of the board of directors except the power to: change the number of directors or fill vacancies on the board of directors; elect or fill vacancies in the offices of president, treasurer or secretary; remove any officer or director; amend our by-laws; change our principal office; authorize the payment of any dividend or distribution to our stockholders; authorize our

reacquisition of capital stock for value; or authorize a merger. In 2021, the executive committee met six times.

Compensation Committee. Our compensation committee is currently composed of three independent directors, Brian D. Connolly, who serves as chairman, John S. Stafford, III and Brent P. Johnstone. In 2021, the compensation committee held three meetings and took four actions by written consent. In March 2004, our board of directors adopted a Compensation Committee Charter, which it amended in March 2019. The Compensation Committee Charter, as amended, is available on our website at www.aware.com.

Audit Committee. Our audit committee is currently composed of Peter R. Faubert, who serves as chairman, Brian D. Connolly and Brent P. Johnstone. Our board of directors has determined that Mr. Faubert is each an audit committee financial expert under Securities and Exchange Commission rules. In 2021, the audit committee met five times. In March 2004, our board of directors adopted an Audit Committee Charter, which it amended in March 2019. The Audit Committee Charter, as amended, is available on our website at www.aware.com.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee is currently composed of five independent directors: Gary Evee who serves as chairman, Brent P. Johnstone, Brian D. Connolly, Peter R. Faubert and John S. Stafford III. In 2021, the nominating and corporate governance committee held two meetings. In March 2004, our board of directors adopted a Nominating and Corporate Governance Committee Charter, which it amended in March 2019. The Nominating and Corporate Governance Committee Charter, as amended, is available on our website at www.aware.com.

The nominating and corporate governance committee, in consultation with our president and chief executive officer, identifies and reviews candidates for our board of directors and recommends to our full board candidates for election to our board. In selecting new directors, the committee considers any requirements of applicable law or listing standards, a candidate’s strength of character, judgment, business experience and specific area of expertise, factors relating to the composition of the board (including its size and structure), principles of diversity, and such other factors as the committee shall deem appropriate.

The committee reviews from time to time the appropriate skills and characteristics required of board members in the context of the current make-up of the board, including such factors as business experience, diversity, and personal skills in technology, finance, marketing, international business, financial reporting and other areas that contribute to an effective board.

The committee, in consultation with our president and chief executive officer, considers and recruits candidates to fill positions on the board, including as a result of the removal, resignation or retirement of any director, an increase in the size of the board or otherwise. The committee also reviews any candidate recommended by our stockholders in light of the committee’s criteria for selection of new directors. Stockholders may make nominations for the election of directors by delivering notice in writing to the Secretary of Aware not less than 60 days nor more than 90 days prior to any meeting of the stockholders called for the election of directors. As part of this responsibility, the committee is responsible for conducting, subject to applicable law, any and all inquiries into the background and qualifications of any candidate for

the board and such candidate’s compliance with the independence and other qualification requirements established by the committee or imposed by applicable law or listing standards. The committee also develops and recommends to the Board governance principles applicable to the Company and is responsible for leading an annual review of the performance of both the Board as a whole and its individual members. The annual Board review took place in December 2021.

The board of directors, upon the recommendation of the nominating and corporate governance committee, has nominated for election at the 2022 annual meeting of stockholders as Class II directors Brent P. Johnstone and John S. Stafford, III, each of whom is currently a Class II director of Aware. In nominating Mr. Johnstone, the board and committee took into account Mr. Johnstone’s over 25 years’ experience in the investment and financial services industries and his expertise in finance. In nominating Mr. Stafford, the board and committee took into account Mr. Stafford’s investing experience, his experience as a member of other boards of directors, and the fact that, as one of our most significant stockholders, his and our stockholders’ interests in the success of Aware are aligned.

Policy regarding board attendance

To the extent reasonably practicable, directors are expected to attend board meetings and meetings of committees on which they serve. Directors are encouraged to attend our annual meeting of stockholders. Last year, one of our directors attended the annual meeting.

