ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Our Directors
Roger
H. Ballou,
Director since 2013,
age 68
Mr. Ballou currently serves as a director of Univest
Financial
Corporation of Pennsylvania (NASDAQ: UVSP), a Pennsylvania bank, and Alliance Data Systems Corporation (NYSE: ADS), a provider of transaction-based, data-driven marketing and
loyalty solutions. Until July 2016, Mr. Ballou served as Chairman of Fox Chase Bankcorp, Inc. Mr. Ballou previously served as the Chief Executive Officer and a director of CDI Corporation, a company that offers engineering, information technology
and professional staffing solutions, from 2001 until 2011. Mr. Ballou had served as Chairman and Chief Executive Officer of Global Vacation Group, Inc. from 1998 to 2000. He was a senior advisor for Thayer Capital Partners from 1997 to 1998. From
1995 to 1997, Mr. Ballou served as Vice-Chairman and Chief Marketing Officer, then as President and Chief Operating Officer, of Alamo Rent A Car, Inc. Before joining Alamo, for more than 16 years, he held several positions with American Express,
culminating in his appointment as President of the Travel Services Group.
Mr. Ballou’s extensive public board and executive management experience and
personal knowledge of the Company’s business segments, in particular its Engineering and Information Technology segments, allow him to make significant contributions in all facets of the business.
Rick
Genovese,
Director since 2018, age
64
Mr. Genovese is currently engaged in private equity consultation roles related to
turnaround and asset acquisition and disposition activities. Mr. Genovese also serves as Executive Chairman of Board of Directors for Complia Health/Develus Systems. From February 2012 to January 2014, Mr. Genovese served as the Chief Operating
Officer and Executive Vice President of CIBER, Inc. and as its Executive Vice President of North American Operations from September 2011 to February 2012. Prior to joining CIBER, Mr. Genovese worked at various technology and consulting leaders
including IBM, Price Waterhouse Coopers (PWC) and Electronic Data Systems (EDS). At IBM, he served as General Manager of Application Services for the Americas, the largest offering group within IBM’s Global Business Services. Prior to that, he was
General Manager of the IBM Business Process Outsourcing practice for the Americas and also Managing Partner for the Global Business Services Communications sector. He joined IBM through its acquisition of PWC in 2002, where he was Managing Partner
of Business Process Outsourcing for the Americas, and Managing Partner for the Global Energy Consulting Practice. At PWC, Mr. Genovese was admitted as a partner in 1990. He began his career at EDS, where he was a principal.
Mr. Genovese’s extensive experience in senior operating and financial roles
provides direct relevance to the day to day issues facing the Company. Additionally, with a skills base founded in information technology services and human capital management there is direct relevance to Company’s performance criteria.
Leon
Kopyt,
Director since 1991, age 74
Mr. Kopyt has been our Founder and Chairman Emeritus since September 2015.
Previously, Mr. Kopyt served as our Chairman of the Board since 1992, as our President & Chief Executive Officer from 1994 to February 2014, as our Chief Financial Officer and Treasurer from 1992 to 1994, and as our Chief Operating Officer from
1990 to 1992. Prior to joining RCM, Mr. Kopyt was President and CEO of a European-based industrial corporation involved in the design and manufacture of a broad range of transportation and defense products for domestic and international markets as
well as related services in international trade and finance. His previous professional experiences include engineering, management and executive positions with Crane Company, Pennsalt Chemicals, Budd Company, General Electric and Metropolitan
Transportation Authority in New York.
Mr. Kopyt’s extensive experience in leading the Company in an executive capacity
for over 25 years makes Mr. Kopyt a valuable member of our Board.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE (CONTINUED)
|
Our Directors (Continued)
S.
Gary Snodgrass,
Director since 2010, age 67
Mr. Snodgrass retired from Exelon Corporation in 2007 after ten years of employment
as Executive Vice President and Chief Human Resources and Security Officer. Prior to joining Exelon, Mr. Snodgrass was employed by USG Corporation as Vice President of Human Resources from 1973 to 1997. Since 2008, Mr. Snodgrass has been Managing
Director of Snodgrass and Associates and Co-Founder and President of the Snodgrass Family Foundation. He served as Mayor of the City of St. Augustine Beach, FL in 2012 and 2013, and City Commissioner from 2014 to 2017. Mr. Snodgrass also served
as an Adjunct Professor of Business for Flagler College in St. Augustine, FL.
Mr. Snodgrass’s extensive experience as a human resources executive facilitates his
valuable insights in general and, more specifically, his contributions regarding human resources operational initiatives and issues.
Bradley
S. Vizi,
Director since 2013, age 35
Mr. Vizi has served as our Executive Chairman & President since June 2018.
Previously Mr. Vizi served as our Chairman of the Board since September 2015 and a board member since December 2013. Since February 2016, Mr. Vizi has served as a member of the Board of Directors at L.B. Foster (NASDAQ: FSTR), a leading
manufacturer, fabricator, and distributor of products and services for the rail, construction, energy and utility markets with locations in North America and Europe. Mr. Vizi founded Legion Partners, Inc. in 2010 and Legion Partners Asset
Management, LLC in 2012, where he served as Managing Director and Portfolio Manager until October 2017. From 2007 to 2010, Mr. Vizi was an investment professional at Shamrock Capital Advisors, Inc. (“Shamrock”), the alternative investment vehicle
of the Disney Family. Prior to Shamrock, from 2006 to 2007, Mr. Vizi was an investment professional with the private equity group at Kayne Anderson Capital Advisors L.P.
