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regulatory, and economic environment. Mr. Monheit was a consultant focusing on financial and operational issues in the corporate restructuring field from January 2005 until May 2009. From
July 1992 until January 2005, Mr. Monheit was associated in various capacities with FTI Consulting, Inc., serving as the President of its Financial Consulting Division from May 1999 through November 2001. Mr. Monheit was a partner with
Arthur Andersen & Co. from August 1988 until July 1992, serving as
partner-in-charge
of its New York Consulting Division and
partner-in-charge
of its U.S. Bankruptcy and Reorganization Practice. We believe Mr. Monheits extensive experience in financial and operational consulting gained as an executive of major
restructuring firms and his executive experience with major and emerging companies provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
Robert L. Scott
has served as a director of our company since December 1999. Mr. Scott is the Chairman of the National
Shooting Sports Foundation and a Governor of the Sporting Arms and Ammunition Institute. Mr. Scott served as a consultant to our company from May 2004 until February 2006; President of our company from December 1999 until September 2002;
Chairman of our wholly owned subsidiary, Smith & Wesson Corp., from January 2003 through December 2003; and President of Smith & Wesson Corp. from May 2001 until December 2002. From December 1989 to December 1999, Mr. Scott
served as Vice President of Sales and Marketing and later as Vice President of Business Development of Smith & Wesson Corp. prior to its acquisition by our company. Prior to joining Smith & Wesson Corp., Mr. Scott was employed
for eight years in senior positions with Berkley & Company and Tasco Sales Inc., two leading companies in the outdoor industry. Mr. Scott previously served as a director and a member of the Compensation Committee of OPT Holdings, a
private company marketing hunting accessories. We believe Mr. Scotts prior extensive service with our company and his very extensive industry knowledge and expertise provide the requisite qualifications, skills, perspectives, and
experience that make him well qualified to serve on our Board of Directors.
P. James Debney
has served as President and
Chief Executive Officer of our company and as a member of our Board of Directors since September 2011. Mr. Debney was Vice President of our company from April 2010 until September 2011, and President of our firearm division from November 2009
until September 2011. Mr. Debney was President of Presto Products Company, formerly a business unit of Alcoa Consumer Products, a manufacturer of plastic products, from January 2007 until February 2009. He was Managing Director of Baco Consumer
Products, a business unit of Alcoa Consumer Products, a manufacturer of U.K.-branded and private label foil, film, storage, food, and trash bag consumer products, from January 2006 until December 2006; Manufacturing and Supply Chain Director from
August 2003 until December 2005; and Manufacturing Director from April 1998 until July 2003. Mr. Debney joined Baco Consumer Products in 1989 and held various management positions in operations, production, conversion, and materials. We believe
Mr. Debneys position as the President and Chief Executive Officer of our company and as the President of our firearm division, his intimate knowledge and experience with all aspects of the operations, opportunities, and challenges of our
company, and his long business career at major companies provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
Anita D. Britt
has served as a director of our company since February 2018. Ms. Britt served as Chief Financial Officer for
Perry Ellis International, Inc., a publicly traded apparel company, from March 2009 until her retirement in March 2017. From August 2006 to February 2009, Ms. Britt served as Executive Vice President and Chief Financial Officer of Urban Brands,
Inc., a privately held apparel company. From 1993 to 2006, Ms. Britt served in various positions, including that of Executive Vice President, Finance, for Jones Apparel Group, Inc., an apparel company. Ms. Britt has served as a member of
the Board of Directors since 2018 and is a member of the Audit Committee and the
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Corporate Governance Committee of Delta Apparel, Inc., a New York Stock Exchange-listed designer, manufacturer, and marketer of lifestyle basics and branded active wear apparel, headwear, and
related accessory products. Ms. Britt previously served on the Board of Trustees and Finance Committee of St. Thomas University from April 2013 to January 2018 and as its Chief Financial Officer from January 2018 to March 2018. Ms. Britt
is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants, the Pennsylvania Institute of Certified Public Accounts, and the National Association of Corporate Directors. We believe
Ms. Britts extensive financial leadership at a number of public and private companies and her extensive experience with consumer-oriented companies provide the requisite qualifications, skills, perspectives, and experience that make her
well qualified to serve on our Board of Directors.
John B. Furman
has served as a director of our company since April 2004.
Since leaving the practice of law in August 1998, Mr. Furman has served as a consultant to or an executive of a number of companies, including serving as the chief executive officer of two public companies, with his focus being on
restructurings, business transactions, capital formation, and product commercialization. From February 2009 until December 2009, Mr. Furman was the President and Chief Executive Officer of Infinity Resources LLC (now Quest Resource Holding
Corporation), a privately held environmental solutions company that served as a single-source provider of recycling programs. Mr. Furman served as President and Chief Executive Officer of GameTech International, a publicly traded company
involved in interactive bingo systems, from September 2004 until July 2005. Mr. Furman served as President and Chief Executive Officer and a director of Rural/Metro Corporation, a publicly traded provider of emergency and fire protection
services, from August 1998 until January 2000. Mr. Furman was a senior member of the law firm of OConnor, Cavanagh, Anderson, Killingsworth & Beshears, a professional association, from January 1983 until August 1998; he was
Associate General Counsel of Waste Management, Inc., a New York Stock Exchange- listed provider of waste management services, from May 1977 until December 1983; and Vice President, Secretary, and General Counsel of the Warner Company, a New York
Stock Exchange-listed company involved in industrial mineral extractions and processing, real estate development, and solid and chemical waste management, from November 1973 until April 1977. Mr. Furman previously served as a director and
Chairman of the Compensation Committee of MarineMax, Inc., a New York Stock Exchange-listed company that is the nations largest recreational boat dealer. We believe Mr. Furmans experience as a chief executive officer and a
consultant to multiple companies, his experience as a lawyer in private practice and for corporations, and his experience as a public company director provide the requisite qualifications, skills, perspectives, and experience that make him well
qualified to serve on our Board of Directors.
