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: 

Quantum Corporation

(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): 

A Message from Our Chairman and CEO

James J. Lerner  President and Chief Executive Officer Chairman of the Board

Dear Quantum Shareholders,

In many ways, our focus in fiscal year 2023 was providing the foundation for innovative products, improved performance, and sustainable profitability for fiscal 2024 and beyond. We invested in new products and additional features that position us well in our target markets. Our Quantum Myriad^TM all-flash file and object storage platform enables us to expand across markets we haven’t fully reached. At the same time, our ActiveScale Cold Storage platform is well suited to address the needs of many companies looking to reduce costs and increase control by repatriating their data from the cloud. Both products, along with others, are winning awards for their impressive features and capabilities.

We formally added Chris Neumeyer, an executive at one of our largest shareholders, to our Board of Directors to ensure investor voices were heard. We also appointed industry executives Don Jaworski and Hugues Meyrath to help guide our technology focus and execution. New Chief Financial Officer Ken Gianella brings a strong investor relations perspective to reinforcing our operational discipline, and we’ve continued to build our sales expertise in selling across our product portfolio.

We were pleased to exit our fiscal 2023 with 10.7% annual revenue growth but recognize that we continue to operate in a challenging macroenvironment and still have work to do to prove that we can deliver the bottom-line results you want to see. We began fiscal 2024 by restructuring both our debt and our business to improve our operating and cost efficiencies. We continue to invest in our end-to-end sales transformation and to progress our subscription-based revenue model. We are seeing customers embrace both our solutions and our approach, and believe our offerings are resonating in the market.

We are asking our leadership team and employees to marshal their energy and engagement on the singular focus of driving fiscal 2024 performance improvements. As most of us are not only employees but also Quantum investors ourselves, our collective interests are aligned on increasing shareholder value in fiscal 2024 and beyond.

James J. Lerner

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Notice of Annual Meeting of Shareholders

July 17, 2023	September 12, 2023	10:30a.m. Pacific Time	In order to attend, you must register at http://www.viewproxy.com/ QMCO/2023
Record Date	Annual Meeting Date	Annual Meeting Time	Virtual Meeting Location

Quantum Corporation (Quantum or the Company) invites you to attend our 2023 annual meeting of shareholders (Annual Meeting) on Tuesday, September 12, 2023, beginning promptly at 10:30 a.m. Pacific Time. At the meeting, we will consider and vote on the following proposals:

	Election of Directors
	Approval to Adopt the 2023 Long-Term Incentive Plan
	Approval to Amend and Restate the Employee Stock Purchase Plan
	Advisory Vote to Approve Executive Compensation
	Advisory Vote on Frequency of Advisory Vote on Executive Compensation
	Other Matters Properly Raised

Only shareholders of record at the close of business on July 17, 2023 (the Record Date), or their valid proxy holders, may vote at the meeting. Our Board of Directors (Board) recommends you vote “FOR” each of the nominees in Proposal 1, “FOR” Proposals 2, 3, and 4, and “ONE YEAR” for Proposal 5.

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS 

Our 2023 proxy statement, including more complete descriptions of proposals and Board candidates, is set forth on the following pages. This information is also available at http://www.viewproxy.com/QMCO/2023.

In order to increase efficiency and reduce the environmental impact of the proxy process, shareholders will not automatically receive paper copies of our proxy statement and annual report. We will instead send a Notice of Internet Availability (Notice) with instructions for accessing the proxy materials and voting online. The notice will also provide information about how shareholders may obtain paper copies of proxy materials if hard copies are preferred. Our Notice is first being mailed on or about August 2, 2023 to all shareholders entitled to vote at the Annual Meeting.

Quantum knows of no other matters to be submitted at the Annual Meeting. As Corporate Secretary, I must receive any shareholder proposals intended for consideration at the Annual Meeting within the timeframes, and including the required information, specified in our Bylaws and required by the rules of the Securities and Exchange Commission (SEC). If any other matters properly come before the Annual Meeting, the persons named in the form of proxy will vote the shares they represent as the Board may recommend.

By Order of the Board of Directors,

Brian E. Cabrera 

Senior Vice President, Chief Administrative Officer, and Corporate Secretary 

July 27, 2023

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Table of Contents

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Board of Directors and Committees

James J. Lerner  President and Chief Executive Officer  Chairman of the Board

 

Marc E. Rothman  Chair, Audit Committee  INDEPENDENT

 

Rebecca J. Jacoby  Chair, Leadership and Compensation  Committee  INDEPENDENT

 

Yue Zhou (Emily) White  Board Member  INDEPENDENT

 

Christopher D. Neumeyer Chair, Corporate Governance and  Nominating Committee  INDEPENDENT

 

Donald J. Jaworski  Board Member  INDEPENDENT

 

Hugues Meyrath  Chair, Technology Advisory  Committee INDEPENDENT

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James J. Lerner President and Chief Executive Officer Chairman of the Board Age: 53

Mr. Lerner has served as our President and Chief Executive Officer since July 2018. He was appointed to the Board at that time and named Chairman in August 2018.

Some of Quantum’s key accomplishments during Mr. Lerner’s tenure include:

Mr. Lerner previously served in senior leadership positions at Pivot3 Inc., a smart infrastructure solutions company. He held the roles of Vice President and Chief Operating Officer from March 2017 to June 2018 and Chief Revenue Officer from November 2016 to March 2017.

Prior to Pivot3, from March 2014 to August 2015, he served as President of Cloud Systems and Solutions at Seagate Technology Public Limited Company, a publicly-traded data storage company.

Before working at Seagate, Mr. Lerner served in various executive roles at Cisco Systems, Inc., a publicly-traded networking hardware and software manufacturing company, including as Senior Vice President and General Manager of the Cloud & Systems Management Technology Group.

Prior to beginning his career as a technology company executive, he was a Senior Consultant at Andersen Consulting, a financial advisory and consulting firm.

From 2011 to 2022, Mr. Lerner served on the Board of Trustees (including serving as Chair) of Astia, a global not-for-profit organization built on a community of men and women dedicated to the success of women-led, high-growth ventures.

Mr. Lerner earned a Bachelor of Arts in Quantitative Economics and Decision Sciences from the University of California, San Diego.

We believe Mr. Lerner’s extensive history in our industry and his understanding of our business given his role as our Chief Executive Officer, combined with his executive-level experience at large, well-established companies qualifies him to serve on our Board. He does not sit on any Board committees.

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Marc E. Rothman Chair, Audit Committee INDEPENDENT Age: 58

		Lead Independent Director
		Chair Audit Committee
		Member Corporate Governance & Nominating Committee

Mr. Rothman has served as a member of our Board since May 2017.

He has been Senior Vice President and Chief Financial Officer at BMC Software, Inc. (BMC), a company that develops, delivers, and services IT operations management software, since October 2020.

Before joining BMC, Mr. Rothman served as Executive Vice President and Chief Financial Officer of Verifone Systems, Inc., a multinational company providing technology for electronic payment transactions from 2013 to July 2020.

Prior to Verifone, Mr. Rothman served in various capacities, including as Senior Vice President and Chief Financial Officer at Motorola Mobility, Inc., a consumer electronics and telecommunications company, from 2000 to 2012.

From 1995 to 2000, Mr. Rothman served in multiple leadership finance roles at General Instrument Corporation, which developed integrated and interactive broadband access solutions, including as Vice President and Corporate Controller.

From 1987 through 1995, he was with Deloitte & Touche LLP, a professional services company.

Mr. Rothman graduated with a bachelor’s degree in Business from Stockton University (formerly Richard Stockton College) with Distinction and is a Certified Public Accountant in California (inactive).

We believe that Mr. Rothman possesses specific attributes that qualify him to serve as a member of the Board, including his executive leadership experience and deep financial expertise in:

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Yue Zhou (Emily) White Board Member INDEPENDENT Age: 51

Member Leadership & Compensation Committee

Ms. White was elected to our Board in September 2021.

She has served as Vice President of Enterprise Data and Analytics at NIKE, Inc., a public company that manufactures and sells athletic apparel, since April 2020.

Prior to NIKE, from February 2017 to April 2020, Ms. White served as Vice President of Enterprise Data Engineering at Synchrony Financial, a publicly-traded consumer financial services company.

Ms. White previously held multiple positions at General Electric entities. From November 2013 to June 2015, she served as Data Science Director and Global Commercial IT Director at General Electric Healthcare, a company that manufactures and distributes medical imaging modalities. From May 2007 to October 2013, she was Global Enterprise Resource Director and Senior Global Business Intelligence Program Manager for General Electric Transportation, a company that manufactures equipment for energy generation industries.

Ms. White’s education includes a:

We believe Ms. White’s extensive senior management experience, particularly in data science and analytics, brings valuable perspective to our Board and to the oversight of these functions within Quantum.