Mr. Vizi’s significant public company experience is particularly valuable in the
areas of strategy, capital allocation, compensation planning, corporate governance and marketing the Company to the investment community.
Our Executive Officers
The following table lists our executive officers. Our Board elects our executive officers annually for
terms of one year and may remove any of our executive officers with or without cause.
Name
|
Age
|
Position
|
Bradley S. Vizi
|
35
|
Executive Chairman & President
|
Kevin D. Miller
|
52
|
Chief Financial Officer, Treasurer and Secretary
|
Michael Boyle
|
47
|
Division President, Information Technology Services
|
Frank Petraglia
|
63
|
Division President, Engineering Services
|
Michael Saks
|
62
|
Division President, Health Care Services
|
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE (CONTINUED)
|
Our Executive Officers (Continued)
Bradley S. Vizi
. See above.
Kevin D. Miller
has served as our Chief Financial Officer, Secretary and Treasurer since October 2008. From July 1997 until September 2008, he was Senior Vice President of RCM. From 1996 until July 1997, Mr. Miller
served as an Associate in the corporate finance department of Legg Mason Wood Walker, Incorporated. From 1995 to 1996, Mr. Miller was a business consultant for the Wharton Small Business Development Center. Mr. Miller previously served as a member
of both the audit and corporate finance groups at Ernst & Young LLP.
Michael Boyle
has served as our Division President of Information Technology Services since June 2018. From February 2018 to June 2018 he was our Senior Vice President, IT Consulting & Solutions. Prior to joining
RCM, Mr. Boyle was Chief Operating Officer of MDT Holdings and has held senior sales management positions with Spherion and Kforce. Mr. Boyle has a wealth of IT operational and sales experience.
Frank Petraglia
has served as our Division President of Engineering Services since June 2018. From December 2014 until June 2018 he was the Senior Vice President of our Energy Services Group. Prior to joining RCM, Mr.
Petraglia spent the last ten years in leadership positions with Siemens Energy and Mitsubishi Electric Power Products. He has extensive experience with highly engineered systems, including serving as the Vice President of High Voltage Solutions
for Siemens US and General Manager of the Substation Division for Mitsubishi.
Michael Saks
has served as our Division President of Health Care Services since June 2018. From May 2007 to June 2018 he was the Senior Vice President and General Manager of our Health Care Services Division. From
January 1994 until May 2007 he was the Vice President and GM of our Health Care Services Division. Prior to joining RCM, Mr. Saks served as a corporate executive at MS Executive Resources, MA Management and Group 4 Executive Search. Mr. Saks has
over 31 years of executive management, sales and recruiting experience.
Corporate Governance
Board Committees.
Our Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, all of which are constituted entirely of independent directors. The
committees report their actions to the full Board at the Board’s next regular meeting. The following table shows on which of our Board’s committees our directors serve.
|
Committee
|
Board Member
|
Audit
|
Compensation
|
Nominating & Corporate
Governance
|
Roger H. Ballou
|
X
(1)
|
X
|
X
|
Richard A. Genovese
|
X
|
X
|
X
(1)
|
Leon Kopyt
|
|
|
|
S. Gary Snodgrass
|
X
|
X
(1)
|
X
|
Bradley S. Vizi
|
|
|
|
____________
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE (CONTINUED)
|
Audit Committee
The Board of Directors has adopted a written Audit Committee Charter. A copy of the Audit Committee
Charter is posted on our website under “Investor Relations - Corporate Governance.”
•
|
Reviews our financial and accounting practices, controls and results, reviews the scope and services of our
auditors and appoints our independent auditors.
|
•
|
Review and approve related parties transactions.
|
Compensation Committee
The Board of Directors has adopted a written Compensation Committee Charter. A copy of the Compensation
Committee Charter is posted on our website under “Investor Relations - Corporate Governance.”
•
|
Determines the compensation of our officers and employees.
|
•
|
Administers our stock option plans.
|
Nominating and Corporate Governance Committee
The Board of Directors has adopted a written Nominating and Corporate Governance Committee Charter. A
copy of the Nominating and Corporate Governance Committee Charter is posted on our website under “Investor Relations - Corporate Governance.”
•
|
Oversees the Board’s review and consideration of shareholder recommendations for Director candidates.
|
•
|
Oversees the Board's annual self-evaluation.
|
Code of Conduct and Code of Ethics
. We have adopted a Code of Conduct applicable to all of our directors, officers and employees. In addition, we have adopted a Code of Ethics, within the meaning of applicable
Commission rules, applicable to our Chief Executive Officer, Chief Financial Officer and Controller. If we make any amendments to either of these Codes (other than technical, administrative, or other non-substantive amendments), or waive
(explicitly or implicitly) any provision of the Code of Ethics to the benefit of our Chief Executive Officer, Chief Financial Officer or Controller, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies
in the investor relations portion of our website at www.rcmt.com, or in a report on Form 8-K that we file with the Commission.
