APi Group Corp 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective at December 31, 2020, due to the material weakness in internal control over financial reporting described below, which was previously disclosed in the “Risk Factors” section of our Form S-4. Item 4. “Controls and Procedures” of our quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2020, June 30, 2020 and September 30, 2020. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis. As indicated above, control deficiencies in our internal control over financial reporting have been identified which constitute material weaknesses relating to inadequate design and implementation of: • information technology general controls that prevent the information systems from providing complete and accurate information consistent with financial reporting objectives and current needs; • internal controls over the preparation of the financial statements, including the insufficient review and oversight over financial reporting, journal entries along with related file documentation; • internal controls to identify and manage segregation of certain accounting duties; • internal controls over estimated costs of completion on contracts where revenue is recognized over time; and • management review controls over projected financial information used in fair value financial models used for purchase accounting and intangible asset valuations. Management has undertaken various steps to begin remediating such control deficiencies . The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. We will monitor the effectiveness of our remediation plans and will make changes management determines to be appropriate. Steps taken by management include the following: • development of an Internal Audit team responsible for a detailed work plan to assess and document the adequacy of internal control over financial reporting, continued steps to improve control processes as appropriate, validation through testing that controls are functioning as documented, and implementation of a continuous reporting and improvement process for internal control over financial reporting; and • adding qualified resources with knowledge, experience and training in the application of U.S. GAAP. 93 We plan to continue our efforts to improve, design and implement integrated processes to enhance our internal control over financial reporting, including: • engaging a third-party firm to assist us in implementing a global consolidation and planning system; • implementing changes to our accounting systems, new controls, procedures and processes in our financial statement close process and importantly, new members have been added to our accounting and finance team with the appropriate qualified experience in financial reporting, consolidations, tax, technical accounting, internal audit and internal controls; • adding further qualified resources to financial reporting, consolidations, tax, technical accounting, financial planning and analysis , and internal audit teams as we further enhance our internal control structure; • enhancing the monitoring controls surrounding the design and operation of our internal controls over financial reporting; and • providing training and education programs for financial personnel responsible for the performance of newly implemented processes and controls Changes in Internal Control Over Financial Reporting We are executing our remediation plan to remediate the material weaknesses relating to our internal controls over financial reporting, as described above. This plan includes a detailed risk and controls assessment, detailed flowcharts, key process walkthroughs, and documentation, training, and execution of determined key controls. Except as otherwise described herein, there were no material changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls and Procedures Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. Item 9B. Other Information Item 5.02 Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers (e) 2020 Cash Award Payouts On February 15, 2021, the Compensation Committee of the Board of Directors (the “Committee”) of the Company approved cash award payouts for Russell Becker and Thomas Lydon of $1,250,000 and $825,000, respectively, which amount was equal to 100% of the cash incentive target opportunity established in Messrs. Becker’s and Lydon’s respective employment agreements, based on the Committee’s review of the Company’s financial performance in 2020, including adjusted net revenue and adjusted EBITDA performance for 2020 compared with the Company’s original projection for those metrics and in light of the negative impacts from COVID-19. In addition, the Committee approved cash award payouts for Paul Grunau, Julius Chepey, Mark Polovitz and Andrea Fike of $300,000, $200,000, $211,437 and $160,000, respectively, based on the recommendations of the Company’s management team, the historical practices of the Company, and on the Committee’s recognition of each of their efforts to address the challenging business climate experience during the COVID-19 pandemic and their individual contributions to the Company’s performance. Base Salary Change On February 15, 2021, the Committee approved an increase of Ms. Fike’s base salary from $350,000 to $400,000. 94 2020 Discretionary Equity Awards On February 15, 2021, the Committee approved discretionary awards of shares of APi common stock to each of Messrs. Becker, Lydon and Grunau with a grant date fair value of approximately $700,246, $186,667 and $173,250, respectively, which amount reflects the difference between the actual base pay reductions voluntarily taken by each of these individuals in 2020 and the general base pay reduction of 20% or less for other employees that were taken as part of the Company’s early preemptive cost-containment measures as a result of the uncertainties presented by the COVID-19 pandemic. These decisions were based on the Committee’s review of the overall company performance and determination that, in light of the financial performance achieved, the outsized base pay reductions taken by each of these named executive officers reflected a diminution in annual compensation that was not merited based on actual company performance and which far exceed the general pay reduction of 20% or less for other employees. 2021 Annual Cash Incentive Award Program On February 15, 2021, the Committee approved the 2021 annual cash incentive award program. For 2021, each of Messrs. Becker, Lydon and Grunau and Ms. Fike will be eligible for an annual cash incentive opportunity based on the achievement of a performance goal tied to the Company’s annual adjusted EBITDA performance. Messrs. Becker, Lydon and Grunau and Ms. Fike will be entitled to receive an annual cash incentive equal to 100%, 100%, 88% and 50%, respectively, of their respective base salary. Amounts payable will be subject to threshold (25% of target) and maximum (125%-200% of target) payouts for achievement of the performance goal at threshold and max levels, respectively. The premium payout levels are: Messrs. Becker, Lydon, and Ms. Fike - 200%; and Mr. Grunau – 125%. If performance is achieved between the threshold level and target or between the target and maximum level, the amount of the annual incentive payment with respect to that metric will be calculated on a linear basis from the target level. 2021 Long-Term Incentive Awards Pursuant to the 2021 executive compensation program approved by the Committee, on February 15, 2021, the Committee approved the grant of long-term equity incentive awards to Messrs. Becker, Lydon, and Grunau and Ms. Fike, in the form of restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). The RSUs represent 20% of the total target award amount and will vest ratably over three years, from the date of the grants. The PSUs represent 80% of the total target award amount, assuming performance and vesting at target levels. The PSUs will vest at threshold or target levels of 25% or 100% respectively, if the applicable performance goal is met at the corresponding threshold or target level. In the event the performance goal is met at the maximum level, a premium factor of 200% will apply for Mr. Becker and a factor ranging from 125% to 200% will apply for the other named executive officers. The performance goal is an adjusted EBITDA margin goal and the achievement of the goal will be determined by the Committee following the three year performance period of January 1, 2021 through December 31, 2023. In addition, an adjusted consolidated net revenue performance goal must be met at the end of the three year performance period for any PSUs to be earned at the end of the performance period. The PSUs will cliff vest on December 31, 2023, and the amounts earned will be based on the Committee’s determination following the performance period. The awards granted are as follows: Name RSUs (# Units) PSUs (# Units) (1) Russell Becker 52,356 209,425 Thomas Lydon 15,707 62,828 Paul Grunau 3,560 14,242 Andrea Fike 3,770 15,079 __________________ (1) Each of the PSU awards represents the target amount; actual shares earned at vesting, if any, may be higher or lower depending on the level of performance achieved. In addition, the PSU awards are subject to double-trigger acceleration of vesting upon a termination without cause or for good reason within 12 months after a change in control of the Company has occurred. Any other termination of employment prior to vesting will result in the forfeiture of the unvested portion of the awards. Additional information regarding compensation of the Company’s current named executive officers is included in Part III, Item 11 of this Annual Report and will also be included in the Company’s 2021 proxy statement when filed with the SEC. (c) Appointment of Principal Accounting Officer 95 Effective March 24, 2021 (immediately following the filing of the 10-K), the Company appointed Andrew J. Cebulla as the Company’s Principal Accounting Officer. Prior to this appointment, Mr. Cebulla served as Vice President and Controller of the Company since January 2021. Prior to joining the Company in January 2021, Mr. Cebulla was the Interim Chief Financial Officer (from January 2020 through December 2020) and Vice President of Finance and Corporate Controller (from September 2017 to December 2019) for Tennant Company, a company that designs, manufactures, and markets cleaning solutions. Prior to that, Mr. Cebulla held various roles in finance and accounting (from 2007 to September 2017) at MTS Systems, a global supplier of advanced test systems, motion simulators and precision sensors, including Vice President of Finance – Test Vehicles and Structures, Director of Investor Relations, Treasurer and Corporate Controller. Mr. Cebulla began his career at Deloitte and Touche, LLP and is a certified public accountant – inactive. Mr. Cebulla has no family relationships with any of the Company's directors or executive officers and there are no transactions in which Mr. Cebulla has an interest in that would require disclosure under Item 404(a) of Regulation S-K. 96 PART III Item 10. Directors, Executive Officers and Corporate Governance. Directors Sir Martin E. Franklin Director Since 2017 Co-Chair Since 2019 Age: 56 Committees: • None Other Public Co. Boards: • Nomad Foods Limited • Element Solutions Inc Sir Martin E. Franklin has served as a director of APi Group Corporation since September 2017 and has served as Co-Chair since October 2019. Sir Martin is the founder and Chief Executive Officer of Mariposa Capital, LLC and Chairman and controlling shareholder of Royal Oak Enterprises, LLC, a manufacturer of charcoal and grilling products, since July 2016. Sir Martin is also founder and Executive Chairman of Element Solutions Inc, a specialty chemicals company, and has served as a director since its inception in April 2013, and co-founder and co-chairman of Nomad Foods Limited, a leading European frozen food company, and has served as a director since its inception in April 2014. Sir Martin was the founder and Chairman of Jarden Corporation (“Jarden”), a broad-based consumer products company, from 2001 until April 2016 when Jarden merged with Newell Brands Inc. (“Newell”). Sir Martin became Chairman and Chief Executive Officer of Jarden in 2001 and served as Chairman and Chief Executive Officer until 2011, at which time he began service as Executive Chairman. Prior to founding Jarden in 2001, between 1992 and 2000, Sir Martin served as the Chairman and/or Chief Executive Officer of three public companies: Benson Eyecare Corporation, an optical products and services company; Lumen Technologies, Inc., a holding company that designed, manufactured and marketed lighting products; and Bollé Inc., a holding company that designed, manufactured and marketed sunglasses, goggles and helmets worldwide. In the last five years, Sir Martin also served as a director of the following public companies: Restaurant Brands International Inc. and Newell. Qualifications : We believe Sir Martin’s qualifications to serve on our Board of Directors include his executive leadership experience, experience as a member of other corporate boards and his knowledge of public companies. James E. Lillie Director Since 2017 Co-Chair Since 2019 Age: 59 Committees: • None Other Public Co. Boards: • Nomad Foods Limited James E. Lillie has served as a director of APi Group Corporation since September 2017 and has served as Co-Chair since October 2019. Mr. Lillie served as Jarden’s Chief Executive Officer from June 2011 until the consummation of Jarden’s business combination with Newell in April 2016. Mr. Lillie joined Jarden in 2003 as Chief Operating Officer and was named President in 2004 and Chief Executive Officer in June 2011. From 2000 to 2003, Mr. Lillie served as Executive Vice President of Operations at Moore Corporation, Limited. From 1999 to 2000, he served as Executive Vice President of Operations at Walter Industries, Inc., a Kohlberg, Kravis, Roberts & Company (“KKR”) portfolio company. From 1990 to 1999, Mr. Lillie held a succession of senior level management positions across a variety of disciplines including human resources, manufacturing, finance and operations at World Color, Inc., another KKR portfolio company. Since June 2015, Mr. Lillie has served on the board of directors of Nomad Foods Limited and served on the board of directors of Tiffany & Co. from February 2017 until January 2021. Qualifications : We believe Mr. Lillie’s qualifications to serve on our Board of Directors include his executive experience, service on other corporate boards and his knowledge of public companies. Ian G.H. Ashken Director Since 2019 Age: 60 Committees: • Audit (Chair) • Nominating and Corporate Governance Other Public Co. Boards: • Nomad Foods Limited • Element Solutions Inc Ian G.H. Ashken has served as a director of APi Group Corporation since October 2019. Mr. Ashken was the co-founder of Jarden and served as its Vice Chairman and President until the consummation of Jarden’s business combination with Newell in April 2016. Mr. Ashken was appointed to the Jarden board in June 2001 and served as Vice Chairman, Chief Financial Officer and Secretary from September 2001. Mr. Ashken was Secretary of Jarden until February 2007 and Chief Financial Officer until June 2014. Prior to Jarden, Mr. Ashken served as the Vice Chairman and/or Chief Financial Officer of three public companies: Benson Eyecare Corporation, Lumen Technologies, Inc. and Bollé Inc. between 1992 and 2000. Mr. Ashken also serves as a director of Element Solutions Inc and Nomad Foods Limited and is a director or trustee of a number of private companies and charitable institutions. During the last five years, Mr. Ashken also previously served as a director of Newell. Qualifications : We believe Mr. Ashken’s qualifications to serve on our Board of Directors include his executive experience, service on other corporate boards and his knowledge of public companies. 