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Christopher D. Neumeyer Chair, Corporate Governance and Nominating Committee INDEPENDENT Age: 42

Chair  Corporate Governance & Nominating Committee

Mr. Neumeyer was elected to our Board in August 2022 and previously served as a non-voting Board observer since 2016.

He is an executive vice president and portfolio manager at Pacific Investment Management Company, LLC (PIMCO), a global investment management firm that provides investment solutions to companies, educational institutions, foundations, and endowments across the world. Since joining PIMCO in January 2010, Mr. Neumeyer has held multiple roles and is currently responsible for identifying, originating, and structuring corporate investments across the capital structure in a variety of industries for various PIMCO-managed investment funds.

Mr. Neumeyer’s previous experience includes:

Mr. Neumeyer earned a Bachelor of Science degree in business from Indiana University and is a CFA^® charterholder.

We believe Mr. Neumeyer is qualified to serve on the Board due to his financial expertise. In addition, we expect his experience conveying shareholder interests to boards and management teams will bring valuable shareholder perspectives to our Board oversight and decision-making processes.

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Donald J. Jaworski Board Member INDEPENDENT Age: 64

Member Leadership & Compensation Committee Technology Advisory Committee

Mr. Jaworski was appointed to our Board in November 2022.

Mr. Jaworski is President and Chief Operating Officer of Lacuna Technologies, Inc., a leader in software that helps municipalities to operationalize digital infrastructure and manage transportation, since March 2021. Mr. Jaworski leads execution and is focused on delivering value to Lacuna’s customers.

Prior to joining Lacuna, from January 2015 to March 2020, he was CEO of SwiftStack, Inc., an open-source cloud data management company focused on large scale data applications, which was acquired by NVIDIA Corporation, a publicly-traded multinational technology company, in March 2020.

Mr. Jaworski previously served as:

Mr. Jaworski’s early career included management positions at Sun Microsystems, Inc. and Amdahl Corporation.

Mr. Jaworski has been an advisor and board member for a number of early-stage companies. He received a B.S. in Computer Science from Bowling Green State University and an MBA from Santa Clara University.

We believe Mr. Jaworski brings strength to our Board through his broad and deep technology and product development experience.

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Hugues Meyrath Chair, Technology Advisory Committee INDEPENDENT Age: 53

Chair Technology Advisory Committee

Member  Audit Committee  Corporate Governance & Nominating Committee

Mr. Meyrath was appointed to our Board in November 2022.

Mr. Meyrath has developed an extensive background in various leadership roles at global technology companies, most notably in the networking and data storage segments.

Most recently, he served as Chief Product Officer of ServiceChannel Holdings Inc., a provider of SaaS-based multi-site solutions, which was acquired by Fortive Corporation, a publicly-traded provider of connected workflow solutions, in 2021. From January 2014 to January 2017, Mr. Meyrath was Vice President at Dell Technologies Capital, a venture capital arm of Dell Technologies that invests in enterprise and cloud infrastructure, where he was responsible for driving venture funding, mergers and acquisitions, and other advisory roles for a diverse set of portfolio companies.

He also held the role of Vice President of Product Management and Business Development for Dell EMC’s Backup and Recovery Services, which offers data protection and business continuity products. Mr. Meyrath’s experience also includes executive roles at:

He was previously a Quantum employee from January 2002 to September 2003.

We believe Mr. Meyrath’s extensive work in product portfolio and technology development, and in particular his experience with data storage technologies, provides valuable experience and perspective to our Board.

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Board Diversity Matrix as of July 17, 2023

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BOARD COMMITTEES AND LEADERSHIP STRUCTURE

Board Committees

Key demographics for our current Board members are:

Female or Ethnically Diverse Directors (29%)	Board Member Independence (86%)	Committee Chair Independence (100%)
	2.9	54.6
Aggregate Meeting Attendance (97%)	Average Tenure (Years)	Average Age (Years)

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The Board’s standing committees are currently comprised of the following members:

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Identifying and Evaluating Director Nominees

 

The Corporate Governance and Nominating Committee uses the following procedures to identify and evaluate potential director nominees:

 

•

Regularly reviewing the Board’s size, composition, and collective performance, in addition to individual member performance and qualifications.

•

Determining whether to retain or terminate any third-party search firm used to identify director candidates, including approving the fees paid.

•

Reviewing qualifications of any properly identified, recommended, or nominated candidate. The committee’s review, in its discretion, may consider only the information provided to it or include discussions with third parties familiar with the candidate, candidate interviews, or other actions the committee deems proper.

•

Evaluating each candidate according to the General and Specific Considerations outlined to the left.

•

Recommending a slate of director nominees to be approved by the Board.

•

Endeavoring to promptly notify director candidates of its decision regarding whether to nominate a candidate for Board election.

 

The Board has not historically maintained a formal diversity policy for its members. However, in evaluating the Board’s composition, the Board and Corporate Governance and Nominating Committee consider diversity of:

 

Knowledge

 

Culture

 

Race

 

Gender

 

Age

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The Board believes that directors with a diverse range of perspectives, skills, and experiences enable it to more effectively oversee all aspects of Quantum’s business. The Board considers underrepresented populations when seeking candidates for future nomination to the Board, and seeks to include women and members of underrepresented groups in each nominee candidate pool.

 

Shareholder Recommendations

 

The Corporate Governance and Nominating Committee’s policy is to consider shareholder recommendations for Board candidates. A shareholder must submit a written recommendation for a Board candidate to the attention of:

 

Quantum Corporation Attn: Corporate Secretary 224 Airport Parkway, Suite 550 San Jose, CA 95110

 

Submissions must include:

 

•

Candidate name and contact information.

•

Detailed biographical data and relevant qualifications, including references.

•

Descriptions of any relationships between the candidate and Quantum.

•

The shareholder’s statement in support of the candidate.

•

The candidate’s written indication of his or her willingness to serve if elected.

•

Other nominee information that our Bylaws and applicable SEC regulations require to be disclosed.

 

Shareholder Nominees

 

Shareholders may also nominate director candidates for election to the Board. A shareholder that desires to nominate a candidate directly for election must meet the deadlines and other requirements set forth in our Bylaws and SEC rules and regulations (see Shareholder Proposals for Our 2024 Annual Meeting for more information).

 

Our Bylaws are available on the Corporate Governance page of our website and as an exhibit to our annual report on Form 10-K.

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Corporate Governance

ETHICS AND COMPLIANCE

We constantly strive to provide an unparalleled customer experience, built on an unparalleled commitment to doing the right thing. Our code of conduct is a means to help us successfully navigate both new opportunities and challenges by enabling effective business processes, relationships, and solutions.

 

The code applies to anyone conducting business on behalf of Quantum or its subsidiaries, including all directors, officers, and employees, and defines expectations in each of the following key areas:

 

How We Treat Each Other

 

How We Support Growth

 

How We Work with Third Parties

 

How We Handle Information

 

When We Need Help

 

The Board most recently revised the code in August 2021, with another update expected this fall. The code includes policies expecting compliance with laws, rules, and regulations, including:

 

•

Reporting concerns and prohibiting retaliation.

•

Avoiding discrimination and harassment and supporting diversity, human rights, and equal opportunity in the workplace.

•

Prohibiting inappropriate sales practices.

•

Preventing bribery and complying with applicable anticorruption and antikickback requirements, including guidelines for giving and receiving gifts and entertainment.

•

Identifying and disclosing conflicts of interest.

•

Complying with insider trading and antitrust and fair competition requirements.

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Some of our key ESG metrics in Fiscal 2023 are included below. More details about our ESG performance and goals are provided in our Fiscal 2023 ESG programs report, available on the Corporate Governance page of our website.

	8,877 metric tonnes CO2e Scope 1 and 2 Greenhouse Gas Emissions reported to Carbon Disclosure Project		29% female Board representation
	3% reduction in reported Scope 1 and 2 Greenhouse Gas Emissions per employee		6,800+ hours of employee training provided
	6+ tons of e-waste recycled		250 hours of exercise during employee wellness challenge
	0 enforcement actions for data breach, environmental and water compliance, or regulatory compliance practices		12,000+ employee acts of kindness during wellness challenge
	$0 fines for regulatory violations		1 OSHA recordable incident in calendar year 2022
	Colorado wastewater No Exposure Exemption permit renewed		0 COVID-19 or other employee workplace fatalities

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The Board is dedicated to Quantum’s human capital management strategy, which includes:

 

Recruiting

 

Retention

 

Career Development

 

Performance Management

 

Rewarding Critical Talent

 

Succession Planning

 

BOARD ROLE IN RISK OVERSIGHT  

Quantum faces a wide spectrum of financial, strategic, operational, and regulatory risks. The Audit Committee is primarily responsible for overseeing the Company’s management of those risks and providing appropriate updates to the Board. The Audit Committee guides our risk identification, assessment, and management policies and procedures, including discussions of our major risk exposures, associated risk mitigation activities, and risk management practices implemented throughout the Company. It also actively monitors the Company’s product and information technology cybersecurity risks and mitigation procedures.