Related Party Transaction Approval Policy
. Our Code of Conduct mandates that officers and directors bring promptly to the attention of our Compliance Officer, currently our Chief Financial Officer, any transaction or
series of transactions that may result in a conflict of interest between that person and the Company. Furthermore, our Audit Committee must review and approve any “related party” transaction as defined in Item 404(a) of Regulation S-K, promulgated
by the Securities and Exchange Commission, before it is consummated. Following any disclosure to our Compliance Officer, the Compliance Officer will then typically review with the Chairman of our Audit Committee the relevant facts disclosed by the
officer or director in question. After this review, the Chairman of the Audit Committee and the Compliance Officer determine whether the matter should be brought to the Audit Committee or the full Board of Directors for approval. In considering
any such transaction, the Audit Committee or the Board of Directors, as the case may be, will consider various relevant factors, including, among others, the reasoning for the Company to engage in the transaction, whether the terms of the
transaction are at arm’s length and the overall fairness of the transaction to the Company. If a member of the Audit Committee or the Board is involved in the transaction, he or she will not participate in any of the discussions or decisions about
the transaction. The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE (CONTINUED)
|
Risk Oversight by the Board.
The role of our Board of Directors in our risk oversight process includes receiving regular reports from members of management on areas of material risk to us, including operational,
financial, legal and strategic risks.
In particular, our Audit Committee is tasked pursuant to its charter to “discuss
significant financial risk exposures and the steps management has taken to monitor, control and report such exposures.” As appropriate, the Chairman of the Audit Committee reports to the full Board of Directors on the activities of the Audit
Committee in this regard, allowing the Audit Committee and the full Board to coordinate their risk oversight activities.
As one component of our risk oversight and anti-fraud program, our Audit Committee
has established complaint reporting procedures described under “Compliance Policy” in the “Investors” section of our website at www.rcmt.com. These procedures indicate how to submit complaints to our Audit Committee regarding concerns about our
accounting practices, our adherence to financial policies and procedures, or our compliance with the Sarbanes-Oxley Act of 2002. Once received, grievances are reviewed by the Chairman of the Audit Committee for consideration.
Board Leadership Structure
. Our governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the Board may
consider many factors, including the specific needs of our business and what is in the best interests of our stockholders. Our Chairman, or our Lead Independent Director if our Chairman is not independent: (i) presides at all meetings of the Board
including presiding at executive sessions of the Board (without management present) at every regularly scheduled Board meeting, (ii) serves as a liaison between the management and the independent directors, (iii) approves meeting agendas, time
schedules and other information provided to the Board, and (iv) is available for direct communication and consultation with major stockholders upon request. On June 1, 2018, in conjunction with Mr. Vizi’s appointment as Executive Chairman and
President, Mr. Ballou was designated by the Company’s independent directors to serve as a Lead Independent Director.
Section 16(a) Beneficial Ownership Reporting Compliance
. We believe that, during our fiscal year ended December 29, 2018, our executive officers and directors made all required filings under Section 16(a) of the
Securities Exchange Act on a timely basis. Our belief is based solely on:
•
|
our review of copies of forms filed pursuant to Section 16(a) and submitted to us during and
with respect to our fiscal year ended
December 29, 2018 and
|
•
|
representations from the Company’s directors, executive officers and beneficial owners of
more than 10% of our Common Stock that they have complied with all Section 16(a) filing requirements with respect to 2018.
|
ITEM 11. EXECUTIVE COMPENSATION
|
Overview of Compensation Program; Certain Developments
The Compensation Committee of the Board has responsibility for establishing,
implementing and continually monitoring adherence with the Company’s compensation philosophy. The Compensation Committee seeks to ensure that the total compensation paid to the executives is fair, reasonable and competitive. Generally, the types
of compensation and benefits provided to our executives, including the named executive officers, are similar to those provided to other executive officers.
The following discussion makes reference to our Named Executive Officers, including
our former President and Chief Executive Officer, Rocco Campanelli, who retired as of June 1, 2018.
As part of our ongoing effort to better align our leadership, corporate governance
structure and compensation methodologies with the interests and perspectives of our stockholders, members of our Board of Directors and management team periodically speak with many of our more significant stockholders. Mindful of the input of these
stockholders and motivated by our commitment to the implementation of best practices in corporate governance and compensation, the Compensation Committee and our Board have undertaken over the last several years a series of efforts with respect to
compensation reform, including the following steps:
•
|
Limiting executive severance cash pay-outs to no more than 24 months’ base salary and bonus;
|
•
|
Prohibiting tax gross-ups in all future employment agreements;
|
•
|
Requiring future employment agreements to contain a "double trigger" with respect to
executive change-in-control payments;
|
•
|
Adopting an incentive payment claw back policy for named executive officers; and
|
•
|
Developed the conceptual framework for a long term incentive plan containing
performance-based stock units for the Company’s Chief Executive Officer and Chief Financial Officer, which, as discussed below, was initially implemented in fiscal year 2016.
|
Since the implementation of the new long term incentive plan described above, three grants have been
made under this program. On each of March 30, 2016, March 24, 2017, and April 5, 2018 the Compensation Committee made grants of 120,000 performance stock units (“PSUs”) to Mr. Campanelli. Mr. Campanelli’s three grants terminated as of June 1,
2018, due to his retirement.