97 Russell A. Becker (Chief Executive Officer) Director Since 2019 Age: 55 Committees: • None Other Public Co. Boards: • None Russell A. Becker has served as a director of APi Group Corporation since October 2019. Mr. Becker joined APi Group, Inc. in 2002 as its President and Chief Operating Officer and became its Chief Executive Officer in 2004. Prior to leading APi Group, Inc., Mr. Becker served in a variety of roles at The Jamar Company, a subsidiary of APi Group, Inc., including as a Manager of Construction from 1995 to 1997 and as President from 1998 until he joined APi Group, Inc. in 2002. Mr. Becker served as a project manager for Ryan Companies from 1993 to 1995 and as a field engineer with Cherne Contracting from 1991 to 1993. Since July 2017, Mr. Becker has served on the board of directors of Liberty Diversified Industries and since January 2019 has served on the board of directors for Marvin Companies, each a private company. Mr. Becker also serves on the advisory board for the Construction Management Program at Michigan Technical University. Qualifications : We believe Mr. Becker’s qualifications to serve on our Board of Directors include his extensive knowledge of APi Group, Inc. and his years of executive leadership at APi Group, Inc. Anthony E. Malkin Director Since 2019 Age: 58 Committees: • Compensation Other Public Co. Boards: • Empire State Realty Trust, Inc. Anthony E. Malkin has served as a director of APi Group Corporation since October 2019. Since October 2013, Mr. Malkin has served as Chairman and Chief Executive Officer of Empire State Realty Trust, Inc. (“ESRT”), a real estate investment trust. Mr. Malkin joined ESRT’s predecessor entities in 1989. Mr. Malkin has been a leader in existing building energy efficiency retrofits through coordinating the team of Clinton Climate Initiative, Johnson Controls, JLL and Rocky Mountain Institute in a groundbreaking project at the Empire State Building. Mr. Malkin led the development of standards for energy efficient office tenant installations, now known as the Tenant Energy Optimization Program, at the Urban Land Institute. Mr. Malkin also serves as a member of the Real Estate Roundtable and Chair of its Sustainability Policy Advisory Committee, the Climate Mobilization Advisory Board of the New York City Department of Buildings, Urban Land Institute, the Board of Governors of the Real Estate Board of New York, the Partnership for New York City’s Innovation Council and the Building Committee of the Metropolitan Museum of Art. Qualifications : We believe Mr. Malkin’s qualifications to serve on our Board of Directors include his real estate investment experience, service on other corporate boards and his knowledge of public companies. Thomas V. Milroy (Lead Independent Director) Director Since 2017 Age: 65 Committees: • Audit • Compensation (Chair) Other Public Co. Boards: • Interfor Corporation Thomas V. Milroy has served as a director of APi Group Corporation since September 2017. Mr. Milroy worked for BMO Capital Markets (“BMOCM”) from 1993 to January 2015. From March 2008 to October 2014, Mr. Milroy served as Chief Executive Officer of BMOCM and acted as senior advisor to the Chief Executive Officer of BMO Financial Group from November 2014 until his retirement in January 2015. During his tenure as CEO at BMOCM, he was responsible for all of BMO’s business involving corporate, institutional and government clients globally. Mr. Milroy also serves as a director of Interfor Corporation, a large lumber producer, and Generation Capital Limited , a private investment company. He also serves on the boards of several not for profit corporations. Mr. Milroy is a member of the Law Society of Ontario. Previously, Mr. Milroy served as a director of Tim Hortons Inc. from August 2013 to December 2014 and Restaurant Brands International Inc. from December 2014 to June 2018. Qualifications : We believe Mr. Milroy’s qualifications to serve on our Board of Directors include his experience as past Chief Executive Officer of a large financial services company, service on other corporate boards and his knowledge of finance, investment and corporate banking, mergers and acquisitions, risk assessment and business development. 98 Lord Paul Myners Director Since 2017 Age: 72 Committees: • Nominating and Corporate Governance (Chair) Other Public Co. Boards: • Nomad Foods Limited Lord Paul Myners has served as a director of APi Group Corporation since September 2017 and previously served as Chair of APi Group Corporation from September 2017 until October 2019. Lord Myners is Chancellor of the University of Exeter and a member of the Court of the London School of Economics and Political Science. Lord Myners served as the Financial Services Secretary in Her Majesty’s Treasury, the United Kingdom’s finance ministry, from October 2008 to May 2010. Prior to his service at the Treasury, Lord Myners served as chairman or a member of the board of several organizations, including as chairman of Guardian Media Group from 2000 to 2008, director of GLG Partners Inc. from 2007 to 2008, director of Land Securities Group plc from 2006 to 2008 (chairman from 2007 to 2008), chairman of Marks & Spencer plc from 2004 to 2006, chairman of Aspen Insurance Holdings Ltd from 2002 to 2007. Lord Myners served as chairman of Platform Acquisition Holdings Limited (now known as Element Solutions Inc) from April 2013 until its business combination with MacDermid, Incorporated in October 2013 and a director of Gartmore Investment Management Limited from 1986 to 2001. Lord Myners also served as the chairman of Justice Holdings Limited from February 2011 until its business combination with Burger King Worldwide, Inc. in June 2012 and Landscape Acquisition Holdings Limited (previously also known as Digital Landscape Group, Inc. and now known as Radius Global Infrastructure Inc.) from November 2017 until its acquisition of AP WIP Investments Holdings, LP in February 2020. Lord Myners has also served in an advisory capacity to the United Kingdom Treasury and the United Kingdom Department of Trade & Industry, with particular focus on corporate governance practices. Other positions held by Lord Myners have included chairman of the Trustees of Tate, chairman of the Low Pay Commission, a member of the Court of the Bank of England, and a member of the Investment Board of GIC, Singapore’s sovereign wealth fund. Lord Myners is currently serving as a non-executive director of Nomad Foods Limited, Windmill Hill Asset Management, and Zouk Ventures Limited. Lord Myners is vice-chairman of Global Counsel, chairman and a partner of Cevian Capital LLP, Chairman of Daniel J Edelman (UK) and an Independent Director of Rockefeller Capital Management. Lord Myners is a Visiting Fellow at Nuffield College, Oxford, an Executive Fellow at London Business School and a crossbench member of the UK’s House of Lords, the senior chamber in Parliament and a Trustee of Somerset House Trust. Qualifications : We believe Lord Myners’ qualifications to serve on our Board of Directors include his extensive experience in investment management and banking, service on other corporate boards and his knowledge of finance and international banking. Cyrus D. Walker Director Since 2019 Age: 53 Committees: • Nominating and Corporate Governance Other Public Co. Boards: • Houlihan Lokey, Inc. Cyrus D. Walker has served as a director of APi Group Corporation since October 2019. Since April 2018, Mr. Walker has served as the founder and Chief Executive Officer of The Dibble Group, an insurance brokerage and consulting firm. From January 2000, Mr. Walker served in several roles at Nemco Group, LLC, an insurance brokerage and consulting firm, including serving as its Co-Chief Executive Officer until April 2012, when it was acquired by a subsidiary of NFP Corp., a multi-national insurance brokerage and consulting business. Mr. Walker also founded and served as Chief Executive Officer of OSI Benefits, an insurance brokerage consulting firm and division of Opportunity Systems, Inc., from 1995 to January 2000. Mr. Walker has served as a director of Houlihan Lokey, Inc., an investment banking firm, since November 2020 and as a director of Folding Helmet Technology Limited, a UK-based privately held helmet safety technology firm. Mr. Walker previously served on the boards of Blue Marble Materials, a privately held sustainability and energy business, and Opportunity Systems, Inc., a privately held data processing firm. Qualifications : We believe Mr. Walker’s qualifications to serve on our Board of Directors include his executive experience and service on other corporate boards. 99 Carrie A. Wheeler Director Since 2019 Age: 49 Committees: • Audit • Compensation Other Public Co. Boards: • Dollar Tree, Inc. Carrie A. Wheeler has served as a director of APi Group Corporation since October 2019. Since September 2020 Ms. Wheeler has served as Chief Financial Officer of Opendoor, a technology firm for residential real estate. From 1996 to December 2017, Ms. Wheeler served in several roles of increasing responsibility at TPG Global, a global private equity firm, including as a Partner and Head of Consumer and Retail Investing. Ms. Wheeler currently serves on the board of directors and audit committee of Dollar Tree (since March 2019) and served on the board of directors of Opendoor (from September 2019 to September 2020). Ms. Wheeler also serves on the boards of several not-for-profit organizations focused on education and children’s healthcare. In addition, Ms. Wheeler has previously served on a number of other corporate boards. Qualifications : We believe Ms. Wheeler’s qualifications to serve on our Board of Directors include her extensive experience in business assessment, mergers and acquisitions, financing and guiding public market transactions, her current experience as a Chief Financial Officer of a public company, and her substantial experience serving on other corporate boards, including her previous service on other companies’ audit committees. Audit Committee Number of Meetings in 2020: Four Responsibilities . Our Audit Committee operates pursuant to a formal charter that governs the responsibilities of the Audit Committee. Pursuant to the Audit Committee Charter, the Audit Committee is responsible for, among other things: • overseeing preparation of our financial statements, the financial reporting process and our compliance with legal and regulatory matters; • appointing and overseeing the work of our independent auditor; • preapproving all auditing services and permitted non-auditing services to be performed for us by our independent auditor and approving the fees associated with such work; • approving the scope of the annual audit; • reviewing interim and year-end financial statements; • overseeing our internal audit function, reviewing any significant reports to management arising from such internal audit function and reporting to the Board; and • approving the audit committee report required to be included in our annual proxy statement. The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate. Pursuant to the Audit Committee Charter, the Audit Committee reviews and pre-approves all audit and non-audit services performed by our independent accountant. Independence and Financial Expertise . The Board has reviewed the background, experience and independence of the Audit Committee members and based on this review, has determined that each member of the Audit Committee: • meets the independence requirements of the NYSE governance listing standards; • meets the enhanced independence standards for audit committee members required by the SEC; and • is financially literate, knowledgeable and qualified to review financial statements. 100 In addition, the Board has determined that each of Mr. Ashken and Ms. Wheeler qualifies as an “audit committee financial expert” under SEC rules. Compensation Committee Number of Meetings in 2020 : Two Responsibilities . Our Compensation Committee operates pursuant to a formal charter that governs the responsibilities of the Compensation Committee. Pursuant to the Compensation Committee Charter, the Compensation Committee is responsible for, among other things: • assisting the Board in developing and evaluating potential candidates for executive positions; • reviewing and approving corporate goals and objectives with respect to compensation for the CEO, evaluating the CEO’s performance and approving the CEO’s compensation based on such evaluation; • determining the compensation of other non-CEO executive officers and all equity awards to such executive officers and other employees; • reviewing on a periodic basis compensation and benefits paid to directors and recommending such compensation to the Board of Directors for approval; • reviewing and approving our equity-based compensation plans and incentive compensation plans, including reviewing and approving the target performance benchmarks, if any, and range of aggregate value of our annual incentive program for senior management; and • approving the compensation committee report on executive compensation required to be included in our annual proxy statement. Independence. The Board has reviewed the background, experience and independence of the Compensation Committee members and based on this review, has determined that each member of the Compensation Committee: • meets the independence requirements of the NYSE governance listing standards; • is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act; and • meets the enhanced independence standards for compensation committee members established by the SEC. Compensation Committee Interlocks and Insider Participation. None of the members of the Compensation Committee who presently serve or, in the past year, have served on the Compensation Committee has interlocking relationships as defined by the SEC or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related party transactions. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. Use of Compensation Consultant The Compensation Committee has the authority to retain compensation consultants, outside counsel and other advisors as it may deem appropriate in its sole discretion. The Compensation Committee has sole authority to approve related fees and retention terms. During 2020, the Compensation Committee utilized the services of Willis Tower Watson (“WTW”), a global management consulting firm, which acted as its compensation consultant to assist in developing a formal executive compensation program, which has been implemented for 2021. The total fees paid to WTW for these services were approximately $158,000. During 2020, our management also retained a separate business unit of WTW to provide insurance brokerage services to the Company. The total fees paid to WTW’s separate business unit with respect to services provided during 2020 (excluding services provided as compensation consultant as discussed above) were approximately $1.3 million. The Compensation Committee was not involved in management’s decision to retain the separate business unit of WTW to provide such services. The Compensation Committee determined that the work of the separate business unit of WTW on matters other than executive compensation did not raise any conflict of interest with WTW’s services as compensation consultant, taking into account, 101 among other factors, WTW’s policies and procedures relating to the prevention and mitigation of conflicts of interest, the use of separate teams for compensation consulting services and other services provided by WTW and its business units. Nominating and Corporate Governance Committee Number of Meetings in 2020 : One Responsibilities . Our Nominating and Corporate Governance Committee operates pursuant to a formal charter that governs the responsibilities of the Nominating and Corporate Governance Committee. Pursuant to the Nominating and Corporate Governance Committee Charter, the Nominating and Corporate Governance Committee is responsible for, among other things: • assisting our Board in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to our Board; • leading the search for individuals qualified to become members of the Board and selecting director nominees to be presented for stockholder approval at our annual meetings; • reviewing the Board’s committee structure and recommending to the Board for approval directors to serve as members of each committee; • developing and recommending to the Board for approval a set of corporate