ITEM
10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The
following table provides information on our executive officers and
directors:
|
Name
|
Age
|
Positions
|
|
Martin
A. Sumichrast
|
53
|
Chairman
of the board of directors, co-Chief Executive
Officer
|
|
R. Scott
Coffman
|
58
|
Director and
co-Chief Executive Officer
|
|
Mark S.
Elliott
|
58
|
Chief Financial
Officer, Chief Operating Officer
|
|
Caryn
Dunayer
|
35
|
President
|
|
Anthony
K. Shriver
|
54
|
Director
|
|
Seymour
G. Siegel
|
77
|
Director
|
|
Gregory
C. Morris
|
58
|
Director
|
|
Bakari
Sellers
|
35
|
Director
|
|
Peter J.
Ghiloni
|
69
|
Director
|
|
Scott G.
Stephen
|
54
|
Director
|
|
William F. Raines,
III
|
60
|
Director
|
Martin A.
Sumichrast. Mr. Sumichrast has
served as a member of the board of directors since April 2015. Mr.
Sumichrast served as our Chief Executive Officer from September
2016 until July 2019 and as our co-Chief Executive Officer since
July 2019. Since 2012, Mr. Sumichrast has served as Managing
Director of Washington Capital, LLC, a family
office. In addition, since 2018 he has been the Managing Director
over SFT1, LLC, a private investment company owned by a family
trust. Since September 2013 he
has been a Managing Member of Stone Street Capital, LLC, a
Charlotte, North Carolina-based private investment company.. Mr.
Sumichrast serves as a Trustee and Chairman of the Nominating and
Governance Committees of the Barings Global Short Duration High
Yield Fund, Inc. (NYSE: BGH) and the Barings Capital Funds Trust,
Inc. From January 2015 until January 2016, he was also a member of
the board of directors of Social Reality, Inc. (NASDAQ:SRAX) and
served as a member of the Audit Committee. We selected Mr.
Sumichrast to serve on our board of directors based upon his
significant experience both as an investor and advisor, as well as
his experience as a member of a board of directors of a listed
company.
R. Scott
Coffman. Mr. Coffman has been a member of our board of
directors since December 2018. He served as Chief Executive Officer
of our CBDI subsidiary from December 2018 until July 2019 and has
served as our co-Chief Executive Officer since July 2019. Mr.
Coffman has over 25 years of business experience in which he
founded several businesses in the internet services, manufacturing
and e-commerce sectors. As an executive or partner in these
entities, Mr. Coffman oversaw the strategic direction, developed
the business plan and oversaw the operation of the companies. Mr.
Coffman was a manager and Chief Executive Officer of Cure Based
Development, LLC from the founding of the company in September 2017
until the mergers with CBDI in December 2018. Prior to that, from
2012 to 2017, he was an Operating Partner in a regional
restaurant group and also had day to day executive
oversight of DataTech Global LLC, a privately held technology
company which focuses on online sales and marketing. In 2009 he founded Blu, an E-cigarette manufacturer
which he built into a leading brand and subsequently sold it to
Lorillard Tobacco in 2012. In 1999, Mr. Coffman founded DataTech
Global LLC and served as its Chief Executive Officer until 2012.
Mr. Coffman is the managing member of Edge of Business LLC, he is
also the managing member of CBD Holdings LLC which was a majority
owner of Cure Based Development LLC and is also the managing member
of Coffman Management LLC, an entity he uses for investments in
other businesses. Mr. Coffman received a Bachelor of Arts degree in
Economics from Marshall University. We selected Mr. Coffman as a
member of our board of directors as a result of his extensive
executive level experience and his role as the founder of Cure
Based Development, LLC.
Mark S.
Elliott. Mr. Elliott has been
our Chief Financial Officer since October 2016 and our Chief
Operating Officer since January 2017. He has over 30 years of
business experience spanning the financial, retail, consulting and
government sectors and includes time at Fortune 500 and regional
firms. Mr. Elliott began his career in the technology arena and
worked with such Fortune 500 companies as JCPenney and First Union
National Bank within their corporate headquarters. Mr. Elliott
moved into the consulting arena as a regional technology specialist
and eventually moved into senior management as a Director for
Contract Data Services (acquired by Inacom Information Systems).