In 2018, the Compensation Committee granted Mr. Vizi 15,000 restricted stock units (“RSUs”) upon his
appointment as the Company's Executive Chairman and President on June 1, 2018. These RSUs will vest on June 1, 2019, contingent on Mr. Vizi continuing to provide service to the Company on such date. On December 14, the Compensation Committee
granted Mr. Vizi, an additional 20,000 RSUs, to vest on January 2, 2020 contingent on Mr. Vizi continuing to provide service to the Company on such date. Further, on October 23, 2018, the Compensation Committee granted 40,000 PSUs to Mr. Vizi. The
number of PSUs that could ultimately be earned and vested under this grant was subject to increase to up to 60,000 PSUs and was to be determined based on the level of achievement of certain performance goals tied to EBITDA (Earnings Before
Interest, Taxes, Depreciation & Amortization) as measured over the performance period beginning on December 31, 2017 and ending on December 29, 2018. On January 21, 2019, the Compensation Committee certified the results under this grant and a
total of 47,148 PSUs, valued at $176,805, vested with respect to this award.
ITEM 11. EXECUTIVE COMPENSATION
|
Overview of Compensation Program; Certain Developments (Continued)
Finally, on March 6, 2019, the Compensation Committee granted to a total of 160,000 PSUs to Mr. Vizi.
The number of PSUs that will ultimately be earned and vested under this grant can be increased to up to 240,000 PSUs and shall be determined based on the level of achievement of certain performance goals tied to EBITDA (Earnings Before Interest,
Taxes, Depreciation & Amortization) as measured over two periods as follows:
•
|
With respect to a target amount of 80,000 (with a maximum of 120,000 PSUs), the performance period beginning on
December 30, 2018 and ending on December 28, 2019 (subject to adjustment upon a Change in Control, as defined under the Plan); and
|
•
|
With respect to a target amount of 80,000 (with a maximum of 120,000 PSUs), the performance period beginning on
December 31, 2017 and ending on January 2, 2021 (subject to adjustment upon a Change in Control, as defined under the Plan).
|
Mr. Petraglia’s and Mr. Sak’s non-equity incentive plan compensation for fiscal 2018 was payable in cash
and was primarily paid based on achievement of targets set for operating income growth. Mr. Petraglia and Mr. Saks earned cash bonuses for fiscal 2018 of $130,000 and $175,000, respectively.
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Summary Compensation Table
The following table lists, for our fiscal years ended December 29, 2018 and December 30, 2017, cash and
other compensation paid to, or accrued by us, for our chief executive officer during our fiscal year ended December 29, 2018 and each of the persons who, based upon total annual salary, annual incentive compensation and bonus, was one of our other
two most highly compensated executives during the fiscal year ended December 29, 2018.
Name and
Principal
Position
|
Year
|
Salary
|
Stock
Awards
(1)
|
Non-Equity
Incentive Plan
Compensation
|
All Other
Compensation
(2)
|
Total
|
|
|
|
|
|
|
|
Bradley S. Vizi
(3)
|
2018
|
$135,577
|
$331,955
|
$ -
|
$23,076
|
$490,608
|
Executive Chairman & President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rocco Campanelli
|
2018
|
$212,596
|
$ -
|
$ -
|
$22,506
|
$235,102
|
President and CEO
(4)
|
2017
|
$400,000
|
$ -
|
$87,500
|
$37,164
|
$524,664
|
|
|
|
|
|
|
|
Frank Petraglia
|
2018
|
$289,711
|
$50,750
|
$130,000
|
$24,107
|
$494,568
|
President, Engineering Services
|
2017
|
$250,000
|
$64,200
|
$160,000
|
$18,413
|
$492,613
|
|
|
|
|
|
|
|
Michael Saks
|
2018
|
$275,000
|
$ -
|
$175,000
|
$31,090
|
$481,090
|
President, Health Care Services
|
2017
|
$260,000
|
$ -
|
$165,000
|
$29,417
|
$454,417
|
____________
(1)
|
Mr. Vizi vested in 47,148 shares in January 2019, pursuant to a performance-based stock award based on fiscal
2018 performance metrics granted on October 23, 2018. Mr. Vizi was also granted time-based restricted stock awards for 15,000 shares on June 1, 2018 and 20,000 shares on December 14, 2018. Mr. Petraglia was granted time-based restricted
stock awards of 15,000 for fiscal 2017 and 12,500 for fiscal 2018. These amounts are based upon the grant date fair value of the option awards calculated in accordance with Financial Accounting Standards Board Accounting Standards
Codification (“ASC”) Topic 718. The assumptions used in determining the amounts in the column are set forth in Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 29, 2018
filed with the Commission. Mr. Campanelli was awarded 120, performance based restricted share units both on March 24, 2017 and April 5, 2018 for total performance based restricted share units of 240,000. Mr. Campanelli’s grants
terminated as of June 1, 2018, due to his retirement.
|
(2)
|
This amount represents (i) premiums we paid during 2018 for medical, dental, vision, life and disability
insurance on each of the officers named in this table as follows: Mr. Vizi: $2,243; Mr. Campanelli: $13,710; Mr. Petraglia: $13,097; and Mr. Saks: $19,665; (ii) matching contributions in the amount of $625 that were made for the 2018
fiscal year for Mr. Campanelli, Mr. Petraglia and Mr. Saks, in accordance with RCM’s retirement savings plan adopted pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended; and (iii) the following approximated amounts
for Company leased automobiles or monthly automobile allowances and related expenses: Mr. Campanelli: $8,171; Mr. Petraglia: $10,384; and Mr. Saks: $10,800. Mr. Vizi was paid $20,833 for monthly director fees while he was non-employee
director from January 1, 2018 through May 31, 2018.
|
(3)
|
Mr. Vizi was appointed Executive Chairman and President on June 1, 2018.
|
(4)
|
Mr. Campanelli retired as the Company’s President and CEO as of June 1, 2018.
|
During our 2018 and 2017 fiscal years, certain of the officers named in this table received personal
benefits not reflected in the amounts of their respective annual salaries or bonuses. The dollar amount of these benefits did not, for any individual in any fiscal year, exceed $10,000.
