ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS and CORPORATE GOVERNANCE.
Directors
Name
|
|
Age
|
|
Position
|
|
Director Since
|
Mark R.
Newcomer
|
|
55
|
|
Chief
Executive Officer, Vice-Chairman and Director
|
|
March
2006
|
Daniel H. Spence
|
|
57
|
|
Executive Vice President,
Director
|
|
March 2006
|
Joan M. Herman
|
|
64
|
|
Executive Vice President,
Director
|
|
November 2018
|
Dan R. Henry
|
|
55
|
|
Chairman and Director
|
|
May 2018
|
Bruce Mina
|
|
74
|
|
Director
|
|
March 2018
|
Quinn Williams
|
|
71
|
|
Director
|
|
April 2018
|
Dennis Triplett
|
|
74
|
|
Director
|
|
May 2018
|
Mark R. Newcomer, Chief
Executive Officer, Vice-Chairman and Director. Mr. Newcomer serves as our Chief Executive Officer and has served in this capacity
and as a director since March 2006. From February of 2001 to present, Mr. Newcomer continues to serve as CEO of 3PEA Technologies, Inc.,
a payment solutions company he co-founded in 2001 with Mr. Spence. Mr. Newcomer continues to be a driving force in guiding the company's
growth through technology investments, acquisitions, new product lines, and strategic partnerships. Mr. Newcomer attended Cal-Poly San
Luis Obispo where he majored in Bio-Science. We believe Mr. Newcomer should serve as our Vice-Chairman based on the perspective
and experience he brings to our board of directors as our founder and Chief Executive Officer, which adds historical knowledge, operational
expertise and continuity to our board of directors.
Daniel H. Spence, Executive
Vice President and Director. Mr. Spence serves as an Executive Vice President and has served as a director since March 2006. Mr.
Spence served as the Company’s Chief Technology Officer until 2020 and is responsible for the design and architecture of the Paysign®
payments platform. Prior to founding 3PEA Technologies, Inc. with co-founder Mr. Newcomer, Mr. Spence designed and developed secure
middleware for Internet financial processing systems in various contract positions. Mr. Spence was Systems Manager from 1995 to 1997,
and then Director of Technology Planning from 1997 to 1999 at The Associated Press, the world’s largest news gathering organization
with over 4000 employees in 227 countries. From 1984-1994, Mr. Spence was with Coca-Cola in Australia implementing financial and line
of business systems for Coca-Cola operations worldwide. In 2007-2008, he was Project Manager for the implementation of Medicare Easyclaim
for ANZ Bank in Australia. Easyclaim allows patients and medical practitioners to lodge Medicare claims using the existing EFTPOS infrastructure.
In 2010-2011 he was Business Analyst on the EFT and Banking Stream that was responsible for the upgrade of POS Terminals to EMV capability
for Australia Post. Previously for 3PEA, he designed and developed EFTPOS terminals and secure key injection systems, and the software
tools (API/SDK) for the EFTPOS terminal integration by third party developers. He has certified several financial interchanges in the
ISO8583 and AS2805 standards to various EFT networks in the United States and Australia. He has over 25 years’ experience deploying
large-scale technology solutions for major international corporations. We believe that Mr. Spence should serve as a director based on
his experience in internet financial processing systems and as a founder of our company.
Joan M. Herman, Executive
Vice President and Director. Ms. Herman serves as an Executive Vice President since September 2017 and director since November 2018.
Ms. Herman‘s experience in payments spans more than 30 years, holding various management positions in operations, product development,
and sales and marketing on both the issuing and acquiring sides of the card business. Ms. Herman’s previous employers and directorships
include Sunrise Bank from June 2012 to August 2017, UMB Bank from 2010 to 2012 and Heartland Bank from 2006 to 2010, and served as a
Director at Heartland Payment Systems from 1997 to 2006. Ms. Herman is a member of the Board of Directors of the National Branded Prepaid
Card Association and serves as its Treasurer. Ms. Herman earned her B.A. and M.A. in business and marketing from Webster University,
St. Louis, Missouri.
Dan R. Henry, Chairman
and Director. Mr. Henry has served as a director since May 2018. Mr. Henry has been a private investor and advisor since 2013.
Mr. Henry previously served as Chief Executive Officer of NetSpend, a leading provider of prepaid debit cards for personal & commercial
use, from 2008 to 2014. Prior to that, he served as president and chief operating officer of Euronet, a global leader in processing secure
electronic financial transactions from 1994 to 2006. He was also a co-founder of Euronet and served on its board until January 2008.