This position involved all aspects of the business including staff
management, business development, strategy, and managing the
profitability of multiple divisions. Mr. Elliott was a founder and
partner of Premier Alliance Group (now named root9B Holdings, Inc.)
(NASDAQ:RTNB) and was the Chairman and CEO of the company from 2004
to 2013 where he oversaw the strategic direction and operation of
the company. He directed the transformation of the company to a
public market company and successfully oversaw and integrated six
merger and acquisition transactions that strategically positioned
the company. Mr. Elliott has had compliance, financial reporting,
and strategic responsibilities within the company (serving as the
CFO also from 2004 to 2010 and as the Chief Administrative Officer
of the company from 2014 to 2015). Mr. Elliott received a Bachelor
of Science degree with a concentration in Computer Science and
Management from Marshall University.
Caryn Dunayer. Ms.
Dunayer has served as our President since July 2019, and served as
President of our CBDI subsidiary from December 2018 until July
2019. Ms. Dunayer was the President of Cure Based Development, LLC
from 2017 until the mergers with CBDI In December 2018. Prior to
venturing into the CBD space, she gained over 15 years of
experience in the sales, marketing, advertising, and digital
industries. After receiving her Bachelors of Arts degree in 2007
from University of North Carolina at Wilmington, Ms. Dunayer began
her professional career at Hewlett Packard. She became proficient
in IT, including various hardware and software solutions. In 2005,
Ms. Dunayer transitioned into the marketing and advertising fields
working for a New York Times company, the Star News. In 2011, Ms.
Dunayer joined Hearst Corporation as a Digital Marketing and Major
Accounts Executive. In 2013, she co-founded American Ecig Supply
where she managed the entire sales force, marketing, and
advertising aspects while helping build the
business.
Anthony K.
Shriver. Mr. Shriver has been a member of our board
of directors since June 2015. Mr. Shriver is the Chairman of Best
Buddies® International, a nonprofit 501(c)(3)
organization he founded in 1989 which is dedicated to establishing
a global volunteer movement that creates opportunities for
one-to-one friendships, integrated employment and leadership
development for people with intellectual and developmental
disabilities (IDD). Best Buddies® International has grown from
one original chapter to almost 1,900 middle school, high school,
and college chapters worldwide, engaging participants programs in
each of the 50 United States, and over 50 countries around the
world. Mr. Shriver, who graduated from Georgetown University, has
been recognized for his work on behalf of Best Buddies®
International with diverse international accolades and honorary
degrees. Mr.
Shriver currently serves on the Compensation Committee of our board
of directors. We
selected Mr. Shriver to serve on our board of directors based upon
his lifelong commitment to charitable efforts and his dedication to
the principles upon which our company seeks to
operate.
Seymour G.
Siegel. Mr. Siegel has
been a member of our board of directors since March 2017. Mr.
Siegel, a certified public accountant no longer in practice, has
over 35 years of experience in public accounting and SEC regulatory
matters and has a strong background in mergers and acquisitions,
start-ups, SEC reporting, cost cutting initiatives, profit
enhancements and business operations. Since 2014 he has been
President of Siegel Rich, Inc., a consulting firm. From April 2000
until July 2014, Mr. Siegel was a principal emeritus at Rothstein
Kass & Company, P.C. (now KPMG), an international firm of
accountants and consultants. Mr. Siegel was a founder of Siegel
Rich & Co., CPAs, which eventually merged with what is now
known as WeiserMazars LLP, where he was a senior partner until
selling his interest and co-founding a business advisory firm which
later became a part of Rothstein Kass. He received his Bachelor of
Business Administration from the Baruch School of The City College
of New York. He has been a director and officer of numerous
business, philanthropic and civic organizations. As a professional
director, he has served on the boards of approximately a dozen
public companies over the last 25 years. He was previously a member
of the board of directors and chairman of the audit committees of
Air Industries Group, Inc. (NYSE American: AIRI), root9B Holdings,
Inc. (NASDAQ:RTNB), Hauppauge Digital, Inc., Emerging Vision. Inc.,
Oak Hall Capital Fund, Prime Motor Inns Limited Partnership, and
Noise Cancellation Technologies, Inc. Mr. Siegel currently serves
as chairman of the Audit Committee of our board of directors and is
also a member of the Compensation Committee of our board of
directors. We selected Mr. Siegel as a member of our board of
directors as a result of his extensive experience in mergers and
acquisitions, public companies and boards, financial reporting and
business advisory services.