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning unvested restricted share units as of December 29,
2018. No options to purchase common stock were outstanding on such date.
|
|
Number of
Shares or
Units of
Stock
That Have
|
|
Market Value
of
Shares or
Units of
Stock
That Have
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
|
Name
|
|
Not Vested
|
|
Not Vested(1)
|
|
Not Vested(2)
|
|
Not Vested(1)
|
|
|
|
|
|
|
|
|
|
Bradley S. Vizi
(3)
|
|
35,000
|
|
$114,450
|
|
40,000
|
|
$130,800
|
|
|
|
|
|
|
|
|
|
Rocco Campanelli
(4)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
|
|
|
|
|
|
|
Frank Petraglia
|
|
27,500
|
|
$89,925
|
|
--
|
|
--
|
____________
(1)
|
Calculated by multiplying the number of shares in the preceding column by $3.27, the closing price per share of
the Company’s common stock on December 28, 2018, the last trading day of our last fiscal year.
|
(2)
|
Consists of performance-based restricted share units of 40,000 awarded to Mr. Vizi on October 23, 2018, assuming
achievement of the applicable performance goals at the target threshold level of achievement.
|
(3)
|
Mr. Vizi was appointed Executive Chairman and President on June 1, 2018.
|
(4)
|
Mr. Campanelli retired as the Company’s President and CEO as of June 1, 2018.
|
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Compensation of Directors
Our employee directors do not receive any compensation for serving on our Board or
its committees, other than the compensation they receive for serving as employees of RCM.
In 2014, the Compensation Committee engaged Towers Watson as an independent
consultant to assist it in altering the structure of compensation to the Board’s non-employee members. Ultimately, the Compensation Committee recommended to the Board, and the Board adopted, the following revised compensation structure for
non-employee members of the Board, which was implemented beginning with the 2015 fiscal year and continued to be utilized through May 31, 2018:
•
|
Annual cash retainer of $40,000, payable in equal monthly installments.
|
•
|
No meeting fees for up to five Board meetings in each calendar year. For each meeting in calendar year in excess
of five, each Board member shall receive a cash payment of $1,500 for an in-person Board meeting and $750 for a telephonic meeting.
|
•
|
Annual equity grants of $40,000, in the form of RSUs with 1-year vesting feature (subject to acceleration upon
Change in Control or separation from service in the same manner as the RSU grants made in December 2014), with delivery of the shares of common stock underlying to such RSUs to be made upon vesting; provided that, except for sales of
shares in an amount no greater than required to generate an amount equal to the income tax on such shares, non-employee directors shall be required to retain shares delivered upon vesting unless, immediately following any such sale, such
director would comply with the Company’s ownership guidelines.
|
•
|
Payment of the following additional annual retainers: Chairman of the Board $10,000; Lead Independent Director
$10,000 (who shall serve only at such time as the Board does not have an independent chair); Audit Committee chair $10,000; Compensation Committee chair $7,500.
|
•
|
No other committee fees, for service or for meetings.
|
On June 1, 2018, the Compensation Committee recommended to the Board certain minor modifications in the
structure of compensation to the Board’s non-employee members. On that date the Board adopted the following revised compensation structure for non-employee members of the Board, which was implemented upon adoption:
•
|
Annual cash retainer of $45,000, payable in equal monthly installments.
|
•
|
Annual equity grants of $45,000, in the form of RSUs with 1-year vesting feature (subject to acceleration upon
Change in Control or separation from service in the same manner as the RSU grants made in December 2017), with delivery of the shares of common stock underlying to such RSUs to be made upon vesting; provided that, except for sales of
shares in an amount no greater than required to generate an amount equal to the income tax on such shares, non-employee directors shall be required to retain shares delivered upon vesting unless, immediately following any such sale, such
director would comply with the Company’s ownership guidelines.
|
•
|
Payment of the following additional annual retainers: Chairman of the Board (if independent) $25,000; Lead
Independent Director $25,000 (who shall serve only at such time as the Board does not have an independent chair); Audit Committee chair $10,000; Compensation Committee chair $10,000; Nominating and Corporate Governance Committee chair
$5,000.
|
•
|
No other committee fees, for service or for meetings.
|
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Compensation of Directors (Continued)
The following table lists cash and other compensation paid to, or accrued by us for, our Board of
Directors for our fiscal year ended December 29, 2018. All compensation received by Mr. Vizi for his service as a non-employee director until his appointment as our Executive Chairman and President on June 1, 2018 is reflected in the Summary
Compensation Table under “All Other Compensation.”