Communications with our board of directors

Our board of directors has established the following process for stockholders to communicate directly with the board, and this process has been approved by a majority of our independent directors. Stockholders wishing to communicate with the board of directors should send correspondence to the attention of the Chairman of the Board at Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts 01730, and should include with the correspondence evidence that the sender of the communication is one of our stockholders. Satisfactory evidence would include, for example, contemporaneous correspondence from a brokerage firm indicating the identity of the stockholder and the number of shares held. Our chairman will review all correspondence confirmed to be from stockholders and decide whether or not to forward the correspondence or a summary of the correspondence to the board or a committee of the board. Accordingly, our chairman will review all stockholder correspondence, but the decision to relay that correspondence to the board or a committee of the board will rest entirely within his discretion.

Code of ethics

We have adopted a code of ethics that applies to all employees, officers and directors. The code of ethics also contains special ethical obligations which apply to employees with financial reporting responsibilities, including our principal executive officer, principal financial officer and principal accounting officer. Our code of ethics includes, among other things, provisions covering compliance with laws and regulations, conflicts of interest, insider trading, proper use of our assets, confidentiality, discrimination and harassment, accounting and record

keeping, the reporting of illegal or unethical behavior, enforcement of the code of ethics and discipline for violations of the code of ethics. Our code of ethics is available on our website at www.aware.com. Any waiver of any provision of the code of ethics granted to an executive officer or director may only be made by the board of directors and will be promptly disclosed on our website at www.aware.com.

Compensation committee interlocks and insider participation

Our compensation committee is currently composed of Messrs. Connolly, Johnstone, and Stafford, III. In 2021, no officer or employee of Aware, including our executives, participated in the deliberations of the compensation committee concerning the compensation of our executive officers. No interlocking relationship existed between our board of directors or compensation committee and the board of directors or compensation committee of any other company in 2021.

Compensation of Executive Officers and Directors

Executive compensation

The following table provides summary information concerning compensation earned for services rendered to Aware in all capacities for the fiscal year ended December 31, 2021 by our Mr. Eckel, our chief executive officer, and our two other most highly compensated executive officers, Mr. Mungovan and Mr. Lazzouni.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)		Stock Awards ($)(1)		Option Award ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
Robert A. Eckel	2021		300,000		55,000		2,280,250		139,330		13,681		2,788,261
Chief Executive Officer, President & Director	2020		300,000		127,000		—		45,000		10,538		482,538
Robert M. Mungovan	2021		275,000		29,150		510,776		99,500		11,578		926,004
Chief Commercial Officer	2020		275,000		63,500		—		31,250		8,994		378,744
Mohamed Lazzouni	2021		275,000		—		547,260		131,329		9,849		963,438
Chief Technology Officer	2020		262,500		90,300		—		41,250		8,183		402,233

(1)

Represents the dollar amount of expense recognized for financial statement reporting purposes attributable to unrestricted stock in accordance with ASC 718.

(2)

Represents the aggregate grant date fair value of option awards granted in 2021 computed in accordance with ASC 718 but with no discount for estimated forfeitures. The value of the 2021 options were calculated in accordance with ASC 718 and using a Black-Scholes valuation model with the following assumptions exercise price of $4.73, volatility of 37%, expected term of 6.14 years, and risk-free interest rate of 0.36%. See Note 6 of our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 15, 2022.

(3)

Reflects cash awards under performance-based compensation plans from the satisfaction of pre-established performance criteria. Performance criteria for each of our named executive officers included achievement of bookings, revenue and operating cash flow goals. Mr. Eckel’s performance criteria included achievement of goals relating to building the organizations reputation and recognition through active IR and PR and Board program, building the organizations infrastructure and process to accelerate the business growth organically and through channel partners, and building the corporate development organization program to accelerate acquiring and expansion of the business transformation. Mr. Mungovan’s performance criteria included achievement of goals relating to building the US and rest of world ABIS and BioSP book of business and successfully integrating AFIX book of business, scaling the Knomi and ABIS subscription business directly and through partners, and scaling Aware SaaS and establish new accounts. Mr. Lazzouni’s performance criteria included achievement of goals relating to providing business scaling and preparation for Aware SaaS expansion and delivery commitment to the market directly or indirectly, executing the technical side of the corporate development program to accelerate acquiring, expansion and ingesting, delivering on Komi, ABIS and BioSP engineering activities to support enhancements, features and service to the market per roadmap requirement and customers per delivery

requirements, driving research to secure our market position, recognition, reputation and presence, and scaling the business agility to deliver faster while implementing processes for optimal resource allocation in program delivery of the technology platforms for large programs. Performance based goals were partially achieved for each of our executive officers.