governance guidelines and generally advising the Board on corporate governance matters; • reviewing such corporate governance guidelines on a periodic basis and recommending changes as necessary; and • reviewing director nominations submitted by stockholders. The Nominating and Corporate Governance Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Nominating and Corporate Governance Committee members or subcommittees. Independence. The Board has reviewed the background, experience and independence of the Nominating and Corporate Governance Committee members and based on this review, has determined that each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE governance standards and SEC rules and regulations. Consideration of Director Nominees . The Nominating and Corporate Governance Committee considers possible candidates for nominees for directors from many sources, including stockholders. The Nominating and Corporate Governance Committee evaluates the suitability of potential candidates nominated by stockholders in the same manner as other candidates recommended to the Nominating and Corporate Governance Committee. In making nominations, the Nominating and Corporate Governance Committee is required to submit candidates who have the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the stockholders. In evaluating nominees, the Nominating and Corporate Governance Committee is required to take into consideration the following attributes, which are desirable for a member of the Board: leadership, independence, interpersonal skills, financial acumen, business experiences, industry knowledge and diversity of viewpoints. In addition, while we do not have a formal, written diversity policy, the Nominating and Corporate Governance Committee will attempt to select candidates who will assist in making the Board a diverse body. We believe that a diverse group of directors brings a broader range of experiences to the Board and generates a greater volume of ideas and perspectives, and therefore, is in a better position to make complex decisions. Code of Business Conduct and Ethics We have adopted a written Code of Business Conduct and Ethics (“Code of Conduct”) that establishes the standards of ethical conduct applicable to all our directors, officers, and employees. In addition, we have adopted a written Code of Ethics for Senior Financial Officers (“Code of Ethics”) applicable to our CEO and senior financial officers. Copies of our Code of Conduct and Code of Ethics are publicly available in the Investor Relations section of our website at www.apigroupcorp.com. Any waiver of our Code of Ethics with respect to our CEO, chief financial officer, controller or persons performing similar functions or waiver of our Code of Conduct with respect to our directors or executive officers may only be authorized by our Board of Directors and will be disclosed on our website as promptly as practicable, as may be required under applicable SEC and NYSE rules. Executive Officers 102 Set forth below is certain information relating to our current executive officers. Biographical information with respect to Mr. Becker is set forth above under “ D irectors ”. Name Age Title Russell A. Becker 55 President and Chief Executive Officer Thomas A. Lydon 56 Chief Financial Officer Andrew J. Cebulla 50 VP and Controller Andrea M. Fike 60 SVP, General Counsel and Secretary Paul W. Grunau 55 Chief Learning Officer Thomas A. Lydon has served as Chief Financial Officer of APi Group Corporation since the completion of the APi Acquisition on October 1, 2019, and previously served as Chief Financial Officer of APi Group, Inc. since July 2014. Prior to joining APi Group, Inc., Mr. Lydon was a partner at KPMG, where he served for 28 years in positions of increasing responsibility. From 1995 to 1997, Mr. Lydon ran KPMG’s U.S. desk in Sydney, Australia, and from 1999 to 2001, he led KPMG’s internal audit practice in Minneapolis, Minnesota. In 2001, Mr. Lydon became managing partner of KPMG’s Des Moines, Iowa office and was promoted in 2009 as business unit partner in charge of audit for the Des Moines and Minneapolis offices. Mr. Lydon also serves on the boards of Cristo Rey Jesuit High School, a Minneapolis non-profit and is a certified public accountant . Andrew J. Cebulla has served as Vice President and Controller of APi Group Corporation since January 2021. Prior to joining APi Group Corporation, Mr. Cebulla was the Interim Chief Financial Officer (from January 2020 through December 2020) and Vice President of Finance and Corporate Controller (from September 2017 to December 2019) for Tennant Company, a company that designs, manufactures, and markets cleaning solutions. Prior to that, Mr. Cebulla held various roles in finance and accounting (from 2007 to September 2017) at MTS Systems, a global supplier of advanced test systems, motion simulators and precision sensors, including Vice President of Finance – Test Vehicles and Structures, Director of Investor Relations, Treasurer and Corporate Controller. Mr. Cebulla began his career at Deloitte and Touche, LLP and is a certified public accountant – inactive. Andrea M. Fike has served as SVP and General Counsel of APi Group Corporation since January 2020 and as Secretary since March 2020. Most recently, Ms. Fike was Executive Vice President and General Counsel for iMedia Brands, Inc. (f/k/a EVINE Live Inc.), a digital and television media and retailing company. From April 2017 to June 2019, Ms. Fike headed the iMedia Brands legal department and assumed leadership of several operations functions, including the company’s customer solutions group, after which she was a consultant until she joined APi Group Corporation. Prior to that, Ms. Fike served as Senior Vice President and General Counsel at Regency Corporation, an educational institution, from 2008 to July 2017. At Regency Corporation, Ms. Fike was responsible for management of the legal and compliance, campus operations and human resources functions. Prior to that, she spent eight years at FICO, an analytics software company, where she was responsible for oversight of the legal department. Prior to that, Ms. Fike spent ten years at a law firm where, as a partner, she focused on financial institutions regulatory law. Ms. Fike also serves on the board of the Jungle Theater, a Minneapolis non-profit. Paul W. Grunau has served as Chief Learning Officer of APi Group Corporation since the completion of the APi Acquisition on October 1, 2019, and previously served as Chief Learning Officer of APi Group, Inc. since January 2016. Mr. Grunau also previously served as Chief Operating Officer of APi Group, Inc. from 2009 to 2011. Mr. Grunau initially joined APi Group, Inc. in 2006 following the acquisition of Grunau Company by APi Group, Inc. and had been the President and owner of Grunau Company from 1999 until its acquisition. From 2011 to December 2015, he served as Chief Operating Officer of Health Payment Systems, a health care technology startup in which he was a founding investor. Mr. Grunau also served as a director of APi Group, Inc. from 2011 until the closing of the APi Acquisition. Mr. Grunau also serves on the boards of two private companies and is a Trustee of the Dunwoody College of Technology. Item 11. Executive Compensation. COMPENSATION DISCUSSION & ANALYSIS Overview This Compensation Discussion and Analysis provides information regarding our executive compensation philosophy, programs and decisions for 2020 for our named executive officers. For 2020, our named executive officers were: 103 Russell A. Becker President and Chief Executive Officer Thomas A. Lydon Chief Financial Officer Julius J. Chepey Former Chief Information Officer (1) Andrea M. Fike Senior Vice President, General Counsel and Secretary (2) Paul W. Grunau Chief Learning Officer Mark T. Polovitz Former Vice President and Controller (3) (1) Mr. Chepey’s employment with the Company terminated in February 2021. (2) Ms. Fike joined the Company in January 2020. (3) Mr. Polovitz transitioned to a new role with a Company operating subsidiary effective June 2020. Compensation Philosophy and Objectives Our Compensation Committee’s guiding principle when reviewing and determining executive compensation is to assure that the Company’s compensation policies attract and retain the key employees necessary to support the Company’s growth and success, both operationally and strategically, and to motivate executives to achieve short- and long-term goals with the ultimate objective of creating sustainable improvements in stockholder value. Because we had no executive officers prior to the APi Acquisition, we did not have or maintain an executive compensation program until the APi Acquisition. During 2020, the Compensation Committee retained WTW as its compensation consultant, and with their assistance, developed a formal executive compensation program which has been implemented for 2021. This program is designed to further the Company’s compensation philosophy and objectives of maintaining a top-tier management team and seeks to ensure that: • executives are appropriately rewarded for their contributions to our successful performance; • a significant portion of each executive’s compensation is “at risk” and tied to overall Company performance and, where applicable business unit performance; and • there is a balance of short and long-term compensation elements to motivate and reward superior performance without encouraging excessive or unnecessary risk taking. • there is alignment between the interests of executives and those of our stockholders. Compensation Governance Practices Our executive compensation governance practices are intended to support the needs of the business, drive performance, and ensure management alignment with the short- and long-term interests of our stockholders. Selected key policies embedded in our new executive compensation program are set forth below: What We Do What We Don’t Do Beginning in 2021, pay for performance with a substantial majority of pay dependent on performance, not guaranteed Maintain single trigger severance provisions upon a change in control in employment agreements Use multi-year vesting terms for annual executive officer equity awards Permit liberal share recycling Balance short and long-term incentives Reprice equity awards without shareholder approval Require executive officers to place compensation at risk of “clawback” actions by the Company in appropriate circumstances Permit hedging or short sales of the Company’s stock Engage an independent compensation consultant Provide tax gross-ups for change in control payments 104 Benchmark compensation to peer and market data during compensation decision-making process Provide dividends (or equivalents) on restricted stock units or performance stock units Provide excessive perquisites Executive Compensation Setting Process Review of the Compensation Committee Our Board of Directors has adopted a written Compensation Committee Charter that governs the responsibilities of the Compensation Committee. The Compensation Committee is responsible for, among other things: • the design, implementation and administration of short- and long-term compensation (including benefits and awards under our 2019 Equity Incentive Plan (the “Equity Incentive Plan”)) for directors, executive officers and other employees; • reviewing and approving corporate goals and objectives with respect to compensation for the CEO, evaluating the CEO’s performance and approving the CEO’s compensation based on such evaluation; and • determining compensation for non-CEO Company executive officers. When making compensation decisions, the Compensation Committee analyzes data relating to our Peer Group (as identified below in “Peer Group and Market Benchmarking”) and considers the dynamics of operating in the safety services, specialty services and industrial services industries, the importance of rewarding and retaining talented and experienced executives to continue to guide the Company, the alignment of our executive compensation program with stockholders’ interests and the voting guidelines of certain proxy advisory firms and stockholders. In reviewing and determining executive compensation, the Compensation Committee also considers: compensation levels at peer companies derived from compensation surveys provided by outside consultants; the Company’s past-year performance and growth; the results of any say on pay votes by stockholders; achievement of specific pre-established financial goals; a subjective determination of the executives’ past performance and expected future contributions to the Company; and past equity awards granted to such executives. In addition, in connection with the 2021 executive compensation program design, the Committee received analyses, guidance and recommendations, including information on executive compensation market trends and practices of peer companies, provided by WTW. Consideration of the Stockholder Advisory Vote on Executive Compensation As part of its decision making on compensation, the Compensation Committee evaluates the most recent advisory vote of the Company’s stockholders on executive compensation, known as the “Say-on-Pay” vote, as well as other feedback that it may receive from the Company’s largest shareholders in connection with this vote. At our annual meeting on August 13, 2020, our executive compensation for 2019 received the support of approximately 93% of the votes cast on the “Say-on-Pay” proposal. We understand that our stockholders support an executive compensation program the majority of which is based on the achievement of performance objectives. In establishing our 2021 executive compensation program, this perspective was reviewed and considered by the Compensation Committee, in combination with the other information outlined herein. As further described below, 80% of our 2021 annual awards to our named executive officers are performance-based and the Compensation Committee expects that future equity awards will have a significant component that is performance-based. The Compensation Committee will continue to consider the views of our stockholders in connection with executive pay practices and programs and will make adjustments based on evolving best practices, competitive market information and practices, and changing regulatory or other requirements. Peer Group and Market Benchmarking As part of the work in 2020 to develop an executive compensation program for 2021, the Compensation Committee identified a representative peer group in the same or similar industries that the Compensation Committee believes is representative of the labor market from which we recruit talent. Factors used to select the peer group included industry segment, revenues, profitability, market capitalization, number of employees, capital structure and a qualitative review of potential companies’ business fundamentals 105 to ensure alignment with our company. Several companies were identified whose business models more closely align with the Company, but which have a larger revenue base. The approach taken by the Compensation Committee in selecting the primary peer group excluded these larger companies from the market data review but included them as “reference peers” for the purpose of providing qualitative data about program design for the Committee’s reference. The primary peer group is composed of the following companies: ADT, Inc.; Advanced Drainage Systems, Inc.; Cintas Corporation; Comfort Systems USA, Inc.; Dycom Industries, Inc.; EMCOR Group, Inc.; Flowserve Corporation; MasTec, Inc.; MYR Group, Inc.; Otis Worldwide Corporation; Primoris Services Corporation; Quanta Services, Inc.; Residio Technologies, Inc.; SPX Corporation; Tutor Perini Corporation; Watts Water Technologies, Inc., and; Xylem Inc. The reference peer group is composed of the following companies: Johnson Controls International PLC; Carrier Global Corporation, and; Jacobs Engineering Group, Inc. In addition to current market trends, t he Compensation Committee will consider the primary peer group to inform pay decisions and both the primary and reference peer groups to inform executive compensation program design. The Compensation Committee expects to