Non-Employee Director Compensation Table
Name and
Principal
Position
|
Fees
Earned
Or Paid
In Cash
|
Equity
Awards
(1)
|
All Other
Compensation
|
Total
|
Roger H. Ballou
|
$70,208
|
$45,000
|
-
|
$115,208
|
Maier O. Fein
(2)
|
$40,861
|
-
|
-
|
$40,861
|
Richard A. Genovese
(3)
|
$ 2,386
|
$45,000
|
|
$47,386
|
Leon Kopyt
|
$42,917
|
$45,000
|
-
|
$87,917
|
Richard D. Machon
(4)
|
$16,667
|
-
|
-
|
$16,667
|
S. Gary Snodgrass
|
$51,875
|
$45,000
|
-
|
$96,875
|
(1)
|
These amounts are based upon the grant date fair value of the option awards calculated in
accordance with ASC Topic 718. The assumptions used in determining the amounts in the column are set forth in Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the
fiscal year
ended December 29, 2018
filed with the Commission.
As of December 29, 2018, Roger H. Ballou, Richard A. Genovese, Leon Kopyt and S. Gary Snodgrass each had 11,968 unvested restricted share
units outstanding and Bradley S. Vizi had 35,000 unvested restricted share units outstanding.
|
(2)
|
Mr. Genovese was elected to the Board on December 14, 2018.
|
(3)
|
Mr. Fien retired from the Board on December 14, 2018.
|
(4)
|
Mr. Machon retired from the Board on June 1, 2018.
|
Executive Severance Agreement and Change in Control Agreement
The Company is a party to an Executive Severance Agreement (the “Executive Severance Agreement”) with
Mr. Vizi, the Company's Executive Chairman and President, dated as of June 1, 2018, which sets forth the terms and conditions of certain payments to be made by the Company to executive in the event, while employed by the Company, Mr. Vizi
experiences (a) a termination of employment unrelated to a “Change in Control” (as defined therein) or (b) there occurs a Change in Control and Mr. Vizi’s employment is terminated for a reason related to the Change in Control.
Under the terms of the Executive Severance Agreement, if either (a) Mr. Vizi is involuntarily terminated
by the Company for any reason other than “Cause” (as defined therein), “Disability” (as defined therein) or death, or (b) Mr. Vizi resigns for “Good Reason” (as defined therein), and, in each case, the termination is not a “Termination Related to a
Change in Control” (as defined below), Mr. Vizi will receive the following severance payments: (i) an amount equal to 1.5 times the sum of (a) Mr. Vizi’s annual base salary as in effect immediately prior to the termination date (before taking into
account any reduction that constitutes Good Reason) (“Annual Base Salary”) and (b) the highest annual bonus paid to Mr. Vizi in any of the three fiscal years immediately preceding his termination date (“Bonus”), to be paid in installments over the
twelve month period following Mr. Vizi’s termination date; and (ii) for a period of eighteen months following Mr. Vizi’s termination date, a monthly payment equal to the monthly COBRA premium that Mr. Vizi is required to pay to continue medical,
vision, and dental coverage, for himself and, where applicable, his spouse and eligible dependents.
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Executive Severance Agreements and Change in Control Agreements (Continued)
Notwithstanding the above, if Mr. Vizi has a termination as described above and can reasonably
demonstrate that such termination would constitute a Termination Related to a Change in Control, and a Change in Control occurs within 120 days following Mr. Vizi’s termination date, Mr. Vizi will be entitled to receive the payments set forth below
for a Termination Related to a Change in Control, less any amounts already paid to Mr. Vizi, upon consummation of the Change in Control.
Under the terms of the Executive Severance Agreement, if a Change in Control occurs and Mr. Vizi
experiences a Termination Related to a Change in Control on account of (i) an involuntary termination by the Company for any reason other than Cause, death, or Disability, (ii) an involuntary termination by the Company within twelve months
following a Change in Control on account of Disability or death, or (iii) a resignation by the Executive with Good Reason, then Mr. Vizi will receive the following severance payments: (1) a lump sum payment equal to two times the sum of Mr. Vizi’s
(a) Annual Base Salary and (b) Bonus; and (2) a lump sum payment equal to twenty-four multiplied by the monthly COBRA premium cost, as in effect immediately prior to Mr. Vizi’s termination date, for Mr. Vizi to continue medical, dental and vision
coverage, as applicable, in such Company plans for himself and, if applicable, his spouse and eligible dependents. Upon the occurrence of a Change in Control, the Company shall establish an irrevocable rabbi trust and contribute to the rabbi trust
the applicable amounts due under the Executive Severance Agreements.
Mr. Petraglia and Mr. Saks, along with several other members of the Company’s senior management (not
including Mr. Vizi), are covered by our Change in Control Plan for Selected Executive Management (the “CIC Plan”).
The CIC Plan sets forth the terms and conditions of severance and benefits to be provided to a covered
employee in the event (a) the covered employee experiences a covered termination of employment after a “Potential Change in Control” (as defined in the CIC Plan), but prior to a “Change in Control” (as defined in the CIC Plan), and a Change in
Control that relates to the Potential Change in Control occurs within the six month period following the covered employee’s termination, or (b) the covered employee is employed by the Company on the date of a Change in Control. The CIC Plan also
sets forth the terms and conditions of severance payments to be made to a covered employee in the event such employee is employed on the date of a Change in Control and is subsequently terminated on account of a covered termination during his
“Designated Severance Period” (a period specified by the Company for each covered employee that is measured from the date of an applicable Change in Control, which is 18 months for Mr. Petraglia and Mr. Saks.