Gregory J. Gluchowski, Jr.
has served as a director of our company since June
2015. Mr. Gluchowski has since September 2015 served as the President and Chief Executive Officer of The Hillman Group, Inc., a leading provider of hardware solutions focused on industry leading sales and service. Prior to his role with
Hillman, Mr. Gluchowski served for six years as President of the $1.2 billion Hardware and Home Improvement (HHI) division of Spectrum Brands Holdings, Inc. and a former division of Stanley Black and Decker. Mr. Gluchowski was Vice
President, Global Operations of Black & Decker Corporation from October 2005 to December 2009; General Manager, Mexican Operations & Director North American Operations from March 2003 to September 2005; and General Manager, Kwikset
Waynesboro Operation from January 2002 to June 2003. Prior to joining Black & Decker Corporation, Mr. Gluchowski served in various executive leadership positions with Phelps Dodge Corporation Wire & Cable Group from
1988 to 2001, with his most recent position being Senior Vice President, Customer Satisfaction. Since July 2017, Mr. Gluchowski has served as a member of the Board of Directors of Milacron Holdings Corp., a New York Stock Exchange-listed
industrial technology company serving the plastics processing industry. We believe Mr. Gluchowskis extensive experience in consumer-focused, high-volume manufacturing companies and his executive
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leadership of global businesses with over 7,000 employees provides the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of
Directors.
Michael F. Golden
has served as a director of our company since December 2004. Mr. Golden served as the
President and Chief Executive Officer of our company from December 2004 until his retirement in September 2011. Mr. Golden served as Interim Chief Executive Officer of Quest Resource Holding Corporation, a publicly traded environmental
solutions company that serves as a single source provider of recycling and environment-related programs, services and information, from October 2015 to February 2016. Mr. Golden has served on its board of directors since October 2012 and serves
as Chairman of the Compensation Committee and a member of the Strategic Planning Committee. Mr. Golden was employed in various executive positions with the Kohler Company from February 2002 until joining our company, with his most recent
position being the President of its Cabinetry Division. Mr. Golden was the President of Sales for the Industrial/Construction Group of the Stanley Works Company from 1999 until 2002; Vice President of Sales for Kohlers North American
Plumbing Group from 1996 until 1998; and Vice President Sales and Marketing for a division of The Black & Decker Corporation where he was employed from 1981 until 1996. Since February 2013, Mr. Golden has served as a member of
the board of directors of Trex Company, Inc., a New York Stock Exchange-listed manufacturer of high-performance wood-alternative decking and railing, and serves as a member of the Nominating/Corporate Governance Committee and Chairman of the
Compensation Committee. We believe Mr. Goldens service as the former President and Chief Executive Officer of our company, his intimate knowledge and experience with all aspects of the operations, opportunities, and challenges of our
company, and his long business career at major companies provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
Mitchell A. Saltz
has served as a director of our company since October 1998. Mr. Saltz has been since December 2015
Chairman of the Board of Thats Etertainment Corp. (formerly Modern Round Entertainment Corporation), a company formed to create and roll out nationally an entertainment concept centered around a virtual interactive shooting experience
utilizing laser technology-based replica firearms and extensive food and beverage offerings, and was a principal of its predecessor, Modern Round LLC, from February 2014 until December 2015. Mr. Saltz has served as the Chairman and Managing
Partner of Southwest Capital Partners, an investment banking firm, since 2009. Since 2016, Mr. Saltz has served as a member of the board of directors, a member of the Audit Committee, Chairman of the Compensation Committee, and a member of the
Nominating and Corporate Governance Committee of VirTra, Inc., a developer and seller of judgmental
use-of-force
training simulators and firearms training simulators for
law enforcement, military, and commercial uses. Mr. Saltz served as the Chairman of Quest Resource Holding Corporation, a publicly traded environmental solutions company that serves as a single service provider of recycling and
environment-related programs, services, and information, or its predecessors from 2005 until April 2019. Mr. Saltz served as Chairman of the Board and Chief Executive Officer of our company from February 1998 through December 2003.