 

The Board’s other committees also oversee risks associated with their respective areas of responsibility, including:

 

•

The Leadership and Compensation Committee’s review of compensation practices risks.

•

The Corporate Governance and Nominating Committee’s oversight of compliance risks.

 

The committees update the Board regarding their risk oversight practices through regular reporting and discussion.

While the Board is responsible for risk oversight, risk management accountability lies with our management team. Quantum’s enterprise risk management practices and formal risk assessments are led by our internal audit team, which periodically reports status to the Audit Committee or Board, where appropriate. Our functional teams apply other appropriate risk assessment and mitigation techniques, with the involved management representatives updating the Board as needed.

 

BOARD EVALUATION

Our Board, committees, and individual directors perform annual self-evaluations in accordance with our corporate governance principles. The evaluations ensure our Board is strategic, productive, and effective, and contributes to long-term shareholder value. As part of the evaluation process, the Board, Mr. Lerner, and Mr. Cabrera hold ongoing discussions regarding Board and committee composition, effectiveness, and decision-making, as well as individual director performance.

 

STOCK OWNERSHIP GUIDELINES

We annually review our stock ownership guidelines for our CEO, directors, and other officers. We compare our guidelines with those of peer group companies and consider ISS ownership governance best practices. Our Board believes that best aligning with shareholder interests requires our directors to hold common stock amounts on the larger end of our peer group and the ISS guidelines.

 

In Fiscal 2023, our Board agreed to continue the following stock ownership guidelines, which were increased in 2020:

 

Directors: 5x Annual Retainer

 

Chief Executive Officer: 3x Annual Base Salary

 

Chief Financial Officer: 2x Annual Base Salary

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The non-employee directors held the following outstanding and unvested equity awards as of March 31, 2023:

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Proposals

PROPOSAL 1: ELECTION OF DIRECTORS

Quantum has nominated six directors to be elected to the Board at the Annual Meeting, to serve until the 2024 annual meeting or until their successors are duly qualified and elected. The size of the Board will be reduced from seven to six directors following the Annual Meeting. The Corporate Governance and Nominating Committee recommended all nominees and the Board nominated all for election.

The nominees are:

James J. Lerner	Marc E. Rothman	Yue Zhou (Emily) White	Christopher D. Neumeyer	Donald J. Jaworski	Hugues Meyrath

Required Vote

This is an uncontested election requiring a majority of votes cast. A majority of votes cast means that the number of shares voted for a director exceeds the number of votes cast against the director. Abstentions will not be counted for or against a nominee. If a director nominee does not receive a majority of votes cast, he or she will not be elected. See Information Concerning Solicitation, Voting, and Communication for more information about majority voting.

Each shareholder voting on Proposal 1 may cumulate their votes as described in Information Concerning Solicitation, Voting, and Communication.

THE BOARD RECOMMENDS A VOTE

“FOR”

EACH OF THE NOMINEES LISTED ABOVE.

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PROPOSAL 2: APPROVAL TO ADOPT THE 2023 LONG TERM INCENTIVE PLAN

We respectfully request that shareholders approve the Quantum Corporation 2023 Long-Term Incentive Plan (the 2023 Plan), approved by the Board on July 25, 2023, subject to shareholder approval. The 2023 Plan is intended to improve our long-term compensation program, currently implemented under our Quantum Corporation Amended and Restated 2012 Long-Term Incentive Plan (the 2012 Plan), which expires in August 2024.

If approved, the 2023 Plan will replace the 2012 Plan and no further grants will be made under the 2012 Plan. If shareholders do not approve Proposal 2, the 2012 Plan will remain in place and will continue to be administered in its current form subject to shares remaining available for grant under the plan. If Proposal 2 is not approved, we anticipate the 2012 Plan will be exhausted of any remaining available shares in fiscal year 2024 and will not be sufficient to competitively compensate our highest-performing employees or executive officers.

We are asking our shareholders to approve the 2023 Plan because we believe the availability of a modern long-term equity plan holding an adequate share reserve is an integral part of our ability to attract and retain key talent and reward employees who demonstrate strong performance and valuable contributions to Quantum’s results. If the 2023 Plan is not approved, we believe the foregoing benefits will be adversely affected and will increase the risk that we may not be able to retain our executive officers and key leadership team members, or to competitively reward our key employees. Either or both of those scenarios could negatively impact our performance and ability to meet our fiscal year 2024 goals.

Long-Term Equity is a Key Component of Our Employee Compensation Program

Our employees are our most valuable asset, and we strive to provide them with competitive compensation packages that reward personal and Company performance and that help meet our retention needs. Equity awards, whose value depends on our stock performance and which require continued service over time before any value can be realized, help achieve these objectives and are a key element of our compensation program. Equity awards also incentivize our employees to manage our business as investors, aligning their interests with those of our shareholders. We believe we must continue to use equity compensation on a broad basis to help attract, retain and motivate employees to grow our business, develop new products, increase operating efficiencies, and ultimately increase shareholder value.

As discussed in Compensation Discussion and Analysis, approximately 50% of the long-term equity awards we granted in Fiscal 2023 and prior years were based on performance-based restricted stock units which were also subject to time-based vesting requirements and continued employment. The majority of the performance targets have not yet been met, meaning that the actual compensation realized by our executive officers has been significantly lower than their target compensation metrics. For that reason, we believe it is imperative that we have sufficient shares available to offer additional performance-based equity awards in fiscal 2024 to align executive interests with our business performance and shareholder value.

The 2023 Plan Incorporates Compensation and Governance Best Practices

The 2023 Plan includes the following important features:

Prohibitions against liberal share recycling practices. Shares tendered by participants to satisfy the exercise price or purchase price of awards, or tax withholding obligation with respect to awards, will not be added back to the balance of shares available to issue under the 2023 Plan.

Shareholder approval required for additional shares. The 2023 Plan does not contain an annual “evergreen” provision. The 2023 Plan authorizes a fixed maximum number of shares and requires shareholder approval to increase the maximum number of shares of our common stock which may be issued under the 2023 Plan.

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	No discount stock options or stock appreciation rights. All stock options and stock appreciation rights must have an exercise price equal to or greater than the fair market value of our common stock on the date the award is granted.
	Repricing and cash buyouts not allowed without shareholder approval. The 2023 Plan prohibits the repricing, cash-out or other exchange of underwater stock options and stock appreciation rights without prior shareholder approval.
	Limitations on dividend payments on unvested awards. Dividends and dividend equivalents may not be paid on awards subject to vesting conditions unless and until such conditions are met. In addition, dividend equivalents may not be granted on options or stock appreciation rights.

	Clawback. The 2023 Plan provides that all awards will be subject to our clawback policy.
	No tax gross-ups. The 2023 Plan does not provide for any tax gross-ups.
	Compensation Committee independence. Our employee equity plans are administered by the Board’s Leadership and Compensation Committee, which is comprised entirely of independent non-employee directors.
	Broad-based eligibility. 54% of Fiscal 2023 equity awards were granted to employees who are not named executive officers or directors.

We Manage Our Incentive Program Thoughtfully

We manage our long-term shareholder dilution by limiting annual equity grants to what we believe is necessary to attract, reward, and retain our key employees. We are also mindful of the ratio of our stock-based compensation expense to our revenues over time.

The table below summarizes our equity grant practices during the three most recent fiscal years.

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Our typical executive equity grants are comprised of:

50% Time-Based Restricted Stock Units, which vest in equal annual installments over three years.

50% Performance-Based Restricted Stock Units, which require attainment of defined performance goals as well as continuing employment over additional time-based vesting requirements.

The performance goals we set for equity award certification are designed to be challenging and require consistent business execution and achievement in order to be earned. Given the challenges presented from the COVID-19 pandemic, supply chain constraints, inflationary pressure, and general macroeconomic concerns, we have not yet achieved the majority of the performance-based metrics associated with equity granted to our executives in Fiscal 2023 or in fiscal year 2022. Of the 1.725 million outstanding performance-based restricted stock units granted since July 2020, 81% are still yet to be earned and will be returned to our available equity balance if they are not attained within their applicable performance periods.

Peer Group Benchmarking

Benchmarking our Fiscal 2023 equity grant practices to those of our Peer Group shows our moderate equity use. According to our Peer Group’s most recent fiscal year Form 10-K filings, our net burn rate for Fiscal 2023 approximated the 56^th percentile of our Peer Group. Our Fiscal 2023 issued, available, and total overhang rates approximated the 44^th, 2^nd, and 9^th percentiles compared to our Peer Group, respectively.

The 2023 Plan Allows Us to Meet Our Forecasted Equity Needs

We are requesting an initial share reserve for the 2023 Plan of 6,000,000 plus the number of shares available under our 2012 Plan as of the Annual Meeting date and any shares returned from subsequent outstanding award expiration, termination, or forfeiture.