continue to utilize outside compensation and benefits consultants from time to time to assist the Compensation Committee in designing management pay, compensation design and other related matters. The information from any outside consultant regarding pay practices at peer companies will be used by the Compensation Committee as a resource in its deliberations regarding executive compensation and will be useful in determining the marketplace competitiveness as well as reasonableness and appropriateness of our executive compensation programs. Although at this time we do not intend to target executive compensation to a specific market percentile, we intend to provide a compensation package that is competitive in the market and rewards each executive’s performance for executing the strategic and financial goals of the Company for the long term benefit of our stockholders. Role of Executives in Establishing Compensation We expect our CEO to evaluate the individual performance and the competitive pay positioning of senior management members who report directly to the CEO, including the named executive officers. Our CEO can then make recommendations to the Compensation Committee regarding the target compensation, job leveling and grading for such named executive officers and other executive officers of the Company. Components of the Executive Compensation Program In connection with the APi Acquisition, our Board of Directors approved executive employment agreements for Messrs. Becker and Lydon and an offer of employment for each of Ms. Fike and Mr. Grunau (collectively, the “Employment Agreements”) which provide for a base salary, annual cash incentive compensation, annual time- and performance-based equity incentive awards (each, an “LTI Award”) and participation in our employee benefits plans. The Company’s 2020 executive compensation program contained three primary components: Base Salary; Annual Incentive Compensation, and Long-Term Equity Compensation. The Compensation Committee believes that a combination of these components provides the named executive officers with a competitive executive compensation package that serves to motivate and retain the executive while promoting the Company’s pay-for-performance philosophy. The 2020 executive compensation program was a continuation of the post-APi Acquisition compensation program, pending the implementation of program design changes adopted in connection with the work and recommendations of the Compensation Committee’s independent compensation consultant, WTW, in 2021. As outlined in greater detail below, the Compensation Committee determined to implement these program changes in 2021 rather than in 2020, due to the impacts the COVID-19 pandemic on the Company, including the need to minimize the management distraction that would result from implementing compensation program changes during the midst of the pandemic. In the first quarter of 2021, the Compensation Committee approved, and the Company implemented, a 2021 executive compensation program. As with the 2020 program, the 2021 executive compensation program is intended to attract and retain a high caliber of executive talent, align incentives with stockholder’s interests, and support the Company’s pay-for-performance philosophy. From time to time, the Compensation Committee may also approve discretionary awards to executives in connection with their initial employment or for extraordinary performance, a significant contribution to the Company’s strategic objectives or other retention or business purposes. The following table summarizes the primary components of the 2021 executive compensation program: Component Fixed or Variable Component Goal(s) Key Features and Considerations 106 Base Salary Fixed Short Term Cash Attract and Retain Key Talent to Lead Our Complex Global Business Peer group and market-based data; Role; Performance; Pay Equity; Compensation History and Executive Potential Annual Incentive Award Variable Short Term Cash Attract and Retain Key Talent to Lead Our Complex Global Business Motivate and Reward Achievement by Company of annual financial Company performance targets established through the annual budget process Targets established by consideration of Role; Pay Equity; and past performance/executive potential; and retention objectives/risks Award targets are established as a percentage of base salary Awards generally determined and paid based on achievement of performance goals after conclusion of year Long Term Incentive Awards Variable Long-Term Equity Attract and Retain Key Talent to Lead Our Complex Global Business Motivate and Reward Achievement by the Company of long-term financial Company performance targets supporting long-term strategic plan Targets established by consideration of Role; Pay Equity; past performance/executive potential; and retention objectives/risks Award targets are established as a percentage of base salary Awards a blend of performance based and time based equity, with heavy reliance on performance awards to balance retention and long-term performance goals. 107 Benefits and other Perquisites Not Applicable Attract and Retain Key Talent with appropriate health and welfare benefits Provide basic financial stability Participation in health, welfare and retirement benefit plans, generally on the same terms as all other full-time employees Limited additional non-monetary benefits consistent with the competitive marketplace Base Salary The Compensation Committee believes base salary, in combination with health, welfare and retirement benefits, serves to attract and retain high-quality executives needed to lead our complex business by providing basic compensation and financial stability . The Compensation Committee expects to annually review the named executive officers’ base salaries and make appropriate adjustments subject to the terms of any individual employment agreements. Any adjustments will be based on individual responsibilities and performance, internal pay equity, compensation history, executive potential and peer group and market based data. During 2020, none of our named executive officers received any increase in base salary. Moreover, due to the uncertainties presented by the COVID-19 pandemic, the Company’s management team took early preemptive cost-containment measures, including the voluntary reduction of named executive officer base salaries. These reductions were effective on March 16, 2020 and ranged from 20% to 97%, with the reduction for our CEO at 97%. These reductions continued for a minimum of 4 months, at which time the base salaries for Messrs. Lydon, Chepey and Polovitz and Ms. Fike were incrementally returned to their original levels over three months’ time. The base salaries for Messrs. Becker and Grunau stayed at fully reduced levels until mid-November, when they were fully restored. Prior to these reductions, the base salaries of our named executive officers were: Mr. Becker - $1.25 million; Mr. Lydon - $825,000; Mr. Grunau - $340,000; Mr. Chepey - $300,000, Ms. Fike - $350,000 and Mr. Polovitz - $275,000. In February 2021, the Compensation Committee reviewed the base salaries for our named executive officers and determined that base salaries for Messrs. Becker, Lydon and Grunau would remain unchanged. Base salary for Ms. Fike was set at $400,000. In addition, in 2021 the Committee reviewed the overall company performance and determined that, in light of the financial performance achieved, the outsized base pay reductions taken by certain named executives reflected a diminution in annual compensation that was not merited based on actual company performance and which far exceed the general pay reduction of 20% or less for other employees. Accordingly, the Compensation Committee awarded a one-time stock grant to each named executive officer whose pay reduction exceed 20% of base salary, in the amount of the difference between the actual pay reductions and a 20% pay reduction. The value of the one-time stock grants were: Mr. Becker - $700,246; Mr. Lydon - $186,667; and Mr. Grunau - $173,250. Annual Cash Incentive Compensation 2020 Annual Incentive In 2020, the Compensation Committee reviewed the numerous significant circumstances facing the Company, each of which could have a material impact on the Company’s results. These included: • the unique events of 2020 relating to the COVID-19 pandemic and in particular the high degree of macroeconomic uncertainty • the relative newness of the Company to the public markets and the significant efforts the Company was undertaking to create systems and process for operation as a public company; and • the APi Acquisition and the inherent retention risks created by integration activities. In light of these circumstances, the Compensation Committee chose to maintain a flexible approach to annual incentive compensation in 2020 and not to establish financial or other performance goals to determine 2020 incentives at a time when the pandemic and its impacts were emerging. Nevertheless, the Committee continued its ongoing review of the Company’s executive 108 compensation program during 2020 with a goal of establishing a more formal executive compensation program for 2021, while temporarily maintaining this flexible approach to annual incentive compensation. Consistent with this approach, in the first quarter 2021, the Committee examined the totality of the results delivered by the organization in comparison to pre-pandemic goals. This included the review of the Company’s financial performance in 2020, including both adjusted net revenue of $3.5 billion and adjusted EBITDA performance of $381 million and compared it with the Company’s 2020 original projections for revenue ($3.75 billion to $3.8 billion) and adjusted EBITDA ($393 million). The revenue achieved was 93% of the projected amount and the adjusted EBITDA achieved represented 97% of the projected amount. The Compensation Committee’s view was that achievement of this level of financial performance despite: (i) the negative economic impacts in the Company’s markets; (ii) the incremental costs required to operate under state and local COVID-19 quarantines; and (iii) the diversion of management attention required to address the new operating conditions created by COVID-19, demonstrated exemplary leadership and management skill. Based on this conclusion, the Committee awarded 100% of the cash incentive target opportunity established in Messrs. Becker’s and Lydon’s respective employment agreements, in the amounts of $1,250,000 and $825,000, respectively and Messrs. Chepey, Grunau, and Polovitz and Ms. Fike received annual cash incentives of $200,000, $300,000, $211,437, and $160,000 respectively. 2021 Annual Incentive Consistent with the Company’s pay-for-performance philosophy, and to promote alignment with stockholders’ interests, the 2021 executive compensation program beginning is based on Company performance. Under this program, Company executives have annual cash incentive targets represented by a percentage of their base salary. Cash incentives awarded will be determined by the Compensation Committee, based on the achievement of annual performance goals, developed in the annual budget process and approved by the Compensation Committee. For 2021, all our named executive officers (other than Mr. Chepey who left the Company in February 2021) will be eligible for an annual cash incentive opportunity as outlined below, based on the achievement of a performance goal tied to the Company’s annual adjusted EBITDA performance. Named Executive Officer Target Annual Incentive as a Percentage of Salary Russell Becker 100% Thomas Lydon 100% Andrea Fike 50% Paul Grunau 88% Amounts payable under the annual incentive portion of the executive compensation plan will be subject to threshold (25% of target) and maximum (125%-200% of target) payouts for achievement of the performance goal at threshold and max levels, respectively. The premium payouts levels are: Messrs. Becker, Lydon, and Ms. Fike - 200%; and Mr. Grunau – 125%. If performance is achieved between the threshold level and target or between the target and maximum level, the amount of the annual incentive payment with respect to that metric will be calculated on a linear basis from the target level. LTI Awards LTI Awards granted by the Compensation Committee are intended to align the financial interests of our executives with those of the stockholders of the Company. We believe that stockholders’ interests are best served by balancing the focus of executives’ decisions between short and long-term measures. We also believe that providing executives with opportunities to acquire significant stakes in the Company’s growth incentivizes and rewards executives for sound business decisions and high-performance team environments, while fostering the accomplishment of short- and long-term strategic objectives and improvement in stockholder value, all of which are essential to our ongoing success. We expect our executive officers and other key management personnel to be and remain stockholders in the Company. LTI Awards are granted under the Equity Incentive Plan, which was approved by our Board of Directors effective as of October 1, 2019 in connection with the closing of the APi Acquisition, or such other long-term incentive plans, programs and arrangements established and modified from time to time by the Compensation Committee. We expect any LTI Awards will be granted in the form of stock options, restricted stock units, performance shares or other forms of equity or long-term incentive as determined by the Compensation Committee and on terms to be specified by the Compensation Committee in its discretion. Our 109 named executive officers are eligible to participate in our Equity Incentive Plan and any other long-term incentive plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Compensation Committee, in its sole discretion. 2020 Equity Awards On January 1, 2020, Messrs. Chepey and Polovitz were granted 19,510 and 24,390 restricted stock units, respectively, which vest in equal installments on the first, second and third anniversaries of the grant date. Additionally, Ms. Fike was granted 24,390 restricted stock units when she joined the Company in January 2020, which vest in equal installments on January 1, 2021, 2022 and 2023. These grants were made as part of the integration activities related to the APi Acquisition. No additional grants were made to the named executive officers in 2020. 