Mr. Saltz founded
Saf-T-Hammer
in 1997, which developed and marketed firearm safety and security products designed to prevent the unauthorized access to firearms,
which acquired Smith & Wesson Corp. from Tomkins, PLC in May 2001 and changed its name to Smith & Wesson Holding Corporation. We believe Mr. Saltzs history as a founder of our company, his service as a former officer of
our company, and his financial, investment, and management experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
I. Marie Wadecki
has served as a director of our company since September 2002. Ms. Wadecki served as the Corporate Budget
Director of the McLaren Health Care Corporation, a
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Director Independence
Our Board of Directors has determined, after considering all of the relevant facts and circumstances, that Anita D. Britt, Robert H.
Brust, John B. Furman, Gregory J. Gluchowski, Jr., Michael F. Golden, Barry M. Monheit, Mitchell A. Saltz, Robert L. Scott, and I. Marie Wadecki are independent directors, as independence is defined by the listing standards of the Nasdaq
Stock Market, or Nasdaq, and by the SEC, because they have no relationship with us that would interfere with their exercise of independent judgment in carrying out their responsibilities as a director. P. James Debney is an employee director.
Committee Charters, Corporate Governance Guidelines, and Codes of Conduct and Ethics
Our Board of Directors has adopted charters for the Audit, Compensation, and Nominations and Corporate Governance Committees describing
the authority and responsibilities delegated to each committee by our Board of Directors. Our Board of Directors has also adopted Corporate Governance Guidelines, a Code of Conduct, and a Code of Ethics for the CEO and Senior Financial Officers. We
post on our website, at
www.aob.com
, the charters of our Audit, Compensation, and Nominations and Corporate Governance Committees; our Corporate Governance Guidelines, Code of Conduct, and Code of Ethics for the CEO and Senior Financial
Officers, and any amendments or waivers thereto; and any other corporate governance materials specified by SEC or Nasdaq regulations. These documents are also available in print to any stockholder requesting a copy in writing from our Secretary at
the address of our executive offices set forth in this proxy statement.
Policy on Corporate Political Contributions and Expenditures
In 2014, our Board of Directors adopted a Policy on Corporate Political Contributions and Expenditures which is posted on our website at
www.aob.com
.
In accordance with this policy, for each fiscal year beginning in 2015, we have posted on our website during the applicable fiscal year an annual report disclosing all political contributions or expenditures in the United
States that are not deductible as ordinary and necessary business expenses under Section 162(e) of the Internal Revenue Code in excess of $50,000.
Non-deductible
amounts generally include
contributions to or expenditures in support of or opposition to political candidates, political parties, or political committees.
Executive Sessions
We regularly schedule executive sessions in which independent directors meet without the presence or participation of management. The
Chairman of our Board of Directors serves as the presiding director of such executive sessions.
Board Committees
Our bylaws authorize our Board of Directors to appoint from among its members one or more committees consisting of one or more directors.
Our Board of Directors has established an Audit Committee, a Compensation Committee, and a Nominations and Corporate Governance Committee, each consisting entirely of independent directors as independence is defined by the listing
standards of Nasdaq and by the SEC.
The Audit Committee
The purpose of the Audit Committee includes overseeing the financial and reporting processes of our company and the audits of the
financial statements of our company and providing assistance to
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Risk Assessment of Compensation Policies and Practices
We have assessed the compensation policies and practices with respect to our employees, including our executive officers, and have
concluded that they do not create risks that are reasonably likely to have a material adverse effect on our company.
Boards Role in Risk Oversight
Risk is inherent in every business. As is the case in virtually all businesses, we face a number of risks, including
operational, economic, financial, legal, regulatory, and competitive risks. Our management is responsible for the
day-to-day
management of the risks we face. Our Board
of Directors, as a whole and through its committees, has responsibility for the oversight of risk management.
In its oversight
role, our Board of Directors involvement in our business strategy and strategic plans plays a key role in its oversight of risk management, its assessment of managements risk appetite, and its determination of the appropriate level of
enterprise risk. Our Board of Directors receives updates at least quarterly from senior management and periodically from outside advisors regarding the various risks we face, including operational, economic, financial, legal, regulatory, and
competitive risks. Our Board of Directors also reviews the various risks we identify in our filings with the SEC as well as risks relating to various specific developments, such as acquisitions, securities repurchases, debt and equity placements,
and product introductions. In addition, our Board of Directors regularly receives reports from our Vice President, Internal Audit, our General Counsel, and our Chief Compliance Officer.
Our board committees assist our Board of Directors in fulfilling its oversight role in certain areas of risk. Pursuant to its charter,
the Audit Committee oversees the financial and reporting processes of our company and the audit of the financial statements of our company and provides assistance to our Board of Directors with respect to the oversight and integrity of the financial
statements of our company, our companys compliance with legal and regulatory matters, the independent registered public accountants qualification and independence, and the performance of our independent registered public accountant. The
Compensation Committee considers the risk that our compensation policies and practices may have in attracting, retaining, and motivating valued employees and endeavors to assure that it is not reasonably likely that our compensation plans and
policies would have a material adverse effect on our company. Our Nominations and Corporate Governance Committee oversees governance related risk, such as board independence, conflicts of interest of members of the Board of Directors and executive
officers, and management and succession planning.