Shares outstanding and available under the 2012 Plan and our 2021 Inducement Plan (the Inducement Plan) as of the Record Date are shown below, in thousands.

Our overhang for the 2012 Plan as of the Record Date was 5.93%. Assuming shareholders approve the 2023 Plan, our overhang will be 11.24%. For this purpose, we are defining overhang as (A + B) / (A + B + C), where A, B, and C are based on the following measurements as of the Record Date:

Overhang calculations exclude shares available for future issue or grant under the 2021 Inducement Plan or ESPP.

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Based on a review of our historical and projected grant practices, we estimate that the requested initial share reserve for the 2023 Plan should meet our equity grant needs for approximately two years. This estimate is based on assumptions about our anticipated hiring rate, stock price over time, and historical forfeiture rates.

Material Terms of the 2023 Long-Term Incentive Plan

This section summarizes certain principal features of the 2023 Plan. This summary is not a complete description of all of the provisions of the 2023 Plan and is qualified in its entirety by reference to the full text of the 2023 Plan.

Eligibility and Types of Awards

The 2023 Plan permits the grant of the following types of equity incentive awards:

Employees, consultants and directors of Quantum and any parent, subsidiary or affiliate of Quantum are eligible to participate in and receive awards pursuant to the 2023 Plan. As of the Record Date, we had approximately 785 employees, consultants and directors who would be eligible to participate in the 2023 Plan.

Administration

The 2023 Plan will be administered by the Board or a committee of individuals satisfying applicable laws appointed by the Board (the Administrator). It currently is expected that the Committee will continue to administer the 2023 Plan, but the Board has the authority to appoint one or more other committees to separately or concurrently administer the 2023 Plan. The Board may require that any committee which administers the 2023 Plan consist of at least two directors who qualify as non-employee directors under Rule 16b-3 of the Securities Exchange Act of 1934 to qualify transactions under the 2023 Plan as exempt under Rule 16b 3.

Subject to the terms of the 2023 Plan, the Administrator has the sole discretion to select the employees, consultants, and directors who will receive awards, determine the terms and conditions of awards, interpret the provisions of the Plan and outstanding awards, and make all determinations necessary or advisable for administering the 2023 Plan. The Administrator may delegate any part of its authority and powers under the 2023 Plan to a committee of officers to the extent permitted by applicable law, provided that such delegation shall specify the total number of awards that such officers may award. The Administrator’s decisions, determinations, and interpretations will be final and binding on all participants and other holders of awards and will be given maximum deference permitted by law.

Share Reserve and Share Recycling Rules

Maximum Share Limit. The maximum number of shares that may be issued or transferred pursuant to awards under the 2023 Plan is equal to the sum of:

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However, in no event will the number of shares available for issuance under the 2023 Plan exceed 11,957,921 shares.

Share Recycling

Administration

Awards granted under the 2023 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which we enter into a merger or similar corporate transaction will not reduce the shares available for grant under the 2023 Plan, but will count against the maximum number of shares that may be issued upon the exercise of ISOs.

Capitalization Adjustments

If Quantum experiences a dividend or other distribution (whether in cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of Quantum, or other change in corporate structure affecting the shares, the Committee will adjust the number and class of shares available for issuance under the 2023 Plan, the number, class and price of shares subject to outstanding awards, and the per-person share limits on awards.

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Individual Award Limitations

The 2023 Plan contains annual grant limits. Specifically, subject to the adjustment provisions of the 2023 Plan, the maximum number of shares or dollars that can be subject to awards granted to any one employee or consultant in any fiscal year is:

The 2023 Plan also provides that the maximum grant date fair value (calculated in accordance with generally accepted accounting principles) of all awards (as a combined limit) granted to an individual non-employee director in any one fiscal year may not exceed an aggregate of $500,000. In the fiscal year in which a non-employee director first joins the Board, this limit is increased to $750,000. Any awards granted to an individual while he or she was an employee or consultant but not a non-employee director shall not count for purposes of this limitation.

No Repricing or Cash Buyouts

The 2023 Plan prohibits the implementation of any program to exchange awards or reduce the exercise price of options or stock appreciation rights, or otherwise implement certain programs under which participants can transfer awards to a financial institution or other person or entity, except with shareholder approval.

No Reload Options

No stock option will include terms entitling a participant to a grant of stock options upon exercise of the original stock option.

Stock Options

The Administrator may grant NSO or ISOs, the latter of which are entitled to potentially favorable tax treatment, under the 2023 Plan. The stock option exercise price is determined at grant by the Administrator and must be at least 100% of the fair market value of a share on the date of grant (110% for incentive stock options granted to shareholders who own more than 10% of the total outstanding shares of Quantum, its parent or any of its subsidiaries). The term of a stock option shall not exceed 7 years from the date of grant. However, a participant who owns stock possessing more than 10% of the total combined voting power of all classes of stock of Quantum or any of its subsidiaries or any Quantum parent may not be granted an incentive stock option that is exercisable after 5 years from the option’s grant date. Dividend equivalents may not be granted on stock options.

Stock Appreciation Rights

SARs are awards that grant the participant the right to receive an amount (in the form of cash, shares of equal value, or a combination thereof, as determined by the Administrator) equal to the number of shares exercised multiplied by the amount by which Quantum’s stock price exceeds the exercise price.

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Quantum may pay the appreciation in cash, in shares or in a combination of both. The exercise price is set by the Administrator but cannot be less than 100% of the fair market value of the covered shares on the grant date. A SAR may be exercised only upon satisfying the vesting or other requirements established by the Administrator. SARs expire under the same rules that apply to options, meaning that the Administrator determines the time at which they expire but the expiration may not be later than 7 years after the grant date. Dividend equivalent rights may not be granted on SARs.

Restricted Stock

Awards of restricted stock are shares that may be subject to vesting conditions in accordance with the terms and conditions established by the Administrator. A holder of restricted stock will have full voting rights, unless determined otherwise by the Administrator. Dividends paid on unvested stock grants will be subject to forfeiture if the vesting condition applicable to the stock grant is not satisfied.

Restricted Stock Units

RSUs represent a right to receive shares (and/or cash of equal value) at a future date determined in accordance with the participant’s award agreement. Participants holding RSUs have no voting rights with respect to the shares represented by the RSUs until the date the underlying shares are issued. The Administrator may provide for dividend equivalent rights on RSUs based on the amount of dividends paid on outstanding shares of our common stock. Any dividend equivalent rights that are awarded will be subject to forfeiture to the same extent as the corresponding RSUs to which the dividend equivalent rights relate.

Performance Awards

Performance awards are awards that result in a payment to a participant (in the form of cash, shares of equal value, or a combination thereof, as determined by the Administrator) only if performance goals and/or other vesting criteria established by the Administrator are achieved or the awards otherwise vest. The applicable performance goals or vesting criteria will be determined by the Administrator and may be applied based on continued employment or service, the achievement of specific performance objectives (such as company-wide, departmental, divisional, business unit or individual goals), applicable federal or securities laws, or any other basis determined by the Administrator in its discretion. Performance awards that are RSUs may contain dividend equivalent rights.

Limited Transferability of Awards

Awards granted under the 2023 Plan generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution, and may be exercised during a participant’s lifetime only by the participant. Notwithstanding the foregoing, subject to the terms of the 2023 Plan, the Administrator may make an award transferable on such terms and conditions as the Administrator deems appropriate, such as permitting an individual to transfer an award to an individual or entity if the transfer is for bona fide estate planning purposes.

Merger, Change in Control, or Other Transactions

In the event of a merger of Quantum with or into another corporation or a change in control (as defined in the 2023 Plan), each outstanding award will be treated as the Administrator determines, including that each award be assumed or substituted by the successor corporation (or its parent or subsidiary). The Administrator is not required to treat all awards similarly.

If there is no assumption or substitution of outstanding awards, the awards will fully vest, all restrictions will lapse, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and the awards will become fully exercisable. In addition, if an option or stock appreciation right is not assumed or substituted in the event of a merger or change in control, the Administrator will notify the participant that the award will be exercisable for a specified period prior to the transaction, and the award will terminate upon the expiration of such period.

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With respect to awards granted to a non-employee director that are assumed or substituted for upon a merger or change in control, if the non-employee director’s status as a director is terminated other than upon voluntary resignation (unless resignation was required by the acquirer) on or after the assumption or substitution, then his or her awards will fully vest, all restrictions will lapse, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and the awards will become fully exercisable.

In the event of a proposed dissolution or liquidation of Quantum, the Administrator will notify each participant as soon as practicable prior to the effective date of the proposed transaction. To the extent options and stock appreciation rights are not exercised or other awards are not vested, the awards will terminate immediately prior to the completion of the proposed transaction.

Amendment and Termination

The Administrator or our Board generally may amend or terminate the 2023 Plan at any time and for any reason. However, no amendment, suspension, or termination may impair the rights of any participant without his or her consent. If not terminated earlier, the 2023 Plan will continue in effect until July 25, 2033.