Under the terms of the CIC Plan, if a covered employee is (a) employed on the date of a Potential Change
in Control, (b) terminated by the Company for a reason other than “Cause” (as defined in the CIC Plan), death, or disability, and (c) a Change in Control to which the Potential Change in Control relates occurs within the six month period following
the covered employee’s covered termination, the covered employee will receive, if the covered employee executes and does not revoke a release of claims, severance payments at the covered employee’s annual base salary rate in regular payroll
installments for the duration of the covered employee’s Designated Severance Period. If the covered employee dies before receiving the entire amount that is owed, the remaining portion will be paid to the covered employee’s estate. Severance
payments will be discontinued if it is determined that the covered employee has engaged in any actions constituting Cause.
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
|
Executive Severance Agreements and Change in Control Agreements (Continued)
Under the terms of the CIC Plan, if a covered employee is employed on the date of a
Change in Control and the covered employee executes and does not revoke a release of claims:
•
|
all outstanding Company equity-based awards granted to the covered employee prior to the date
of the Change in Control will be immediately fully vested;
|
•
|
the Compensation Committee may, in its sole discretion, determine that the covered employee
will receive a pro-rated annual bonus if (a) the Committee determines that the Change in Control is an asset sale with respect to an entity in which the covered employee is associated, (b) the covered employee’s employment with the
Company terminates in connection with such asset sale, and (c) the covered employee was eligible to participate in the Company’s annual bonus plan at the time of the Change in Control; any such pro-rated annual bonus will be determined
based on the level of achievement under the annual bonus plan at the time of the Change in Control; and
|
•
|
the Committee may, in its sole discretion, determine that the covered employee will receive a discretionary
bonus upon a Change in Control.
|
Any bonuses paid under the CIC Plan upon a Change in Control will be paid in a
single lump sum following the Change in Control.
Under the terms of the Plan, if a covered employee’s employment with the “Employer”
(as defined in the CIC Plan) is terminated during the covered employee’s Designated Severance Period following the occurrence of a Change in Control (a) by the Employer for any reason other than Cause, death, or disability, or (b) by the covered
employee for “Good Reason” (as defined in the CIC Plan), and the covered employee executes and does not revoke a release of claims, the Employer will continue to pay to the covered employee his annual base salary in regular payroll installments for
the remainder of the covered employee’s Designated Severance Period. A covered employee is not eligible for severance benefits from the Company after a Change in Control if the Change in Control is an asset sale with respect to the covered
employee and the successor to the Company offers the covered employee employment with a level of compensation and benefits that in the aggregate are at least as favorable as the level of the covered employee’s compensation and benefits with the
Company prior to the Change in Control. If the covered employee dies before receiving the entire amount that is owed, the remaining portion will be paid to the covered employee’s estate. Severance payments will be discontinued if the Employer
determines that the covered employee has engaged in any actions constituting Cause.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
Security Ownership of Certain Beneficial Owners
The following table lists the persons we know to be beneficial owners of at least five percent of our
common stock as of April 26, 2019.
Name and Address of Beneficial Owner
|
Number
of Shares
|
Approximate
Percentage
of Outstanding
Common Stock
|
|
|
|
IRS Partners No. 19, L.P
(1)
|
3,042,665
|
23.6%
|
515 S. Figueroa Street, Suite 1050
|
|
|
Los Angeles, CA 90071
|
|
|
|
|
|
Dimensional Fund Advisors LP
(2)
|
901,503
|
7.0%
|
Building One
|
|
|
6300 Bee Cave Road
|
|
|
Austin, TX 78746
|
|
|
|
|
|
Renaissance Technologies LLC
(3)
|
728,700
|
5.7%
|
800 Third Avenue
|
|
|
New York, NY 10022
|
|
|
(1)
|
Based on Amendment No. 15 to Schedule 13D (the “Amendment”), filed with the Commission on March 18, 2019, by IRS Partnership No. 19, L.P. (“IRS 19”), The
Leonetti/O’Connell Family Foundation (the “Foundation”), M2O, Inc. (“M2O”), The Michael F. O’Connell and Margo L. O’Connell Revocable Trust (the “Trust”), Michael O’Connell (“Mr. O’Connell” and, collectively with IRS 19, the Foundation,
M2O and the Trust, the “O’Connell Entities”), Harvest Financial Corporation (“Harvest”) and Bradley Vizi (“Mr. Vizi”). The Amendment states that IRS 19, M2O, the Trust and Mr. O’Connell may be deemed to have the shared voting and
dispositive power over the 2,692,065 shares owned by IRS 19 and that the Foundation and Mr. O’Connell may be deemed to have shared voting and dispositive power over 266,074 shares owned by the Foundation. The Amendment also states that
Harvest exclusively manages IRS 19’s and the Foundation’s investment in the Common Shares pursuant to which Mr. Vizi on behalf of Harvest manages such investments. In addition to the Schedule 13D, this amount reflects certain
additional information known to the Company regarding Mr. Vizi’s share ownership. As a result, Harvest and Mr. Vizi may be deemed to have shared dispositive power with respect to the 2,958,139 shares held by IRS 19 and the Foundation.
