UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
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Preliminary
Proxy Statement
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Confidential,
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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ENGlobal
Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Per
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the filing fee is calculated and state how it was determined):
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654
N. Sam Houston Parkway E., Suite 400
Houston,
Texas 77060-5914
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
December
2, 2019
Dear
Shareholder:
I
am pleased to invite you to the Annual Meeting of Shareholders of ENGlobal Corporation (“ENGlobal”). The meeting will
be held at our headquarters located at 654 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060, on Monday, December 30,
2019 at 10:00 a.m., local time, to:
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Elect
five directors to the Board of Directors of ENGlobal;
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Ratify
the appointment of Moss Adams LLP as the independent auditors of ENGlobal for fiscal year 2019; and
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Transact
such other business as may properly come before the meeting or any adjournment thereof.
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We
are providing you access to our proxy materials both by sending you this full set of proxy materials, including a proxy card,
and by notifying you of the availability of our proxy materials on the Internet. You may read, print and download our proxy statement
and annual report at http://www.proxyvote.com.
Only
shareholders of record at the close of business on November 25, 2019, are entitled to notice of, and to vote at, the meeting and
any adjournment or postponement thereof. Each share entitles the holder to one vote. You can vote via the Internet at http://www.proxyvote.com,
by telephone or by mailing a completed proxy card as an alternative to voting in person at the meeting. For specific voting information,
see “General Information” beginning on page 1 of the enclosed proxy statement. Please submit a proxy card or voting
instructions in advance of the meeting even if you plan to attend the meeting. Submitting a proxy card or voting instructions
will not prevent you from attending the meeting in person, if you so desire, but will help ENGlobal ensure a quorum and reduce
the expense of additional proxy solicitation.
Attendance
is limited to shareholders of ENGlobal, their proxy holders and our guests. Shareholders holding stock in brokerage accounts must
bring a brokerage statement or other evidence of share ownership as of November 25, 2019, in order to be admitted to the meeting.
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Sincerely,
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William
A. Coskey, P.E.
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Chairman
of the Board
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NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
Time
and Date
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10:00
a.m., local time, on Monday, December 30, 2019
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Place
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654
N. Sam Houston Parkway E., Suite 400
Houston,
Texas 77060
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Items
of Business
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(1) To
elect five directors to the Board of Directors of ENGlobal;
(2) To
ratify the appointment of Moss Adams LLP as the independent auditors of ENGlobal for fiscal year 2019; and
(3) To
transact such other business as may properly come before the meeting or any adjournment thereof.
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Except
with respect to the procedural matters incident to the conduct of the Annual Meeting, we are not aware of any other business
to be brought before the Annual Meeting.
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Adjournments
and Postponements
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Any
action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified
above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
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Record
Date
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You
are entitled to notice of, and to vote at, the Annual Meeting only if you were an ENGlobal shareholder as of the close of
business on November 25, 2019.
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Meeting
Admission
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You
are entitled to attend the Annual Meeting only if you were an ENGlobal shareholder as of the close of business on November
25, 2019, or hold a valid proxy for the Annual Meeting. You should be prepared to present photo identification for admittance.
If you are not a shareholder of record but hold shares through a broker or nominee (i.e., in street name), you
should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to
November 25, 2019, a copy of the voting instruction card provided by your bank or brokerage firm, or other similar evidence
of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request,
you will not be admitted to the Annual Meeting.
The
Annual Meeting will begin promptly at 10:00 a.m., local time. Check-in will begin at 9:00 a.m., local time, and you should
allow ample time for the check-in procedures.
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Voting
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Your
vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read the accompanying proxy
statement and vote as soon as possible. This will not only ensure the presence of a quorum at the Annual Meeting but also
that your shares are voted in accordance with your wishes. You will be able to vote via the Internet, by telephone or by mailing
a completed proxy card as an alternative to voting in person at the meeting. For detailed information regarding voting, please
refer to the section entitled “General Information” on page 1 of this proxy statement and the instructions on
the proxy or voting instruction card.
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By
Order of the Board of Directors,
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Mark
A. Hess
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Chief
Financial Officer, Treasurer and Corporate Secretary
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2019
ANNUAL MEETING OF SHAREHOLDERS
PROXY
STATEMENT
TABLE
OF CONTENTS
You
may receive a copy of our Annual Report on Form 10-K and other information at no charge upon request directed to:
Mark
A. Hess
Chief
Financial Officer, Treasurer and Corporate Secretary
654
N. Sam Houston Parkway E., Suite 400
Houston,
Texas 77060-5914
Telephone
281-878-1000
GENERAL
INFORMATION
We
are providing these proxy materials to you in connection with the solicitation of proxies by the Board of Directors (the “Board”)
of ENGlobal Corporation (“ENGlobal”) for the 2019 Annual Meeting of Shareholders (the “Meeting”) and for
any adjournment or postponement of the Meeting. In this proxy statement, we refer to ENGlobal as the “Company,” “we,”
“our,” or “us.”
This
proxy statement and the accompanying proxy card are first being mailed to stockholders on or about December 2, 2019. Stockholders
are urged to read carefully the material in this proxy statement.
Who
is soliciting my proxy?
We
are making these proxy materials available to you in connection with our solicitation of proxies for use at the Meeting. Specified
directors, officers, and employees of ENGlobal may also solicit proxies on our behalf, without additional compensation, by mail,
telephone, fax, or in person.
Who
is paying for this solicitation?
ENGlobal
will pay for the solicitation of proxies, including the cost of preparing, assembling and mailing these proxy materials and making
these proxy materials available on the Internet. We have retained and paid a fee to Broadridge Financial Solutions, Inc. to assist
us in preparing, assembling and mailing our proxy materials, making our proxy materials available on the Internet and tabulating
our proxies, but we pay no separate compensation solely for the solicitation of proxies.
What
is the purpose of the Meeting?
At
the Meeting, shareholders will be asked to (1) elect directors, and (2) ratify the appointment of Moss Adams LLP for fiscal year
2019.
Who
is entitled to vote at the Meeting?
Only
shareholders of record at the close of business on November 25, 2019, the record date for the Meeting, are entitled to receive
notice of and to vote at the Meeting. If you were a shareholder of record on that date, you are entitled to vote all of the shares
you held on that date at the Meeting, or any postponements or adjournments of the Meeting.
If
your shares are registered directly in your name, you are the holder of record of these shares, and we will send the proxy materials
and a proxy card with voting instructions directly to you. If you hold your shares in a brokerage account or through a bank or
other holder of record, you hold the shares in “street name,” and your broker, bank or other holder of record will
send voting instructions to you.
How
many votes do I have?
You
have one vote at the Meeting, or any postponements or adjournments of the Meeting, for each share of our common stock you owned
as of the record date. Shareholders do not have cumulative voting rights.
How
do I vote?
You
may vote your shares either in person at the Meeting or by proxy. You may submit a proxy or voting instructions over the Internet
at http://www.proxyvote.com or by telephone by following the instructions provided in the proxy card mailed to you. You may also
submit a proxy by completing and mailing a proxy card in the prepaid and addressed envelope that was enclosed with the proxy materials.
If
you hold your shares in street name, you have the right to direct your broker, bank or other holder of record how to vote by following
the instructions sent to you by the holder of record. If you desire to vote in person at the Meeting, as a holder in street name,
you must provide a legal proxy from your bank, broker or other holder of record.
May
I revoke my proxy or change my voting instructions?
Yes,
you may revoke your proxy or change your voting instructions by (a) voting in person at the Meeting, (b) casting a vote over the
Internet or by telephone at a later date, (c) mailing a proxy card with a later date or (d) sending a written notice of revocation
to our Corporate Secretary by mail to ENGlobal Corporation, 654 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060-5914
or by facsimile at (281) 878-1010; provided, that, with regard to (b), (c) and (d), the Company receives such change prior to
the Meeting. If you submit a new proxy, only your later dated proxy (whether cast by Internet, telephone, mail or in person) will
be counted.
What
are the Board’s recommendations?
The
Board’s recommendations are set forth together with the description of each item in this proxy statement. The Board recommends
a vote FOR the election of five directors to our Board to serve until the next annual meeting of shareholders and
FOR the ratification of the appointment of Moss Adams LLP as the independent auditors of ENGlobal for fiscal year
2019.
If
any other matter properly comes before the Meeting, with regard to any proxies submitted by shareholders, William A. Coskey, P.E.
and Mark A. Hess, the persons appointed on the proxy card, will vote as recommended by the Board or, if no recommendation is given,
in their own discretion.
How
many votes must be present to hold the Meeting?
We
will have a quorum and will be able to conduct the business of the Meeting if the holders of a majority of shares of our common
stock outstanding and entitled to vote are represented in person or by proxy at the Meeting. As of the record date, 27,413,626
shares of our common stock, representing the same number of votes, were outstanding. Thus, the presence in person or by proxy
of the record holders of at least 13,706,814 shares of our common stock will be required to establish a quorum. Shareholders of
record who are present at the Meeting in person or by proxy and who abstain from voting, including brokers holding customers’
shares of record who cause abstentions to be recorded at the Meeting, will be included in the number of shareholders present at
the Meeting for purposes of determining whether a quorum is present.