Mr. Henry currently serves as Chief Executive Officer of Green Dot Corporation and serves on the Boards of Directors of Paysign and Dama
Financial. Mr. Henry is a seasoned financial services industry entrepreneur who brings valuable senior leadership, experience and insight
to the Board.
Bruce Mina, Director.
Mr. Mina has served as a director since March 2018. Mr. Mina, MS-Taxation, CPA/ABV, CFF, CVA, BVAL is a co- founder & managing member
of Mina Llano Higgins Group, LLP (founded 1974). Mr. Mina is a Certified Public Accountant licensed in the State of New York for over
30 years. He is experienced in, and responsible for litigation support and valuation assignments regarding business valuations, damage
studies and appraisal engagements. Mr. Mina has been retained as a Business Appraiser, Expert Witness, Consultant, Forensic Examiner,
Auditor, Accountant and Tax Planner by business owners and corporate officers, attorneys and Municipalities to provide services in business
appraisal and enterprise valuation, forensic examination and litigation support. Mr. Mina served as CFO for Coal Brick Oven Pizzeria,
Inc., a Nevada corporation that operates the Grimaldi’s Pizzeria chain of restaurants, from 2011 to 2018. He also has served as
CFO for Academy of Aviation in Long Island, NY since 2009. Mr. Mina earned his B.A. degree from Hofstra University, and his Master of
Science-Taxation Degree from Long Island University.
Quinn Williams, Director. Mr.
Williams has served as a director since April 2018. Mr. Williams is an attorney and shareholder with the firm of Greenberg Traurig LLP,
which he joined in June 2002. Admitted to the Bar in New York and Arizona, Mr. Williams practice focuses on mergers and acquisitions,
public and private securities offerings, venture capital transactions and advising on the formation and funding of emerging companies.
Mr. Williams’ industry experience includes technology, fintech, banking, manufacturing, distribution, real estate and specialty
service industries. He serves as corporate counsel for private companies and was formerly general counsel of an international retail
franchisor and served on the Board of Directors of Swenson’s Inc., in 1985. Mr. Williams possesses a long list of accolades and
awards, including listed, The Best Lawyers in America, Corporate Law; Franchise Law; Venture Capital Law, 1995-2018; selected
by The Business Journal “Best of the Bar Award” Corporate Financing, 2005, and is rated AV preeminent® 5.0
out of 5 from Martindale Hubbell. Mr. Williams graduated from the University of Wisconsin and University of Arizona College of Law.
Dennis Triplett, Director. Mr.
Triplett has served as a director since May 2018. Mr. Triplett served as Chief Executive Officer (March 2004 to April 2015) and Chairman
(April 2015 to March 2017) of Healthcare Services at UMB Bank, N.A. a leading provider of healthcare payment solutions including health
savings accounts (“HSAs”), healthcare spending accounts and payments technology. Mr. Triplett founded this division that
is now the fifth largest HSA custodian in the nation with $2.6 billion in assets and accounts exceeding 1.25 million. Mr. Triplett
developed the Bank’s Medical Savings Account product in the late 90’s and grew that into a multipurpose card product supporting
a variety of spending accounts including HSAs, flexible spending accounts, and health reimbursement accounts. Mr. Triplett has over 35
years of experience in the banking industry including serving as the President and Chief Executive Officer of two banks in the Midwest
and has extensive credit and debit card experience. Mr. Triplett is a graduate of several banking schools and holds an MBA degree
from the University of Missouri. Mr. Triplett industry leadership has included Chairing the Employers Council on Flexible Compensation
from 2007 to 2014; a founding Board Member of the American Bankers Association’s HSA Council; Chairing American Health Insurance
Plan’s HSA Leadership Council from 2009 to 2013. Civically, Mr. Triplett serves on the Board of the Greater Kansas City Crime Commission
since 2011, Chairperson for Community for Coaches since 2016 and member of UMB Healthcare Services Strategic Advisory Council since 2016.
Executive Officers
The following table sets forth information
regarding our executive officers as of April 21, 2021.