All other compensation represents group term life insurance premiums paid by us on behalf of the executive officers and matching contributions by us under our 401(k) plan for the benefit of the named executive officers. Such amounts for 2021 were as follows:

Name	401(k) Matching Contributions ($)		Group Term Life Insurance Premiums ($)
Mr. Eckel		11,625		2,056
Mr. Mungovan		10,417		1,161
Mr. Lazzouni		8,067		1,782

Outstanding Equity Awards At December 31, 2021

The following table summarizes the option awards and stock awards outstanding as of December 31, 2021 held by our named executive officers.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable				Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)
Robert A. Eckel
		—		1,250,000	(1	)		4.73	2/24/2031			—				—
		28,125		21,875	(2	)		4.50	9/19/2029			—				—
		28,125		21,875	(2	)		5.50	9/19/2029			—				—
		28,125		21,875	(2	)		6.50	9/19/2029			—				—
		28,125		21,875	(2	)		7.50	9/19/2029			—				—
		—		21,875				-	0			40,000	(4	)		126,000
Robert M. Mungovan
		—		280,000	(1	)		4.73	2/24/2031			—				—
		12,500		12,500	(3	)		4.50	10/1/2029			—				—
		12,500		12,500	(3	)		5.50	10/1/2029			—				—
.		12,500		12,500	(3	)		6.50	10/1/2029			—				—
		12,500		12,500	(3	)		7.50	10/1/2029			—				—
		—		—				-		—		20,000	(5	)		63,000
Mohamed Lazzouni
		—		300,000	(1	)		4.73	2/24/2031			—				—
		9,375		9,375	(3	)		4.50	11/19/2029			—				—
		9,375		9,375	(3	)		5.50	11/19/2029			—				—
		9,375		9,375	(3	)		6.50	11/19/2029			—				—
		9,375		9,375	(3	)		7.50	11/19/2029			—				—

(1)

Options vest fifty percent on February 24, 2023, with the remainder vesting in 24 equal monthly installments starting on March 24, 2023

(2)

Options vest in 7 quarterly installments on the last day of each quarter from March 31, 2021 to September 30, 2023.

(3)

Options vest in 8 quarterly installments on the last day of each quarter from March 31, 2021 to September 30, 2023.

(4)

Unrestricted stock award will issue shares in two (2) equal installments on September 19, 2022 and September 19, 2023 provided Mr. Eckel is serving as a director, officer, or employee of the Company or any subsidiary of the Company on said dates.

(5)

Unrestricted stock award will issue shares in two (2) equal installments on October 1, 2022 and October 1, 2023 provided Mr. Mungovan is serving as an officer, or employee of the Company or any subsidiary of the Company on said dates.

Post-Employment Compensation

Pension Benefits Table

We do not have any tax-qualified or non-qualified defined benefit plans or supplemental executive retirement plans.

Non-qualified Deferred Compensation Table

We do not have any non-qualified defined contribution plans or other non-qualified deferred compensation plans.

Potential Payments Upon Termination or Change in Control

Employment Agreements

We entered into an Employment Agreement (the “Employment Agreement”) with each of our named executive officers, as follows: on September 19, 2019 with Robert A. Eckel, on October 1, 2019 with Robert M. Mungovan and on November 19, 2019 with Mohamed Lazzouni.