What
vote is required to approve each item?
The
election of directors is decided by a plurality of the votes cast. For this purpose, “plurality” means that the individuals
receiving the largest number of affirmative votes, whether or not they receive a majority of the votes, are elected as directors,
up to the maximum number of directors to be chosen at the election. A properly executed proxy marked “WITHHOLD AUTHORITY”
with respect to the election of one or more directors will not be voted with regard to the director or directors indicated, although
it will be counted for purposes of determining whether there is a quorum.
With
regard to each other item voted on at the Meeting, the affirmative vote of the holders of a majority of the votes cast in person
or by proxy and entitled to vote on the item will be required for approval. A properly executed proxy marked “ABSTAIN”
with respect to any such matter will not be voted, although it will be counted for purposes of determining whether there is a
quorum. Accordingly, an abstention will have the effect of a negative vote.
For
shares held in “street name” through a broker or other nominee, the broker or nominee may not be permitted to exercise
voting discretion with respect to some of the matters to be acted upon. Under the rules that govern brokers who are voting with
respect to shares that are held in street name, brokers have the discretion to vote such shares on routine matters, but not on
non-routine matters. The election of directors is not considered a routine matter. Thus, if shareholders do not give their broker
or nominee specific instructions, their shares may not be voted on that matter and will not be counted in determining the number
of shares necessary for approval. Shares represented by such “broker non-votes” will, however, be counted in determining
whether there is a quorum.
What
if I do not mark a voting choice for some of the matters listed on my proxy card?
If
you send a proxy card without specifying a vote or an abstention, your shares will be voted “FOR”: (1) the director
nominees listed on the proxy card and in this proxy statement, and (2) the ratification of the appointment of Moss Adams LLP as
the independent auditors of ENGlobal for fiscal year 2019.
Could
other matters be decided at the Meeting?
We
do not know of any matters that will be considered at the Meeting other than the items set forth in this proxy statement. If other
matters are properly raised at the Meeting, your proxy authorizes the proxy holders to vote as they think best, unless authority
to do so is withheld by you in your proxy.
What
happens if the Meeting is postponed or adjourned?
Pursuant
to Nevada law, the Meeting may be adjourned by the chairman of the Meeting to reconvene at the same or some other place. If the
adjournment is for more than 60 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice
of the adjournment shall be given to each shareholder of record entitled to vote at the Meeting. If the adjournment is for less
than 60 days, no additional notice will be delivered.
Who
will count the votes?
We
will appoint an inspector of the election who will count the votes at the Meeting.
What
does it mean if I receive more than one proxy card?
Your
shares are probably registered in more than one account. You should vote each proxy card you receive. We encourage you to consolidate
all your accounts by registering them in the same name, social security number and address. This can be accomplished by contacting
your stockbroker. Additionally, our transfer agent, Computershare Trust Company, N.A., can assist you if you want to consolidate
multiple accounts registered in your name by contacting our transfer agent at P.O. Box 30170, College Station, TX 77842-3170,
telephone: (781) 575-4238.
How
do I get copies of the exhibits filed with ENGlobal’s Annual Report on Form 10-K?
A
copy of ENGlobal’s Annual Report on Form 10-K and consolidated financial statements is being delivered to you with this
proxy statement. You may also read, print and download our annual report at http://www.proxyvote.com. ENGlobal will provide to
any shareholder as of the record date, who so specifically requests in writing, copies of the exhibits filed with our annual report
for a reasonable fee. Requests for such copies should be directed to Corporate Secretary, ENGlobal Corporation, 654 N. Sam Houston
Parkway E., Suite 400, Houston, Texas 77060-5914. Our annual report may also be read, downloaded and printed at www.englobal.com.
In addition, copies of all exhibits filed electronically by ENGlobal may be reviewed and printed from the website of the Securities
and Exchange Commission (the “SEC”) at: www.sec.gov.
Where
can I find the voting results of the Meeting?
The
preliminary voting results will be announced at the Meeting. The final results will be published in a current report on Form 8-K
to be filed within four business days after the Meeting.
Who
can help answer my questions?
If
you have any questions or if you need additional copies of this proxy statement or the enclosed proxy card, you should contact
Mark A. Hess, Chief Financial Officer, Treasurer and Corporate Secretary, at 654 N. Sam Houston Parkway E., Suite 400, Houston,
Texas 77060-5914, telephone 281-878-1000.
SMALLER
REPORTING COMPANY
The
SEC has adopted rules allowing smaller reporting companies to tailor their disclosure to reduce costs. Because the Company qualifies
as a “smaller reporting company” under the SEC rules, the Company has elected to prepare this proxy statement and
other annual and periodic reports as a “Smaller Reporting Company” consistent with rules of the SEC. Under the scaled
disclosure obligations, the Company is not required to provide, among other things, Compensation Discussion and Analysis and certain
other tabular and narrative disclosures relating to executive compensation.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Board
Size; Meetings of the Board
Our
Board currently has five members. During 2018, the Board met seven times and each director attended at least 75% of the meetings
held during the period for which he was a director, other than David C. Roussel, who attended 71% of such meetings. Our four independent
directors serve on three Board committees: Audit, Compensation, and Nominating & Corporate Governance.
Executive
Sessions
In
2018, the Board held multiple executive sessions of its non-employee directors, David W. Gent, P.E., Randall B. Hale, David C.
Roussel, and Kevin M. Palma. Any non-employee director can request that an executive session be scheduled.
Board
Leadership Structure
The
Company is committed to strong, independent board leadership and governance, including the flexibility to select and revise its
leadership structure on the basis of the best interests of the Company and its shareholders at any given point in time. The Board
evaluates this structure in connection with the annual appointments to the positions of Chairman of the Board (“Chairman”)
and Chief Executive Officer (“CEO”). We do not have a written policy with respect to separation of the roles of Chairman
and CEO; however, the Board believes that it is currently in the best interests of the Company and its shareholders to combine
the Chairman and CEO roles and to appoint a Lead Independent Director annually. In this way, the Company’s shareholders
have the benefit of Board leadership by Mr. Coskey, an executive with extensive day-to-day knowledge of the Company’s operations,
strategic plan execution and future needs, as well as a Lead Independent Director who provides Board member leadership.
Lead
Independent Director
David
W. Gent has served as the Company’s lead independent director since 2002, and was re-elected by the Board to this role in
2018. The Lead Independent Director position responsibilities currently include chairmanship of the Nominating & Corporate
Governance Committee; Chair of the Board meetings at which the Chairman is not in attendance; liaison between the Chairman and
the independent directors, which includes facilitating communications and assisting in the resolution of conflicts, if any, between
the independent directors and the Company’s management; providing counsel to the Chairman and CEO, including provision of
appropriate feedback regarding effectiveness of Board meetings, and otherwise as needed or requested; and such other responsibilities
as the Board delegates. In performing these responsibilities, the Lead Independent Director is expected to consult with the chairpersons
of other Board committees as appropriate and solicit their participation in order to avoid the appearance of diluting the authority
or responsibility of the Board committees and their chairpersons.
Board
and Committees’ Role in Risk Oversight
The
Board is responsible for oversight of us and our business, including risk management. Together with the Board’s standing
committees, the Board is responsible for ensuring that material risks are identified and managed appropriately. The Board and
its committees regularly review material strategic, operational, financial, compensation and compliance risks with our senior
management. The Audit Committee has oversight responsibility for financial risk (such as accounting, finance, internal controls
and tax strategy), and also oversees compliance with applicable laws and regulations. The Compensation Committee and the Board
each discuss the relationship between our compensation policies and corporate risk to assess whether these policies encourage
excessive risk-taking by executives and other employees. The Nominating & Corporate Governance Committee oversees compliance
with our corporate governance principles. During its regular course of its activities, our Audit Committee discusses our policies
with respect to risk assessment and risk management. Each of the committees’ report to the Board regarding the areas of
risk they oversee.
Director
Independence
The
Board has determined that no non-employee director has a relationship which, in the opinion of the Board, would interfere with
the exercise of his independent judgment in carrying out the responsibilities of a director, and that all directors, except Mr.
Coskey, meet the criteria for independence under NASDAQ rules. The Board has also determined that the members of each of its committees,
including the Audit Committee and the Compensation Committee, meet the criteria for membership applicable to each committee under
the NASDAQ listing standards and applicable SEC rules and regulations.
Director
Attendance at Annual Meetings
Although
we do not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders, we encourage
directors to attend. All of our directors attended the 2018 annual meeting and we expect all directors will attend the 2019 annual
meeting.
Committees
of the Board of Directors
Committee
Composition and Meetings
Each
of our directors attended at least 75% of the total meetings held by all Board committees on which they served in 2018, other
than David C. Roussel, who attended 67% of the meetings of the Audit Committee and Compensation Committee meetings.