Name
|
|
Age
|
|
Title
|
Mark R. Newcomer
|
|
55
|
|
Chief Executive Officer
|
Robert P. Strobo
|
|
42
|
|
General Counsel,
Chief Legal Officer, and Secretary
|
Daniel H. Spence
|
|
57
|
|
Executive Vice President
and Director
|
Jeff Baker
|
|
50
|
|
Chief Financial Officer
and Treasurer
|
Matt Lanford
|
|
54
|
|
Chief Operating Officer
and President
|
The biographies of Messrs. Newcomer and Spence
are included above under the section titled “Directors”
Jeff Baker, Chief Financial
Officer and Treasurer. Mr. Baker serves as our Chief Financial Officer and Treasurer since February 2021. Prior to joining Paysign,
Inc. Mr. Baker served as an executive vice president of mergers and acquisitions at InComm Payments from 2011 to 2021 and chief development
and strategy officer at Global Payments Inc. from 2003 to 2011. During his career Mr. Baker has also held various senior equity analyst
positions at firms covering the financial technologies and services, business-to-business (B2B), personal computer and enterprise storage
industries, including U.S. Bancorp Piper Jaffray, W.R. Hambrecht & Co., SunTrust Equitable Securities, and Principal Financial Securities.
Mr. Baker also serves as a Georgia regional director of Birmingham, Alabama-based ServisFirst Bank. Mr. Baker is a graduate of Texas
Christian University in Ft. Worth, Texas, where he graduated cum laude with a Bachelor of Business Administration in Finance.
Matt Lanford, Chief
Operating Officer and President. Mr. Lanford serves as our Chief Operating Officer and President since February 2021. Mr. Lanford
served as the Company’s Chief Product Officer from 2019 to 2021. Prior to joining Paysign, Inc., Mr. Lanford served as senior vice
president and general manager of the financial services division of InComm Payments from 2016 to 2019, where he was responsible for the
company’s consumer-facing Vanilla™ suite of products. Prior to his tenure at InComm, Mr. Lanford was with Mastercard from
2006 to 2016, where he was a vice president with the global prepaid product and solutions group and the prepaid product lead for Europe,
based in London. Mr. Lanford had regional responsibility for innovation, product development, go-to-market strategy and commercialization
of the Mastercard prepaid portfolio of products, in addition to senior leadership roles in product management and investor relations.
Mr. Lanford was twice awarded the prestigious top spot in Europe’s Prepaid Power 10. Mr. Lanford earned his Bachelor of Science
in Computer Science from the University of Arkansas at Little Rock.
Robert P. Strobo, General
Counsel, Chief Legal Officer, and Secretary. Mr. Strobo serves as our General Counsel, Chief Legal Officer, and Secretary since October
2018. Prior to joining Paysign, Inc., from 2005 to 2018, Mr. Strobo served as Deputy General Counsel and Vice President for Republic
Bank & Trust Company, a state-charted financial institution out of Louisville, Kentucky. He specializes in prepaid card issuance
and non-traditional banking, which includes small-dollar consumer lending, commercial lending, payments and tax-related financial products.
In addition, Mr. Strobo served as Chairman of the Board of Directors for Commonwealth Theatre Center, a non-profit youth conservatory
and outreach program serving all of Kentucky and southern Indiana. He received his B.A. in Psychology and Philosophy from the University
of Kentucky and his J.D. from DePaul University College of Law in Chicago, Illinois.
There are no family relationships
among any of our directors and executive officers.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange
Act requires directors, executive officers, and persons who own more than 10% of a registered class of our securities to file with the
SEC initial reports of ownership and reports of changes in ownership. Directors, executive officers, and greater than 10% stockholders
are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon our
review of the copies of such forms that we received during the year ended December 31, 2020, and written representations that no other
reports were required, we believe that each person who at any time during such year was a director, executive officer, or beneficial
owner of more than 10% of our common stock complied with all Section 16(a) filing requirements during the year ended December 31, 2020,
except that (i) the Form 4 filed by Mark Attinger on November 3, 2020 was late; (ii) the Form 4s filed by Joan Herman on October 29,
2020 and November 3, 2020 were late; (iii) the Form 4 filed by Robert Strobo on November 3, 2020 was late; (iv) the Form 4 filed by Dennis
Triplett on May 7, 2020 was late; (v) the Form 4 filed by Mark Newcomer on April 3, 2020 was late; and (vi) the Form 4s filed by Daniel
Spence on April 20, 2020 and October 29, 2020 were late.
Code of Ethics
We have adopted a Code
of Ethics that applies to all our directors, officers and employees. The Code of Ethics is publicly available on our website at www.paysign.com.
Amendments to the Code of Ethics and any grant of a waiver from a provision of the Code of Ethics requiring disclosure under applicable
SEC rules will be disclosed on our website.
Corporate Governance
Board Leadership Structure
Dan R. Henry serves as
our Chairman of the Board, and Mark Newcomer serves as our Chief Executive Officer (“CEO”). Our Board has decided to maintain
separate Chairman and CEO roles to allow our CEO to focus on the development and execution of our business strategy and leading the Company,
while allowing the Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management.