2021 LTIP The Compensation Committee has adopted a 2021 executive compensation program, including provisions relating to the award of LTI grants. The Compensation Committee believes that named executive officer long-term compensation should be correlated with salary and short term incentive compensation. Accordingly, the Compensation Committee will use a percentage of each named executive officer’s base salary to determine the value of the LTI award to be granted each named executive officer each year. The Compensation Committee also believes that the structure of LTI grants should correlate the value of any such award to the achievement by the Company of long-term and strategic objectives. As such, the Compensation Committee expects that a significant percentage of the amount of LTI awards will be subject to the achievement of three-year Company performance goals. Time-based awards may be awarded as part of a balanced approach to encourage retention and ensure that the Company’s compensation programs do not encourage excessive risk-taking. Pursuant to the newly adopted executive compensation program, on February 15, 2021 the Compensation Committee approved the grant of a mix of performance stock units and restricted stock units to the named executive officers. The restricted stock units represent 20% of the total target award amount and will vest ratably over three years, from the date of grant. The performance stock units represent 80% of the total target award amount, assuming performance and vesting at target levels. The performance stock units will vest at threshold or target levels of 25% or 100%, respectively, if the applicable performance goal is met at the corresponding threshold or target level. In the event the performance goal is met at the maximum level, a premium factor of 125% to 200% will apply. The performance goal is an adjusted EBITDA margin goal and the achievement of the goal will be determined by the Compensation Committee following the three year performance period of January 1, 2021 through December 31, 2023. In addition, an adjusted consolidated net revenue performance goal must be met at the end of the three year performance period for any PSUs to be earned at the end of the performance period. The awards granted to the named executive officers are as follows: Named Executive Officer Restricted Stock Units Performance Stock Units Russell Becker 52,356 209,425 Thomas Lydon 15,707 62,828 Andrea Fike 3,770 15,079 Paul Grunau 3,560 14,242 The premium factor to be applied to the award to Messrs. Becker, Lydon, and Ms. Fike is 200%; and the premium factor to be applied to the award to Mr. Grunau is 125%. Each of the above performance stock unit awards represents the target grant amount; actual shares earned at vesting, if any, may be higher or lower depending on the level of performance achieved. Benefits and Other Perquisites We provide employees, including the named executive officers, with a range of employee benefits including life and health insurance, disability benefits and retirement benefits (as described below), that are designed to assist in attracting and retaining skilled employees critical to our long-term success, provide basic financial stability, and to be competitive with market practice. Profit Sharing & 401(k) Plan Most of our domestic employees, including our named executive officers, are eligible to participate in the Company’s tax-qualified Profit Sharing & 401(k) Plan (the “401(k) Plan”). Pursuant to the 401(k) Plan, employees may elect to contribute a portion 110 of their current compensation to the 401(k) Plan, in an amount up to the statutorily prescribed annual limit. The 401(k) Plan provides the option for the Company to make matching contributions. Participants may also direct the investment of their 401(k) Plan accounts into several investment alternatives. Other Benefits and Perquisites We also provide each of our named executive officers with an executive term life insurance policy which provides a death benefit of $550,000 and an executive disability insurance policy which covers up to 75% of their base salary. In addition, we provide certain of our named executive officers with a car allowance. Company matching contributions and cash profit sharing contributions allocated to named executive officers under the 401(k) Plan, premiums paid by the Company on the life and disability insurance policies on behalf of named executive officers and amounts paid by the Company for the car allowance for named executive officers are shown in the “All Other Compensation” column in the Summary Compensation Table for Fiscal 2019 in the “Executive Compensation” section. Employee Stock Purchase Plan Most of our domestic employees, including our named executive officers, are eligible to participate in the Company’s Employee Stock Purchase Plan (the “ESPP”). Sales of shares of our Common Stock under the ESPP are generally made pursuant to offerings that are intended to satisfy the requirements of Section 423 of the Internal Revenue Code. The ESPP permits employee of the Company, including our named executive officers, to purchase Common Stock at a discount equal to 85% of the lesser of (i) the market value of the Common Stock on the first day of the offering period, or (ii) the market value of the Common Stoch on the purchase date, whichever is lower. Participants are subject to eligibility requirements and may not purchase more than 500 shares in any offering period or more than $10,000 of Common Stock in a year under the ESPP. Other Compensation-Related Practices and Policies Change in Control The Employment Agreements (other than Ms. Fike’s) provide that if an executive is terminated either without “cause” (as defined in the Employment Agreements) or terminates their employment for “good reason” (as defined in the Employment Agreements) during the two-year period immediately following a “change in control” (as defined in the Equity Incentive Plan), they shall be entitled to certain payments and benefits. See the “Potential Payments Upon Termination or Change in Control” section below. We believe such change in control provisions serve the best interests of the Company and our stockholders by allowing our executives to exercise sound business judgement without fear of significant economic loss in the event they lose their employment with the Company as a result of a change in control. We also believe that such arrangements are competitive, reasonable and necessary to attract and retain key executives. Severance The Employment Agreements provide that if an executive is involuntarily terminated without “cause” or terminates their employment for “good reason”, they shall be entitled to all previously earned and accrued but unpaid amounts of their base salary up to their termination date. Subject to certain conditions, such an executive will also be entitled to severance pay as set forth in their Employment Agreement and described under the “Potential Payments Upon Termination or Change in Control” section below. Clawback Policy The Dodd-Frank Wall Street Reform and Consumer Protection Act (known as the “Dodd-Frank Act”), enacted in July 2010, required stock exchanges to adopt rules requiring listed companies to develop and implement a policy for recovery (i.e., clawback) of incentive-based compensation from executive officers in the event of the restatement of previously published financial statements resulting from a material accounting error, material noncompliance with financial reporting requirements or violations of U.S. securities laws. These rules have not yet been adopted. The Equity Incentive Plan includes a clawback policy which allows the Company to recoup compensation, including any equity awards issued thereunder under certain circumstances, affording the Company significant flexibility to require recoupment in 111 appropriate circumstances. The Compensation Committee will review, amend or adopt a clawback policy as necessary to ensure compliance with these regulations. EXECUTIVE COMPENSATION Summary Compensation Table The following table summarizes the compensation to our named executive officers for the fiscal years ended December 31, 2020 and 2019. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($)(1) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Russell A. Becker 2020 440,379(2) 1,251,000(3) -- --(4) 51,615(5) 1,742,994 President and Chief 2019 1,100,000 6,256,461(6) 5,022,500 — 24,375(7) 12,403,336 Executive Officer -- Thomas A. Lydon 2020 566,146(2) 950,000(3) -- --(4) 55,147(5) 1,571.989 Chief Financial Officer 2019 825,000 950,000(8) 1,537,500 18,730(7) 3,330,870 Julius J. Chepey 2020 267,750(2) 200,250(3) 211,684 --(4) 34,499(5) 702,477 Chief Information Officer(9) 2019 300,000 250,000(10) — — 17,070(7) 567,070 Andrea M. Fike 2020 303,669(2) 172,000(3) 264,632 --(4) 16,652(5) 722,319 Senior Vice President and General Counsel Paul W. Grunau 2020 137,045(2) 301,000(3) --- --(4) 37,813(5) 475,858 Chief Learning Officer 2019 332,500 275,000(9) 499,995 — 26,011(7) 1,133,506 Mark T. Polovitz 2020 258,271(2) 226,437(3) 264,632 --(4) 26,745(5) 761,451 Vice President and Controller(11) 2019 228,750 700,000(12) — — 15,270(7) 944,020 (1) The amounts in this column do not reflect compensation actually received by the named executive officer nor do they reflect the actual value that will be recognized by the named executive officer. Instead, the amounts represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in calculating the amounts for 2020, see Note 18 to our historical consolidated financial statements for the year ended December 31, 2020 included in this Annual Report on Form 10-K for the year ended December 31, 2020. (2) As part of early preemptive cost-containment measures taken in 2020 due to the uncertainties presented by the COVID-19 pandemic, our named executive officers voluntarily agreed to a reduction in their base salaries. These reductions in base salaries ranged from 20% to 97%. These reductions were initiated on March 16, 2020 and were in place for a period of between 4 and 8 months. For additional details see “ Compensation Discussion and Analysis—Components of the Executive Compensation Program—Base Salary .” In 2021 the Committee reviewed the overall company performance and determined that, in light of the Company’s solid financial performance despite the significantly challenging environment, the outsized base pay reductions taken by certain named executives reflected a diminution in annual compensation that was not merited based on actual company performance and which far exceed the general pay reduction of 20% or less for other employees. Accordingly, the Compensation Committee awarded a one-time stock grant to each named executive officer whose pay reduction exceed 20% of base salary, in the amount of the difference between the actual pay reductions and a 20% pay reduction. (3) This amount represents a bonus relating to the named executive officer’s 2020 performance. In addition, amounts listed for Messrs. Becker, Grunau and Chepey also represent a nominal bonus related to years of service. Mr. Becker’s years of service award was declined and awarded to charity. For Messrs. Lydon and Polovitz and Ms. Fike, the amounts listed also include a one-time bonus award related to the Company’s completion of the re-domestication and initial listing on the NYSE. . Mr. Becker and Mr. Lydon each declined a portion of the award granted by the Compensation Committee for 2020 performance in the amounts of $200,000 and $6,300 respectively. These declined amounts were retained by the Company for other corporate purposes. (4) Pursuant to their employment agreements, Messrs. Becker and Lydon and Ms. Fike were entitled to receive payments under the annual cash incentive program based on Company performance in 2020. However, for 2020, and as more fully described in “ Compensation Discussion and Analysis—Components of the Executive Compensation Program—Base Salary ”, the establishment of annual incentive performance goals was deferred by the Compensation Committee for all executive officers during development of the Company’s new executive compensation program for 2021 and in light of the unique events of 2020 relating to the COVID-19 pandemic to maintain a flexible approach to annual incentive compensation in 2020. (5) These amounts represent Company payments for executive life and disability insurance benefits and Company matching contributions to such named executive officer’s 401(k) plan. For all executive officers other than Ms. Fike, the amounts also include a Company cash profit-sharing contribution to such officer’s 401(k) plan and a Company-paid car allowance. (6) This amount includes a $2,500,000 one-time transaction bonus paid to Mr. Becker in connection with the closing of the APi Acquisition, including a portion that was directed by the sellers in the APi Acquisition, and a $3,756,461 bonus relating to a bonus arrangement with APi Group, Inc. that was terminated upon the closing of the APi Acquisition (7) These amounts represent Company payments for executive life and disability insurance benefits, a Company-paid car allowance, Company matching contributions to such named executive officer’s 401(k) plan and, for Mr. Lydon, a nominal gift card. (8) This amount represents a one-time transaction bonus paid to Mr. Lydon in connection with the closing of the APi Acquisition, including a portion that was directed by the Sellers. (9) Mr. Chepey’s employment with the Company terminated in February 2021. (10) This amount represents a bonus relating to the named executive officer’s 2019 performance. (11) Mr. Polovitz transitioned to a new role with a Company operating subsidiary effective June 2020. ( 12 ) This amount includes a $500,000 one-time transaction bonus paid to Mr. Polovitz in connection with the APi Acquisition. 112 Grants of Plan-Based Awards During 2020 The table below provides information regarding equity and non-equity awards granted to our named executives during fiscal 2020. All Other Stock Awards: Number of Shares of Stock or Units (#) (1) Grant Date Fair Value of Stock Awards ($) Name Grant Date Russell A. Becker -- -- Thomas A. Lydon -- -- Julius J. Chepey(2) 1/1/2020 19,510 211,684 Andrea M. Fike 1/20/2020 24,390 264,632 Paul W. Grunau -- -- Mark T. Polovitz 1/1/2020 24,390 264,632 (1) This column represents the number of restricted stock units granted in 2020 to our named executive officers. The awards to Messrs. Chepey and Polovitz are restricted stock units that vest in equal installments on the first, second and third anniversaries of the grant date. The award to Ms. Fike is restricted stock units that vest in equal installments on January 1, 2021, 2022 and 2023. (2) Mr. Chepey’s employment with the Company terminated in February 2021. As a result, the 13,006 restricted stock units that had not vested as of the effective date of termination were forfeited as per the terms of the award. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table Pursuant to their respective Employment Agreements, Mr. Becker is entitled to a base salary of $1.25 million, Mr. Lydon is entitled to a base salary of $825,000, Ms. Fike is entitled to a base salary of $350,000, and Mr. Grunau is entitled to a base salary of $340,000, which amounts will be reviewed and may be adjusted annually by the Compensation Committee. Pursuant to their respective Employment Agreements, Mr. Becker and Mr. Lydon were both eligible in 2020 to receive an annual cash incentive award with a target incentive opportunity equal to 100% of their annual base salary and a maximum incentive opportunity equal to 200% of their annual base salary, in each case subject to the performance metrics and targets to be established by the Compensation Committee. Pursuant to her offer letter, Ms. Fike was eligible to receive an annual cash incentive award with a target incentive opportunity of 40% of her annual base salary. Messrs. Chepey, Grunau, and Polovitz were also eligible to participate in any annual cash incentive program established by the Compensation Committee. Pursuant to their respective Employment Agreements, beginning in 2021, Messrs. Becker and Lydon are entitled to annual time and/or performance based long term compensation awards under the Equity Incentive Plan and/or such other plans, programs or arrangements having a grant date value of not less than 400% and 185%, respectively, of their then current base salaries. The awards will be granted in the form of stock options, restricted stock units, performance shares or other forms of equity or long-term incentive as determined by the Compensation Committee and on terms to be specified by the Compensation Committee in its discretion. All other awards granted to the named executive officers will be made at the discretion of the Compensation Committee on terms and conditions approved by the Compensation Committee. The Employment Agreements with Messrs. Becker, Lydon and Grunau and Ms. Fike provide for severance payments under certain circumstances. See “—Potential Payments Upon Termination or Change in Control” for additional information. Outstanding Equity Awards at 2020 Year End The following table provides information concerning unvested restricted stock units held by each of our named executive officers as of December 31, 2020. Stock Awards Name Grant Date Number of Shares or Units of Stock That Have Not Vested (#)(1) Market Value of Shares or Units of Stock That Have Not Vested ($)(2) Russell A. Becker 10/1/2019 326,666 5,928,988 Thomas A. Lydon 10/1/2019 100,000 1,815,000 113 Julius J. Chepey(3) 1/1/2020 19,510 354,107 Andrea M. Fike 1/20/2020 24,390 442,679 Paul W. Grunau 10/1/2019 32,520 590,238 Mark T. Polovitz 1/1/2020 24,390 442,679 (1) The restricted stock units vest in equal installments on the first, second and third anniversaries of the grant date, except for Ms. Fike’s grant, of which one third vested on 1/1/2021 and the remaining units will vest on the first and second anniversaries