Clawback Provisions

Awards granted under the 2023 Plan will be subject to any provisions of applicable law providing for the recoupment or clawback of incentive compensation, such as provisions imposed pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; the terms of any Quantum recoupment, clawback or similar policy in effect at the time of grant of the award, and any recoupment, clawback or similar provisions that may be included in the applicable award agreement.

Material U.S. Federal Income Tax Consequences

The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the 2023 Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.

Nonqualified Stock Options

No taxable income is reportable when a nonqualified stock option with an exercise price at least equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the portion of the option exercised. Any taxable income recognized in connection with an option exercise by an employee of Quantum is subject to tax withholding by Quantum. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Incentive Stock Options

No taxable income is reportable when an incentive stock option is granted or exercised (unless the participant is subject to the alternative minimum tax). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the exercised shares on the exercise date (or the sale price, if less) minus the exercise price of the portion of the option exercised.

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Stock Appreciation Rights

No taxable income is reportable when a stock appreciation right with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and/or the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Restricted Stock and RSUs

A participant generally will not have taxable income at the time an award of restricted stock or RSUs is granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either freely transferable or no longer subject to substantial risk of forfeiture. However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted.

Tax Effect for Quantum

Quantum generally will be entitled to a tax deduction in connection with an award under the 2023 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). However, special rules limit the deductibility of compensation paid to our Chief Executive Officer, Chief Financial Officer, and to our three other most highly compensated named executive officers (other than our Chief Executive Officer and our Chief Financial Officer). Because the exception for performance-based compensation under Section 162(m) has been repealed, the annual compensation paid to any of these specified executives generally will be deductible only to the extent that it does not exceed $1 million.

Section 409A of the Code

Certain types of awards under the 2023 Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the 2023 Plan and awards granted under the 2023 Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code. To the extent determined necessary or appropriate by the Administrator, the 2023 Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code.

New Plan Benefits

Except with respect to grants of RSUs that will be awarded to each non-employee director serving on our Board on the date of this Annual Meeting as discussed above under the heading “Non-Employee Director Compensation,” the number of awards that our named executive officers, directors, other executive officers and other employees and consultants may receive under the 2023 Plan in the future, will be determined in the discretion of our Board or Committee, and neither our Board nor the Committee has made any determination to make future grants to any persons under the 2023 Plan as of the date of this Annual Meeting. Therefore, it is not possible to determine the future benefits that will be received by these participants under the 2023 Plan.

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Summary

We believe that the approval of the 2023 Plan is essential to our continued ability to attract, reward, and retain our executive and non-executive employees, as well as our Board members. Awards such as those provided under the 2023 Plan constitute an important incentive desired by employees and candidates whose skills and performance are critical to our success. Shareholder approval of the 2023 Plan is vital to achieving our projected operating results in fiscal year 2024 and beyond.

Required Vote

Approval of the 2023 Plan requires the affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote against Proposal 2. If shareholders do not approve the 2023 Plan, the 2012 Plan and the Inducement Plan will remain in place and will continue to be administered in their current form subject to shares remaining available for grant under such plans.

The proposed 2023 Plan is provided for review as Appendix A on page 75 of this proxy statement.

THE BOARD RECOMMENDS A VOTE

“FOR”

THE APPROVAL OF THE 2023 LONG-TERM INCENTIVE PLAN.

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PROPOSAL 3: APPROVAL TO AMEND AND RESTATE THE EMPLOYEE STOCK PURCHASE PLAN

Our Employee Stock Purchase Plan (ESPP) allows our employees to purchase shares of Quantum’s common stock at a discount. The ESPP helps us attract, motivate, and retain highly qualified employees and promotes employee stock ownership, which aligns employees’ interests with those of our shareholders.

One hundred sixty-five employees participated in the ESPP in the last regular offering period concluded in February 2023, purchasing a total of 299,911 shares. Following the purchase, only 87,666 shares remained, which the Board determined was not sufficient to support meaningful continued employee participation. As a result, we paused additional employee contributions pending available share replenishment.

We believe that continuing to offer our employees the opportunity to increase their investment in Quantum effectively advances the interests of the Company and our shareholders. Accordingly, the Board has approved the amended and restated ESPP subject to shareholder approval at the Annual Meeting. We are therefore asking shareholders to approve the following ESPP amendments:

All of these changes are expected to encourage employees to increase their participation in the ESPP and improve alignment of their interests with our shareholders.

If Proposal 3 is approved, the total number of shares authorized and reserved for issuance under the ESPP will be 13,725,769 shares.

Material Terms of the Employee Stock Purchase Plan

The following paragraphs provide a summary of the principal features of the ESPP and its operation. However, this summary is not a complete description of all of the provisions of the ESPP and is qualified in its entirety by the specific language of the ESPP.

Purpose

The purpose of the ESPP, a broad-based stock purchase program, is to provide eligible employees of the Company and its participating affiliates with the opportunity to purchase shares of our common stock at a discount through payroll deductions or, if payroll deductions are not permitted under local laws, through other means as specified by the Committee. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (Section 423). In addition, the ESPP authorizes the grant of purchase rights that do not qualify under Section 423 pursuant to rules, procedures, or sub-plans adopted by the Company’s Board that are designed to achieve desired tax, securities law or other compliance objectives in particular locations outside of the United States (the Non-Section 423 Plan).

Eligibility to Participate

Most employees of the Company and its participating affiliates are eligible to participate in the ESPP, excluding employees who have the right to acquire 5% or more of the voting stock of the Company or of any subsidiary of the Company. The Committee has discretion to exclude employees from participating in the ESPP, from the Section 423 portion of the ESPP (the Section 423 Plan) on a uniform and nondiscretionary basis or as otherwise permitted by Section 423, if the employee normally is scheduled to work less than or equal to 20 hours per week or five months per calendar year, has worked for the Company for less than two years, or is an officer or other highly compensated employee, provided that the exclusion of employees in such categories is not prohibited under applicable local law. As of the Record Date, approximately 740 employees were eligible to participate in the ESPP.

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Administration, Amendment, and Termination

The Board or a committee of the Board administers the ESPP. Currently, the Committee acts as administrator of the ESPP. The members of the Committee serve at the pleasure of the Board. Subject to the terms of the ESPP, the Committee has all of the discretion and authority necessary or appropriate to control the operation and supervise the administration of the ESPP. The Committee also may establish a waiting period (not to exceed two years) before new employees may become eligible for the ESPP. The Committee’s authority under the ESPP includes, among other powers, interpreting and determining the terms and provisions of the ESPP and purchase rights thereunder. The Committee may delegate one or more of the ministerial duties in the administration of the ESPP. All actions, interpretations and decisions of the Committee are conclusive and binding on all persons and will be given the maximum deference permitted by law.

The Committee or the Board may amend or terminate the ESPP at any time and for any reason. However, as required by Section 423 of the Internal Revenue Code, certain material amendments must be approved by the Company’s shareholders.

Number of Shares of Common Stock Available under the ESPP

Currently, a maximum of 9,725,769 shares have been approved for issuance pursuant to the ESPP. If shareholders approve the amended and restated ESPP, the number of shares issuable under the ESPP would be increased by 4,000,000 shares, bringing the total that may be granted under the ESPP to 13,725,769 shares. Shares sold under the ESPP may be newly issued shares or treasury shares. In the event of any stock split, stock dividend, or other change in the capital structure of the Company, appropriate adjustments will be made in the number, kind, and purchase price of the shares available for purchase under the ESPP. The closing price of our common stock on the Record Date was $1.09.

Enrollment and Contributions

Eligible employees voluntarily elect whether or not to enroll in the ESPP. Assuming approval of the amended and restated ESPP at the Annual Meeting, shares will be offered under the ESPP through a series of consecutive and/or overlapping offering periods (not longer than 27 months each) as determined by the Committee. Employees who join the ESPP participate during an initial offering period. Employees who have joined the ESPP automatically are re-enrolled for additional offering periods but cancel his or her enrollment at any time (subject to ESPP rules).

Employees contribute to the ESPP through payroll deductions or, if payroll withholding is not permitted under local laws, through such other means as specified by the Committee. Participating employees generally may contribute up to 10% of their eligible compensation through after-tax payroll deductions. From time to time, the Committee may establish a different maximum permitted contribution percentage, change the definition of eligible compensation, or change the length of the offering periods. An employee later may increase or decrease his or her contribution percentage by following procedures established by the Administrator.

Purchase of Shares

On the last business day of each six-month offering period, the Company uses each participating employee’s payroll deductions or contribution to purchase shares for the employee. The price of the shares purchased will be determined under a formula established in advance by the Committee. However, in no event may the purchase price be less than 85% of the lower of:

The fair market value of a share on any relevant date will be the closing price of our common stock as quoted on Nasdaq for the date of purchase, and as reported in the Wall Street Journal or such other source as the Administrator deems reliable.