The Board recognizes the time, effort and energy that the CEO is required to devote to his position in the current business environment,
as well as the commitment required to serve as our Chairman. While our Bylaws and Corporate Governance Guidelines do not require that
our Chairman and CEO positions be separate, the Board believes that having separate positions and having an independent director serve
as Chairman is the appropriate leadership structure for us at this time.
Role of the Board in Risk Oversight
Management is responsible
for the day-to-day management of risk and for identifying our risk exposures and communicating such exposures to our board. Our Board
is responsible for designing, implementing and overseeing our risk management processes. The Board does not have a standing risk management
committee, but administers this function directly through the Board as a whole. The whole Board considers strategic risks and opportunities
and receives reports from its officers regarding risk oversight in their areas of responsibility as necessary. We believe our Board’s
structure facilitates the division of risk management oversight responsibilities and enhances the Board’s efficiency in fulfilling
its oversight function with respect to different areas of our business risks and our risk mitigation practices.
Meetings of the Board
During 2020, there were
five meetings of the Board. Each of the directors attended at least 75% of the aggregate number of meetings of the Board of Directors
and the committees of the Board of Directors on which he or she served during the year ended December 31, 2020 (in each
case, which were held during the period for which he or she was a director and/or a member of the applicable committee). In addition
to participation at Board meetings, our directors discharge their responsibilities throughout the year through personal meetings and
other communications, including considerable personal and telephone contact with the chairman and chief executive officer and others
regarding matters of interest and concern to us.
We do not have a formal
policy requiring members of the Board to attend the annual meeting of stockholders, although all directors are strongly encouraged to
attend. All of our board members, excluding Daniel Spence, attended our 2020 annual meeting of stockholders.
Executive Sessions of Non-Management Directors
Pursuant to our corporate
governance principles or as required by the Nasdaq Stock Market rules, non-management directors of the Board meet from time to time without
the presence of management. The Chairman generally chairs these sessions.
Committees of the Board
In 2018, the Board established
three standing committees: the Audit Committee, the Compensation Committee and the Nominating & Corporate Governance Committee. From
time to time, the Board may also create various ad hoc committees for special purposes. The membership during the last fiscal year
and the function of each of the Audit, Compensation, and Nominating and Corporate Governance Committees are described below. The
board has determined that all of the members of each of the Audit, Compensation, and Nominating and Corporate Governance Committees are
independent as defined under the rules of the Nasdaq Stock Market, including, in the case of all members of the Audit Committee, the
independence requirements contemplated by Rule 10A-3 under the Exchange Act. The charter of each standing committee is available on the
Company’s website at www.paysign.com.
The following chart sets
forth the directors who currently serve as members of each of the Board committee as of the date of this proxy statement.
Directors
|
|
|
Audit
Committee
|
|
|
|
Compensation
Committee
|
|
|
|
Nominating
Committee
|
|
Dan R. Henry*
|
|
|
X
|
|
|
|
C
|
|
|
|
X
|
|
Bruce Mina
|
|
|
C
|
|
|
|
X
|
|
|
|
|
|
Quinn Williams
|
|
|
|
|
|
|
X
|
|
|
|
C
|
|
Dennis Triplett
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
_______________________
* Chairman of the Board
“C” Denotes member and chair of committee
“X” Denotes member
Audit Committee Functions
We have a separately designated
standing Audit Committee established in accordance with Section 3(a)(58)(a) of the Exchange Act. The Audit Committee
met four times in 2020. The members of the Audit Committee are Bruce Mina (chair), Dennis Triplett and Dan Henry. The Board has determined
that each member of the Audit Committee is independent in accordance with SEC rules applicable to audit committee members. The
Audit Committee is responsible for oversight of the quality and integrity of the accounting, auditing and reporting practices of Paysign.
More specifically, it assists the Board of Directors in fulfilling its oversight responsibilities relating to (i) the quality and
integrity of our financial statements, reports and related information provided to stockholders, regulators and others, (ii) our
compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered
public accounting firm, (iv) the internal control over financial reporting that management and the Board have established, and (v) the
audit, accounting and financial reporting processes generally. The Committee is also responsible for review and approval of related-party
transactions. The Board has determined that Mr. Mina is an “audit committee financial expert” as defined by SEC rules.
The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside
legal, accounting or other advisors as it deems necessary to carry out its duties.