thereof. (2) The market value of the restricted stock units is calculated by multiplying the closing price of the underlying shares of Common Stock on December 31, 2020, or $18.15 per share, by the number of restricted stock units. (3) Mr. Chepey’s employment with the Company terminated in February 2021. As a result, the 13,006 restricted stock units that had not vested as of the effective date of termination were forfeited as per the terms of the award. Stock Vested During 2020 The following table provides information regarding vesting of restricted stock units and the value realized on vesting of restricted stock units on an aggregated basis during the fiscal year ended December 31, 2020 for each of the named executive officers. Stock Awards (1) Name (2) # of Shares Acquired on Vesting (#) (3) Value Realized on Vesting ($) (4) Russell A. Becker 163,334 $2,378,143 Thomas A. Lydon 50,000 $728,000 Paul W. Grunau 16,260 $236,746 (1) These columns reflect restricted stock units previously awarded to the named executive officers that vested during 2020. (2) Messrs. Chepey and Polovitz and Ms. Fike are omitted from this chart because they had no vesting events during 2020. (3) Of these amounts, shares were withheld by us to cover tax withholding obligations as follows: Mr. Becker, 80,361 shares; and Mr. Lydon, 15,335 shares. (4) Calculated based on the closing price of a share of Common Stock on the applicable vesting dates. Potential Payments Upon Termination or Change in Control Our Employment Agreements with Messrs. Becker, Lydon and Grunau and Ms. Fike (each an “Executive,” and collectively “Executives”) provide for severance payments under certain circumstances. Under these Employment Agreements, the Company may terminate Executive’s employment at any time with or without “cause,” as defined in the Employment Agreements, and Executive may terminate employment at any time for “good reason,” as defined in the applicable Employment Agreements. With respect to Messrs. Becker and Lydon, if the Company should terminate Executive without cause or if Executive terminates employment for good reason, Executive would be entitled to receive (i) his base salary for two years from the date of termination, (ii) an amount equal to two times his target annual bonus, paid in two annual installments, (iii) any earned and accrued but unpaid base salary up to the date of termination, (iv) his pro-rata annual bonus for the year in which the termination occurs, (v) any unpaid annual bonus with respect to any completed fiscal year and (vi) his vested employee benefits. Executive would not be entitled to any unearned salary, bonus or other benefits if the Company were to terminate him for cause or if Executive were to terminate employment voluntarily without good reason. With respect to Mr. Grunau, if the Company should terminate Executive without cause, he would be entitled to receive an amount equal to two times his annual base salary, payable in equal installments over a 24-month period. With respect to Ms. Fike, if the Company should terminate Executive without cause, she would be entitled to receive an amount equal to her annual base salary, payable in equal installments over a 12-month period. With respect to Messrs. Becker and Lydon, pursuant to his Employment Agreement, if the Company should terminate Executive without cause or if Executive terminates employment for good reason during the two-year period immediately following a “change in control,” as defined in the Employment Agreements, then in lieu of any amounts otherwise payable, Executive would be entitled to receive (i) all earned and accrued but unpaid base salary and annual bonus amounts up to the date of termination, (ii) an amount equal to two times his base salary, (iii) an amount equal to two times his target annual bonus, (iv) continued insurance coverage for eighteen months following the date of termination, (v) full and immediate vesting of all outstanding long-term incentive awards, (vi) reasonable legal fees and related expenses as a result of the termination and (vii) outplacement counseling. Upon a change in control, each Executive will be entitled to the benefit resulting from the acceleration of his unvested restricted stock units upon a change in control as provided in his or her restricted stock unit agreement, whether or not his employment is terminated. 114 With respect to Messrs. Becker and Lydon, pursuant to his Employment Agreement, if employment should terminate as a result of the death or disability of the Executive, the Executive, or his estate, would be entitled to receive (i) all previously earned and accrued but unpaid base salary up to the date of termination and (ii) his pro-rata annual bonus for the year in which termination occurs. The Company’s obligation under the Employment Agreements with Executives terminates on the last day of the month in which Executive’s death occurs or on the date of termination of employment on account of Executive’s disability. Mr. Chepey’s employment with the Company terminated in February 2021. In connection with his termination, the Company entered into an Executive Severance Agreement with Mr. Chepey pursuant to which Mr. Chepey will be entitled to (1) a severance payment equal to $300,000, less applicable withholdings and deductions, payable over a twelve-month period, (2) payment of his 2020 annual cash incentive in the amount of $200,250 and (3) payment of COBRA premiums for continued coverage under APi Group’s health plans for twelve months. In consideration for such benefits, Mr. Chepey has agreed to various restrictive covenants, including non-solicitation of employees or other business partners for two years post-termination and confidentiality and non-disparagement covenants as well as a release of claims in favor of APi Group. As a result of his termination, the 13,006 restricted stock units that had not vested as of the effective date of termination were forfeited as per the terms of the award. Mr. Polovitz is not entitled to any severance or related benefits upon termination. Upon a change in control, Mr. Polovitz would be entitled to receive the benefit resulting from the acceleration of his unvested restricted stock units as provided in his restricted stock unit agreements. The following table shows the estimated benefits payable to each Executive in the event of termination of employment and/or change in control of the Company. The amounts shown assume that a termination of employment or a change in control occurs on December 31, 2020. The amounts do not include payments or benefits provided under insurance or other plans that are generally available to all full-time employees. Name Termination without Cause or for Good Reason not in connection with a Change in Control ($) Death or Disability ($) Termination without Cause or for Good Reason in connection with a Change in Control ($) Change in Control ($) Russell A. Becker Cash Severance (1) 5,000,000 1,250,000 5,000,000 — Intrinsic Value of Equity (2) — — 5,928,988 5,022,500 Insurance Benefits (3) — — 72,499 — Total 5,000,000 1,250,000 10,087,965 5,022,500 Thomas A. Lydon Cash Severance (1) 3,300,000 825,000 3,300,000 — Intrinsic Value of Equity (2) — — 1,815,000 1,537,500 Insurance Benefits (3) — — 64,080 — Total 3,300,000 825,000 4,897,411 1,537,500 Julius J. Chepey(4) Intrinsic Value of Equity (2) 354,107 Andrea M. Fike Cash Severance (1) 350,000 --- 350,000 -- Intrinsic Value of Equity (2) -- --- 295,119 442,679 Total 350,000 --- 645,119 442,679 Paul W. Grunau Cash Severance (1) 680,000 — 680,000 — Intrinsic Value of Equity (2) — — 590,238 499,995 Total 680,000 — 1,179,995 499,995 Mark T. Polovitz Intrinsic Value of Equity (2) 442,679 (1) For Messrs. Becker and Lydon, cash severance includes: (i) base salary for two years and (ii) two times target annual bonus amount. For Ms. Fike, cash severance includes twelve months of annual base salary. For Mr. Grunau, cash severance includes two times annual base salary. (2) Represents the value of the acceleration of vesting of Executive’s restricted stock unit awards in the event of death or disability or termination without cause or for good reason during the two-year period immediately following a change in control. The value is calculated by multiplying the closing price of a share of Common Stock on December 31, 2020, or $18.15 per share, by the number of restricted stock units. (3) Amount includes the cost of continuing health, dental, life and certain disability insurance plans for eighteen months. (4) Mr. Chepey’s employment with the Company terminated in February 2021. A description of his Executive Severance Agreement is set forth above. 115 CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of our CEO, Mr. Becker. In 2019, to identify our median employee and calculate such employee’s annual total compensation, we used the following methodology: • Determination date. We selected December 31, 2019, the last day of our fiscal year, as the determination date for identifying the median employee. As of December 31, 2019, our employee population consisted of approximately 14,678 individuals working at the Company and its subsidiaries, of which approximately 13,444 are based in the United States and approximately 1,234 are based outside of the United States. • Employee Population. In determining the identity of the median employee, we excluded 59 employees based in the United Kingdom, who represented less than 5% of our employee population. As a result, the Company’s employee population used for determining the median employee was approximately 14,619 individuals, including 13,444 employees based in the United States and approximately 1,175 employees based outside of the United States. • Consistently applied compensation measure. To identify the median employee, we used the gross pay of all of our employees, excluding our CEO, our U.K.-based employees, and independent contractors and consultants who were not paid directly by the Company. We did not make any cost-of-living or other adjustments in identifying the median employee and we did not annualize the pay of any employees who were not employed for the full year. Based on this methodology, we identified the median employee. As of December 31, 2020, this employee was employed in the same capacity. As part of our efforts to contain costs during the pandemic, our median employee had a 20% reduction in wage for a four month period, after which the employee’s pre-pandemic wage rate was restored. This, combined with fewer hours worked in 2020 at both regular and overtime rates, resulted in a year-over-year decline in the median employee’s annual total compensation. We believe there were no significant changes in our employee population and, accordingly, we reasonably believe that there have been no changes that would significantly affect our pay ratio disclosure. Therefore, to determine our pay ratio for 2020, we used the same median employee identified in 2019. We then calculated the 2020 total annual compensation of such median employee in accordance with the requirements of the executive compensation rules for the Summary Compensation Table (Item 402(c)(2)(x) of Regulation S-K). Under this calculation, the median employee’s annual total compensation was $59,372. Utilizing the same executive compensation rules, and consistent with the amount reported in the “Total” Column of our Summary Compensation Table for 2020 above for our CEO, the annual total compensation of our CEO was $1,742,994. The resulting ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 29 to 1. This ratio represents a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. We understand that the CEO pay ratio disclosure is intended to provide greater transparency to annual CEO pay and how it compares to the pay of the median employee. As reported in the bonus column of the Summary Compensation Table for 2019, Mr. Becker received a $2,500,000 one-time transaction bonus in 2019 connection with the closing of the APi Acquisition and a $3,756,461 bonus in 2019 relating to a bonus arrangement with APi Group, Inc. that was terminated upon the closing of the APi Acquisition. We attribute the substantial decrease in the CEO pay ratio in 2020 as compared to 2019 to the inclusion of these payments in Mr. Becker’s annual total compensation for 2019, combined with the fact that no equity award was made to Mr. Becker during 2020 and further combined with the reduction in Mr. Becker’s base salary during 2020, as discussed in the Compensation Discussion and Analysis section. During 2021, we anticipate the year-over-year comparison of the CEO pay ratio will reflect more normalized compensation for Mr. Becker as well as the one-time stock award granted in 2021, as also discussed in the Compensation Discussion and Analysis section. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices, and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided in response to SEC disclosure requirements. Neither the Compensation Committee nor management of the Company uses the pay ratio measure in making any compensation decisions. 116 Compensation Committee Interlocks and Insider Participation. None of the members of the Compensation Committee who presently serve or, in the past year, have served on the Compensation Committee has interlocking relationships as defined by the SEC or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related party transactions. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the disclosure set forth above under the heading “Compensation Discussion and Analysis” with management and, based on such review and discussions, it has recommended to the Board that the “Compensation Discussion and Analysis” be included in this the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The Compensation Committee Thomas V. Milroy, Chair Anthony E. Malkin Carrie A. Wheeler The information contained above under the caption “Compensation Committee Report” will not be considered “soliciting material” or to be “filed” with the SEC, nor will that information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into a filing. Director Compensation Our non-employee compensation policy, applicable to all non-employee director compensation, provides for the following compensation for our non-employee directors: • Annual Retainer . Each non-employee director is entitled to an annual cash fee of $75,000, payable quarterly. • Committee Fees . Members of any of our Committees are entitled to an additional annual cash fee of $5,000. Each of the chairs of our Committees is entitled to an additional $10,000 annual cash fee. • Annual Equity Award . Each non-employee director will be granted annually a number of restricted stock units equal to $100,000 at the date of issue. The restricted stock units will vest and settle into shares of Common Stock on the earlier of the one-year anniversary of the date of issuance and the date of the following year’s annual meeting of stockholders. In addition, all of our directors are entitled to be reimbursed by the Company for reasonable expenses incurred by them in the course of their directors’ duties relating to the Company. Lord Myners and Messrs. Ashken, Milroy, Malkin and Walker and Ms. Wheeler will be paid compensation for their respective services on our Board. Sir Martin will not receive any additional compensation for services as a director in light of his affiliation with Mariposa Capital, LLC, which provides advisory services to the Company in exchange for a fee. In addition, Mr. Becker, who serves as our CEO, is not entitled to receive any additional compensation for his services as a director. Mr. Lillie has elected to waive all compensation for service as a director. The table below sets forth the non-employee director compensation for the year ended December 31, 2020. Mr. Becker, our CEO, is omitted from the table as he does not receive any additional compensation for his services as a director. For more information on Mr. Becker’s compensation, see “ Executive Compensation ”. 