Committee
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Members
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Audit
Committee
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Randall
B. Hale (Chairperson)
David
C. Roussel
Kevin
M. Palma
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Compensation
Committee
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David
C. Roussel (Chairperson)
Kevin
M. Palma
David
W. Gent
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Nominating
& Corporate Governance Committee
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David
W. Gent (Chairperson)
Randall
B. Hale
David
C. Roussel
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The
Audit, Compensation and Nominating & Corporate Governance Committees held six, six and two meetings, respectively, in 2018.
Summary
of Committee Responsibilities
All
of our committee charters are available under the “Investor Relations” section of our website at www.englobal.com.
The charters are reviewed annually.
Audit
Committee
The
duties and responsibilities of the Audit Committee are to oversee:
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the
quality and integrity of our financial statements;
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our
compliance with legal and regulatory requirements; and
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our
independent auditors’ qualifications, independence and performance.
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In
addition, the Audit Committee annually reviews our disclosures regarding deficiencies, if any, in the design or operation of our
internal controls.
The
Board has determined that Mr. Hale and Mr. Palma are qualified as audit committee financial experts under the SEC’s rules
and regulations. In addition, the Board has determined that each member of the Audit Committee has the requisite accounting and
related financial management expertise under NASDAQ rules.
Nominating
& Corporate Governance Committee
The
duties and responsibilities of the Nominating & Corporate Governance Committee are to:
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assist
the Board by identifying individuals qualified to become Board members and recommend to the Board director nominees for election
at the annual meetings of shareholders or for appointments to fill vacancies;
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recommend
to the Board director nominees for each Board committee and advise the Board on the appropriate composition of the Board and
its committees;
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make
an annual report to the Board on succession planning;
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advise
the Board about and recommend to the Board appropriate corporate governance practices and assist the Board in implementing
those practices; and
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implement
the annual performance review process for the Board and its committees.
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In
addition, the Nominating & Corporate Governance Committee reviews all relationships each director has with us in connection
with the nomination process and reports the results of its review to the Board with appropriate recommendations, if any, for approval.
Compensation
Committee
The
duties and responsibilities of the Compensation Committee are to:
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review
the Company’s evaluation process, compensation, incentive compensation and equity-based plans and recommend changes
in such plans to the Board as needed;
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produce
a report, if required, for inclusion in our Proxy Statement for the annual meeting of shareholders;
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evaluate
the performance of our Chief Executive Officer and other executives;
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set
the compensation for our Chief Executive Officer and such other executives as the Compensation Committee deems appropriate
and otherwise discharge the Board’s responsibilities relating to compensation of our officers and directors;
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delegate
authority to executive officers to establish compensation levels, incentive compensation and equity-based plan awards, with
oversight and approval;
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encourage
stock ownership by directors and executives, including through the use of equity compensation programs;
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review
director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices
to the Board; and
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approve
and review reports of any compensation consultants hired by the Company, and establish the independence of those consultants.
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The
Compensation Committee establishes salaries, incentives and other forms of compensation for executive officers. The Compensation
Committee currently delegates its authority to establish salaries (other than the salary of the CEO) to the CEO, and does not
currently engage any compensation consultants to determine the amount or form of executive and director compensation. From time
to time, the Compensation Committee has reviewed publicly available data compiled by executive officers of the Company relating
to compensation paid to executive officers and directors in similar size, publicly traded companies in the same geographic area
in which the Company is located. The Compensation Committee has also solicited input from the CEO with respect to compensation
for executive officers other than the CEO.
Code
of Business Conduct and Ethics
The
Company has adopted a Code of Business Conduct and Ethics that applies to all of the Company’s directors, officers and employees
in accordance with NASDAQ rules. The purpose and role of this code is to focus our officers, directors, and employees on areas
of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report unethical
or unlawful conduct, and help enhance and formalize our culture of integrity, honesty and accountability. We have posted this
Code of Business Conduct and Ethics on the “Investor Relations” section of our website at www.englobal.com.
The
Company also has a Code of Ethics applicable to the Chief Executive Officer and certain senior financial officers of the Company
that complies with Item 406 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and with applicable NASDAQ rules. We have posted this Code of Ethics on the “Investor Relations” section of our website
at www.englobal.com.
Director
Nominations
Consideration
of Director Nominees
Shareholder
Nominees
The
Nominating & Corporate Governance Committee will carefully consider all qualified director candidates, whether such candidates
are recommended by a shareholder or otherwise. Other than the provisions contained in our bylaws set forth below, the Nominating
& Corporate Governance Committee has not established formal procedures to be followed by shareholders submitting recommendations
for candidates for the Board. Our bylaws provide that nominations for the election of directors may be made upon timely notice
given by any shareholder of record entitled to vote for the election of directors. A timely notice must be made in writing, contain
the information required by our bylaws and be received by the Secretary of the Company at the principal executive offices of the
Company, not later than the close of business on the 90th calendar day, nor earlier than the close of business on the
120th calendar day, immediately before the first anniversary of the preceding year’s annual meeting. However,
in the event that the date of the upcoming annual meeting is advanced more than 30 calendar days before, or delayed more than
70 calendar days after, such anniversary date, notice by the shareholder to be timely must be delivered not later than the close
of business on 10th calendar day following the day on which public announcement of a meeting date is first made by
the Company.
Director
Qualifications
The
Nominating & Corporate Governance Committee establishes criteria for selecting new members of the Board. The Board as a whole
should reflect a range of skills, knowledge and experience in areas of importance to the Company. Directors must be committed
to upholding the highest standards of personal and professional integrity and to representing the interests of all shareholders,
not particular shareholder constituencies. The Nominating & Corporate Governance Committee places no specific restrictions
on the number of terms directors may serve or other Boards on which a director may sit, but directors must possess sufficient
time and energy to carry out their duties effectively. A majority of directors must be “independent” under the NASDAQ
rules, and members of the Company’s audit committee must meet NASDAQ financial literacy and sophistication requirements.
In determining whether a director is independent, the Board will broadly consider all relevant facts and circumstances.
Identifying
and Evaluating Nominees for Directors
The
Nominating & Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director.
The Nominating & Corporate Governance Committee regularly assesses the appropriate size of the Board, and whether any vacancies
on the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, the Nominating &
Corporate Governance Committee will consider various potential candidates for director. Candidates may come to the attention of
the Nominating & Corporate Governance Committee through current Board members, shareholders or other persons. These candidates
will be evaluated at regular or special meetings of the Nominating & Corporate Governance Committee, and may be considered
at any point during the year. As described above, the Nominating & Corporate Governance Committee will consider properly submitted
shareholder nominations for candidates for the Board based on the same criteria. Although not part of any formal policy, our goal
is a balanced and diverse Board, with members whose skills, backgrounds and experiences are complimentary and, together, cover
the spectrum of areas that impact our business. As part of this evaluation and to further our commitment to diversity, the Nominating
& Corporate Governance Committee assesses whether the nominees, as a group, collectively represent a diversity of views, backgrounds,
and experiences that will enhance the Board’s and our effectiveness.
Communications
with the Board
Shareholders
may communicate with the Board, Board committees, non-employee directors as a group, and individual directors by submitting their
communications in writing to ENGlobal Corporation, 654 N. Sam Houston Parkway E., Suite 400, Houston, TX 77060-5914, Attention:
Corporate Secretary. Any communication must contain:
|
●
|
a
representation that the shareholder is a holder of record of our capital stock;
|
|
●
|
the
name and address, as they appear on our books, of the shareholder sending the communication; and
|
|
●
|
the
number of shares of our capital stock that are beneficially owned by such shareholder.
|
ENGlobal’s
Corporate Secretary will distribute such communications to the intended recipient upon receipt, unless the communication is unduly
hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to discard the
communication or to take appropriate legal action regarding the communication.
PROPOSAL
ONE:
ELECTION
OF DIRECTORS
Nominees
At
the Meeting, you and the other shareholders will elect five individuals to serve as directors until the next annual meeting of
shareholders, until their successors are duly elected or appointed or until their earlier death, resignation, or removal. Each
of the nominees is currently a member of the Board. The Nominating & Corporate Governance Committee, which consists solely
of directors that are independent within the meaning of the rules of the NASDAQ, recommended the nomination of the five directors
to the Board.
The
individuals named as proxies will vote proxies received for the election of all nominees, unless you direct them to withhold your
votes. If any nominee becomes unable to serve as a director before the Meeting, an event that is not presently anticipated, discretionary
authority may be exercised by the persons named as proxies to vote for substitute nominees proposed by the Board.
There
are no arrangements or understandings between ENGlobal and any person pursuant to which such person has been elected as director.
The
nominees for director, each of whom has consented to serve, if elected, are as follows:
Name
of Nominee:
|
|
William
A. Coskey, P.E.
|
Position:
|
|
Chairman
of the Board, President and Chief Executive Officer
|
Director
Since:
|
|
1985
|
Age:
|
|
66
|
Present
positions and offices with the Company, principal occupations and other directorships during the past five years:
Mr.