Compensation Committee Functions
The
Compensation Committee met four times in 2020. Dan R. Henry (chair), Dennis Triplett, Quinn Williams and Bruce Mina are the members of
the Compensation Committee. The Board has determined that each member of the Compensation Committee is independent in accordance with
SEC rules applicable to compensation committee members. The Committee is responsible for reviewing and recommending compensation policies
and programs, management and corporate goals, as well as salary and benefit levels for our executive officers and other significant employees.
Its responsibilities include supervision and oversight of the administration of our incentive compensation and stock programs. As such,
the Committee is responsible for administration of grants and awards to directors, officers, employees, consultants and advisors under
the Paysign 2018 Incentive Compensation Plan. The Compensation Committee has the authority to obtain advice and assistance from, and
receive appropriate funding from the Company for, outside legal, compensation consultant, or other advisors as it deems necessary to
carry out its duties.
Nominating & Corporate Governance Committee Functions
The
Nominating and Corporate Governance Committee met three times in 2020. Dan R. Henry and Quinn Williams (chair) are the members of the
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for identifying individuals
qualified to become members of the Board, recommending to the Board, candidates for election or re-election as directors, and
reviewing our governance policies in light of the corporate governance rules of the SEC. Under its charter, the Committee is required
to establish and recommend criteria for service as a director, including matters relating to professional skills and experience, board
composition, potential conflicts of interest and manner of consideration of individuals proposed by management or stockholders for nomination.
The Committee believes candidates for the Board should have the ability to exercise objectivity and independence in making informed business
decisions; extensive knowledge, experience and judgment; the highest integrity; loyalty to the interests of Paysign and its stockholders;
a willingness to devote the extensive time necessary to fulfill a director’s duties; the ability to contribute to the diversity
of perspectives present in board deliberations, and an appreciation of the role of the corporation in society. The Committee will consider
candidates meeting these criteria who are suggested by directors, management, stockholders and other advisers hired to identify and evaluate
qualified candidates. This committee also monitors the ethical behavior of our employees, officers and directors.
Communication with the Board
The Board and management
encourage communication from our stockholders. Stockholders who wish to communicate with our management or directors should direct their
communication to the Corporate Secretary of the Company, 2615 St. Rose Parkway, Henderson, Nevada 89052. The Secretary will forward communications
intended for the Board to the Chairman of the Board, currently Mr. Henry, or, if intended for an individual director, to that director.
If multiple communications are received on a similar topic, the Secretary may, in his discretion, forward only representative correspondence.
Any communications that are abusive, in bad taste or present safety or security concerns may be handled differently.
Director Nomination Process
The Nominating and Corporate
Governance, or Nominating Committee, is responsible for, among other things, selection of candidates for the annual slate of directors.
When identifying and evaluating
candidates, the Nominating Committee first determines whether there are any evolving needs of the Board that require an expert in a particular
field. The Nominating Committee may retain a third-party search firm to assist it in locating qualified candidates that meet the needs
of the Board at that time. The search firm would provide information on a number of candidates, which the Nominating Committee discusses.
The Nominating Committee chair and some or all of the members of the Nominating Committee, and the Chief Executive Officer, will interview
potential candidates that the Nominating Committee deems appropriate. If the Nominating Committee determines that a potential candidate
meets the needs of the Board, has the qualifications, and meets the independence standards required by NASDAQ rules, it will recommend
the nomination of the candidate to the Board. It is the Nominating Committee’s policy to consider director candidates recommended
by stockholders, if such recommendations are properly submitted to the Company. Stockholders wishing to recommend persons for consideration
by the Nominating Committee as nominees for election to the Board can do so by writing to the Corporate Secretary of Paysign, Inc., at
2615 St. Rose Parkway, Henderson, Nevada 89052. Recommendations must include the proposed nominee’s name, biographical data and
qualifications, as well as a written statement from the proposed nominee consenting to be named and, if nominated and elected, to serve
as a director. Recommendations must also follow the Company’s procedures for nomination of directors by stockholders (see the information
under the subheadings “Nominating and Corporate Governance Committee” and “Criteria and Diversity”).
The Nominating Committee will consider the candidate and the candidate’s qualifications in the same manner in which it evaluates
nominees identified by the Nominating Committee. The Nominating Committee may contact the stockholder making the nomination to discuss
the qualifications of the candidate and the stockholder’s reasons for making the nomination. The Nominating Committee may then
interview the candidate if it deems the candidate to be appropriate. The Nominating Committee may use the services of a third-party search
firm to provide additional information about the candidate prior to making a recommendation to the Board.