117 Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1)(2) Total ($) Sir Martin E. Franklin — — — James E. Lillie — — — Ian G.H. Ashken 90,000 100,000 190,000 Anthony E. Malkin 80,000 100,000 180,000 Thomas V. Milroy 90,000 100,000 190,000 Lord Paul Myners 85,000 100,000 185,000 Cyrus D. Walker 80,000 100,000 180,000 Carrie A. Wheeler 85,000 100,000 185,000 ______________ (1) Represents the aggregate grant date fair values of restricted stock units granted during 2020, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in calculating the amounts for 2020, see Note 18 to our historical consolidated financial statements for the year ended December 31, 2020 included in this Annual Report on Form 10-K for the year ended December 31, 2020. (2) The following table sets forth the aggregate number of restricted shares of our Common Stock and unexercised stock options to purchase our Common Stock outstanding at December 31, 2020 for each of our non-employee directors: Name Aggregate Number of Restricted Stock Units Outstanding at December 31, 2020 Aggregate Number of Unexercised Stock Options Outstanding at December 31, 2020 Sir Martin E. Franklin — — James E. Lillie — — Ian G.H. Ashken 6,920 — Anthony E. Malkin 6,920 — Thomas V. Milroy 6,920 37,500 Lord Paul Myners 6,920 50,000 Cyrus D. Walker 6,920 — Carrie A. Wheeler 6,920 — 118 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information regarding (i) all stockholders known by the Company to be the beneficial owners of more than 5% of the Company’s issued and outstanding Common Stock and (ii) each director, each named executive officer and all directors and executive officers as a group, together with the approximate percentages of issued and outstanding Common Stock owned by each of them. Percentages are calculated based upon shares issued and outstanding plus shares which the holder has the right to acquire under share options, warrants or Series A Preferred Stock exercisable for or convertible into Common Stock within 60 days. Unless otherwise indicated, amounts are as of March 12, 2021 and each of the stockholders has sole voting and investment power with respect to the Common Stock beneficially owned, subject to community property laws where applicable. As of March 12, 2021, we had 200,652,118 shares of Common Stock issued and outstanding. Unless otherwise indicated, the address of each person named in the table below is c/o APi Group, Inc., 1100 Old Highway 8 NW, New Brighton, MN 55112. Shares Beneficially Owned Beneficial Owner Number % More than 5% Stockholders: Entities managed by Viking Global Investors LP 33,333,333 (1) 16.6% Sir Martin E. Franklin 22,333,294 (2) 11.1% The Vanguard Group 11,807,477 (3) 5.9% BlackRock, Inc. 9,776,369 (4) 4.9% Named Executive Officers and Directors: Sir Martin E. Franklin 22,333,294 (2) 11.1% James E. Lillie 4,245,999 (5) 2.1% Ian G.H. Ashken 4,255,999 (6) 2.1% Russell A. Becker 2,793,323 (7) 1.4% Julius J. Chepey 25,105 (8) * Andrea M. Fike 8,130 * Paul W. Grunau 542,423 (9) * Thomas A. Lydon 107,329 ( 10) * Thomas V. Milroy 57,500 (11) * Anthony E. Malkin 10,000 * Lord Paul Myners 73,333 (12) * Mark T. Polovitz 8130 (13) * Cyrus D. Walker 10,000 * Carrie A. Wheeler 10,000 * All Executive Officers, Directors and Covered Persons as a group (14 persons): 25,978,606 (14) 12.9% _________________ * Represents beneficial ownership of less than one percent (1%) of our outstanding Common Stock. (1) Based on a Form 3 filed by Viking Global Investors LP and Viking Global Opportunities Illiquid Investments Sub-Master LP as of April 28, 2020. According to the Form 3, the reported securities are held by Viking Global Opportunities Illiquid Investments Sub-Master LP, which has the power to dispose of and vote the shares directly owned by it, which power may be exercised by its general partner, Viking Global Opportunities Portfolio GP LLC (“Viking Opportunities GP”), and Viking Global Investors LP (“VGI”), which provides managerial services to Viking Global Opportunities Liquid Portfolio Sub-Master LP. O. Andreas Halvorsen, David C. Ott and Rose Shabet, as Executive Committee members of Viking Global Partners LLC (the general partner of VGI) and Viking Opportunities GP have shared power to direct the voting and disposition of investments beneficially owned by VGI and Viking Opportunities GP. The address for each of the above entities is c/o Viking Global Investors LP, 55 Railroad Avenue, Greenwich, CT 06830. (2) This amount consists of (i) 9,247,551 shares of Common Stock held by MEF Holdings, LLLP; (ii) 4,000,000 shares of Common Stock issuable upon conversion of Series A Preferred Stock held by Mariposa Acquisition IV, LLC which are convertible at any time at the option of the holder into Common Stock on a one-for-one basis; (iii) 3,120,999 shares of Common Stock held by JTOO(as defined below), which Sir Martin has the sole power to vote pursuant to an Irrevocable Proxy Agreement, dated January 5, 2021, between himself and each of Ian G. H. Ashken, James E. Lillie and Robert A. E. Franklin, pursuant to which each of them granted Sir Martin an irrevocable proxy to vote , for so long as Sir Martin serves as a director of the Company, all shares of Common Stock owned, directly or indirectly, by each of them (the “2021 Proxy Agreement”); (iv) 1,125,000 shares of Common Stock held by James E. Lillie, which Sir Martin has the sole power to vote pursuant to the 2021 Proxy Agreement; (v) 4,245,999 shares of Common Stock held by IGHA (as defined below), which Sir Martin has the sole power to vote pursuant to the 2021 Proxy Agreement; (vi) 10,000 shares of Common Stock held by Ian G. H. Ashken, which Sir Martin has the sole power to vote pursuant to the 2021 Proxy Agreement; (vii) 583,745 shares of Common Stock held by Robert A. E. Franklin, which Sir Martin has the sole power to vote pursuant to the 2021 Proxy Agreement. MEF Holdings, LLLP, the general partner of which is wholly-owned by the Martin E. Franklin Revocable Trust of which Sir Martin is the sole settlor and trustee, holds a limited liability company interest in Mariposa Acquisition IV, LLC and, as a result, Sir Martin may be deemed to have a pecuniary interest in 1,728,400 shares of Common Stock issuable upon conversion of Series A Preferred Stock held by Mariposa Acquisition IV, LLC. (3) Based on a Schedule 13G filed with the SEC on February 10, 2021. As of December 31, 2020, the Vanguard Group, Inc. has shared voting power over 128,862 shares of Common Stock; sole dispositive power over 11,586,137 shares of Common Stock and shared dispositive power over 221,340 shares of Common Stock. The address of the principal business office of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. (4) Based on a Schedule 13G filed with the SEC on February 2, 2021. As of December 31, 2020, BlackRock, Inc. has sole voting power over 9,556,889 shares of Common Stock and sole dispositive power over 9,776,369 shares of Common Stock. The address of the principal business office of BlackRock, Inc. is 55 East 52 nd Street, New York, NY 10055. 119 (5) This amount consists of (i) 3,120,999 shares of Common Stock held directly by JTOO and (ii) 1,125,000 shares of Common Stock held directly by Mr. Lillie (each of which are subject to the 2021 Proxy Agreement but over which Mr. Lillie retains direct or indirect investment power). In addition, JTOO LLC (“JTOO”), which is owned by the Lillie 2015 Dynasty Trust of which Mr. Lillie is the grantor, holds a limited liability company interest in Mariposa Acquisition IV, LLC and, as a result, Mr. Lillie may be deemed to have a pecuniary interest in 768,000 shares of Common Stock issuable upon conversion of Series A Preferred Stock held by Mariposa Acquisition IV, LLC. (6) This amount consists of (i) 4,245,999 shares of Common Stock held by IGHA and (ii) 10,000 shares of Common Stock held directly by Mr. Ashken (each of which are subject to the 2021 Proxy Agreement but over which Mr. Ashken has retained direct or indirect investment power). In addition, IGHA Holdings, LLLP (“IGHA”), the general partner of which is wholly-owned by The Ian G.H. Ashken Living Trust of which Mr. Ashken is the sole settlor and trustee, holds a limited liability company interest in Mariposa Acquisition IV, LLC and, as a result, Mr. Ashken may be deemed to have a pecuniary interest in 768,000 shares of Common Stock issuable upon conversion of Series A Preferred Stock held by Mariposa Acquisition IV, LLC. (7) This amount includes (i) 768,200 shares of Common Stock held directly; (ii) 572,993 shares of Common Stock held by The Russell A. Becker 2016 Family Trust, of which Mr. Becker’s spouse is the trustee and over which she has sole voting and investment power; (iii) 605,000 shares of Common Stock held by The Patricia L. Becker Legacy Trust, of which Mr. Becker is the trustee and over which he has sole voting and investment power; (iv) 505,000 shares of Common Stock held by The Russell A. Becker GST Trust, of which Mr. Becker’s spouse is the trustee and over which she has sole voting and investment power; (v) 2,100 shares of Common Stock held by Mr. Becker’s children, whose principal residence is the same as Mr. Becker’s and (vi) 150,064 shares of Common Stock held in an Individual Retirement Account for the benefit of Mr. Becker. This amount does not include any pro rata ownership interest Mr. Becker may have in the any of the shares of Common Stock held in an indemnification escrow account in connection with the APi Acquisition (the “ESOP Escrow Shares”), of which shares the Company has the power to direct the vote, to the extent any remain following the termination of the indemnification escrow. (8) This amount includes (i) 14,169 shares of Common Stock held directly and (ii) 10,936 shares of Common Stock held in an Individual Retirement Account for the benefit of Mr. Chepey. This amount does not include any pro rata ownership interest Mr. Chepey may have in the ESOP Escrow Shares to the extent any remain following the termination of the indemnification escrow. (9) This amount includes (i) 521,338 shares of Common Stock held directly and (ii) 12,014 shares of Common Stock held in an Individual Retirement Account for the benefit of Mr. Grunau. This amount does not include any pro rata ownership interest Mr. Grunau may have in the ESOP Escrow Shares to the extent any remain following the termination of the indemnification escrow. (10) This amount includes (i) 94,165 shares of Common Stock held directly and (ii) 3,390 shares of Common Stock held in an Individual Retirement Account for the benefit of Mr. Lydon. This amount does not include any pro rata ownership interest Mr. Lydon may have in the ESOP Escrow Shares to the extent any remain following the termination of the indemnification escrow. (11) This amount includes (i) 10,000 shares of Common Stock and (ii) 37,500 shares of Common Stock underlying options to purchase Common Stock, pursuant to an Option Deed, which are exercisable at any time until October 1, 2024 at the option of the holder. (12) This amount includes (i) 13,333 shares of Common Stock and (ii) 50,000 shares of Common Stock underlying options to purchase Common Stock, pursuant to an Option Deed, which are exercisable at any time until October 1, 2024 at the option of the holder. (13) This amount includes 8,130 shares of Common Stock held directly and does not include any pro rata ownership interest Mr. Polovitz may have in the ESOP Escrow Shares to the extent any remain following the termination of the indemnification escrow. (14) This amount includes an aggregate of 4,000,000 shares of Common Stock issuable upon conversion of Series A Preferred Stock and 87,500 shares of Common Stock issuable upon exercise of options to purchase Common Stock that are convertible or exercisable within 60 days after March 12, 2021. Equity Compensation Plan Information The following table provides information about the Company’s equity compensation plans under which the Company’s equity securities are authorized for issuance as of December 31, 2020. (1) Included in the total number of securities in column (a) is 1,108,562 restricted stock units, which have no exercise price. The weighted average exercise price of outstanding options, warrants and rights (excluding restricted stock units) is $11.50. (2) Represents stock options previously issued in connection with its initial public offering to the Company’s then non-founder directors. 120 Descriptions of our equity compensation plans can be found in Note 18 to our historical consolidated financial statements for the year ended December 31, 2020 included in this Annual Report on Form 10-K. See the sections of this Annual Report under Item 11 titled “Executive Compensation - Outstanding Equity Awards at 2020 Year End” and “Director Compensation” for a description of the terms of the equity awards. See the section of this Annual Report under this Item 12 titled “Security Ownership” for information regarding the number of equity awards held by our directors and executive officers. Item 13. Certain Relationships and Related Transactions, and Director Independence. Director Independence Upon the listing of our Common Stock on the NYSE, the composition of the Board and its Committees became subject to the independence requirements set forth under the NYSE corporate governance listing standards as well as the Governance Guidelines which have been adopted by the Board. Under the NYSE governance standards, a director qualifies as independent if the Board affirmatively determines that the director has no material relationship with us. While the focus of the inquiry is independence from management, the Board is required to broadly consider all relevant facts and circumstances in making an independence determination. In making each of these independence determinations, the Board has considered all of the information provided by each director in response to detailed inquiries concerning his or her independence and any direct or indirect business, family, employment, transactional or other relationship or affiliation of such director with us. Specifically, Mr. Malkin currently serves as an executive officer of a company that has in the past procured services from one or more Company subsidiaries. We reviewed these commercial relationships and found that all transactions between us and the relevant companies were made in the ordinary course of business and negotiated at arms’ length. Furthermore, these commercial relationships were below the threshold set forth in the NYSE governance standards (i.e., two percent of such other company’s consolidated gross revenues for such year or $1 million, whichever is greater). As a result, our Board determined that these commercial relationships did not impair Mr. Malkin’s independence. Based on information provided by each director concerning his or her background, employment, and affiliations, and after considering the transactions described above, the Board has affirmatively determined that each of Lord Myners, Messrs. Ashken, Lillie, Milroy, Malkin and Walker and Ms. Wheeler are “independent” as that term is defined under the applicable rules and regulations of the SEC and the NYSE governance standards. Because Sir Martin owns the entity which receives advisory fees from us, he is not independent under NYSE governance standards. As CEO of the Company, Mr. Becker is also not independent. Certain Relationships and Related Transactions Since January 1, 2020, we did not enter into any related party transactions other than as set forth below. Advisory Services Agreement On October 1, 2019, we entered into an Advisory Services Agreement with Mariposa Capital, LLC, an affiliate of Sir Martin. Under this agreement, Mariposa Capital, LLC agreed to provide certain services, including corporate development and advisory services, advisory services with respect to mergers and acquisitions, investor relations services, strategic planning advisory services, capital expenditure allocation advisory services, strategic treasury advisory services and such other services relating to the Company as may from time to time be mutually agreed. In connection with these services, Mariposa Capital, LLC is entitled to receive an annual fee equal to $4,000,000, payable in quarterly installments. The initial term of this agreement was through October 1, 2020 and has been and will in the future be automatically renewed for successive one-year terms unless