Coskey founded ENGlobal in 1985 and has served in various positions, including service as Chairman of the Board since June 2005
and as President and Chief Executive Officer since August 2012. From April 2007 until May 2010, he served as Chief Executive Officer.
Prior to that, he served as Chairman of the Board, Chief Executive Officer and President from 1985 until 2001, Chief Operating
Officer from 2001 to 2003, and President from 2001 to June 2005. Mr. Coskey, an honors graduate, received a Bachelor of Science
in Electrical Engineering from Texas A&M University in 1975 and is a Registered Professional Engineer. He served on the Texas
A&M University Electrical Engineering Department Advisory Council from 1999 to 2014, and from 2006 until 2014, he served as
Chairman of the Council. Mr. Coskey received the 2014 Outstanding Alumni Honor Award from the Texas A&M University College
of Engineering. In 2014, Mr. Coskey was also appointed to the Texas A&M College of Engineering Advisory Council.
Qualifications
for Consideration:
The
Board selected Mr. Coskey to serve as a director because it believes that, as the founder of ENGlobal, he provides a unique perspective
to the Board. He was responsible for ENGlobal’s initial public offering in 1994, listing on the American Stock Exchange
in 1998, and listing on the NASDAQ Stock Market in 2007. In June 2009, he was awarded the Ernst & Young Entrepreneur of The
Year® in the Energy Services category for the Houston & Gulf Coast Area. The Board believes Mr. Coskey’s industry
knowledge and business experiences give him invaluable insights into the Company’s challenges, opportunities and operations.
Name
of Nominee:
|
|
David
W. Gent, P.E.
|
Position:
|
|
Lead
Independent Director
|
Director
Since:
|
|
1994
|
Age:
|
|
66
|
Present
positions and offices with the Company, principal occupations and other directorships during the past five years:
Mr.
Gent has served as a director of ENGlobal since June 1994, is Chairman of the Nominating & Corporate Governance Committee
and is a member of the Compensation Committee. Mr. Gent has served as the Company’s Lead Independent Director since 2002.
Since 2011, Mr. Gent has served as the Chairman of SofTest Designs Corporation, an automation and test systems company that he
founded in 1980. From 1991 through 2011, Mr. Gent held various positions for Bray International, Inc., an industrial flow control
manufacturer. From 2005 to 2011, Mr. Gent served as Executive Vice President of Bray International and was responsible for overseeing
worldwide engineering, information services, and training. Mr. Gent, an honors graduate, received a Bachelor of Science in Electrical
Engineering from Texas A&M University in 1975 and a Master of Business Administration from Houston Baptist University in 1984.
He is a Registered Professional Engineer. Mr. Gent serves on the Texas A&M University Electrical and Computer Engineering
Department Advisory Council and he holds several patents in the field of industrial flow controls.
Qualifications
for Consideration:
The
Board selected Mr. Gent to serve as a director, and as Lead Independent Director, because it believes he possesses valuable engineering
expertise, including extensive experience managing multinational engineering, research and development, information technology,
and manufacturing operations, including domestic and international operations obtained through start-ups and acquisition. He provides
the perspective of a leader with experience in global operations and strategy who has faced and effectively dealt with economic
and governance issues.
Name
of Nominee:
|
|
Randall
B. Hale
|
Position:
|
|
Independent
Director
|
Director
Since:
|
|
2001
|
Age:
|
|
57
|
Present
positions and offices with the Company, principal occupations and other directorships during the past five years:
Mr.
Hale has served as a director of ENGlobal since December 2001, and is Chairman of the Audit Committee and a member of the Nominating
& Corporate Governance Committee. Mr. Hale is the founder of Rock Hill Capital Group, LLC, an investment management firm,
and serves as its Managing Director. Mr. Hale is responsible for managing all aspects of the investment activities of the firm,
including capital raising, deal sourcing and investment management of portfolio companies. Prior to founding Rock Hill, he served
as an Executive Vice President and a Director of Equus Capital Management Corporation, investment advisor to several private equity
funds, from November 1992 to November 2002. Prior to joining Equus, Mr. Hale served in an audit, consulting and advisory capacity
with a public accounting firm in Houston, Texas. In September 2004, he co-founded ConGlobal Industries, Inc., a provider of intermodal
services to the shipping industry, and served as its Executive Chairman until its sale in December 2013. ConGlobal was formed
in September 2004 to facilitate the merger of Container-Care International, Inc., an intermodal services company, with Global
Intermodal Systems, Inc. Prior to the merger, Mr. Hale served as the President and Chief Executive Officer of Container-Care from
February 2003 to September 2004. Mr. Hale serves on several private company boards. He is the past President and Director of the
Houston Private Equity Association and is an active member of the Association for Corporate Growth. Mr. Hale received a Bachelor
in Business Administration from Texas A&M University in 1985 and is a certified public accountant.
Qualifications
for Consideration:
The
Board selected Mr. Hale to serve as a director because it believes he possesses valuable financial expertise, including extensive
experience with capital markets transactions and investments in both public and private companies. Mr. Hale’s CPA background
assists ENGlobal with financial and accounting issues and is invaluable to our Board’s discussions of the Company’s
capital and liquidity needs. ENGlobal also benefits from Mr. Hale’s entrepreneurial experience and his service as a director
and chairman on several private company boards.
Name
of Nominee:
|
|
David
C. Roussel
|
Position:
|
|
Independent
Director
|
Director
Since:
|
|
2001
|
Age:
|
|
70
|
Present
positions and offices with the Company, principal occupations and other directorships during the past five years:
Mr.
Roussel has served as a Director of the Company since December 2001, and is Chairman of the Compensation Committee and a member
of the Audit and Nominating & Corporate Governance Committees. Mr. Roussel served as President of Petrolog Automation, Inc.,
an oil field service company providing well site automation and data collection, from August 2016 until his retirement in October
2017. He previously worked for Jefferies Energy Investment Banking, a leading mergers and acquisitions advisor in the global oil
and gas industry, or its predecessor companies from 2003 until 2014 and served as a Senior Vice President responsible for managing
acquisition and divestiture projects on behalf of clients. Jefferies Energy Investment Banking is a division of Jefferies &
Company, Inc., a global investment bank and institutional securities firm. Mr. Roussel received a Bachelor of Science degree in
Mechanical Engineering from Iowa State University in 1971 and completed the Harvard Advanced Management Program in 1992.
Qualifications
for Consideration:
The
Board selected Mr. Roussel to serve as a director because it believes he possesses valuable engineering experience, including
a sound background in the energy industry, business operations and business development practices. Mr. Roussel’s experience
in senior and general management roles helps the Board address the challenges the Company faces with respect to development of
its growth strategy, mergers and acquisitions, and joint venture formation. ENGlobal also benefits from Mr. Roussel’s ability
to address diverse matters that come before the Board.
Name
of Nominee:
|
|
Kevin
M. Palma
|
Position:
|
|
Independent
Director
|
Director
Since:
|
|
2016
|
Age:
|
|
41
|
Present
positions and offices with the Company, principal occupations and other directorships during the past five years:
Mr.
Palma has served as a Director of the Company since June 2016, and is a member of the Audit and Compensation Committees. Mr. Palma
served as the Chief Financial Officer of B-29 Investments, LP, an energy private equity firm, from 2006 until he was promoted
to Chief Operating Officer in December 2018, and also served as the Chief Financial Officer of B-29 Family Holdings, LLC, a family
office, since its inception in 2014 until December 2018. In his role within the private equity space, Mr. Palma focuses on investment
strategy, investment execution, and portfolio company management for both privately-held and publicly-traded companies. Mr. Palma
currently serves on several private company boards, including Silver Creek Oil and Gas, LLC, Caliber Completion Services, LLC,
and Klear Bit Technologies, LLC. His past experiences on private company boards include Crest Pumping Technologies, LLC and TEC
Holdings, LLC (which was recently rebranded as AXIS Energy Services, LLC). Prior to his roles at B-29, Mr. Palma was a member
of the energy investment banking team at Raymond James & Associates, focusing on capital market raises and merger and acquisition
activity. Mr. Palma is licensed as a Certified Public Accountant in the State of Texas, and holds a Master of Business Administration
from the Harvard Business School in addition to a Bachelor of Business Administration and a Master of Public Administration from
the University of Texas.
Qualifications
for Consideration:
The
Board selected Mr. Palma to serve as a director because his experience in identifying strategic growth trends in the energy industry,
evaluating and completing numerous acquisitions, and exhibiting an extensive knowledge of financial markets make him well qualified
to serve on ENGlobal’s board of directors.
Vote
Required
Directors
are elected by a plurality, and the five nominees who receive the most “FOR” votes will be elected. Abstentions and
broker non-votes will not affect the outcome of the election.
Recommendation
of the Board
The
Board recommends that shareholders vote FOR each of the nominees to serve as a director.