The Nominating Committee’s
nomination process is designed to ensure that the Nominating Committee fulfills its responsibility to recommend candidates who are properly
qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established by the Nominating
Committee under our corporate governance principles. The Nominating Committee did not receive any director nominee recommendations from
stockholders for the 2020 Annual Meeting.
Criteria and Diversity
In considering whether
to recommend any candidate for inclusion in the Board’s slate of recommended director nominees, the Nominating and Corporate Governance
Committee will apply the criteria set forth in governance guidelines. These criteria include the candidate’s integrity, business
acumen, age, experience, commitment, diligence, conflicts of interest and the ability to act in the interests of all stockholders. Our
guidelines specify that the value of diversity on the Board should be considered by the Nominating and Corporate Governance Committee
in the director identification and nomination process. The Committee seeks nominees with a broad diversity of experience, professions,
skills, geographic representation and backgrounds. The Committee does not assign specific weights to particular criteria, and no particular
criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors,
considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to
fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation,
disability or any other basis proscribed by law.
Report of the Audit Committee
The Audit Committee is
responsible for providing independent, objective oversight of Paysign’s accounting functions and internal control over financial
reporting. The Audit Committee has reviewed and discussed audited financial statements for Paysign with management. The Audit Committee
also has discussed with BDO USA, LLP (“BDO”) the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and the SEC, which includes, among other items, matters related to the conduct
of the annual audit of our Company’s financial statements. The Audit Committee has also received and reviewed the written disclosures
and the letter from BDO, as required by applicable requirements of the Public Company Accounting Oversight Board, regarding the communications
by BDO with the Audit Committee concerning independence, and has discussed with BDO its independence from Paysign.
Based upon the review
and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited financial statements of
Paysign for the 2020 fiscal year be included in the Annual Report filed on Form 10-K for the year ended December 31, 2020.
By the Audit Committee
of the Board of Directors of Paysign, Inc.
Bruce Mina, Chair
Dan Henry
Dennis Triplett
ITEM
11. EXECUTIVE COMPENSATION.
Executive Compensation
Our named executive officers
(“NEOs”), consist of our principal executive officer during the last completed fiscal year and our two most highly compensated
executive officers as of December 31, 2020:
|
·
|
Mark R. Newcomer, Chief Executive Officer;
|
|
|
|
|
·
|
Daniel H. Spence, Chief Technology Officer;
|
|
|
|
|
·
|
Mark K. Attinger, Chief Financial Officer.
|
Summary Compensation Table
Name and Principal Position
|
|
Year
|
|
|
Salary
$
|
|
|
Bonus
$(1)
|
|
|
Stock
Awards
$
(2)(3)
|
|
|
All
Other
Compensation
$ (4)
|
|
|
Total
$
|
|
Mark R. Newcomer, President & CEO
|
|
|
2020
|
|
|
$
|
950,000
|
|
|
$
|
–
|
|
|
$
|
63,036
|
|
|
$
|
24,000
|
|
|
$
|
1,037,036
|
|
|
|
|
2019
|
|
|
$
|
883,333
|
|
|
$
|
53,600
|
|
|
$
|
63,036
|
|
|
$
|
32,000
|
|
|
$
|
1,031,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel H. Spence, CTO
|
|
|
2020
|
|
|
$
|
600,000
|
|
|
$
|
–
|
|
|
$
|
63,036
|
|
|
$
|
–
|
|
|
$
|
663,036
|
|
|
|
|
2019
|
|
|
$
|
600,000
|
|
|
$
|
–
|
|
|
$
|
63,036
|
|
|
$
|
–
|
|
|
$
|
663,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark K. Attinger, CFO
|
|
|
2020
|
|
|
$
|
360,385
|
|
|
$
|
45,000
|
|
|
$
|
368,478
|
|
|
$
|
16,215
|
|
|
$
|
790,078
|
|
|
|
|
2019
|
|
|
$
|
323,731
|
|
|
$
|
–
|
|
|
$
|
312,157
|
|
|
$
|
11,200
|
|
|
$
|
647,088
|
|
|
(1)
|
Represents
discretionary bonuses determined by the Board of Directors and not based on the fulfillment of any formula, criteria, or fulfillment
of any performance target, goal or condition.
|
|
(2)
|
In November
2016, the Company granted Mark R. Newcomer and Daniel H. Spence 2,000,000 and 2,000,000 shares of restricted common stock, respectively,
which had a total value of $315,180 and $315,180, respectively, based upon a value of $0.15759 per share. The value per share was
based on the market value on the date of grant, less a 15% discount due to the shares being restricted and lacking market liquidity.