Payments on Termination by Aware Without Cause or by the Named Executive Officer with Good Reason

Pursuant to the terms of each executive’s Employment Agreement, if the executive’s employment is terminated by us without “Cause”, or the executive terminates his employment for “Good Reason”, the executive shall receive from us: (i) an amount equal to the executive’s annual base salary paid during the twelve (12) months immediately preceding the termination of the Executive’s employment, divided by the number of days employed during the twelve (12) months immediately preceding the termination of the Executive’s employment and multiplied by 365, (ii) notwithstanding anything to the contrary in any applicable option agreement or stock-

based award agreement, all time-based stock options and other time-based stock-based awards held by the executive in which such stock option or other stock-based award would have vested if the executive had remained employed for an additional twelve (12) months following the “Date of Termination” shall vest and become exercisable or nonforfeitable as of the Date of Termination and (iii) for up to twelve (12) months following the executive’s termination of employment, payment of the difference between the cost of COBRA continuation coverage for the executive and any dependent who received health insurance coverage prior to such termination, and any premium contribution amount applicable to the executive as of such termination. Our obligation to provide the foregoing benefits is subject to the executive entering into a new noncompetition agreement with us that contains noncompetition and employee non-solicitation covenants in effect for one year from termination of the executive’s employment and the effectiveness of a release of claims executed by the executive in favor of us.

Payments on Termination by Aware Without Cause or by the Named Executive Officer with Good Reason Following a Change of Control

Pursuant to the terms of each executive’s Employment Agreement, if the executive’s employment is terminated during the eighteen (18) month period following a “Change of Control” (a) by us without “Cause” or (b) by the executive for “Good Reason” (as those terms are defined in the Employment Agreement), the executive will receive from us: (i) a lump-sum amount equal to (A) 1.5 times (B) the executive’s annual base salary paid during the twelve (12) months immediately preceding the termination of the executive’s employment, divided by the number of days employed during the twelve (12) months immediately preceding the termination of the executive’s employment and multiplied by 365, (ii) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, all time-based stock options and other time-based stock-based awards held by the executive as of the occurrence of such Change of Control shall immediately accelerate and become fully exercisable or nonforfeitable as of the Date of Termination; and (iii) for up to eighteen (18) months following the executive’s termination of employment, payment of the difference between the cost of COBRA continuation coverage for the executive and any dependent who received health insurance coverage prior to such termination, and any premium contribution amount applicable to the executive as of such termination. Our obligation to provide the foregoing benefits is subject to the executive entering into a new noncompetition agreement with us that contains noncompetition and employee non-solicitation covenants in effect for one year from termination of the executive’s employment and the effectiveness of a release of claims executed by the executive in favor of us.

Other Separation Benefits

With the exception of the Employment Agreements and Change in Control Agreements, Our executive officers do not have any agreements different from other employees with respect to payments or benefits received as a result of a termination of employment, retirement and change in control. The payments and benefits include accrued vacation pay and the right to elect continued health coverage under COBRA. There is no acceleration in the vesting of stock options or other equity awards that are required as a result of a retirement.

DIRECTOR COMPENSATION

We reimburse each director for expenses incurred in attending meetings of the board of directors.

In March 2022, the Compensation Committee approved the following grants of unrestricted stock to our directors under our 2001 Nonqualified Stock Plan in recognition of their ongoing contributions to us:

Name	# of Shares
Brent P. Johnstone		19,169
Brian D. Connolly		15,147
Gary Evee		12,332
Peter R. Faubert		13,807
John Stafford, III		12,466

The number of shares underlying each award is equal to value of the award divided by the closing price for a share of our common stock on the Nasdaq Global Market on the date of the grant. For 2021 and 2022, the value of the director awards was determined as follows:

Board Role	Value of Award
Chairman of the board of directors	$	60,000
Service on the board of directors (other than as Chairman)	$	40,000
Audit Committee chair	$	10,000
Audit Committee member (other than chair)	$	5,000
Compensation Committee chair	$	10,000
Compensation Committee member (other than chair)	$	5,000
Nominating and Corporate Governance committee chair	$	6,000
Nominating and Corporate Governance committee member (other than chair)	$	1,500

The following table provides information about the compensation of our directors for 2021.