Board Diversity
We seek diversity in experience, viewpoint, education, skill, and other individual qualities and attributes to be represented on our
Board of Directors. We believe directors should have various qualifications, including individual character and integrity; business experience; leadership ability; strategic planning skills, ability, and experience; requisite knowledge of our
industry and finance, accounting, and legal matters; communications and interpersonal skills; and the ability and willingness to devote time to our company. We also believe the skill sets, backgrounds, and qualifications of our directors, taken as a
whole, should provide a significant mix of diversity in personal and professional experience, background, viewpoints, perspectives, knowledge, and abilities. Nominees are not to be discriminated against on the basis of race, religion, national
origin, sex, sexual orientation, disability, or any other basis proscribed by law. The assessment of prospective directors is made in the context of the perceived needs of our Board of Directors from time to time.
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COMPENSATION DISCUSSION AND ANALYSIS
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based on their size, industry, and competitive factors to enable our company to attract executives from other industries and to establish compensation levels that it deems appropriate to retain
and motivate our executive officers. The Compensation Committee uses this peer group information as well as published executive compensation survey data from a broader group of companies with similar revenue to our company as points of reference but
does not benchmark or target our compensation levels against this competitive information.
The Compensation Committee retains the
services of an independent compensation consultant to review trends in executive compensation, assist with the identification of relevant peer companies, and conduct an assessment and analysis of executive market compensation. The Compensation
Committee makes all determinations regarding the engagement, fees, and services of its compensation consultant, and its compensation consultant reports directly to the Compensation Committee. From time to time, the Compensation Committee may retain
the services of outside legal counsel to advise it on compensation matters.
Components of Compensation
Our executive compensation program continues to emphasize our
pay-for-performance
philosophy with the opportunity to receive higher total compensation based on successful performance against objective metrics, financial
and otherwise, and above- market stock price appreciation.
Base Salary
The Compensation Committee sets the base salaries of our executive officers at levels that it believes are required to attract, motivate,
and retain highly qualified individuals assuming that they will not receive incentive compensation, but reflecting the possible receipt of incentive compensation. Base salaries for our executive officers are established based on an individuals
position, responsibilities, skills, experience, performance, and contributions. In determining base salaries, the Compensation Committee also considers individual performance and contributions, future potential, competitive salary levels for
comparable positions at other companies, salary levels relative to other positions within our company, corporate needs, and the advice of the Compensation Committees independent compensation consultant. The Compensation Committees
evaluation of the foregoing factors is subjective, and the Compensation Committee does not assign a particular weight to any one factor.
The Compensation Committee independently determines the base salary of our Chief Executive Officer. The base salaries for our other
executive officers, other than the Chief Executive Officer, are determined by the Compensation Committee following consultations with the Chief Executive Officer. The Compensation Committee considers the recommendations of our Chief Executive
Officer as one of the factors described above.
Given the high-profile nature of the firearms industry, it has become increasingly
difficult to attract, motivate, and retain highly qualified individuals willing to be associated with our company and the firearms industry as a whole. The Compensation Committee has become increasingly aware of the impact this factor has had not
only on existing and potential future employees but also the pressures this factor places on the families of these individuals.
The
Compensation Committee generally sets base salary levels for our executive officers at the beginning of each fiscal year, although it can make changes to base salary levels at any time during the fiscal year. For more detailed information regarding
the amounts paid as base salary to our named executive officers in fiscal 2019, see Compensation Discussion and Analysis Fiscal 2019 Compensation Base Salaries.
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term incentive stock-based compensation even though the investment community generally has not recently looked favorably upon the positive financial performance of our company given the
unfavorable factors attributed to the firearm industry as a whole.
Benefits and Perquisites
Our executive officers are eligible to participate in those health, welfare, and retirement plans, including our profit sharing, 401(k),
employee stock purchase, and medical and disability plans generally available to employees of our company who meet applicable eligibility requirements. For more detailed information regarding the retirement benefits for which our named executive
officers are eligible and contributions made to retirement plans on behalf of our named executive officers, see Executive Compensation Retirement Plans.
In addition, from time to time, we provide certain of our executive officers with other benefits and perquisites that we believe are
reasonable. These benefits and perquisites include severance and
change-in-control
benefits, car allowances, housing allowances, relocation assistance, a nonqualified
supplemental deferred compensation plan, and, for our Chief Executive Officer, reimbursement of insurance premiums. For more detailed information regarding these other benefits and perquisites for which our named executive officers are eligible, see
Executive Compensation.
We do not view perquisites and other personal benefits as a significant element of our
executive compensation program, but do believe they can be useful in attracting, motivating, and retaining the executive talent for which we compete. We believe that these additional benefits may assist our executive officers in performing their
duties and provide time efficiencies for our executive officers in appropriate circumstances.
In the future, we may provide
additional benefits and perquisites to our executive officers as an element of their overall compensation. All future practices regarding benefits and perquisites will be approved and subject to periodic review by the Compensation Committee.
Policies for the Pricing and Timing of Stock-Based Compensation
The Compensation Committee sets the exercise or strike price of stock options at the fair market value of our common stock, which is the
closing price of our common stock on the Nasdaq Global Select Market on the effective date of grant and sets the value of RSUs and PSUs. The Compensation Committee generally grants stock-based compensation to our executive officers annually within
the same time frame each year. In the case of new hires, grant prices generally are determined by the closing price of our common stock on the 15th day of the month following the date on which the employee reports for service. The Compensation
Committee authorizes our Chief Executive Officer to grant stock-based compensation to employees who are not executive officers, subject to limitations on amount and subsequent reporting to the Compensation Committee.