PROPOSAL
TWO:
THE
RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP
AS
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF
ENGLOBAL
FOR FISCAL YEAR 2019
The
Audit Committee has appointed Moss Adams LLP, an independent registered public accounting firm, as the Company’s independent
registered public accounting firm to examine the consolidated financial statements of ENGlobal for the fiscal year ended December
28, 2019, and to perform other appropriate audit and advisory services and is requesting ratification of such appointment by the
shareholders.
In
the event that the shareholders do not ratify the appointment of Moss Adams LLP, the adverse vote will be considered as a direction
to the Audit Committee to select another independent registered public accounting firm for the next fiscal year. However, because
of the difficulty and expense of making any substitution of independent registered public accounting firms after the beginning
of the current fiscal year, it is contemplated that the appointment for the fiscal year ended December 28, 2019, will be permitted
to stand, unless the Audit Committee finds other reasons for making a change. It is understood that even if the selection of Moss
Adams LLP is ratified, the Audit Committee, in its discretion, may direct the appointment of a new independent registered public
accounting firm at any time during the year if the Audit Committee feels that such a change would be in the best interests of
ENGlobal and its shareholders.
Representatives
of Moss Adams LLP are expected to be present at the Meeting, will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
Vote
Required
The
ratification of the appointment of Moss Adams LLP for the year ending December 28, 2019, requires the affirmative vote of the
holders of a majority of the shares represented at the Meeting, in person or by proxy, and entitled to vote. For the ratification
of our independent registered public accountants, you may vote “FOR” or “AGAINST” or abstain from voting.
If you hold your shares in your own name and abstain from voting on this matter, your abstention will have the effect of a vote
“AGAINST” this proposal. If you hold your shares through a broker, bank, trustee or other nominee and you do not instruct
them how to vote on this proposal, your broker may have authority to vote your shares. As a result, broker non-votes are not expected
to have an effect on the approval of this proposal.
Recommendation
of the Board
The
Board recommends that shareholders vote FOR the ratification of the appointment of Moss Adams LLP as the independent
registered public accounting firm of ENGlobal for fiscal year 2019.
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Directors
and Executive Officers
The
following table shows the number of shares of our common stock beneficially owned as of November 25, 2019, by each director or
director nominee, the executive officers named in the “Summary Compensation Table” and all directors and executive
officers as a group. None of these shares are pledged as security.
Name of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
|
Percent of Class(2)
|
|
|
|
|
|
|
|
|
Mr. Coskey
|
|
|
8,840,697
|
(3)
|
|
|
32.25
|
%
|
Mr. Hale
|
|
|
343,346
|
(4)
|
|
|
1.25
|
%
|
Mr. Gent
|
|
|
331,346
|
(5)
|
|
|
1.21
|
%
|
Mr. Roussel
|
|
|
291,346
|
(6)
|
|
|
1.06
|
%
|
Mr. Palma
|
|
|
44,891
|
(7)
|
|
|
*
|
|
Mr. Hess
|
|
|
325,731
|
(8)
|
|
|
1.19
|
%
|
Mr. Williams
|
|
|
152,456
|
(9)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (10 persons)
|
|
|
10,448,466
|
(10)
|
|
|
38.11
|
%
|
*
Represents less than 1% of the shares of common stock outstanding.
|
(1)
|
Beneficial
ownership of common stock has been determined for this purpose in accordance with Rule 13d-3 under the Exchange Act, under
which a person is deemed to be the beneficial owner of securities if such person has or shares voting power or investment
power with respect to such securities, has the right to acquire beneficial ownership within 60 days, or acquires such securities
with the purpose or effect of changing or influencing the control of ENGlobal.
|
|
(2)
|
Based
on 27,413,626 shares issued and outstanding on November 25, 2019.
|
|
(3)
|
Includes
8,840,597 shares of common stock held in the name of Alliance 2000, Ltd., whose general partner is jointly owned by Mr. Coskey
and his spouse. Mr. Coskey has shared power to vote and dispose of such shares.
|
|
(4)
|
Includes
32,051 unvested shares of restricted stock which were granted to Mr. Hale in June 2017 and which will vest at a time yet to
be determined.
|
|
(5)
|
Includes
32,051 unvested shares of restricted stock which were granted to Mr. Gent in June 2017 and which will vest at a time yet to
be determined.
|
|
(6)
|
Include
32,051 unvested shares of restricted stock which were granted to Mr. Roussel in June 2017 and which will vest at a time yet
to be determined.
|
|
(7)
|
41,041
shares of common stock are held in a Beneficiary IRA and 3,850 shares of common stock are held in a Rollover IRA. Mr. Palma
does not beneficially own any of the 2,100,000 shares of common stock held by B-29 Family Holdings, LLC.
|
|
(8)
|
Includes
10,125 unvested shares of restricted stock which were granted to Mr. Hess in March 2016 and which will vest on March 1, 2020.
Includes 20,000 shares of restricted stock which were granted to Mr. Hess on August 10, 2017 that will vest in two equal installments
on August 10, 2020 and August 10, 2021.
|
|
(9)
|
Includes
6,750 unvested shares of restricted stock which were granted to Mr. Williams in March 2016 which will vest on March 1, 2020.
Includes 15,000 shares of restricted stock which were granted to Mr. Williams on August 10, 2017 that will vest in two equal
installments on August 10, 2020 and August 10, 2021.
|
|
(10)
|
Includes
91,875 shares of unvested restricted stock granted to our executive officers and 96,153 shares of unvested restricted stock
granted to our directors.
|
Principal
Shareholders
Except
as set forth below, the following table sets forth information as of November 25, 2019, about persons whom we know to be the beneficial
owners of more than 5% of our issued and outstanding common stock based solely on our review of the statement of beneficial ownership
filed by these persons/entities with the SEC as of the date of such filing:
Name and Address
of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
|
Percent of
Class(1),(2)
|
|
|
|
|
|
|
|
|
Alliance 2000, Ltd.
c/o 654 N. Sam Houston Pkwy. E.
Suite 400
Houston, TX 77060-5914
|
|
|
8,840,697
|
(3)
|
|
|
32.25
|
%
|
|
|
|
|
|
|
|
|
|
B-29 Family Holdings, LLC
1700 Pacific Ave., Suite 3840
Dallas, TX 75201
|
|
|
2,100,000
|
(4)
|
|
|
7.66
|
%
|
|
|
|
|
|
|
|
|
|
NGP Energy Technology Partners II, L.P.
NGP ETP II, L.L.C.
Energy Technology Partners, L.L.C.
Philip J. Deutch
c/o 1700 K Street NW, Suite 750
Washington, D.C. 20006
|
|
|
1,994,659
|
(5)
|
|
|
7.28
|
%
|
|
|
|
|
|
|
|
|
|
NorthPointe Capital, LLC
c/o 101 W. Big Beaver, Suite 745
Troy, MI 48084
|
|
|
1,550,716
|
(6)
|
|
|
5.66
|
%
|
|
(1)
|
Beneficial
ownership of common stock has been determined for this purpose in accordance with Rule 13d-3 under the Exchange Act, under
which a person is deemed to be the beneficial owner of securities if such person has or shares voting power or investment
power with respect to such securities, has the right to acquire beneficial ownership within 60 days, or acquires such securities
with the purpose or effect of changing or influencing the control of ENGlobal.
|
|
(2)
|
Based
on 27,413,626 shares issued and outstanding on November 25, 2019.
|
|
(3)
|
Alliance
2000, Ltd. (“Alliance”) is a Texas limited partnership whose general partner is jointly owned by Mr. Coskey and
his spouse.
|
|
(4)
|
The
foregoing information is based upon information contained in a Schedule 13G/A filed by B-29 Family Holdings, LLC with the
SEC on April 3, 2019. B-29 Family Holdings, LLC has the sole power to vote or direct the vote of 2,100,000 shares and the
sole power to dispose or direct the disposition of 2,100,000 shares.
|
|
(5)
|
The
foregoing information is based solely upon information contained in a Schedule 13G/A filed by NGP Energy Technology Partners
II, L.P. (“NGP Energy Tech”), NGP ETP II, L.L.C. (“NGP GP”), Energy Technology Partners, L.L.C. (“ETP”),
and Mr. Philip J. Deutch with the SEC on February 14, 2019. NGP GP is the general partner of NGP Energy Tech. ETP is the sole
manager of NGP GP and Mr. Deutch is the sole member and manager of ETP. NGP Energy Tech will have sole voting and dispositive
power with respect to the shares beneficially owned by NGP Energy Tech. By virtue of the relationships between and among the
reporting persons described in the Schedule 13G/A, NGP GP, ETP and Mr. Deutch disclaim beneficial ownership of the reported
securities except to the extent of their pecuniary interest therein.
|
|
(6)
|
The
foregoing information is based solely upon information contained in a Schedule 13G/A filed by NorthPointe Capital, LLC (“NorthPointe”)
with the SEC on February 11, 2014. NorthPointe has the sole power to vote or direct the vote of 285,388 shares and sole power
to dispose or direct the disposition of 1,550,716 shares.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Under
U.S. securities laws, directors, executive officers and persons holding more than 10% of our common stock must report their initial
ownership of our common stock and any changes in that ownership to the Securities and Exchange Commission. The SEC has designated
specific due dates for such reports and ENGlobal must identify in this proxy statement those persons who did not file such reports
when due.