The stock grants vest in equal amounts over a period of five years as of the end of each calendar quarter to the extent the officer
is still employed by us at the time. For Mr. Newcomer a total of 1,600,000 shares were vested and issued as of December 31, 2020.
For Mr. Spence, a total of 1,500,000 shares were vested and issued as of December 31, 2020. The balance of the unvested shares had
not been issued as of December 31, 2020.
|
|
(3)
|
In October 2018, the Company granted Mark
K. Attinger 450,000 shares of restricted common stock with a value of $1,561,500, which vest annually in equal amounts over a four-year
period on the anniversary date of the grant, if Mr. Attinger is still employed by us at that time. As of December 31,
2020, a total of 180,000 shares had vested and been issued. In March 2020, the Company granted Mark K. Attinger 100,000 stock option
awards which vest on an annual basis over four years. Mr. Attinger’s employment terminated on March 31, 2021. Per the
terms of Mr. Attinger’s severance agreement, 90,000 restricted shares will vest in October 2021 and the remaining restricted
shares were cancelled in March 2021. Per the terms of Mr. Attinger’s severance agreement, 25,000 stock option awards vested
in March 2021 and the remaining stock option awards were cancelled.
|
|
(4)
|
All Other Compensation
is comprised of 401(k)-employer matching and profit-sharing plan contributions for Mark R. Newcomer and Mark K. Attinger
|
We did not grant any stock
appreciation rights to our named executive officers in the last fiscal year. We did not reprice any options or stock appreciation rights
during the last fiscal year. We did not waive or modify any specified performance target, goal or condition to payout with respect to
any amount included in any incentive plan compensation included in the summary compensation table.
Option Exercises in 2020
There were no exercises of stock options by
the NEOs during the 2020 fiscal year.
Narrative Disclosure to Summary Compensation Table
The Board is responsible
for creating and reviewing the compensation of our executive officers, as well as overseeing our compensation and benefit plans and policies
and administering our equity incentive plans. The following describes our 2020 executive compensation program and explains our compensation
philosophy, policies, and practices, focusing primarily on the compensation of our named executive officers, or NEOs. The following is
intended to be read in conjunction with the tables that follow, which provide detailed historical compensation information for our NEOs.
Compensation Philosophy
We believe in providing
a competitive total compensation package to its executives through a combination of base salary, annual performance bonuses, and long-term
equity awards. The executive compensation program is designed to achieve the following objectives:
|
·
|
provide competitive
compensation that will help attract, retain and reward qualified executives;
|
|
·
|
align
executives’ interests with our success by making a portion of the executive’s compensation dependent upon corporate performance;
and
|
|
·
|
align executives’
interests with the interests of stockholders by including long-term equity incentives.
|
The Board believes that
our executive compensation program should include annual and long-term components, including cash and equity-based compensation, and
should reward consistent performance that meets or exceeds expectations. The Board evaluates both performance and compensation to make
sure that the compensation provided to executives remains competitive relative to compensation paid by companies of similar size and
stage of development operating in the payment processing industry and taking into account our relative performance and its own strategic
objectives.
The Board has not used compensation consultants
in the past but reserves the right to do so in the future.
Employment Contracts of Named Executive Officers
There are no agreements
or understandings between the Company and any NEO which guarantees continued employment or any level of compensation, including incentive
or bonus payments, to the NEO.
Potential Payments Upon Termination or Change-in-Control
Other than described below,
we do not have any agreements with our named executive officers that contain provisions requiring that we make payments to the name executive
officer at, following, or in connection with the resignation, retirement or other termination of the named executive officer, or a change
in control of us, or a change in the named executive officer's responsibilities following a change in control.
On February 24, 2021 the
Company announced that Mr. Mark K. Attinger resigned from his position as Chief Financial Officer of the Company, effective February
19, 2021, and that the Board had appointed Jeffery Baker to succeed Mr. Attinger as Chief Financial Officer, effective February 22, 2021.
Per the terms of Mr. Attinger’s severance agreement, the Company will continue to pay his salary and benefits through September
30, 2021 and his stock options and stock awards will continue to vest through March 2021 and October 2021, respectively.
Employee Benefit Plans
We sponsor a 401(k)-retirement
plan in which our NEO’s participate on the same basis as our other employees. Effective January 2017, our Board approved a matching
contribution of 100% of employee contributions up to 3% of the employee’s earnings, and a matching contribution of 50% of the next
2% of the employee’s earnings. During the year ended December 31, 2020 and 2019, the Company made contributions to this plan of
approximately $201,000 and $246,000 , respectively.