Fiscal 2019 Compensation
Compensation Consultant
The Compensation Committee engaged Compensia, Inc., or Compensia, an independent national compensation consulting firm, to
assist in the design of our executive compensation program for fiscal 2019. The Compensation Committee has the sole authority to retain and dismiss its compensation consultants and approve the fees of its compensation consultant. No member of the
Compensation Committee or any named executive officer has any affiliation with Compensia, and Compensia did not provide any services to our company during fiscal 2019 other than services to the
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number of shares that can be delivered with respect to the fiscal 2019 PSU awards is limited to a dollar value, determined as of the vesting date, of 600% of the grant date value. See
Compensation Discussion and Analysis Introduction Highlights of Fiscal 2019 Compensation Program.
Upon a
change in control of our company prior to the three year anniversary of the date of grant, each named executive officer will earn a number of PSUs subject to the award in accordance with the formula described above, provided that (i) the
relative performance of our common stock will be measured based on the consideration offered for one share of our common stock in the change in control (or in the event of a change in control that does not involve an acquisition of our stock, based
on the trading price of our common stock on the date of the change in control) against the average closing price of our common stock during the
90-calendar-day
period
immediately following the date of grant; and (ii) the relative performance of the RUT will be measured based on the average closing price of the RUT during the
90-calendar-day-period
immediately prior to the change in control against the average closing price of the RUT during the
90-calendar-day-period
immediately following the date of grant. The PSUs earned pursuant to the formula described above will then be converted into RSUs that will vest upon the earlier of (i) a
qualifying termination of employment or (ii) the original vesting date.
During fiscal 2019, we also granted the following RSUs
to our named executive officers, which equaled the number of RSUs granted during fiscal 2018. While the number of RSUs granted during fiscal 2019 remained the same as was granted during fiscal 2018 for most of our named executive officers, the value
of such RSUs was significantly lower.
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Name
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RSUs
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P. James Debney
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63,700
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Jeffrey D. Buchanan
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22,900
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Robert J. Cicero
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13,000
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Mark P. Smith
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13,000
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Brian D. Murphy
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13,000
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These RSUs vest
one-fourth
on May 1st following each of the
first, second, third, and fourth anniversaries of the date of grant, subject to each named executive officers continued service with us, and the underlying shares are delivered on the
one-year
anniversary of the applicable vesting date. These RSUs will vest in the event of a qualifying termination of employment following a change in control of our company (as defined in the applicable award agreements).
For more information regarding the grants of stock-based compensation to our named executive officers in fiscal 2019, see
Executive Compensation Fiscal 2019 Grants of Plan-Based Awards.
Each named executive officer forfeits the
unvested portion, if any, of this stock-based compensation if his service to our company is terminated for any reason, except as otherwise set forth in the applicable award agreement, in any employment or severance agreement between our company and
the named executive officer, in any policy or plan of our company applicable to the named executive officer, or as may otherwise be determined by the administrator of the applicable equity plan. See Executive Compensation Potential
Payments Upon Termination or Change in Control.
Certain Stock-Based Compensation Arrangements Granted in Prior Fiscal Years
Results for Previous PSU Awards
The PSUs granted in fiscal 2016 to our executive officers, which had a three-year performance period ending at the conclusion of fiscal
2019, were not earned because our common stock did not
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meet the threshold performance requirements compared with the RUT. Over the three-year performance period, our stock price declined 56.91% while the RUT appreciated 34.68%, which resulted in our
stock price trailing the RUT by 91.59%. As a result, the Compensation Committee confirmed that this underperformance resulted in none of the PSUs granted in fiscal 2016 being earned, and, therefore, our named executive officers did not receive any
shares of common stock underlying the PSUs granted in fiscal 2016.
Other Elements of Fiscal 2019 Compensation
Clawback Policy
We
maintain a compensation recovery, or clawback, policy. In the event we are required to restate our financial results as a result of a material noncompliance by us with any financial reporting requirement under the federal securities laws, we will
have the right to use reasonable efforts to recover from any current or former executive officer who received incentive compensation (whether cash or equity) from us during the three-year period preceding the date on which we were required to
prepare the accounting restatement, any excess incentive compensation awarded as a result of the misstatement. This policy is administered by the Compensation Committee. If final rules are adopted by the SEC regarding clawback requirements under the
Dodd-Frank Act, we will review this policy and make any amendments as necessary to comply with the new rules.
This clawback policy
applies to cash and stock-based incentive compensation programs, including our 2013 Incentive Stock Plan and our 2013 Incentive Bonus Plan.
Derivative Trading and Hedging
We have a policy prohibiting our directors and officers, including our executive officers, and any family member residing in the same
household, from engaging in derivatives trading and hedging involving our securities or pledging or margining our common stock.