Based
solely upon a review of Forms 3 and 4 and any amendments thereto furnished to ENGlobal during our fiscal year ended December 29,
2018, and Forms 5 and any amendments thereto furnished to ENGlobal with respect to the same fiscal year, we believe that our directors,
officers, and greater than 10% beneficial owners timely filed all required Section 16 reports, except that Mr. Palma was late
filing a Form 3 in connection with being elected a director in June 2016.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Board has adopted a policy requiring that all transactions between the Company and its officers, directors, principal shareholders
and their respective affiliates be on terms no less favorable to the Company than could be obtained from unrelated third parties
and that any such transactions be approved by a majority of the disinterested members of the Board. Pursuant to such policy, the
Company’s Audit Committee is responsible for the review and assessment of all related party transactions.
Mr.
Coskey holds a 25% interest in and Mr. Hale holds a 12.5% interest in a small privately held company which placed orders with
ENGlobal U.S., Inc. totaling $399,328 (later reduced to $234,403) during the fiscal year ended December 31, 2016, which was billed
in February 2017, and an additional $14,839 during the fiscal year ending December 30, 2017. Disinterested members of the Audit
Committee reviewed and approved these transactions and found that they complied with the Company’s policy and that the transactions
were made on terms no less favorable to the Company than could be obtained from unrelated third parties. During 2018, orders were
placed by this company for approximately $26,462. No other related party transactions occurred during fiscal year 2017 and 2018.
EXECUTIVE
OFFICERS
Our
executive officers serve at the pleasure of our Board of Directors and are subject to annual appointment by the Board at the first
meeting following the annual meeting of shareholders. Set forth below is a brief description of the business experience of each
of our executive officers, except Mr. Coskey, whose biography is listed above.
Executive
Officer:
|
|
Mark
A. Hess
|
Position:
|
|
Chief
Financial Officer, Treasurer and Corporate Secretary
|
Age:
|
|
60
|
Present
positions and offices with the Company, principal occupations during the past five years:
Mr.
Hess has served as Chief Financial Officer and Treasurer of ENGlobal Corporation since September 2012 and served as interim Chief
Financial Officer from June 2012 to September 2012. Mr. Hess previously served as the Company’s Corporate Controller from
July 2011 until June 2012. Mr. Hess assumed the Corporate Secretary responsibilities in December 2017. Prior to joining ENGlobal,
Mr. Hess served as Vice President and Chief Accounting Officer of Geokinetics, Inc., a publically-traded seismic data service
company, from April 2008 to April 2010. From November 2004 to April 2008, he served as Director of Finance for CGGVeritas, a publically-traded
seismic data service company. In total he has over 35 years of experience in various accounting, merger and acquisition, and finance
roles primarily in public companies. Mr. Hess is a licensed CPA in the state of Texas, holds a Bachelor of Business Administration
in Accounting from the University of Houston and is an active member of Financial Executives International.
Executive
Officer:
|
|
R.
Bruce Williams
|
Position:
|
|
Senior
Vice President
|
Age:
|
|
67
|
Present
positions and offices with the Company, principal occupations during the past five years:
Mr.
Williams is currently serving as a Senior Vice President for ENGlobal’s Engineering and Construction segment. Mr. Williams
served as the Chief Operating Officer from December 2013 through March 2017 and the President of ENGlobal Government Services,
Inc. from September 2012 through March 2017. He served as Senior Vice President, Midwest/Southwest Operations of ENGlobal’s
Engineering and Construction segment from September 2012 to September 2013. He initially joined ENGlobal in 2004, and from November
2010 until September 2012, he served in various roles at ENGlobal, including General Manager of the Tulsa Office, Vice President
of Midwest and Southwest Operations, Senior Project Manager of Engineering/ Projects, and acting General Manager of ENGlobal Government
Services, Inc. Prior to joining ENGlobal, Mr. Williams served as Vice President – Engineering for U.S. Transcarbon LLC,
a petroleum coke gasification project developer, from April 2008 until October 2010. In total, he has over 35 years of domestic
and international experience in engineering and project management, including several project management positions of increasing
responsibility in the U.S., Middle East, Papua New Guinea, Asia, Mexico and Brazil. Mr. Williams has an undergraduate degree in
Chemistry from the University of Northern Iowa, with post graduate studies in Environmental Management from the University of
Houston and MBA studies at Incarnate Word University.
Executive
Officer:
|
|
Michael
Patton
|
Position:
|
|
Senior
Vice President
|
Age:
|
|
66
|
Present
positions and offices with the Company, principal occupations during the past five years:
Mr.
Patton rejoined ENGlobal Corporation as Senior Vice President in April 2016. Mr. Patton was also at ENGlobal from 1998 through
2010, when he held many positions, including Senior Vice President of Business Development, President of ENGlobal Government Services,
Inc., Senior Vice President and General Manager of ENGlobal’s Tulsa Office. In 2014 and 2015, Mr. Patton served as Senior
Vice President and General Manager of the Gulf Coast Regional offices for Saulsberry Industries and as their Senior Vice President
of Strategic Planning. Prior to joining Saulsberry Industries, Mr. Patton served as Senior Vice President and General Manager
of the Oil, Gas, and Chemical Division of CDI from 2011 through 2013. Mr. Patton graduated from the University of Oklahoma in
1975 with a Bachelor of Science in Electrical Engineering. Mr. Patton has been a Registered Professional Engineer since 1980.
He has held several positions within technical societies, including most recently the Rice Global Forum.
Executive
Officer:
|
|
John
Kratzert
|
Position:
|
|
Senior
Vice President
|
Age:
|
|
57
|
Present
positions and offices with the Company, principal occupations during the past five years:
John
Kratzert currently serves as Senior Vice President for ENGlobal Government Services, and in this role is responsible for all of
the Company’s government related design, integration, fabrication and field support operations. Mr. Kratzert joined ENGlobal
as a Program Manager and then General Manager of ENGlobal Government Services in November of 2012. Prior to joining ENGlobal,
Mr. Kratzert served as the Technical Director for Physical and Electronic Security Programs (BAE Systems), Principle Systems Engineer
(SAIC) and Division Manager (MANDEX). Mr. Kratzert is a retired Marine Corps Officer and has over 33 years of experience leading
domestic and international organizations. Mr. Kratzert holds a Bachelor of Science degree in Biology from The Citadel, Military
College of South Carolina and a Master of Science degree in Management from Troy University.
EXECUTIVE
COMPENSATION TABLES
Summary
Compensation Table
The
following table sets forth information regarding compensation earned during the last two fiscal years by our Chief Executive Officer,
Chief Financial Officer, and Senior Vice President (the “named executive officers”).
Name
and Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus
($)(4)
|
|
|
Stock
Awards(1)
($)
|
|
|
Non-Equity
Incentive Plan Compensation(2)
|
|
|
All
Other Compensation(3) ($)
|
|
|
Total ($)
|
|
Mr. Coskey ~ President & Chief
|
|
2018
|
|
|
|
49,442
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,422
|
|
Executive Officer
|
|
2017
|
|
|
|
49,442
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hess ~ Chief Financial Officer,
|
|
2018
|
|
|
|
216,299
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,159
|
|
|
|
220,458
|
|
Secretary & Treasurer
|
|
2017
|
|
|
|
216,299
|
|
|
|
21,535
|
|
|
|
83,000
|
|
|
|
-
|
|
|
|
4,003
|
|
|
|
324,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Williams ~ Senior Vice
|
|
2018
|
|
|
|
236,912
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,098
|
|
|
|
240,010
|
|
President
|
|
2017
|
|
|
|
236,912
|
|
|
|
16,211
|
|
|
|
71,700
|
|
|
|
-
|
|
|
|
3,090
|
|
|
|
327,913
|
|
(1)
|
This
column shows the grant date fair value of equity awards computed in accordance with stock-based compensation accounting rules
(FASB ASC Topic 718). Values for awards subject to performance conditions are computed based upon the probable outcome of
the performance condition as of the grant date. For a description of certain assumptions made in the valuation of stock awards,
see Note 8 to the Company’s audited consolidated financial statements, included in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 29, 2018, as filed with the SEC on March 28, 2019.
|
(2)
|
The
Non-Equity Incentive Plan includes amounts awarded pursuant to the Company’s Short Term Incentive Plan. Metrics are
set annually and are generally contingent on the Company reaching certain levels of Net Operating Income.
|
(3)
|
All
Other Compensation includes 401(k) matching contributions. Does not include perquisites or personal benefits if the aggregate
amount less than $10,000. Does not include medical, dental, life, short and long term disability or paid time off benefits
which were available to all employees.
|
(4)
|
Bonus
includes a discretionary bonus to cover payroll taxes on the issuances of shares of restricted stock.