In any single year, no employee may purchase more than $25,000 of common stock (based on the fair market value on the first day of the offering period). The maximum number of shares that any participant may purchase on any purchase date shall not exceed 10,000 shares.

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The Committee has discretion to set a different limit on the number of shares that any participant may purchase on any purchase date, to set a lower (but not higher) limit on the dollar value of shares that may be purchased, and to change the dates on which shares are purchased.

Termination of Participation

Participation in the ESPP generally terminates when a participating employee’s employment with the Company or an affiliate ceases for any reason, the employee withdraws from the ESPP, or the Company terminates or amends the ESPP such that the employee no longer is eligible to participate. A participating employee may withdraw their participation in the ESPP at any time in accordance with procedures, and prior to the deadline, specified by the Administrator. Upon withdrawal from the ESPP, generally the employee will receive the return of any remaining amounts not used to purchase shares that have been credited to his or her account, without interest (unless otherwise required by applicable law), and their payroll withholdings or contributions under the ESPP will cease.

Certain U.S. Income Tax Consequences

The following brief summary of the effect of U.S. federal income taxation upon the participant and the Company with respect to the shares purchased under the ESPP does not purport to be complete, and does not discuss the tax consequences of a participant’s death or the income tax laws of any state or foreign country in which the participant may reside.

The ESPP is intended to be an employee stock purchase plan within the meaning of Section 423. The ESPP also authorizes the grant of rights to purchase stock that do not qualify under Section 423 pursuant to the Non-Section 423 Plan. Under an employee stock purchase plan that qualifies under Section 423, no taxable income will be recognized by a participant, and no deductions will be allowable to the Company, upon either the grant or the exercise of the purchase rights. Taxable income will not be recognized until there is a sale or other disposition of the shares acquired under the ESPP or in the event the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposes of the purchased shares within two years after the start date of the offering period in which the shares were acquired or within one year after the actual purchase date of those shares, then the participant generally will recognize ordinary income in the year of sale or disposition equal to the amount by which the fair market value of the shares on the purchase date exceeded the purchase price paid for those shares, and the Company will be entitled to an income tax deduction, for the taxable year in which such disposition occurs in an amount equal to such excess. The amount of this ordinary income will be added to the participant’s basis in the shares, and any resulting gain or loss recognized upon the sale or disposition will be a capital gain or loss. If the shares have been held for more than one year since the date of purchase, the gain or loss will be long-term.

If the participant sells or disposes of the purchased shares more than two years after the start date of the offering period in which the shares were acquired and more than one year after the actual purchase date of those shares, then the participant generally will recognize ordinary income in the year of sale or disposition equal to the lesser of the amount by which the fair market value of the shares on the sale or disposition date exceeded the purchase price paid for those shares, or 15% of the fair market value of the shares on the start date of that offering period. Any additional gain upon the disposition will be taxed as a long-term capital gain. Alternatively, if the fair market value of the shares on the date of the sale or disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a long-term capital loss. The Company will not be entitled to an income tax deduction with respect to such disposition.

If the participant still owns the purchased shares at the time of death, the lesser of the amount by which the fair market value of the shares on the date of death exceeds the purchase price, or 15% of the fair market value of the shares on the start date of the offering period in which those shares were acquired will constitute ordinary income in the year of death.

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New Plan Benefits

Participation in the ESPP is voluntary and dependent on each eligible employee’s election to participate and their determination as to the level of payroll deductions. Further, the number of shares that may be purchased under the ESPP is determined, in part, by the price of our common stock on the first and last day of each offering period, as applicable. Accordingly, the actual number of shares that may be purchased by any eligible individual is not determinable. All participants, however, are subject to the limitations on the amounts that can be invested and the shares that can be purchased as provided in the ESPP and described above.

Required Vote

Approval of the amended and restated ESPP requires the affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote against Proposal 3.

The amended and restated ESPP is provided for review as Appendix B on page 91 of this proxy statement.

THE BOARD RECOMMENDS A VOTE

“FOR”

THE APPROVAL OF THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN.

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PROPOSAL 4: ADVISORY VOTE ON SAY ON PAY

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) and Section 14A of the Securities Exchange Act of 1934 (the Exchange Act) require that we provide our shareholders with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement.

Following approval from a substantial majority of shareholders at our March 31, 2017 annual meeting, the Board adopted a policy providing for annual advisory votes to approve our named executive officer compensation.

We are again asking our shareholders to approve, on an advisory basis, our named executive officers’ compensation as disclosed in Compensation Discussion and Analysis, the Summary Compensation Table, and the related tables, notes, and narrative in this proxy statement. We believe that information demonstrates that our executive compensation program is appropriately designed, performance-based, and aligned with interests of our shareholders.

Required Vote

Adopting a resolution approving, on an advisory basis, our named executive officer compensation requires the affirmative majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting. While the advisory vote on Proposal 4 is non-binding, it is required under Section 14A of the Securities Exchange Act of 1934 and provides valuable information regarding shareholder sentiment, which the Leadership and Compensation Committee will consider when determining future executive compensation programs. Abstentions will have the same effect as a vote against Proposal 4.

THE BOARD RECOMMENDS A VOTE

“FOR”

THE FOLLOWING RESOLUTION AT THE ANNUAL MEETING:

“RESOLVED, that the Company’s shareholders approve, on a non-binding advisory basis, our named executive officers’ compensation as disclosed pursuant to Item 402 of Regulation S-K in the Company’s proxy statement for the 2023 annual meeting of shareholders, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.”

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PROPOSAL 5: ADVISORY VOTE ON FREQUENCY OF SAY ON PAY

The Dodd-Frank Act and Section 14A of the Exchange Act require that we provide our shareholders with the opportunity to vote every six years, on a non-binding advisory basis, for their preference as to how frequently to vote on future advisory votes on the compensation of our named executive officers as disclosed in accordance with the compensation disclosure rules of the SEC.

The Board adopted a policy providing for an annual advisory vote to approve our named executive officer compensation following a substantial majority of shareholders at our March 31, 2017 annual meeting voting for that approach.

We are now providing shareholders with the option of selecting a frequency of one, two, or three years, or abstaining from such an advisory vote. We recommend that our shareholders select a frequency of one year, or an annual vote because an annual vote will allow shareholders to better review our executive compensation program in relation to our long-term performance. The Board has determined that an annual non-binding advisory vote on executive compensation will provide us with the time to thoughtfully respond to shareholders’ sentiments and implement any necessary changes. We therefore request that our shareholders select “ONE YEAR” when voting on the frequency of non-binding advisory votes on executive compensation.

By voting on this proposal, shareholders are not approving or disapproving our Board’s recommendation, but rather are indicating their preferred frequency for an advisory vote on named executive officer compensation. Shareholders may also abstain from voting.

Required Vote

The frequency that receives the highest number of votes cast by the holders of the shares present at the Annual Meeting in person or by proxy and entitled to vote will be the frequency recommended by shareholders. Abstentions have the same effect as votes against all frequencies in this proposal. While the advisory vote on Proposal 5 is non-binding on the Company and our Board, it is required under Section 14A of the Securities Exchange Act of 1934. We will provide our shareholders with the opportunity to vote on the frequency of future advisory votes on our named executive officers’ compensation at our annual meetings at least once every six calendar years.

THE BOARD RECOMMENDS A VOTE

FOR “ONE YEAR”

AS THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION.

OTHER PROPOSALS

As of the date of this proxy statement, Quantum is not aware of:

The Annual Meeting proxy solicited by the Board grants the proxy holders discretionary authority to vote on any matters other than Proposals 1 – 5 that may be properly brought before the Annual Meeting.

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) describes Quantum’s overall philosophy and criteria for determining our executive officer compensation practices. The CD&A disclosures relate to Fiscal 2023 for our principal executive officer, principal financial officer, and three other most highly compensated executive officers.

 

Our named executive officers for Fiscal 2023 were:

 

James J. Lerner	Kenneth P. Gianella	Brian E. Cabrera
President & Chief	Chief Financial	Chief Administrative
Executive Officer;	Officer	Officer
Chairman of the
Board	Since 2023	Since 2021
Since 2018

 

John Hurley	Lewis W. Moorehead	J. Michael Dodson
Chief Revenue	Former Chief	Former Chief
Officer	Accounting Officer	Financial Officer
Since 2021	From 2018 to 2023	From 2018 to 2023

 

FISCAL 2023 EXECUTIVE COMPENSATION HIGHLIGHTS

In Fiscal 2023, the Board and management team continued to focus on executing the Company’s vision to be a leader in end-to-end solutions for video and unstructured data, shifting more significantly to a recurring software and services licensing model. We also paid special attention to attracting and retaining top talent, particularly within our sales team, with the experience required to accomplish our goals and drive Quantum’s performance and sales model transformation. Finally, we hired Kenneth P. Gianella as our new Chief Financial Officer in January 2023. Mr. Gianella’s strength in financial operations and investor relations bring additional value and experience to our leadership team competencies.