Tax and Accounting
Considerations
Deductibility of Executive Compensation
Section 162(m) of the Code generally limits our deductibility, for federal income tax purposes, of compensation paid to each of our
chief executive officer and the next three highest-paid named executive officers (other than the chief financial officer solely for taxable years beginning prior to January 1, 2018) in excess of $1 million per person per year. For taxable
years beginning prior to January 1, 2018, certain compensation, including qualified performance-based compensation, was not subject to this annual deduction limit if certain requirements were met.
For taxable years beginning prior to January 1, 2018, when reasonably practicable, the Compensation Committee sought to qualify the
variable incentive compensation paid to our executive officers for the qualified performance-based compensation exemption from the deductibility limit. The Compensation Committee, however, had the discretion to authorize compensation payments that
did not comply with this exemption when it believed that such payments were in the best interests of our company and our stockholders, such as, for example, in order to attract or retain executive talent.
Effective for tax years beginning after December 31, 2017, this $1 million annual deduction limit will apply to all our named
executive officers, including our chief financial officer, and the exemption for qualified performance-based compensation will no longer be available. As a result, compensation paid to each of our named executive officers in any taxable year in
excess of $1 million
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We know of no other matters to be submitted to the meeting. If any other matters properly come before the
meeting, it is the intention of the persons named in the proxy to vote the shares they represent as our Board of Directors may recommend.
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APPENDIX
A AOBC REPORT ISSUED ON FEBRUARY 8, 2019 IN RESPONSE TO 2018 STOCKHOLDER PROPOSAL
In 2018, the Sisters of the Holy Names of Jesus and Mary, a stockholder that purchased the bare minimum 200 shares of our common stock,
and other
co-sponsors,
or Proponent, filed a proposed resolution, or the Resolution, addressing the issue of
gun-related
violence. According to the Resolution,
Proponents objective was to compel our company to assess all options for decreasing the societal impact of gun violence and mitigate the financial and reputational risks for the company.
The Resolution requested that we produce, at reasonable expense and excluding proprietary information, a report that
included three things:
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Evidence of monitoring of violent events associated with products produced by the company.
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Efforts underway to research and produce safer guns and gun products.
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Assessment of the corporate reputational and financial risks related to gun violence in the U.S.
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We included the proposal in our definitive proxy materials for our annual meeting of stockholders held on September 25, 2018. A
majority of stockholders voting, representing only 28% of our outstanding shares, approved the Resolution by a 2.5% margin.
Despite
serious reservations regarding Proponents motive, particularly in light of Proponents stated purpose elsewhere that they were pursuing what most would call an
anti-gun
agenda, we immediately began
preparing the report. We committed to doing so on a timely basis, declining Proponents offer for additional time in which to prepare the report.
On February 8, 2019, we published our report entitled Shareholder Requested Report on Product Safety Measures and Monitoring
of Industry Trends, or the Report. The Report is posted on our website at
www.aob.com
.
In the Report, we did the following:
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Explained that we had retained a leading independent media firm to conduct retrospective monitoring of the risks
presented by Proponent and that the media firm would continue to monitor those risks.
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Explained the reasons why smart gun technology was unlikely to be a viable market opportunity.
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Explained how our diversification mitigated risk.
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The response to the Report by our stockholders, customers, and media was overwhelmingly positive. As explained more fully below, we
believe we were fully responsive and that the Report addressed the issues raised in the Resolution.
History of Stockholder Engagement on the Issues Presented in
the Report
Contrary to Proponents suggestions, industry risk related to violence committed with guns generally, as well as
risk related to activists seeking to capitalize on such violence to impose a gun control agenda, is something that is an integral part of managing a firearms company. Toward that end, we regularly engage with many stakeholders for the purpose of
identifying real risk and appropriate risk mitigation actions. We engaged with representatives of stockholders holding approximately 21% of our outstanding shares, both before and after our 2018 Annual Meeting of Stockholders. We also engaged with
our largest stockholders to discuss the Report subsequent to its issuance. Many of these calls were conducted by the independent Chairman of our Board and members of our executive management team.
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2019 Proxy Statement
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A-1
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We also engaged with Proponent to better understand the undefined parameters of the
Resolution. This engagement was particularly important because the Resolution suggested that we take unlimited responsibility for all the alleged harm that could be attributed to firearms. Our engagement with Proponent also sought to conform the
statements in Proponents filings in support of the Resolution that it did not seek to impose an
anti-gun
agenda with its public statements elsewhere that were in pursuit of an
anti-gun
agenda.
Despite this engagement, Proponent was either unwilling or unable to provide any
adequate explanation as to the scope of Proponents undefined demands, particularly the insistence that the fundamental obligations of our company were rooted in the United Nations Guiding Principles on Human Rights.
See
Notice of Exempt
Solicitation,
Rationale for Voting in Favor of the American Outdoor Brands Company Shareholder Proposal Number 4 on Gun Safety,
filed with the SEC on August 22, 2018. We found Proponents responses to our engagement to
be largely unhelpful, leaving the clear impression that the Resolution was in pursuit of an unstated agenda, one more in line with Proponents publicly stated
anti-gun
positions made outside of our annual
stockholder meeting than the purported reputational risks Proponent claimed was their concern in communications to our stockholders. Section B of Appendix B of the Report provides additional details on Proponents evasiveness during this
engagement.