Gregory C.
Morris. Mr. Morris has been a member of our board of
directors since March 2017. Mr. Morris has worked in positions
involving finance, investments, benefits, risk management, legal
and human resources for more than 30 years. Since June 2015 he has
served as the Vice President of Human Resources for Healthstat,
Inc., a privately held company providing onsite health clinics and
workplace wellness programs. Prior to that, from January 2013 until
June 2015, he was the Vice President of Administration and
Corporate Secretary at Swisher Hygiene (at that time a
NASDAQ-listed company), leading the human resources, risk
management and legal functions. He was employed by
Snyder’s-Lance, Inc. (NASDAQ: LNCE) for 15 years prior to
joining Swisher Hygiene, Inc., holding the positions of Vice
President-Human Resources and Senior Director – Benefits and
Risk Management. At Snyder’s-Lance, Mr. Morris chaired the
Business Continuity Plan Steering Committee and was a member of the
Corporate Mergers & Acquisitions team. Prior to joining
Snyder’s-Lance, he held various positions with Belk Stores,
Collins & Aikman and Laporte plc. Mr. Morris also served as a
board member for root9B Holdings, Inc. (NASDAQ:RTNB) from 2008
through April, 2017 where he chaired the Compensation Committee and
also served on the Audit Committee. Mr. Morris also served as a
board member for the Second Harvest Food Bank of Metrolina from
2001 to 2016. Mr. Morris received a Bachelor of Science degree in
Accounting from West Virginia University. Mr. Morris
currently serves as chairman of the Compensation Committee of our
board of directors and is also a member of the Audit Committee and
Corporate Governance and Nominating Committee of our board of
directors. We selected Mr. Morris as a member of our board of
directors as a result of his extensive executive level experience
in public companies regarding human resources, accounting,
compliance and compensation matters as well as public board
experience.
Bakari
Sellers. Mr. Sellers has been a
member of our board of directors since March 2017. Mr. Sellers, an
attorney, has been a member of the Strom Law Firm, LLC, in
Columbia, South Carolina since 2007. Mr. Sellers is a former member
of the South Carolina House of Representative, where he represented
the 90th District beginning in 2006, making history as the youngest
member of the South Carolina state legislature and the youngest
African American elected official in the nation. In 2014, he ran as
the Democratic nominee for Lt. Governor of South Carolina. He has
worked for United States Congressman James Clyburn and former
Atlanta Mayor Shirley Franklin. Earning his undergraduate degree
from Morehouse College, where he served as student body president,
and his law degree from the University of South Carolina, Mr.
Sellers has followed in the footsteps of his father, civil rights
leader Cleveland Sellers, in his tireless commitment to service
taking championing progressive policies to address issues ranging
from education and poverty to preventing domestic violence and
childhood obesity. He has served as a featured speaker at events
for the National Education Association, College Democrats of
America National Convention, the 2008 Democratic National
Convention and, in 2007, delivered the opening keynote address to
the AIPAC Policy Conference in Washington, DC. Mr. Sellers is also
a political commentator at CNN. Mr. Sellers currently serves as
chairman of the Corporate Governance and Nominating Committee of
our board of directors and is also a member of the Audit Committee
of our board of directors. We selected Mr. Sellers as a result of
his leadership experience, commitment to public policy and legal
background.