|
Outstanding
Equity Awards at Fiscal Year End 2018
The
following table sets forth information as of December 29, 2018 regarding outstanding equity awards held by the named executive
officers. On December 28, 2018, the closing price on NASDAQ for the Company’s common stock was $0.68 per share.
|
|
Restricted Stock Awards
|
|
Name
|
|
Number of
Shares That
Have Not
Vested(1)
|
|
|
Market Value of
Shares of Stock
That Have Not
Vested
|
|
|
Equity Incentive
Plan Awards:
Number of Unearned
Shares That Have
Not Vested
|
|
|
Equity Incentive Plan
Awards: Market Value
of Unearned Shares
That Have Not Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Coskey
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Mr. Hess(1)
|
|
|
60,375
|
|
|
$
|
41,055
|
|
|
|
—
|
|
|
|
—
|
|
Mr. Williams(2)
|
|
|
46,125
|
|
|
$
|
31,365
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
Includes
10,125 shares that were granted under the 2009 Equity Incentive Plan (the “Plan”) on February 9, 2015, which vested
on February 9, 2019. Includes 20,250 shares that were granted under the Plan on March 1, 2016, which vested 10,125 shares
on March 1, 2019 and will vest 10,125 shares on March 1 2020. Includes 30,000 shares that were granted under the Plan on August
10, 2017, which vested 10,000 shares on August 10, 2019 and will vest 10,000 shares on August 10, 2020 and 10,000 shares on
August 10, 2021.
|
|
|
(2)
|
Includes
10,125 shares that were granted under the Plan on February 9, 2015, which vested on February 9, 2019. Includes 13,500 shares
that were granted under the Plan on March 1, 2016, which vested 6,750 shares on March 1, 2019 and will vest 6,750 shares on
March 1 2020. Includes 22,500 shares that were granted under the Plan on August 10, 2017, which vested 7,500 shares on August
10, 2019 and will vest 7,500 shares on August 10, 2020 and 7,500 shares on August 10, 2021.
|
Employment
Agreements; Termination and Change-in-Control Arrangements
As
of December 29, 2018, Messrs. Coskey and Hess were each a party to a written employment agreement (the “Employment Agreements”)
with ENGlobal. The Employment Agreements provide for an annual base salary, subject to discretionary increases by the Board, and
other compensation in the form of cash bonuses, incentive compensation, stock options, stock appreciation rights, and restricted
stock awards. Additionally, the executives receive health, life, and other insurance benefits in accordance with the terms of
the Company’s benefit plans, and the Company provides management level support services and reimbursement for specified
business expenses.
The
Employment Agreements provide for severance payments and benefits in the case of termination of employment. If employment ends
because of death, the Company will pay any accrued but unpaid salary, additional compensation, and other benefits earned up to
that date. In the case of a physical or mental disability that prevents the executive from performing his services under the Employment
Agreement for a period of six months in the case of Mr. Coskey, and three months, in the case of Mr. Hess, the Company may terminate
the executive’s employment. If the Company terminates an executive’s employment in such cases of disability, the Employment
Agreements provide that the Company will continue to pay the executive his full salary and benefits for the six months following
the date of termination (the “Initial Severance Period”). At the Company’s option, severance payments consisting
of 50% of the monthly amount of the base salary for Mr. Coskey, and in the case of Mr. Hess, 100% of the monthly amount of his
base salary, and full benefits may be extended for an additional six-month period following the Initial Severance Period.
If
the Company terminates an executive’s employment for “cause,” as defined in the Employment Agreements, the Company
will pay any accrued but unpaid salary, additional compensation, and other benefits earned up to the effective date of termination.
If the Company terminates an executive’s employment without “cause,” the Employment Agreement provides that
the Company will continue to pay the executive his full salary and benefits for the Initial Severance Period. At the Company’s
option, severance payments consisting of 50% of the monthly amount of the base salary for Mr. Coskey, and in the case of Mr. Hess,
100% of the monthly amount of his base salary, and full benefits may be extended for an additional six-month period following
the Initial Severance Period.
The
Employment Agreements include a covenant not to compete following termination of employment for a period of up to one year, as
well as confidentiality provisions that are customary in nature and scope, for such agreements.
The
terms of the Employment Agreements were set through the course of arms-length negotiations with the executives. As part of these
negotiations, the Compensation Committee analyzed the terms of the same or similar arrangements for comparable executives employed
by some of the companies in our peer group. The Compensation Committee used this approach in setting the amounts payable and the
triggering events under the Employment Agreements. The Employment Agreements’ termination of employment provisions were
entered into in order to address competitive concerns by providing the executives with a fixed amount of compensation that would
offset the potential risk of foregoing other opportunities. At the time of entering into the Employment Agreements, the Compensation
Committee considered ENGlobal’s aggregate potential obligations in the context of retaining the executives and their expected
compensation.
Executive
Perquisites
Our
use of perquisites as a component of compensation is limited and largely based on historical practices and policies of our Company.
These perquisites and other benefits are provided to assure competitiveness and provide an additional retention incentive for
these executives. Our Compensation Committee endeavors to adhere to a high level of propriety in managing executive benefits and
perquisites. We do not own a plane and do not provide any personal aircraft use for executives.
Other
Compensation
From
time to time, we make available to employees and executives certain other fringe benefits. We may provide club memberships, tickets
to sporting or cultural events, tickets to community events, etc. To the extent that such items are taxable to the individual,
they are considered to be part of the individual’s compensation package.
Review
of and Conclusion Regarding All Components of Executive Compensation
Based
on our performance during the past several years, and in light of our executives’ efforts in directing the Company, the
Compensation Committee and the Board have determined that the compensation paid to Mr. Coskey, as well as compensation paid to
our other named executive officers, serves the best interests of our shareholders and continues to emphasize programs that the
Compensation Committee and the Board believe positively affect shareholder value.
DIRECTOR
COMPENSATION
The
principal objectives of our director compensation programs are to: (i) compensate for time spent on the Company’s behalf,
and (ii) align the compensation programs with long-term value to the Company’s shareholders. We attempt to accomplish these
objectives in an economical manner through a combination of reasonable director retainer fees and equity incentive grants to the
directors.
Retainer
Fees
Historically,
our non-employee directors received a cash retainer as compensation for their service to the Company, and our Chairman of the
Audit Committee also received an additional cash retainer as compensation for such service. Our non-employee directors are also
eligible for reimbursement of travel and other miscellaneous expenses associated with attendance at Board and Committee meetings.
However, due to the losses that the Company has incurred during 2016 and 2017, the Compensation Committee recommended and the
Board approved that cash retainer fees be suspended effective October 1, 2017 and reviewed for reinstatement on a quarterly basis.
At this time, cash retainer fees have not been reinstated.
Restricted
Stock Grants
Under
the Plan, non-employee directors are eligible to receive equity grants. Our non-employee directors typically receive the equity
grants in June concurrent with the annual shareholder’s meeting. On June 15, 2017, in recognition of the services provided
by its Board for the 2017-2018 service term, our non-employee directors, Messrs. Gent, Hale and Roussel, each received 42,735
restricted shares of the Company’s common stock, valued at $50,000 based on the fair market value of the shares on the date
of grant, or $1.17 per share. One quarter of the shares vested on September 30, 2017. Due to the losses that the Company incurred
in 2016 and 2017, the Compensation Committee recommended and the Board approved the suspension of the vesting provisions of these
restricted shares to be extended indefinitely; therefore, the remaining future vestings are not determined at this time and will
be revisited on a quarterly basis for reinstatement.
The
Company did not issue restricted shares to its non-employee directors in June 2018 or June 2019. The equity grant component of
director compensation will be reviewed for reinstatement on a quarterly basis. Any unvested shares will be forfeited as of the
date the non-employee director ceases to qualify as an independent director.
Mr.
Palma does not receive any compensation from the Company for his service as a director, but is eligible for reimbursement of travel
and other miscellaneous expenses associated with attendance at Board and Committee meetings.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The
following table sets forth certain information concerning the Company’s 2009 Equity Incentive Plan as of December 29, 2018.
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
554,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plan not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
AUDIT
MATTERS
Report
of the Audit Committee
The
information contained in this Report of the Audit Committee shall not be deemed to be “soliciting material” or to
be “filed” or incorporated by reference in future filings with the SEC, or to be subject to the liabilities of Section
18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the
Securities Act of 1933, as amended, or the Exchange Act.
In
accordance with its written charter, the Audit Committee assists the Board in, among other matters, oversight of our financial
reporting process, including the effectiveness of our internal accounting and financial controls and procedures, and controls
over our accounting, auditing, and financial reporting practices. A copy of the Audit Committee Charter is available on our website
at www.englobal.com.
The
Board has determined that all three members of the Audit Committee are “independent” based upon the standards adopted
by the Board, which incorporate the independence requirements under applicable laws, rules and regulations.