In many of our communications with stockholders, the issue that repeatedly came up was that the Resolution sought
nothing more than the publication of a report. Our position was that given Proponents preference for United Nations statements of liability over U.S. law and the Constitution, it was inevitable that the Report merely would be the first
step in pursuit of Proponents publicly stated
anti-gun
agenda. Unfortunately, Proponent proved our concerns well founded when it filed a new stockholder proposal, this time requiring us to voluntarily
give up our rights under U.S. law and replace those rights with extensive liability pursuant to United Nations principles, through the vehicle of a benign sounding human rights policy.
AOBCs Engagement of a Leading Independent Media Firm to Conduct Ongoing Monitoring of Reputational Risk
Stripped to its core, Proponent sought to make the demands in the Resolution sound reasonable by making potential reputational risk to
our company the foundation for the gun control proposals Proponent sought. We did not reject the idea that the activities of
anti-gun
activists could create reputational risk for our company. To the contrary,
we decided to address this issue directly by reviewing such risk both historically and prospectively.
The initial monitoring by a
leading independent media firm consisted of a
12-month
retrospective study and the initial data demonstrated that the conversation around firearm-related violence in the United States is largely an unbranded
conversation, with Smith & Wesson brands accounting for less than 1% of all monitored media mentions related to firearms and crime. Thus, the results of the initial monitoring program demonstrated that the data serves no useful purpose in
addressing the issues raised by Proponent. Nonetheless, while the media firm concluded that data integrity and reporting issues make it unlikely that brand specific information could be useful in analyzing risk assessment and mitigation, we
committed to continue monitoring for at least one year to test these initial results. The details of our monitoring efforts are contained in Section IV of the Report.
Although monitoring was a key component of the Resolution, Proponent has now presented a new resolution with far more substantive, and
possibly crippling, obligations without even waiting to learn the results of the monitoring. Such precipitous action by Proponent further suggests that the concerns raised by us in Appendix B of the Report were well founded.
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2019 Proxy Statement
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A Word on Safer Firearms and Firearm Products
The second prong of the Resolution requested that we report on current efforts to research and produce safer firearms, in reality
Smart Guns. The core of this issue is that Proponent, a self-acknowledged social justice group focused primarily on doing what they view as good works,
www.snjm.org/en/
;
https://www.globalsistersreport.org/column/horizons/equality/build-nonviolent-future-act-now-56256
, simply disagrees with the entire firearm industry and their
customers as to what is a viable and marketable firearm product. In other words, Proponent, which has no business or market experience, would substitute their judgment for that of those in the industry.
To state Proponents position is to demonstrate its flaws. Proponent suggests that despite the existence of extensive capital for
development of smart guns and the actual investment in the development of smart guns by various companies, all of these companies somehow have no interest in making a profit selling smart guns. While we respect Proponents efforts to what it
views as doing good works, we suggest that its judgment is influenced by its broader social justice agenda, and not any rational business reasons. Nonetheless, in the Report, we committed to continue to regularly assess the market for smart
gun technology, which will allow us to move quickly if, in our reasonable judgment, such technology ever becomes reliable and there is sufficient customer demand to afford a reasonable return on the projected cost of development.
Assessment of the Corporate Reputational and Financial Risks Related to Gun Violence in the United States
The last prong of the Resolution asked us to assess the corporate reputational and financial risks associated with gun violence. We
provided in our Report a comprehensive discussion of the risks associated with the firearm industry, the misuse of firearms, gun violence, and the mitigation of those risks. We described in detail the risks inherent in our industry in general and
our company in particular and pointed out that our industry is uniquely situated because of the well-known risk that a substantial and organized opposition, such as Proponent, seeks to ban the private ownership of firearms.
Possibly the greatest disconnect between Proponent and stockholders who seek an investment in our company is the complete failure to
accept the existence of any risks other than those that they have identified. In the Report, we explained some additional risks, including the fact that the gun control agenda that Proponent favors would create the
greatest
reputational and
financial risks to our company and its stockholders. As we pointed out, our reputation among defenders of the Second Amendment is essential to protecting our marketplace position and significantly more important than spending resources to win over
detractors such as Proponent. Proponent has been dismissive of these very real risks, claiming to know better than industry experts the views of the gun owners to whom Proponents interests are openly hostile.
Lastly, the Report explained how risk is being mitigated in a way that does not threaten to undermine our core firearms business through
our diversification into outdoor products and accessories, a long-standing and effective risk mitigation strategy that Proponent does not acknowledge or address. That market, ranging from $30 to $35 billion annually, offers significant growth
opportunities while also mitigating the risks associated with a focus on any single product line or division. Proponent simply has rejected this measured and balanced approach.
The comprehensive Report we issued in February 2019 was prepared within the requested time frame, posted on our website, responded fully
to the issues raised in the Resolution, prepared in good faith after extensive engagement with many of our stockholders, and addressed in detail the three components of the Resolution, including an ongoing media monitoring program designed to
address in the future the issues raised by the Resolution. For these reasons, the Report fulfilled our responsibilities to our stockholders.