Peter J. Ghiloni.
Mr. Ghiloni has been a member of our board of directors since April
2019. In 2018 Mr. Ghiloni retired as Chief Executive Officer of
Swisher International, Inc., North America’s largest producer
of cigars. Mr. Ghiloni began his career in the tobacco business
with the United States Tobacco Company in 1972 after graduating
from Fordham University with a Bachelor of Science degree in
Marketing. In 1983, he moved to The Helme Tobacco Company as Vice
President of Marketing and in 1991, he was promoted to Senior Vice
President of Sales and Marketing. Following the merger of Swisher
International, Inc. and The Helme Tobacco Company, Mr. Ghiloni
assumed the role of Senior Vice President of Marketing for the
combined company. In 2013, Mr. Ghiloni was promoted to the position
of President and Chief Executive Officer. Mr. Ghiloni serves on a
variety of boards including the Board of Swisher International,
Inc., the Board of Jacksonville University and the Board of the
Baptist Beaches Hospital. We selected Mr. Ghiloni to serve on the
board of directors as a result of his executive leadership
positions, his position as President, Chief Executive Officer and a
member of the Board of Directors of Swisher International, Inc.,
his service on additional boards and extensive business
background.
Scott G. Stephen.
Mr. Stephen has been a member of our board of directors since April
2019. Mr. Stephen has served as Chief Growth Officer of Guaranteed
Rate Inc., a U.S. residential mortgage company headquartered in
Chicago, IL, since February 2012. Mr. Stephen also serves as
President of Guaranteed Rate Insurance and Ravenswood Title,
affiliates of Guaranteed Rate Inc. From 2003 until 2012, he was
employed by Playboy Enterprises, Inc., a leading men’s global
entertainment and lifestyle company, serving in a variety of
positions including Chief Operations Officer, Executive Vice
President, Playboy Print/Digital Group and Executive Vice President
and General Manger of Playboy Digital Media. From 1999 to 2003 Mr.
Stephen was employed by Yesmail, Inc., an online relationship
marketing company, serving as Chief Operating Officer and Vice
President of Client Services and Operations. Mr. Stephen received a
Bachelor of Business Administration in Finance from the University
of Notre Dame and a Master of Management in Marketing and
Organizational Behavior from the Kellogg School of Management at
Northwestern University. We selected Mr. Stephen to serve on the
board of directors as a result of his executive leadership
positions, his positions with Guaranteed Rate Inc. and Playboy
Enterprises and his extensive business
background.
William F. Raines,
III. Mr. Raines has been a member of our board of directors
since April 2019. Since 2008 Mr. Raines has been employed by
DataTech Global, LLC, a privately held technology company
affiliated with Mr. Coffman which focuses on online sales and
marketing, serving as Chief Financial Officer from 2008 to 2012 and
Chief Executive Officer since 2012. Mr. Raines has over 35 years of
accounting and financial experience with a primary focus on
financial control of operations, financial reporting, acquisitions
and implementation of acquisition plans. Earlier in his career,
from 1991 until 2006 Mr. Raines served in various capacities from
Corporate Controller of Speedway Motorsports, Inc. (NYSE:TRK) to
General Manager of SMI Properties, Inc., a subsidiary of Speedway
Motorsports, Inc.,, and from 2009 until 2012 he was Chief Executive
Officer and Chief Financial Officer of Intermark Brands, LLC, the
manufacturer of Blu, an e-cigarette, and its related entities BLEC,
LLC and QSN Technologies, LLC, which were subsequently sold to Lorillard Tobacco in
2012. Mr. Raines received a B.S. in Accounting from the University
of Maryland in 1981. We selected Mr. Raines to serve on the board
as a result of his extensive technology, accounting and
mergers and acquisitions experience.
There are no family
relationships between any of the executive officers and
directors.
Key
employees
While not executive
officers or directors of our company, the following individuals are
expected to make significant contributions to
us.
Paul DiBrito. Mr.