Pension Benefits
None of our NEOs are covered
by a pension plan or similar benefit plan that provides for payment or other benefits at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our NEOs are covered
by a deferred contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
Outstanding Equity Awards at Fiscal Year-End 2020
The following table sets
forth information regarding all outstanding equity awards held by the NEOs at December 31, 2020. Outstanding restricted stock grants
have been approved by our Board.
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares or
Units
of
Stock that
have not Vested
(#)
|
|
|
Market
Value of
Shares
or
Units of
Stock that
have not Vested (1)
($)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or
Other
Rights that
have not
Vested
(#)
|
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or other
Rights that
have not
Vested (1)
($)
|
|
Mark R. Newcomer (2)
|
|
|
300,000
|
|
|
|
1,392,000
|
|
|
|
–
|
|
|
|
–
|
|
Daniel H. Spence (2)
|
|
|
300,000
|
|
|
|
1,392,000
|
|
|
|
–
|
|
|
|
–
|
|
Mark K. Attinger (3)
|
|
|
270,000
|
|
|
|
1,252,800
|
|
|
|
100,000
|
|
|
|
77,000
|
|
(1)
|
The value of the unearned
awards is based upon the closing price of our common stock on December 31, 2020, which was $4.64 per share.
|
(2)
|
The restricted stock
grant consisted of 2,000,000 shares granted on November 21, 2016, which vest on a quarterly basis over five years to the extent the
executive is still employed by us at the end of each quarter, of which 1,700,000 shares were vested as of December 31, 2020.
|
(3)
|
The restricted stock
grant consisted of 450,000 shares granted in October 2018, which vest on an annual basis over five years to the extent the executive
is still employed by us at the end of each anniversary date, of which 180,000 shares have vested as of December 31, 2020. In March
2020, 100,000 stock option awards were issued which vest on an annual basis over four years. Mr. Attinger’s employment ended
on March 31, 2021. Per the terms of Mr. Attinger’s severance agreement, 90,000 restricted shares will vest in October 2021
and the remaining restricted shares were cancelled in March 2021. In March 2021, 25,000 option awards vested and the remaining option
awards were cancelled per the terms of Mr. Attinger’s severance agreement.
|
Director Compensation
The
following table details the total compensation earned by our non-employee directors during the year ended December 31,
2020.
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
|
Restricted
Stock
Awards
($) (2)
|
|
|
Option
Awards
($) (3)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Total
Compensation
($) (4)
|
|
Dan R. Henry (1)
|
|
|
21,000
|
|
|
|
–
|
|
|
|
393,644
|
|
|
|
–
|
|
|
|
414,644
|
|
Bruce Mina (1)
|
|
|
21,000
|
|
|
|
58,621
|
|
|
|
–
|
|
|
|
–
|
|
|
|
79,621
|
|
Dennis Triplett (1)
|
|
|
21,000
|
|
|
|
67,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
88,000
|
|
Quinn Williams (1)
|
|
|
21,000
|
|
|
|
80,109
|
|
|
|
–
|
|
|
|
–
|
|
|
|
101,109
|
|
(1)
|
Mr. Henry, Mr. Mina, Mr. Triplett and
Mr. Williams were appointed to the board for the first time in 2018.
|
(2)
|
Mr. Mina, Mr. Triplett
and Mr. Williams received restricted stock grants in 2018 as part of their compensation for their services. The restricted shares
will vest over a four-year period from the date of their appointment as a director.
|
(3)
|
Represents the grant
date fair value of stock option award based upon the Black Scholes valuation model made in 2018. Options were granted on May 3, 2018,
and will vest over a four-year period from the date his appointment.
|
(4)
|
Excludes business travel expense reimbursements.
|
Name
|
|
Number of
Shares Subject
to Option
Awards Held as of
December 31,
2020
|
|
Dan R. Henry
|
|
|
1,350,000
|
|
TOTAL
|
|
|
1,350,000
|
|
We
also reimburse our directors for reasonable business travel and other related expenses in connection with their duties as a director.
Independent Board members are paid an annual fee of $21,000 per year, and $1,500 each quarterly board meeting they attend in person.
In
2018, we also issued 200,000 shares of restricted common stock to three of our independent directors (other than Dan Henry) at the time
of their appointment to the Board. The shares vest over a four-year period from the date of their appointment. Mr. Henry was granted
a stock option for 1,500,000 shares of common stock with an exercise price of $1.34 for his role as an independent director and chairman
of the Board at the time of his appointment to the Board. Mr. Henry’s options vest over a four-year period from the date of his
appointment.