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2019 Proxy Statement
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APPENDIX
B ADJUSTED EBITDAS
Adjusted EBITDAS
, as used in the Proxy Statement and our
2019 Executive Annual Cash Incentive Program, is a financial measure that is not calculated or presented in accordance with generally accepted accounting principles (GAAP). While we believe that this measure is useful in evaluating our
performance and for purposes of determining annual cash incentive, investors should not consider it to be a substitute for financial measures prepared in accordance with GAAP. In addition, this financial measure may differ from similarly titled
financial measures used by other companies and does not necessarily provide a comparable view of our performance relative to other companies in similar industries.
The table below shows for fiscal years 2019 and 2018 the reconciliation of our GAAP net income as reported in our Annual Reports on Form
10-K
to
non-GAAP
Adjusted EBITDAS.
AMERICAN OUTDOOR BRANDS
CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDAS
(in thousands)
(Unaudited)
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For the Years
Ended
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April 30, 2019
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April 30, 2018
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GAAP net income
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$
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18,410
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$
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20,128
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Interest expense
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9,790
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11,092
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Income tax expense/(benefit)
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10,328
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(2,511
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)
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Depreciation and amortization
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52,770
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50,970
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Stock-based compensation expense
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7,992
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7,816
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Diode Recall
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1,666
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Impairment of long-lived
tangible assets
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10,396
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Fair value inventory step-up
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454
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500
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Debt extinguishment costs
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226
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Acquisition-related costs
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28
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769
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Transition costs
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1,185
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439
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Change in contingent consideration
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(60
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(1,640
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)
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Non-GAAP Adjusted EBITDAS
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$
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111,293
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$
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89,455
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2019 Proxy Statement
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AMERICAN
OUTDOOR BRANDS CORPORATION 2100 ROOSEVELT AVENUE
SPRINGFIELD, MA 01104
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting -
Go to www.virtualshareholdermeeting.com/AOBC2019
You may attend the meeting via the Internet and vote during
the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E83439-P27647
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AMERICAN OUTDOOR BRANDS CORPORATION
The Board of
Directors recommends you vote FOR the following:
1. PROPOSAL 1: ELECTION OF DIRECTORS:
To elect as directors all of the nominees listed below to serve until our next annual meeting of stockholders and until
their successors are elected and qualified:
Nominees:
01) Barry M. Monheit 06) Gregory J. Gluchowski, Jr. 02) Robert L. Scott 07) Michael F. Golden 03) Anita D. Britt 08)
Mitchell A. Saltz 04) P. James Debney 09) I. Marie Wadecki 05) John B. Furman
The Board of Directors
recommends you vote FOR the following proposals:
2. PROPOSAL 2: To provide a non-binding advisory vote on the
compensation of our named executive officers for fiscal 2019 (say-on-pay).
3. PROPOSAL 3: To
ratify the appointment of Deloitte & Touche LLP, an independent registered public accounting firm, as the independent registered public accountant of our company for the fiscal year ending April 30, 2020.
For address changes and/or comments, please check this box and write them on the back where indicated.
NOTE: Please sign exactly as your name or names appear(s) on this proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee, or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
For All Withhold All Except For All
For Against Abstain
To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
The Board of Directors recommends you vote AGAINST the following proposal:
4. PROPOSAL 4: A stockholder proposal, if properly presented at the meeting.
and upon such matters which may properly come before the meeting or any adjournment or postponement thereof. The shares
represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). If no directions are made, this proxy will be voted FOR all directors, FOR proposals 2 and 3, and AGAINST proposal 4.
If any other matters properly come before the meeting, the persons named in this proxy will vote in their discretion.
For Against Abstain
Signature [PLEASE SIGN WITHIN
BOX] Date
Signature (Joint Owners) Date
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement
and Annual Report are available at www.proxyvote.com.
E83440-P27647
AMERICAN OUTDOOR BRANDS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 2019 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 24, 2019
The undersigned stockholder of
AMERICAN OUTDOOR BRANDS CORPORATION, a Nevada corporation (the Company), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement of the Company, each dated August 16, 2019, and hereby appoints P.
James Debney and Jeffrey D. Buchanan, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2019 Annual Meeting of Stockholders of
the Company, to be held on Tuesday, September 24, 2019, at 12:00 p.m., Eastern Time, online at www.virtualshareholdermeeting.com/AOBC2019 and at any adjournment or postponement thereof, and to vote all shares of the Companys Common Stock that
the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side.
This Proxy will be voted as directed or, if no contrary direction is indicated, will be voted FOR the election of the nominee directors; FOR the say-on-pay proposal; FOR the ratification
of the appointment of Deloitte & Touche LLP as the independent registered public accountant of the Company; AGAINST the stockholder proposal; and as said proxies deem advisable on such other matters as may come before the meeting.
A majority of such proxies or substitutes as shall be present and shall act at the meeting or any adjournment or
postponement thereof (or if only one shall be present and act, then that one) shall have and may exercise all of the powers of said proxies hereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE DIRECTORS, FOR THE SAY-ON-PAY PROPOSAL, FOR THE RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT OF THE COMPANY FOR THE FISCAL YEAR ENDING APRIL 30, 2020, AND AGAINST THE STOCKHOLDER PROPOSAL.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
Address Changes/Comments:
(If you noted any
Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED
ON REVERSE SIDE.