DiBrito joined cbdMD in January 2019 as our Chief Revenue Officer,
initially heading up manufacturing, procurement, fulfillment and
warehouse operations. In April 2019, he was tasked with creating
cbdMD’s PAW division, which we launched in July 2019. He has
over 35 years of executive management experience with extensive
experience in corporate strategy, operations, merchandising,
logistics, procurement, cost containment, marketing, development
and company growth. Prior to joining cbdMD, Mr. Dibrito spent four
years in the vapor industry where he was the president of Saffire
Vapor LLC and Kure Corp. Previously he also spent 14 years in
corporate executive positions, with Dollar General, A&P Stores
and Fleming Foods. Mr. DiBrito was one of the original employees of
PetSmart, where he spent 13 years during which time the company
grew to approximately 500 stores.
Ken
Cohn. Mr. Cohn
joined cbdMD in January 2019 as our
Chief Marketing Officer where he oversees a team responsible for
advertising, affiliate program, email campaigns, website, industry
research, press releases, content, design, sponsorships, events,
athlete program, digital, radio/podcasts, and video. He has
been involved in the marketing industry for over 25 years with
roles encompassing business, account and brand development and has
expertise in strategy, sponsorships, media, public relations,
advertising, experiential, events, merchandising, contract
negotiation, research, measurement and analytics. Prior to
joining cbdMD, he was a senior vice president at Breaking
Limits, an integrated marketing
agency, where he was responsible for overseeing business
development, operations, client management, public relations, event
management, and sponsorships. Over his career he has worked on a variety
of business sectors including consumer packaged goods, retail,
automotive, technology, oil & gas, insurance and spirits,
across such blue chip brands as Armour, Arrow Electronics,
AutoZone, Don Julio, Duralast, Elizabeth Arden, Gatorade, General
Motors, Hertz, M&M’s, Mountain Dew, Nabisco,
Nathan’s, Pepsi, Progresso, Sherwin Williams, Sirius XM,
State Farm, Sunoco, Sylvania, and True Value. Mr. Cohn received a
Bachelor's degree in business from Indiana
University.
Consultant
While not an
employee of our company, Mr. Todd Justice provides various
management advisory services as directed by Mr. Coffman. Under the
terms of this oral agreement, since February 2019 we pay Mr.
Justice a monthly consulting fee of $10,833 and he maintains an
office at our principal executive offices at no cost to Mr.
Justice. We have been advised Mr. Justice provided similar
consulting and advisory services to Cure Based Development, LLC
prior to the closing of the mergers. See Item. 12. Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
Board
of directors
The board of
directors oversees our business affairs and monitors the
performance of management. In accordance with our corporate
governance principles, the board of directors does not involve
itself in day-to-day operations. The directors keep themselves
informed through discussions with the Chairman and co-Chief
Executive Officers and our Chief Financial Officer/Chief Operating
Officer and by reading the reports and other materials that we send
them and by participating in board of directors and committee
meetings. Directors are elected for a term of one year, serving
until our next annual meeting. Our directors hold office until
their successors have been elected and duly qualified unless the
director resigns or by reason of death or other cause is unable to
serve in the capacity of director. If any director resigns, dies or
is otherwise unable to serve out his or her term, or if the board
increases the number of directors, the board may fill any vacancy
by a vote of a majority of the directors then in office, although
less than a quorum of directors then exists. A director elected to
fill a vacancy shall serve for the unexpired term of his or her
predecessor. Vacancies occurring by reason of the removal of
directors without cause may only be filled by vote of the
shareholders.
Board
leadership structure and board’s role in risk
oversight
Mr.
Martin A. Sumichrast serves as both our co-Chief Executive Officer
and Chairman of our board of directors. Mr. R. Scott Coffman serves
as our co-Chief Executive Officer. Messrs. Shriver, Siegel,
Sellers, Morris, Stephen, Ghiloni and Raines are each considered an
independent director within the meaning of Section 803 of the NYSE
American LLC Company Guide. We do not have a “lead”
independent director.