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EXECUTIVE COMPENSATION PHILOSOPHY

Each year, the Committee reviews Quantum’s executive compensation philosophy of paying for performance. We focus on maintaining a competitive total compensation program that rewards executives for delivering results and long-term shareholder value. That philosophy is founded on four guiding principles designed to:

 

		Attract and Retain top talent and compete against our peer companies.
		Motivate desired behaviors that allow our team to drive Company success.
		Reward achieving the Company’s short- and long-term objectives.
		Align executive and shareholder interests to drive long-term value.

 

We believe that our mix of fixed and variable compensation elements, including cash and equity incentives, also:

 

•

Promotes achievement of Quantum’s objectives established by the Board and the Company’s senior management team.

•

Provides a strong link between pay and performance while motivating and rewarding employees for significant contributions to our success.

•

Aligns our employees’ interests with shareholder expectations.

•

Considers relevant economic and market factors.

•

Maintains equitable compensation programs that incorporate effective internal and external controls.

 

COMPETITIVE POSITIONING

Market competitiveness is an important feature of our executive compensation program and helps

motivate and retain our executive officers.

 

In assessing competitiveness, we compare individual elements including base salary, target annual incentive opportunity, annual equity awards, and total aggregate compensation for each executive officer, to those of executive officers holding similar positions or comparable levels of responsibility in our Peer Group and other similarly sized technology companies.

 

The Company uses applicable compensation data from our Peer Group as well as the Radford Global Compensation Database of technology companies with annual revenue less than $1 billion.

 

Peer Group

 

We annually evaluate our competitive peer group to identify companies similar in financial scope, size, and industry (Peer Group). Peer Group selection criteria include revenue, market capitalization, industry, and companies with which we compete in recruiting new employee talent.

 

We also consider shareholder perspective by including companies with similar business structures, end markets, and competitors that align with our business. The Committee approves the Peer Group and uses it to guide executive compensation decisions for the associated fiscal year, following compensation assessments, performance evaluations, and potential pay gap resolutions. The Peer Group is not the only determinant for executive compensation decisions, which are also influenced by:

 

		Company and Individual Performance
		Compensation Program Affordability
		Market Conditions

 

With assistance and input from independent compensation consultant Compensia, the Committee reviewed relevant considerations and approved the following Peer Group for Fiscal 2023, which was also used for fiscal 2022 compensation decisions:

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COMPENSATION ELEMENTS

We provide a mix of compensation elements that emphasizes annual cash and long-term equity incentives, in a manner that is consistent with our compensation philosophy and objectives. The primary elements of our executive compensation program consist of:

 

		Annual Base Salary as a fixed compensation element determined in comparison to the Peer Group and intended to competitively attract and retain executive talent.
		Target Variable Cash via annual cash-based incentives structured to reward achieving short-term strategic goals and paid based on Company and individual performance.
		Long-Term Equity Grants consisting of both time- and performance-based restricted stock units used to attract and retain executives while creating long-term shareholder value.

 

Fiscal 2023 Pay Mix

 

We offer our named executive officers a total direct compensation package that includes both fixed and variable compensation. Because target variable cash was not paid in Fiscal 2023, the actual compensation earned was reduced from target and projected pay mix was restricted to only base salary and long-term

¹Projected Mix Company excludes Fiscal 2023 Target Variable Cash and ARR-measured performance-based RSUs not earned in Fiscal 2023.

Mr. Moorehead’s Long-Term Incentives include the retention bonus paid to him in Fiscal 2023, as more fully described in Fiscal 2023 Compensation Tables.

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Fiscal 2023 Annual Base Salary

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¹The grant date fair value equals the number of RSUs awarded multiplied by the market price of Quantum’s common stock on the grant date.

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Executive Compensation Consultant Role

 

In Fiscal 2023, the Committee also engaged Compensia on a number of matters, including setting executive compensation. Compensia performs services only for the Committee, at its discretion. The Committee regularly reviews its advisors’ independence and determined that no relationship or conflict of interest exists that would preclude Compensia from independently advising the Committee.

 

Executive Management Role

 

The Committee reviews recommendations regarding compensation leveling and market trends from our executive management team, including the CEO, Chief Financial Officer, and Chief Administrative Officer. The Board and Committee retain final authority over executive compensation decisions. Management also assists the Committee in monitoring compensation related risk by reporting to the Committee on:

 

		Equity Pool Balances
		Burn Rate and Dilution
		Shareholder Return
		Quantum’s Strategic Goals

 

Peer Group Role

 

The Committee examines Peer Group pay practices and programs and compares the total target compensation for our CEO and officers to similar roles as market reference points. While it is the Committee’s goal to ensure our compensation practices are competitive, the Committee also considers other factors when making compensation decisions, including Quantum’s financial position and individual and Company performance.

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	Independent Consultant The Committee regularly engages with our external independent compensation consultant on Board and executive compensation matters.
	Clawback Policy •    Covers cash and equity incentive or bonus compensation paid to all Section 16 executive officers, all officers who directly report to the CEO, and the Vice President of Supply Chain (Covered Employees). •    Entitles recovery of any bonus or other incentive- or equity-based compensation paid to involved Covered Employees during the twelve months following first filing of financial statement containing errors requiring material restatement arising from knowing misconduct of Covered Employees. •    Allows recovery of any net profits Covered Employees realized from selling Quantum securities during that twelve-month period. •    We also plan to amend our clawback policies to comply with the final Nasdaq listing standards implementing the Dodd-Frank Act clawback provisions prior to December 1, 2023.
	Stock Ownership Guidelines Please refer to page 22 for an explanation of our director and officer stock ownership guidelines.
	Anti-Hedging and Anti-Pledging Policies •    Insider Trading Policy expressly prohibits buying Quantum securities on margin or using or pledging owned shares as collateral for loans, in addition to engaging in transactions in publicly traded options, puts and calls, and other derivatives of the Company’s stock.

•	Extends prohibition to any hedging or similar transaction designed to decrease the risks associated with holding Company securities.
	Insider Trading Policy •    Prohibits trading during a closed window. •    Precludes buying stock on margin. •    Prohibits pledging shares owned as loan collateral. •    Applies to all directors and employees.
	No Single-Trigger Change of Control Our change of control policy maintains that a double-trigger event must occur before an executive is entitled to specified compensation and benefits.
	Annual Risk Assessment We conduct an annual risk assessment of our executive compensation practices and believe our Fiscal 2023 programs were appropriate and discouraged excessive risk taking.
	Pay Mix •    Retaining our executive officers remains a primary focus as internal and external factors impact our business. •    For Fiscal 2023, our long-term incentive mix was equally balanced between performance- and time- based awards. •    Performance-based awards align our executives’ interests with Company performance goals. •    Time-based awards help address potential retention concerns.
	Perquisites   We grant only limited perquisites to our officers, as more fully described on page 49.

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Fiscal 2023 Compensation Tables

FISCAL 2023 SUMMARY COMPENSATION TABLE

The following table displays our named executive officer compensation as of the end of Fiscal 2023 for fiscal years 2023, 2022, and 2021.

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FISCAL 2023 GRANTS OF PLAN-BASED AWARDS 

The table below presents information on incentive plan-based awards granted to our named executive officers.

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OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END

The following table provides information regarding outstanding restricted stock unit awards held by our named executive officers as of March 31, 2023. There were no outstanding stock options held by our named executive officers at that time.

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FISCAL 2023 OPTIONS EXERCISED AND STOCK VESTED

The table below provides information on Fiscal 2023 restricted stock and RSU vesting for our named executive officers. There were no outstanding stock options held by our named executive officers. Our executive officers did not exercise option awards in Fiscal 2023.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL FOR FISCAL 2023

We maintain change of control agreements with all of our named executive officers, and their employment agreements provide for certain severance benefits in the event of a qualifying employment termination not associated with a change of control. While the Board approved some administrative updates to the agreements in Fiscal 2023, the material terms have remained unchanged since fiscal year 2019, and are explained in the tables.

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Fiscal 2023 Potential Severance Benefits

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EQUITY COMPENSATION PLAN INFORMATION

The table below presents information relating to compensation plans under which we may issue shares of our common stock, as of March 31, 2023.