Non-Employee Director Compensation Table for 2021

Name	Stock Awards (1)		Stock Awards ($)(2)		Total ($)
Brian D. Connolly		11,099		52,500		52,500
Gary Evee		8,985		42,500		42,500
Peter R. Faubert		11,099		52,500		52,500
Brent P. Johnstone		15,328		72,500		72,500
John S. Stafford, III		10,042		47,500		47,500

(1)

In 2021, received shares of unrestricted stock for serving as a director of Aware per table above.

(2)

The value of the unrestricted stock award was determined based on the fair market value of Aware stock on the date of the grant in accordance with ASC 718.

Report of the Audit Committee

The purpose of the audit committee is to assist the board of directors in its general oversight of Aware’s financial reporting process. The Audit Committee (“Committee”) is comprised solely of independent directors as defined by the listing standards of the Nasdaq Stock Market and the rules of the Securities and Exchange Commission. The Committee held five meetings during 2021.

The Committee oversees Aware’s financial reporting process on behalf of the board of directors. Management is responsible for the preparation, presentation and integrity of Aware’s financial statements and reporting processes, including its systems of internal controls, while RSM US LLP ("RSM"), Aware’s independent, registered public accounting firm is responsible for performing an independent audit of the consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America. The Committee discussed with RSM the overall scope and plans for its audit.

In connection with this oversight, the Committee received periodic updates provided by management and RSM at regularly scheduled committee meetings. The Committee reviewed the report of management contained in Aware’s Annual Report on Form l0-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission, as well as RSM’s Report of Independent Registered Public Accounting Firm included in Aware’s Annual Report on Form l0-K related to its audit of the consolidated financial statements. The Committee continues to oversee Aware’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in 2022.

The Committee has reviewed and discussed the consolidated financial statements with management and RSM, Aware’s independent auditors. The Committee has discussed with RSM the matters required to be discussed under the rules adopted by the PCAOB concerning communications with audit committees. In addition, RSM has provided the Committee with the written disclosures and the letter required by the PCAOB RULE 3526, Communication with Audit Committees Concerning Independence, and the Committee has discussed with RSM their firm's independence.

Based on the review of the consolidated financial statements and discussions with and representations from management and RSM referred to above, the Committee recommended to the board of directors that the audited financial statements be included in Aware’s Annual Report on Form 10-K for 2021, for filing with the Securities and Exchange Commission.

	The Audit Committee

	Peter R. Faubert, Chairman
	Brian D. Connolly
	Brent P. Johnstone

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

At the close of business on April 8, 2022, there were issued and outstanding 21,642,260 shares of common stock. On April 8, 2022 the closing price of our common stock as reported by the Nasdaq Global Market was $2.77 per share.

Principal stockholders

The following table provides information about the beneficial ownership of our common stock as of April 8, 2022 by:

•

each person known by us to own beneficially more than five percent of our common stock;

•

each of our directors;

•

each of our named executive officers; and

•

all of our current executive officers and directors as a group.

In accordance with Securities and Exchange Commission rules, beneficial ownership includes any shares for which a person has sole or shared voting power or investment power and any shares of which the person has the right to acquire beneficial ownership within 60 days after April 8, 2022 through the exercise of any option or otherwise. Except as noted below, we believe that the persons named in the table have sole voting and investment power with respect to the shares of common stock set forth opposite their names. The inclusion of shares listed as beneficially owned does not constitute an admission of beneficial ownership. Percentage of beneficial ownership is based on 21,642,260 shares of common stock outstanding as of April 8 2022. In calculating a person’s percentage ownership, we have treated as outstanding any shares that the person has the right to acquire within 60 days of April 8, 2022. All shares included in the “Right to acquire” column represent shares subject to outstanding stock options potentially exercisable within 60 days after April 8, 2022. The information as to each person has been furnished by such person.

Unless otherwise noted in the following table, the address of each person listed in the table is c/o Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts 01730.