Risk
is inherent with every business, and how well a business manages
risk can ultimately determine its success. We face a number of
risks, including credit risk, interest rate risk, liquidity risk,
operational risk, regulatory risk, strategic risk and reputation
risk. Management is responsible for the day-to-day management of
risks we face, while the board, as a whole and through its
committees, has responsibility for the oversight of risk
management. In its risk oversight role, the board of directors has
the responsibility to satisfy itself that the risk management
process designed and implemented by management are adequate and
functioning as designed. Our co-Chief Executive Officers are both
members of our board of directors. Our Chief Financial Officer
attends the board meetings and is available to address any
questions or concerns raised by the board on risk management and
any other matters. Our co-Chief Executive Officers and the
independent members of the board work together to provide strong,
independent oversight of our company’s management and affairs
through its standing committees and, when necessary, special
meetings of independent directors.
Board
committees
The board of
directors has standing Audit, Compensation, Compensation and
Corporate Governance and Nominating committees. Each committee has
a written charter. The charters are available on our website at
www.cbdmd.com. All
committee members are independent directors. Information concerning
the current membership and function of each committee is as
follows:
|
Director
|
Audit
Committee Member
|
|
Compensation
Committee Member
|
Corporate
Governance and Nominating Committee Member
|
|
Anthony K.
Shriver
|
|
|
✓
|
|
|
Seymour G.
Siegel
|
✓*
|
|
✓
|
|
|
Bakari
Sellers
|
✓
|
|
|
✓*
|
|
Gregory C.
Morris
|
✓
|
|
|
✓
|
|
Scott G.
Stephen
|
|
|
✓*
|
|
|
Peter J.
Ghiloni
|
|
|
|
✓
|
|
*
denotes
chairperson.
|
|
|
|
|
Audit Committee
The
Audit Committee assists the board in fulfilling its oversight
responsibility relating to:
●
the
integrity of our financial statements;
●
our
compliance with legal and regulatory requirements;
and
●
the
qualifications and independence of our independent registered
public accountants.
The
Audit Committee has the ultimate authority to select, evaluate and,
where appropriate, replace the independent auditor, approve all
audit engagement fees and terms, and engage outside advisors,
including its own counsel, as it deems necessary to carry out its
duties. The Audit Committee is also responsible for performing
other related responsibilities set forth in its
charter.
The
Audit Committee is composed of three directors, Messrs. Siegel,
Sellers and Morris, each of whom has been determined by the board
of directors to be independent within the meaning of Section 803 of
the NYSE American LLC Company Guide. In addition, Mr. Siegel meets
the definition of “audit committee financial expert”
under applicable SEC rules. The Audit Committee met four times
during the fiscal year ended September 30,
2019.
Compensation Committee
The
Compensation Committee assists the board in:
●
determining,
in executive session at which our chief executive officer is not
present, the compensation for our co-Chief Executive Officers and
our Chief Financial Officer;
●
discharging
its responsibilities for approving and evaluating our officer
compensation plans, policies and programs;
●
reviewing
and recommending to the board regarding compensation to be provided
to our employees and directors; and
●
administering
our equity compensation plan.
The
Compensation Committee is charged with ensuring that our
compensation programs are competitive, designed to attract and
retain highly qualified directors, officers and employees,
encourage high performance, promote accountability and assure that
employee interests are aligned with the interests of our
shareholders. The Compensation Committee is composed of three
directors, Messrs. Stephen, Shriver and Siegel, each of whom has
been determined by the board of directors to be independent within
the meaning of Section 803 of the NYSE American LLC Company Guide.
The Compensation Committee met three times during the fiscal year
ended September 30, 2019.