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	Revenue
	Adjusted EBITDA
	Subscription-Based Annual Recurring Revenue
	Gross Margin
	Stock Price

 

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			Average		Value of Initial Fixed $100
			Summary	Average	Investment Based on:
	Summary		Compensation	Compensation
	Compensation	Compensation	Table Total for	Actually Paid to			Net Income
Fiscal	Table Total for	Actually Paid to	Non-PEO NEOs	Non-PEO NEOs3	Company	Peer Group	($) (in	Stock Price6
Year1	PEO ($)	PEO2 ($)	($)	($)	TSR4 ($)	TSR5 ($)	thousands)	($)
2023	1,635,508	613,584	698,916	469,781	17	439	(37,943)	1.15
2022	2,526,902	(2,063,248)	1,437,464	467,884	33	468	(32,280)	2.27
2021	2,989,619	9,101,583	919,011	2,232,959	115	332	(35,459)	8.33

1	Mr. Lerner served as our Chief Executive Officer and our principal executive officer (PEO) through the entire reporting period. The named executive officers included in the non-PEO named executive officer (NEO) average for each year are as follows: •   Fiscal 2023: Kenneth P. Gianella, Brian E. Cabrera, John Hurley, Lewis W. Moorehead, and J. Michael Dodson •   Fiscal year 2022: J. Michael Dodson, Brian E. Cabrera, John Hurley, and Lewis W. Moorehead •   Fiscal year 2021: J. Michael Dodson, Regan J. MacPherson, Elizabeth P. King, and Lewis W. Moorehead
2	See Table A for the explanation of adjustments to the Summary Compensation Table totals to derive CAP for Mr. Lerner as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Lerner during the applicable year.
3	See Table B for the explanation of adjustments to the Summary Compensation Table totals to derive the average CAP for our non-PEO NEOs as computed in accordance with Item 402(v) of Regulation S-K.
4	Represents the Company’s common stock cumulative total shareholder return (TSR) on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2020 (March 31, 2020) through the end of each applicable fiscal year in the table.
5	Represents the cumulative TSR of the S&P 500 Technology Hardware & Peripherals Index on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2020 through the end of each applicable fiscal year in the table.
6	As noted in our Compensation Disclosure and Analysis, for Fiscal 2023 the Committee determined that the Company’s common stock price continues to be viewed as a key metric of our business performance and aligned with long term shareholder value creation. Values listed reflect the Company’s common stock price at market close on March 31 of each fiscal year.

 

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Table A

 

PEO
				Fiscal Year	Fiscal Year
			Fiscal 2023	2022	2021
	Summary Compensation Table – Total Compensation	(a)	$1,635,508	$2,526,902	$2,989,619
-	(Minus) Grant Date Fair Value of Equity Awards Granted in Fiscal year	(b)	$(953,194)	$(1,939,820)	$(2,013,600)
+	Plus Fair Value at Fiscal Year End of Outstanding and Unvested Equity Awards Granted in Fiscal Year	(c)	$768,870	$718,000	$4,652,000
+/-	Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years	(d)	$(584,266)	$(2,100,796)	$2,418,732
+/-	Plus (Minus) Change in Fair Value as of Vesting Date for Which Application Vesting Conditions Were Satisfied During Fiscal year	(e)	$(253,333)	$(1,267,534)	$1,054,832
-	(Minus) Fair Value as of Prior Fiscal Year End That Failed to Meet Applicable Vesting Conditions During Fiscal Year	(f)	-	-	-
=	Compensation Actually Paid		$613,584	$(2,063,248)	$9,101,583

(a)	Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year.
(b)	Represents the aggregate grant date fair value of the stock awards and option awards granted to the PEO during the indicated fiscal year, computed in accordance with FASB ASC 718.
(c)	Represents the aggregate fair value as of the indicated fiscal year-end of the PEO’s outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718.
(d)	Represents the aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards held by the PEO as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718 and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year.
(e)	Represents the aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by the PEO that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with FASB ASC 718.
(f)	Represents the aggregate fair value as of the last day of the prior fiscal year of the PEO’s stock awards and option awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with FASB ASC 718.

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Table B

 

NEO Average
				Fiscal Year	Fiscal Year
			Fiscal 2023	2022	2021
	Summary Compensation Table – Total Compensation	(a)	$698,916	$1,437,464	$919,011
-	(Minus) Grant Date Fair Value of Equity Awards Granted in Fiscal year	(b)	$(310,778)	$(684,225)	$(420,535)
+	Plus Fair Value at Fiscal Year End of Outstanding and Unvested Equity Awards Granted in Fiscal Year	(c)	$238,218	$332,569	$966,038
+/-	Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years (d) $(100,083) Granted in Prior Fiscal Years	(d)	$(100,083)	$(475,494)	$526,285
+/-	Plus (Minus) Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Fiscal years for Which Application Vesting Conditions Were Satisfied During Fiscal year	(e)	$(56,493)	$(142,429)	$242,161
-	(Minus) Fair Value as of Prior Fiscal Year End of Equity Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year	(f)	-	-	-
=	Compensation Actually Paid		$469,781	$467,884	$2,232,959

(a)	Represents the average Total Compensation as reported in the Summary Compensation Table for the reported NEOs in the indicated fiscal year.
(b)	Represents the average aggregate grant date fair value of the stock awards and option awards granted to the reported NEOs during the indicated fiscal year, computed in accordance with FASB ASC 718.
(c)	Represents the average aggregate fair value as of the indicated fiscal year-end of the reported NEOs’ outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718.
(d)	Represents the average aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards held by the reported NEOs as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718 and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year.
(e)	Represents the average aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by the reported NEOs that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with FASB ASC 718.
(f)	Represents the average aggregate fair value as of the last day of the prior fiscal year of the reported NEOs’ stock awards and option awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with FASB ASC 718.

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Actual Compensation Paid vs. Net Income

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Board Committee Reports and Related Information

REPORT OF THE LEADERSHIP AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS¹ 

We, the Leadership and Compensation Committee of the Board, have reviewed and discussed the Compensation Discussion and Analysis within this proxy statement with Quantum’s management team. Based on such review and discussion,

we have recommended to the Board that the CD&A be included as part of this proxy statement.

 

Submitted by the Leadership and Compensation Committee of the Board of Directors:

 

Rebecca J. Jacoby	Yue Zhou (Emily)	Donald J. Jaworski
Chair	White

 

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS¹ 

The Audit Committee of the Board of Directors oversees Quantum’s financial reporting process and internal control structure on behalf of the Board. Management is responsible for preparing and presenting the financial statements and ensuring their integrity and the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed and discussed Quantum’s Fiscal 2023 audited financial statements with management.

 

Quantum’s independent auditors are responsible for expressing an opinion regarding whether Quantum’s consolidated financial statements conform with generally accepted accounting principles and the effectiveness of the Company’s control over financial reporting.

 

The Audit Committee determined that it fulfilled its charter responsibilities during Fiscal 2023. Management represented to the Audit Committee that Quantum’s Fiscal 2023 consolidated financial statements were prepared in accordance with generally accepted accounting principles and the Audit Committee has reviewed and discussed them with the

Company’s independent registered public accounting firm (the Firm). This review included discussing with management the:

 

•

Quality and acceptability of Quantum’s accounting principles.

•

Reasonableness of significant estimates and judgments.

•

Clarity of disclosure.

 

The Audit Committee reviewed with the Firm those matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 1301, Communications with Audit Committees, and the SEC. The Firm provided the Audit Committee with the written disclosures and letter from auditors mandated by applicable PCAOB requirements, including the:

 

•

Independent accountant’s communications with the Audit Committee concerning independence; and

•

Firm’s own independence.

 

In reliance on these reviews and discussions and the report of the Firm, the Audit Committee has recommended to the Board, and the Board has approved, filing with the SEC the audited consolidated financial statements in Quantum’s Annual Report on Form 10-K for the year ended March 31, 2023.

 

Submitted by the Audit Committee of the Board of Directors:

 

Marc E. Rothman	Rebecca J. Jacoby	Hugues Meyrath
Chair

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

Armanino LLP resigned as Quantum’s independent registered public accounting firm on July 21, 2023. Armanino LLP’s audit reports on Quantum’s consolidated financial statements as of and for the fiscal years ended March 31, 2022 and 2023 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.

¹This report shall not be deemed soliciting material or filed with the SEC, nor incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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Related parties include:

 

	Executive Officers
	Directors or Director Nominees
	Beneficial Owners of More Than 5% of our Common Stock
	Any of Their Immediate Family Members or Household Occupants
	Any Entity in Which Any of Them Are Employed, a General Partner or Principal, or Has a 5% or Greater Beneficial Interest

 

In approving or rejecting any Related Party Transaction, the Audit Committee identifies and considers relevant and available facts and circumstances, including:

 

•

Whether the transaction terms are no less favorable than those generally available to an unaffiliated third party under the same or similar circumstances.

•

The extent of the related party’s interest in the transaction.

 

The Audit Committee has determined that certain transactions will be considered preapproved, even if the value exceeds $120,000, when they involve:

 

	Executive Officer Employment Agreements
	Director Compensation
	Transactions Generally Available to All Employees
	All Holders of Common Stock Receiving the Same Benefits on a Pro-Rata Basis

 

Quantum’s Fiscal 2023 Related Party Transactions, to the extent they currently exist or are otherwise planned, are described below.

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Information Concerning Solicitation, Voting, and Communication

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