	Number of shares beneficially owned						Percent
Name	Outstanding shares		Right to acquire		Total number		beneficially owned
John S. Stafford, III**		4,691,384		0		4,691,384		21.7	%
Susan Yang Stafford (1) Susan Yang Stafford 2010 Kimborama Trust and Kimberly Susan Stafford 2004 Irrevocable Trust and Susan Yang Stafford Revocable Trust of 2011 c/o Ronin Capital, LLC 350 N. Orleans Street, Suite 2N Chicago, IL 60654		2,746,881		0		2,746,881		12.7	%
Dimensional Fund Advisors LP (2) Building One 6300 Bee Cave Road Austin, Texas 78746		1,572,282		0		1,572,282		7.3	%

Robert A. Eckel**		177,194		125,000		302,194		1.4	%
Robert M. Mungovan**		146,280		56,250		202,530	*
Brian D. Connolly**		116,099		0		116,099	*
Brent P. Johnstone**		119,464		0		119,464	*
David B. Barcelo		40,000		21,873		61,873	*
Mohamed Lazzouni**		23,392		4,218		27,610	*
Peter R. Faubert**		21,099		0		21,099	*
Gary Evee**		8,985		0		8,985	*
All directors and executive officers as a group ** (8 persons)		5,303,897		185,468		5,489,365		25.4	%

*	Less than one percent

** Director and/or executive officer.

(1)

The number of shares beneficially owned by Susan Yang Stafford, Susan Yang Stafford 2010 Kimborama Trust, Kimberly Susan Stafford 2004 Irrevocable Trust and Susan Yang Stafford Revocable Trust of 2011 is based upon information in a Schedule 13G/A filed by Susan Yang Stafford, Susan Yang Stafford 2010 Kimborama Trust, Kimberly Susan Stafford 2004 Irrevocable Trust and Susan Yang Stafford Revocable Trust of 2011 on February 14, 2018. According to such Schedule 13G/A, (a) Susan Yang Stafford 2010 Kimborama Trust is the record owner of 2,131,449 shares of common stock of Aware; Susan Yang Stafford, in her capacity as trustee of the Susan Yang Stafford 2010 Kimborama Trust, has the power to vote and dispose of the common stock of Aware held by such Trust (b) Kimberly Susan Stafford 2004 Irrevocable Trust is the record owner of 315,693 shares of common stock of Aware; Susan Yang Stafford, in her capacity as trustee of the Kimberly Susan Stafford 2004 Irrevocable Trust, has the power to vote and dispose of the common stock of Aware held by such Trust and (c) Susan Yang Stafford Revocable Trust of 2011 is the record owner of 299,739 shares of common stock of Aware. Ms. Yang Stafford is the wife of John S. Stafford, Jr. Mr. Stafford, Jr. disclaims beneficial ownership in the 2,746,881 shares of the common stock of Aware owned beneficially by his wife, Susan Yang Stafford, through the Susan Yang Stafford 2010 Kimborama Trust, the Kimberly Susan Stafford 2004 Irrevocable Trust and the Susan Yang Stafford Revocable Trust of 2011.

(2) The number of shares beneficially owned by Dimensional Fund Advisors LP is based upon information in a Schedule 13G/A filed by Dimensional Fund Advisors LP on February 14, 2022. According to such Schedule 13G/A, Dimensional Fund Advisors LP has sole power to vote or to direct the vote with respect to 1,549,196 shares and has sole power to dispose or direct the disposition of 1,572,282 shares.

Equity compensation plan information

The following table sets forth additional information as of December 31, 2021, regarding securities authorized for issuance under our existing equity compensation plans and arrangements, divided between plans approved by our stockholders and plans or arrangements that were not required to be and were not submitted to our stockholders for approval.

The equity compensation plan approved by our stockholders is our 2021 Employee Stock Purchase Plan. Our 2001 Nonqualified Stock Plan was not approved by our stockholders. Our board of directors approved the 2001 Nonqualified Stock Plan in April 2001 and amended it in July 2002.

Plan category

Number of shares

to be issued

upon exercise

of outstanding

options, warrants

and rights (#)

Weighted-

average

exercise price of

outstanding

options,

warrants and

rights ($)

SEC Form DEF 14A filed by Aware Inc.