Mr. Vizi has sole voting and dispositive power over 84,526 shares.
|
(2)
|
Based on a Form 13G filed with the Commission on February 8, 2019. The Form 13G states that Dimensional Fund Advisors LP, a registered investment advisor, has
sole voting power over 893,953 of these shares and sole or shared dispositive power as to all of these shares.
|
(3)
|
Based on a Form 13G filed with the Commission on February 13, 2019. The Form 13G states that Renaissance Technologies LLC has sole voting power over 695,100
of these shares and sole or shared dispositive power over all of these shares.
|
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS (CONTINUED)
|
Security Ownership of Management
The following table lists the number of shares of our common stock beneficially owned, as of April 26,
2019, by each director and director nominee, each of our executive officers, certain members of our senior management, and by our directors, nominees and executive officers as a group. In general, beneficial ownership includes those shares a
person has the power to vote or transfer, as well as shares owned by immediate family members who live with that person.
Name
|
Number
of
Shares
|
Approximate
Percentage
of Outstanding
Common Stock
|
Roger H. Ballou
|
61,094
|
*
|
Richard A. Genovese
|
-
|
*
|
Leon Kopyt
|
572,734
|
4.4%
|
S. Gary Snodgrass
|
44,640
|
*
|
Bradley S. Vizi
(1)
|
99,526
|
*
|
Frank Petraglia
|
20,277
|
*
|
Michael Saks
|
80,343
|
*
|
Other executive officers
|
461,231
|
3.6%
|
All directors and executive officers as a group (9 persons)
|
1,339,845
|
10.4%
|
__________
*
|
Represents less than one percent of our outstanding common stock.
|
(1)
|
Includes 15,000 shares issuable upon the vesting of restricted stock units on June 1, 2019.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
|
|
INDEPENDENCE
|
Related Party Transaction Approval Policy
Our Code of Conduct mandates that officers and directors bring promptly to the attention of our
Compliance Officer, currently our Chief Financial Officer, any transaction or series of transactions that may result in a conflict of interest between that person and the Company. Furthermore, our Audit Committee must review and approve any
“related party” transaction as defined in Item 404(a) of Regulation S-K, promulgated by the Securities and Exchange Commission, before it is consummated. Following any disclosure to our Compliance Officer, the Compliance Officer will then
typically review with the Chairman of our Audit Committee the relevant facts disclosed by the officer or director in question. After this review, the Chairman of the Audit Committee and the Compliance Officer determine whether the matter should be
brought to the Audit Committee or the full Board of Directors for approval. In considering any such transaction, the Audit Committee or the Board of Directors, as the case may be, will consider various relevant factors, including, among others,
the reasoning for the Company to engage in the transaction, whether the terms of the transaction are at arm’s length and the overall fairness of the transaction to the Company. If a member of the Audit Committee or the Board is involved in the
transaction, he or she will not participate in any of the discussions or decisions about the transaction. The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.
Independence of the Board of Directors
The Board of Directors has determined that Roger H. Ballou, Richard A. Genovese, Leon Kopyt, and S. Gary
Snodgrass are “independent directors” as defined in Marketplace Rule 4200(a)(15) of the NASDAQ Stock Market LLC.
ITEM 14
.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Our Audit Committee plans to engage EisnerAmper LLP (“EisnerAmper”) as our independent registered public
accounting firm for the current fiscal year ending December 29, 2018.
Fees Billed by EisnerAmper during fiscal 2018 and 2017
Audit
Fees
. Fees billed to the Company by EisnerAmper for audit services rendered by EisnerAmper for the audit of the Company's 2018 annual financial statements, for the review of those financial statements included in the Company's Quarterly
Reports on Form 10-Q, and for services that are normally provided by EisnerAmper in connection with statutory and regulatory filings or engagements, totaled approximately $218,500. Fees billed to the Company by EisnerAmper for audit services
rendered by EisnerAmper for the audit of the Company's 2017 annual financial statements, for the review of those financial statements included in the Company's Quarterly Reports on Form 10-Q, and for services that are normally provided by
EisnerAmper in connection with statutory and regulatory filings or engagements, totaled approximately $181,560.
Audit-Related
Fees
. Fees billed to the Company by EisnerAmper during 2018 and 2017 for audit-related services that were reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under the
preceding paragraph totaled $0 in both fiscal years.
Tax
Fees
. Fees billed to the Company by EisnerAmper during 2018 and 2017 for professional services rendered for tax compliance, tax advice and tax planning totaled $0 in both fiscal years.
All
Other Fees
. Other fees billed to the Company by EisnerAmper were $20,000 for 2018 and $0 for 2017. EisnerAmper does not audit the Company’s 401(k) plan.
The Audit Committee has considered whether EisnerAmper’s provision of services other than professional
services rendered for the audit and review of our financial statements is compatible with maintaining EisnerAmper’s independence, and has determined that it is so compatible.
All audit, audit-related, tax and other services were pre-approved by the Audit Committee pursuant to
applicable regulations. The Audit Committee currently pre-approves all engagements of the Company’s accountants to provide both audit and non-audit services, and has not established formal pre-approval policies or procedures. The Audit Committee
did not approve any non-audit services pursuant to Rule 2-01 (c) (7) (i) (C) of Regulation S-X during 2018.