either party notifies the other party in writing of its intention not to renew this agreement no later than 90 days prior to the expiration of the term. This agreement may only be terminated by the Company upon a vote of a majority of our directors. In the event that this agreement is terminated by the Company, the effective date of the termination will be six months following the expiration of the initial term or a renewal term, as the case may be. Registration Rights The Company has agreed to provide Sir Martin, Mr. Lillie, Mr. Ashken and the Mariposa Acquisition IV, LLC with certain registration rights that require the Company to provide them with such information and assistance following the APi Acquisition, subject to the restrictions described in the paragraph above and customary exceptions, as they may reasonably request to enable it to 121 effect a disposition of all or part of their Common Stock or warrants, including, without limitation, the preparation, qualification and approval of a prospectus in respect of such Common Stock or warrants. In connection with an early warrant exercise financing (the “Warrant Financing”), each of Mariposa Acquisition IV, LLC and certain entities managed by Viking Global Investors LP (the “Viking Opportunities Fund”) that beneficially owned more than 5% of the Company’s issued and outstanding Common Stock, irrevocably committed to exercise their respective APi Group Corporation warrants. In exchange for such commitment, the Company agreed, among other things, that when requested by written notice (delivered not earlier than three months following the APi Acquisition), the Company would use commercially reasonable efforts to promptly enter into a customary registration rights agreement with such entity, which agreement would provide for customary registration rights (subject to customary exceptions) with respect to the Common Stock, or any other equity interests later acquired by such entity in exchange for the Common Stock in connection with a recapitalization, redomiciliation or similar transaction. Pursuant to the foregoing agreement, on March 24, 2020, we entered into a registration rights agreement with Viking Global Opportunities Liquid Portfolio Sub-Master LP (“Viking”), the beneficial owner of approximately 19.7% of our outstanding shares of Common Stock. Those shares were acquired by Viking in our initial public offering and the Warrant Financing. Pursuant to the registration rights agreement, we agreed that, subject to certain terms and conditions, (i) on or promptly after the one year anniversary of our becoming subject to the SEC reporting company requirements, we will file with the SEC a registration statement registering the resale of the Common Stock held by the Viking Opportunities Fund and use our commercially reasonable efforts to have such registration statement declared effective as promptly as practicable after its filing (but no later than 60 days after filing) and (ii) if we propose to register any of our Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) in connection with the public offering of such securities solely for cash (other than in certain excluded registrations), we will register all of the shares that the Viking Opportunities Fund requests to be included in such registration (subject to customary cutbacks if the underwriters determine that less than all of the shares requested to be registered can be included in such offering). In addition, we agreed, among other things to, (i) make and keep available adequate current public information (as those terms are understood and defined in Rule 144); (ii) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of us under the Securities Act and the Exchange Act (at any time after we have become subject to such reporting requirements); (iii) furnish certain information as may be requested by Viking as to our compliance with the reporting requirements of Rule 144 under the Securities Act and (iv) cooperate with Viking’s reasonable requests to facilitate any proposed sale of shares in accordance with the provisions of Rule 144 under the Securities Act, including, without limitation, by providing opinions of counsel, to the extent required. The registration rights agreement contains customary indemnities. Our obligations under the registration rights agreement will terminate on the earlier of (a) such time as all of the shares that may be registered under the agreement have been sold and (b) such time as all of such shares may be sold, transferred or otherwise disposed of in a single transaction without limitation under Rule 144. During 2020, we, through certain of our subsidiaries, provided fire safety and dust mitigation services to Royal Oak Enterprises, LLC (“ROE”), a manufacturer and distributor of charcoal, fire logs and related products, in the ordinary course of business and on arm’s length terms. As consideration for our services, we received aggregate revenue of approximately $335,267 from ROE. Our Co-Chair, Sir Martin E. Franklin, is the chairman and controlling shareholder of ROE. Policy Concerning Related Party Transactions The Board of Directors has determined that the Audit Committee is best suited to review and approve or ratify transactions with related persons, in accordance with the policy set forth in the Audit Committee Charter. Such review will apply to any material transaction or series of related transactions or any material amendment to any such transaction involving a related person and the Company or any subsidiary of the Company. For purposes of the policy, “related persons” will consist of executive officers, directors, director nominees, any stockholder beneficially owning more than 5% of the issued and outstanding common stock, and immediate family members of any such persons. In reviewing related person transactions, the Audit Committee will take into account all factors that it deems appropriate, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. No 122 member of the Audit Committee will be permitted to participate in any review, consideration or approval of any related person transaction in which the director or any of his or her immediate family members is the related person. Item 14. Principal Accounting Fees and Services. Fees Billed to the Company by its Independent Registered Public Accounting Firms The following table presents fees billed for audit and other services rendered by KPMG and PricewaterhouseCoopers LLP (United Kingdom) (“PWC”) in 2020 and 2019: Services Provided 2020 (KPMG) ($) 2019 (KPMG) ($) 2019 (PWC) ($) Audit Fees (1) 6,002,800 11,400,000 — Audit-Related Fees (2) — 2,018,603 2,508,184 Tax Fees (3) 3,404,367 1,544,919 — All Other Fees — — — Total 9,407,167 14,963,522 2,508,184 ____________________ (1 ) Audit fees for 2020 were for professional services rendered in connection with the audit of our consolidated financial statements, including quarterly reviews and a consent related to a Form S-8 filing in connection with the registration of securities related to our profit sharing plan. Audit fees for 2019 were for professional services associated with the filing of our Registration Statement on Form S-4 in connection with our domestication and registration in the U.S., including the audit of the financial statements included in our Registration Statement on Form S-4. With respect to PWC, the audit fees were paid for by us prior to the APi Acquisition in connection with the audit of our financial statements. (2) With respect to KPMG, the 2019 audit-related fees were for professional services associated with the Company’s transition to public company GAAP, including the adoption of ASC 606 and ASC 842, and other related public company readiness services. With respect to PWC, audit-related fees were for professional services provided in connection with acquisition related activities and the transition to KPMG as our independent registered public accounting firm. (3) Tax fees for 2020 and 2019 were for professional services associated with tax compliance and tax advice. Pre-Approval Policies and Procedures for Audit and Permitted Non-Audit Services The Audit Committee requires that it preapprove all auditing services and permitted non-audit services to be performed by its independent auditor, subject to the de minimis exceptions for non‑audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit. Either the Chair of the Audit Committee acting alone or the other two members acting jointly may grant preapprovals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant preapprovals shall be presented to the full Audit Committee or the Board of Directors at its next scheduled meeting. Consistent with these policies and procedures, the Audit Committee has approved all of the services rendered by KPMG during fiscal year 2020, as described above. 123 PART IV Item 15. Exhibits, Financial Statement Schedules. The following financial statements, schedules and exhibits are filed as part of this Form 10-K: (a) 1. Financial Statements – the consolidated financial statements and the reports of the Independent Registered Public Accounting firms are listed on pages 50 through 94. 2. Financial Statement Schedules – Schedule II - Valuation and Qualifying Accounts. 3. Exhibits including those incorporated by reference – The Exhibit Index below contains a list of exhibits filed or furnished with this Form 10-K. 124 Exhibit Index Exhibit Number Description (File No. 001-39275) 2.1# Business Combination Agreement, dated as of September 2, 2019, by and among J2 Acquisition Limited, APi Group, Inc., the shareholders listed on the signature pages thereto, Lee R. Anderson, Sr. and Shareholder Representative Services LLC, as shareholder representative (incorporated by reference to Exhibit 2.1 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)) . 2.2 Amendment Number One to Business Combination Agreement, dated as of October 1, 2019, by and among J2 Acquisition Limited, APi Group, Inc., the shareholders listed on the signature pages thereto, Lee R. Anderson, Sr. and Shareholder Representative Services LLC, as shareholder representative (incorporated by reference to Exhibit 2.2 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 3.1 Certificate of Incorporation of APi Group Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 3.2 Bylaws of APi Group Corporation Certificate of Incorporation of APi Group Corporation (incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 4.1* Description of Capital Stock . 4.2 Amended and Restated Warrant Instrument (form of Warrant contained in Schedule 1 thereto) (incorporated by reference to Exhibit 4.3 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.1 † Executive Employment Agreement, dated as of September 2, 2019, by and among APi Group, Inc., J2 Acquisition Limited and Russell Becker (incorporated by reference to Exhibit 1 0.1 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.2 † Executive Employment Agreement, dated as of September 2, 2019, by and among APi Group, Inc., J2 Acquisition Limited and Thomas Lydon (incorporated by reference to Exhibit 10.2 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.3 † Offer of Employment, dated as of September 2, 2019, by and among APi Group, Inc., J2 Acquisition Limited and Paul Grunau (incorporated by reference to Exhibit 10.3 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.4 † APi Group Corporation 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-8 effective June 3, 2020 (File No. 333-238891)). 10.5 † Form of Restricted Stock Unit Agreement (Non-Employee Directors) – APi Group Corporation 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.6 † Form of Restricted Stock Unit Agreement (Employees) – APi Group Corporation 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.7 † Form of Amended and Restated Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.7 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.8 Credit Agreement, dated as of October 1, 2019, by and among APi Group DE, Inc., as borrower, J2 Acquisition Limited, the guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank, N.A., as administrative agent and as collateral agent (incorporated by reference to Exhibit 10.8 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 125 10.9 Pledge and Security Agreement, dated as of October 1, 2019, by and among APi Group DE, Inc., as borrower, J2 Acquisition Limited, the grantors from time to time party thereto, and Citibank, N.A., as administrative agent and as collateral agent (incorporated by reference to Exhibit 10.9 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.10 Advisory Services Agreement, dated October 1, 2019, by and between APi Group Corporation and Mariposa Capital, LLC (incorporated by reference to Exhibit 10.10 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.12 Form of Option Deeds (incorporated by reference to Exhibit 10.12 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.13 Registration Rights Agreement, dated March 24, 2020, by and between APi Group Corporation and Viking Global Opportunities Liquid Portfolio Sub-Master LP (incorporated by reference to Exhibit 10.13 to the registrant’s Registration Statement on Form S-4 effective May 1, 2020 (File No. 333-237553)). 10.14 Amendment No. 1 to Credit Agreement, dated as of October 22, 2020, by and among APi Group DE, Inc., as borrower, APi Group Corporation, the guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank, N.A., as administrative agent and as collateral agent (incorporated by reference to Exhibit 10.14 to the registrant’s Quarterly Report on Form 10-Q filed on November 12, 2020). 10.15 Executive Severance Agreement, dated February 16, 2021, by and between APi Group, Inc. and Julius Chepey (incorporated by reference to Exhibit 10.15 to the registrant’s Current Report on Form 8-K filed on February 19, 2021). 10.16 † APi Group Corporation 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the registrant’s Registration Statement on Form S-8 effective June 3, 2020 (File No. 333-238890)). 10.17 †* Offer of Employment between APi Group Corporation and Andrea Fike . 21.1* List of subsidiaries of the registrant . 23.1* Consent of KPMG LLP . 31.1* Certification by Russell Becker, Chief Executive Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification by Thomas Lydon, Chief Financial Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 . 32.1** Certifications by Russell Becker, Chief Executive Officer, and Thomas Lydon, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 . 95.1* Mine Safety Disclosures 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. 126 ** Furnished herewith. † Management contract or compensatory plan or arrangement. # The schedules to these agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish a copy of any schedule omitted from the agreements to the SEC upon request. Item 16. Form 10-K Summary Not applicable 127 APi Group Corporation SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS (in millions) Balance at beginning of period Credit loss expense Write-offs Balance at end of period Allowance for doubtful accounts: Year ended December 31, 2020 $ — $ 4 $ (2 ) $ 2 Year ended December 31, 2019 $ — $ — $ — $ — 128 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . APi Group Corporation Date: March 24, 2021 By: /s/ Russell A. Becker Russell A. Becker President and Chief Executive Officer (principal executive officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signature Title Date /s/ Russell A. Becker President and Chief Executive Officer (principal executive officer) March 24, 2021 Russell A. Becker /s/ Thomas A. Lydon Chief Financial Officer (principal financial and accounting officer) March 24, 2021 Thomas A. Lydon /s/ Sir Martin E. Franklin Co-Chairman of the Board March 24, 2021 Sir Martin E. Franklin /s/ James E. Lillie Co-Chairman of the Board March 24, 2021 James E. Lillie /s/ Ian G.H. Ashken Director March 24, 2021 Ian G. H. Ashken /s/ Lord Paul Myners Director March 24, 2021 Lord Paul Myners /s/ Thomas V. Milroy Director March 24, 2021 Thomas V. Milroy /s/ Anthony E. Malkin Director March 24, 2021 Anthony E. Malkin /s/ Cyrus D. Walker Director March 24, 2021 Cyrus D. Walker /s/ Carrie A. Wheeler Director March 24, 2021 Carrie A. Wheeler 129