Use of Outside
Advisors. All compensation
decisions are made with consideration of the committee’s
guiding principles to provide competitive compensation for the
purpose of attracting and retaining talented executives and of
motivating our executives to achieve improved cbdMD executive
performance, which ultimately benefits our shareholders. The
committee has the sole authority to retain and terminate any advisors, including
independent counsel, compensation consultants and other advisors to
assist as needed, and has sole authority to approve the
advisors’ fees, which will be paid by us, and the other terms
and conditions of their engagement. The committee considers input
and recommendations from management, including our co-Chief
Executive Officers (who are not present during any committee
deliberations with respect to compensation) in connection with its
review of our compensation programs and its annual review of the
performance of the other executive officers. During fiscal 2019 the
committee engaged the services of an independent compensation
consultant, Willis Towers Watson, to provide it with an executive
pay review. The committee takes into consideration the
recommendations of the outside compensation consultant and our
co-Chief Executive Officers, but retains absolute discretion as to
whether to adopt such recommendations in whole or in part, as it
deems appropriate.
Corporate Governance and Nominating Committee
The
Corporate Governance and Nominating Committee:
●
assists
the board in selecting nominees for election to the
board;
●
monitor
the composition of the board;
●
develops
and recommends to the board, and annually reviews, a set of
effective corporate governance policies and procedures applicable
to our company; and
●
regularly
review the overall corporate governance of our company and
recommends improvements to the board as
necessary.
The
purpose of the Corporate Governance and Nominating Committee is to
assess the performance of the board and to make recommendations to
the board from time to time, or whenever it shall be called upon to
do so, regarding nominees for the board and to ensure our
compliance with appropriate corporate governance policies and
procedures. The Corporate Governance and Nominating Committee is
comprised of three directors, Messrs. Sellers, Ghiloni, and Morris,
each of whom have been determined by the board of directors to be
independent within the meaning of Section 803 of the NYSE American
LLC Company Guide. The Corporate Governance and Nominating
Committee met one time during fiscal 2019.
Shareholder nominations
Shareholders
who would like to propose a candidate to serve as a member of our
board of directors may do so by submitting the candidate’s
name, resume and biographical information to the attention of our
Corporate Secretary. All proposals for nomination received by the
Corporate Secretary will be presented to the Corporate Governance
and Nominating Committee for appropriate consideration. It is the
policy of the Corporate Governance and Nominating Committee to
consider director candidates recommended by shareholders who appear
to be qualified to serve on our board of directors. The Corporate
Governance and Nominating Committee may choose not to consider an
unsolicited recommendation if no vacancy exists on the board of
directors and the committee does not perceive a need to increase
the size of the board of directors. In order to avoid the
unnecessary use of the Corporate Governance and Nominating
Committee’s resources, the committee will consider only those
director candidates recommended in accordance with the procedures
set forth below. To submit a recommendation of a director candidate
to the Corporate Governance and Nominating Committee, a shareholder
should submit the following information in writing, addressed to
the Corporate Secretary of cbdMD at our main
office:
●
the
name and address of the person recommended as a director
candidate;
●
all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended;
●
the
written consent of the person being recommended as a director
candidate to be named in the proxy statement as a nominee and to
serve as a director if elected;
●
as to the person making the recommendation, the
name and address, as they appear on our books, of such person, and
number of shares of our common stock owned by such person;
provided,
however, that if the person is
not a registered holder of our common stock, the person should
submit his or her name and address along with a current written
statement from the record holder of the shares that reflects the
recommending person’s beneficial ownership of our common
stock; and
●
a
statement disclosing whether the person making the recommendation
is acting with or on behalf of any other person and, if applicable,
the identity of such person.
Code of Ethics and Conduct and Insider Trading
Policy
In
January 2017 we adopted a Code of Ethics and Conduct which applies
to our board of directors, our executive officers and our
employees. The Code of Ethics and Conduct outlines the broad
principles of ethical business conduct we adopted, covering subject
areas such as:
●
corporate
opportunities;
●
public
disclosure reporting;
●
protection
of company assets;
●
conflicts
of interest; and
●
compliance
with applicable laws.
A copy of our Code of Ethics and Conduct is
available on our website at www.cbdmd.com.