Management
is responsible for the financial reporting process, the preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America, and our system of internal controls and procedures designed to
ensure compliance with accounting standards and applicable laws and regulations. Our independent registered public accounting
firm is responsible for auditing the financial statements. The Audit Committee’s responsibility is to monitor and review
these processes and procedures. The members of the Audit Committee are not professionally engaged in the practice of accounting
or auditing and we are not professionals in those fields. The Audit Committee relies, without independent verification, on the
information provided to us and on the representations made by management that the financial statements have been prepared with
integrity and objectivity and on the representations of management and the opinion of the independent registered public accounting
firm that such financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America.
During
fiscal year 2018, the Audit Committee held six meetings. The Audit Committee’s meetings were conducted so as to encourage
communication among the members of the Audit Committee, management, and our independent registered public accounting firm, Moss
Adams LLP. Among other things, the Audit Committee discussed with our internal and independent auditors the overall scope and
plans for ENGlobal’s audits. The Audit Committee met separately with the independent registered public accounting firm,
with and without management, to discuss the results of their examinations and their observations and recommendations regarding
our internal controls. The Audit Committee also discussed with our independent registered public accounting firm all matters required
to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The
Audit Committee reviewed and discussed our audited consolidated financial statements as of and for the year ended December 29,
2018, with management and our independent registered public accounting firm. Management’s discussions with the Audit Committee
included a review of critical accounting policies.
The
Audit Committee obtained from the independent auditors a formal written statement describing all relationships between us and
our registered public accounting firm that might bear on the independence of the independent registered public accounting firm
consistent with the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered
public accounting firm communications with audit committees concerning independence The Audit Committee discussed with the independent
registered public accounting firm any relationships that may have an impact on the auditors’ objectivity and independence
and satisfied itself as to the auditors’ independence. The Audit Committee has reviewed and approved the amount of fees
paid to Moss Adams LLP for audit and non-audit services. The Audit Committee concluded that the provision of services by Moss
Adams LLP is compatible with the maintenance of Moss Adams LLP’s independence.
At
four of its meetings during 2018, the Audit Committee met with members of senior management and the independent registered public
accounting firm to review the certifications provided by the Chief Executive Officer and Chief Financial Officer under the Sarbanes-Oxley
Act of 2002, the rules and regulations of the SEC and the overall certification process. At these meetings, Company officers reviewed
each of the Sarbanes-Oxley certification requirements concerning internal control over financial reporting and any fraud, whether
or not material, involving management or other employees with a significant role in internal control over financial reporting.
Based
on the above-mentioned review and discussions with management, and the independent registered public accounting firm, and subject
to the limitations on our role and responsibilities described above and in the Audit Committee Charter, the Audit Committee recommended
to the Board of Directors that ENGlobal’s audited consolidated financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended December 29, 2018, for filing with the SEC.
Audit
Committee of the Board of Directors,
Randall
B. Hale, Chairman
David
C. Roussel
Kevin
M. Palma
March
28, 2019
Principal
Auditor Fees
Moss
Adams LLP was appointed as the Company’s independent auditors on November 16, 2017 and has audited the Company’s 2018
and 2017 consolidated financial statements. During 2018 and 2017, Moss Adams LLP did not audit the Company’s internal control
over financial reporting because the Company is a “smaller reporting company” as defined under the rules of the Exchange
Act. The Audit Committee has determined that the audit-related services provided by Moss Adams LLP are compatible with maintaining
its independence in the conduct of its auditing functions pursuant to the auditor independence rules of the SEC. No non-audit
services were provided by Moss Adams LLP in 2018 and 2017.
The
following table shows the fees paid or accrued by ENGlobal for the audit and other services provided by Moss Adams LLP for fiscal
years 2018 and 2017.
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
|
168,250
|
|
|
|
102,750
|
|
Audit-Related Fees
|
|
|
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
168,250
|
|
|
|
102,750
|
|
Hein
& Associates LLP was appointed as the Company’s independent auditors on December 20, 2013. Effective November 16, 2017,
Hein & Associates LLP combined with Moss Adams LLP. As a result of this transaction, on November 16, 2017, Hein resigned as
the independent registered public accounting firm for the Company. Concurrent with such resignation, the Audit Committee approved
the engagement of Moss Adams LLP as the new independent registered public accounting firm for the Company, and Moss Adams LLP
audited the Company’s 2017 consolidated financial statements.
The
following table shows the fees paid or accrued by ENGlobal for the audit and other services provided by Hein & Associates
LLP for fiscal year 2017.
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
|
-
|
|
|
|
62,250
|
|
Audit-Related Fees
|
|
|
-
|
|
|
|
-
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
-
|
|
|
|
62,250
|
|
As
defined by the SEC, (i) “audit fees” are fees for professional services rendered by the Company’s independent
registered public accounting firm for the audit of the Company’s annual financial statements and review of financial statements
included in the Company’s Quarterly Reports on Form 10-Q, or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees”
are fees for assurance and related services by the Company’s independent registered public accounting firm that are reasonably
related to the performance of the audit or review of the Company’s financial statements and are not reported under “audit
fees”; (iii) “tax fees” are fees for professional services rendered by the Company’s independent registered
public accounting firm for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products
and services provided by the Company’s independent registered public accounting firm, other than the services reported under
“audit fees,” “audit-related fees,” and “tax fees.”
Pre-Approval
Policy
Under
applicable SEC rules, except for the ability to designate a portion of this responsibility as described below, the full Audit
Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting
firm in order to ensure that they do not impair the auditors’ independence from ENGlobal. The Audit Committee may delegate
pre-approval authority to a member of the Audit Committee, and if it does, the decisions of that member must be presented to the
full Audit Committee at its next scheduled meeting. The SEC’s rules specify the types of non-audit services that an independent
auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the
engagement of the independent registered public accounting firm.
Consistent
with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services
and permitted non-audit services provided by the independent registered public accounting firm to ENGlobal or any of its subsidiaries,
except that the Audit Committee Chairman has the right to approve up to $25,000 of services in any year. During 2018, all fees
were pre-approved by the Audit Committee.
OTHER
MATTERS
To
the best of the knowledge, information and belief of the directors, there are no other matters which are to be acted upon at the
Meeting. If such matters arise, the form of proxy provides that discretionary authority is conferred on the designated persons
in the enclosed form of proxy to vote with respect to such matters.
The
Company has received no notice of any other items to be submitted for consideration at the Meeting and, except for reports of
operations and activities by management, which are for informational purposes only and require no approval or disapproval, and
consideration of the minutes of the preceding annual meeting for approval, which may involve technical corrections to the text
where actions taken were incorrectly recorded, but which require no action of approval or disapproval of the subject matter, management
does not know of or contemplate any other business that will be presented for action by the shareholders at the Meeting. If any
further business is properly presented at the Meeting, the persons named as proxies will act in their discretion on behalf of
the shareholders they represent.
SHAREHOLDER
PROPOSALS FOR 2020
Under
Rule 14a-8 of the Exchange Act, shareholder proposals must be received by the Company no later than January 6, 2020 to be considered
for inclusion in the Company’s proxy statement relating to the 2020 Annual Meeting of Shareholders or, if the Company changes
the date of the 2020 Annual Meeting by more than 30 days from the date of the 2019 Annual Meeting, then shareholder proposals
must be received by the Company a reasonable time before the Company begins to print and send its proxy materials for the 2020
Annual Meeting of Shareholders.
In
addition, pursuant to our bylaws, shareholder proposals to be presented at the 2020 Annual Meeting of Shareholders of the Company
(whether or not to be included in the Company’s proxy statement) must be made upon timely notice. A timely notice must be
made in writing, contain the information required by our bylaws and be received by the Secretary of the Company at the principal
executive offices of the Company not earlier than the close of business on the 120th calendar day, nor later than the
close of business on the 90th calendar day, immediately before the first anniversary of the 2019 Annual Meeting of
Shareholders. However, in the event that the date of the 2020 Annual Meeting is advanced more than 30 calendar days before, or
delayed more than 70 calendar days after, such anniversary date, notice by the shareholder to be timely must be delivered not
later than the close of business on the 10th calendar day following the day on which public announcement of a meeting
date is first made by the Company. For information regarding the nomination of director candidates, please see “Consideration
of Director Nominees - Shareholder Nominees” on page 8 of this proxy statement.
ANNUAL
REPORT TO SHAREHOLDERS
A
copy of ENGlobal’s Annual Report on Form 10-K, which includes our consolidated financial statements, is being delivered
to you with this proxy statement. You may also read, print and download our annual report at http://www.proxyvote.com. The annual
report may also be read, downloaded and printed at www.englobal.com.
APPROVAL
OF THE BOARD OF DIRECTORS
The
contents of this proxy statement have been approved by the Board of Directors, and the Board of Directors has authorized the mailing
of this proxy statement to the shareholders of the Company.
|
By
Order of the Board of Directors,
|
|
|
|
|
|
Mark
A. Hess
|
|
Chief
Financial Officer, Treasurer and Corporate Secretary
|
|
|
Houston,
Texas
|
|
December
2, 2019
|
|
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