Additionally,
all of our directors, officers, employees and consultants are
subject to our Insider Trading Policy. Our Insider Trading Policy
prohibits the purchase, sale or trade of our securities with the
knowledge of material nonpublic information. In addition, our
Insider Trading Policy prohibits our employees, officers,
directors, and consultants from trading on a short-term basis,
engaging in a short sale of our securities, engaging in
transactions in puts, call or other derivatives tied to our
securities, engaging in hedging transactions, holding any of our
securities in a margin account or otherwise pledging our securities
as collateral for a loan. Any transactions by our directors,
officers, employees and consultants must be first pre-cleared by
Mr. Sumichrast, our co-Chief Executive Officer, or our Chief
Financial Officer in an effort to assist these individuals from
inadvertently violating our Insider Trading Policy. Our Insider
Trading Policy also fixes certain quarterly and event specific
blackout periods.
Compensation
of directors
Our management
directors do not receive separate compensation for their services
as members of our board of directors.
Independent Director Compensation Program
In
May 2019, after reviewing the results of an independent
compensation study on public company executive and board
compensation and upon recommendation of the Compensation Committee
of our board of directors, the board of directors adopted a new
compensation program for our independent directors and
non-management directors for the 2019 board term which began in
April 2019. The compensation plan provided that our independent
directors would be compensated as follows:
●
an
annual retainer of $35,000 and an option grant of 20,000
options;
●
an annual retainer for committee chairpersons of
$17,000 for the Audit Committee Chairman, $7,000 for the
Compensation Committee Chairman and $5,000 for the Corporate
Governance and Nominating
Committee Chairman; and
●
an
annual retainer for committee members of $8,500 for service on the
Audit Committee, $4,000 for service on the Compensation Committee
and $3,000 for service on the Corporate Governance and Nominating
Committee.
Fiscal 2019 Director Compensation
The
following table sets forth the compensation paid or earned for
fiscal 2019 by our directors.
|
Name
|
Fees
earned
or
paid
in
cash
($)
|
|
|
Non-equity
incentive
plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
|
|
Scott G.
Stephen
|
38,500
|
-
|
93,740
|
-
|
-
|
-
|
132,240
|
|
Anthony K.
Shriver
|
37,000
|
-
|
93,740
|
-
|
-
|
-
|
130,740
|
|
Seymour G.
Siegel
|
45,500
|
-
|
93,740
|
-
|
-
|
-
|
139,240
|
|
Bakari
Sellers
|
41,750
|
-
|
93,740
|
-
|
-
|
-
|
135,490
|
|
Gregory C.
Morris
|
40,750
|
-
|
93,740
|
-
|
-
|
-
|
134,490
|
|
Peter J.
Ghiloni
|
36,500
|
-
|
93,740
|
-
|
-
|
-
|
130,340
|
|
William Raines
III
|
35,000
|
-
|
83,920
|
-
|
-
|
-
|
118,920
|
|
(1)
|
Represents
the grant date value of the options granted during the year,
determined in accordance with FASB ASC Topic 718. The assumptions
made in the valuations of the option awards are included in Note 10
of the notes to our consolidated financial statements appearing in
our 2019 10-K.
|
Compliance
with Section 16(a) of the Securities Exchange Act of
1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who beneficially
own more than 10% of a registered class of our equity securities to
file with the Securities and Exchange Commission initial statements
of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common shares and other
equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% stockholders are required
by the Securities and Exchange Commission regulations to furnish us
with copies of all Section 16(a) reports they file. Based solely
upon a review of Forms 3 and 4 and amendments thereto furnished to
us under Rule 16a-3(d) of the Securities Exchange Act of 1934, as
amended, during 2019 and Forms 5 and amendments thereto furnished
to us with respect to fiscal 2019, as well as any written
representation from a reporting person that no Form 5 is required,
we are not aware that any officer, director or 10% or greater
shareholder failed to file on a timely basis, as disclosed in the
aforementioned forms, reports required by Section 16(a) of the
Securities Exchange Act of 1934, as amended, during fiscal
2019.