ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
and Executive Officers
Certain
disclosures required by this item and Item 403(a) of Regulation S-K of the Exchange Act were filed under Item 4a to the Original Filing.
Family
Relationships
To
our management’s knowledge, there are neither any family relationships among any of our directors or executive officers nor have
any of our directors been involved in a legal proceeding that would be required to be disclosed pursuant to Item 401(f) of Regulation
S-K of the Exchange Act.
Corporate
Governance
Agreements
with Directors
None
of our directors or director nominees were selected pursuant to any arrangement or understanding, other than with our directors acting
within their capacity as such.
Meetings
of the Board and its Committees
Our
Board has a standing Audit Committee, a Compensation Committee, a Governance and Nominating Committee, and a Risk and Disclosure Committee.
Our Board met 11 times, including telephonic meetings, during fiscal year 2021. All six directors attended 100% of the Board meetings.
Messrs. Geiskopf, Bond, and Cragun and Mses. Heinen and Hammerschmidt attended 100% of the meetings held by committees of the Board on
which they served.
It
is our policy that all of our directors are required to make a concerted and conscientious effort to attend our annual meeting of stockholders
in each year during which that director serves as a member of our Board. At the date of our 2021 annual meeting of stockholders, we had
six members on our Board, all of whom attended the meeting.
Audit
Committee and Audit Committee Financial Expert
On
June 10, 2021, our Board amended and restated the Audit Committee charter that governs the Audit Committee. The Audit Committee charter
requires that each member of the Audit Committee meet the independence requirements of Nasdaq and the SEC and requires the Audit Committee
to have at least one member that qualifies as an “audit committee financial expert.” Currently, Messrs. Geiskopf, Bond, and
Cragun (Chairman) serve on the Audit Committee and each meets the independence requirements of Nasdaq and the SEC. Mr. Cragun qualifies
as an “audit committee financial expert.” In addition to the enumerated responsibilities of the Audit Committee in the Audit
Committee charter, the primary function of the Audit Committee is to assist the Board in its general oversight of our accounting and
financial reporting processes, audits of our financial statements, and internal control and audit functions. The Audit Committee charter
can be found online at https://www.verb.tech/investor-relations/governance/audit.
Compensation
Committee
On
August 14, 2018, our Board approved and adopted a charter to govern the Compensation Committee, which was amended and restated on June
10, 2021. Currently, Messrs. Geiskopf (Chairman), Bond and Cragun and Mses. Heinen, and Hammerschmidt serve as members of the Compensation
Committee and each meets the independence requirements of Nasdaq and the SEC, qualifies as a “non-employee director” within
the meaning of Rule 16b-3 under the Exchange Act, and qualifies as an outside director within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended. In addition to the enumerated responsibilities of the Compensation Committee in the Compensation Committee
charter, the primary function of the Compensation Committee is to oversee the compensation of our executives, produce an annual report
on executive compensation for inclusion in our proxy statement, if and when required by applicable laws or regulations, and advise our
Board on the adoption of policies that govern our compensation programs. The Compensation Committee has the authority to form and delegate
any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees
or to one or more designated members of the Compensation Committee, as the Compensation Committee may deem appropriate in its sole discretion.
For the development of our compensation program, the Compensation Committee retained Compensation Advisory Partners LLC, or CAP, during
the year ended December 31, 2020. CAP provided the Committee with advisory services only with respect to executive and Board compensation.
CAP reviewed the compensation paid to our executive officers and Board and compared our compensation with certain companies CAP identified
as peer companies. The Committee’s recommendation and the Board’s approval of the 2021 compensation program was based on
various factors, including, among others, recommendations made by CAP. The Compensation Committee charter may be found online at https://www.verb.tech/investor-relations/governance/compensation-committee.
Governance
and Nominating Committee
On
August 14, 2018, our Board approved and adopted a charter to govern the Governance and Nominating Committee, which was amended and restated
on June 10, 2021. Currently, Messrs. Geiskopf, Bond (Chairman), and Cragun and Mses. Heinen, and Hammerschmidt serve as members of the
Governance and Nominating Committee and each meets the independence requirements of Nasdaq and the SEC. The Governance and Nominating
Committee charter requires that each member of the Governance and Nominating Committee meet the independence requirements of Nasdaq and
the SEC. In addition to the enumerated responsibilities of the Governance and Nominating Committee in the Governance and Nominating Committee
charter, the primary function of the Governance and Nominating Committee is to determine the slate of director nominees for election
to the Board, to identify and recommend candidates to fill vacancies occurring between annual stockholder meetings, to review our policies
and programs that relate to matters of corporate responsibility, including public issues of significance to us and our stockholders,
and any other related matters required by federal securities laws. The charter of the Governance and Nominating Committee may be found
online at https://www.verb.tech/investor-relations/governance/governance-and-nominating-committee.
Risk and Disclosure Committee
On June 10, 2021, our
Board approved and adopted a charter to govern the Risk and Disclosure Committee. Currently, Messrs. Geiskopf, Bond, and Cragun (Chairman)
and Ms. Heinen serve as members of the Risk and Disclosure Committee and each meets the independence requirements of Nasdaq and the SEC.
The Risk and Disclosure Committee charter requires that each member of the Risk and Disclosure Committee meet the independence requirements
of Nasdaq and the SEC. In addition to the enumerated responsibilities of the Risk and Disclosure Committee in the Risk and Disclosure
Committee charter, the primary function of the Risk and Disclosure Committee is to assist our Chief Executive Officer and Chief Financial
Officer in fulfilling their responsibility for oversight of the accuracy and timeliness of the disclosures made by us. The charter of
the Risk and Disclosure Committee may be found online at https://www.verb.tech/investor-relations/governance/risk-and-disclosure.
Nominations
Process and Criteria
As
of March 25, 2022, we had not effected any material changes to the procedures by which our stockholders may recommend nominees to our
Board. Our Board does not have a formal policy with regard to the consideration of any director candidates recommended by our stockholders.
Our Board has determined that it is in the best position to evaluate our requirements, as well as the qualifications of each candidate
when it considers a nominee for a position on our Board. Accordingly, we do not currently have any specific or minimum criteria for the
election of nominees to our Board and we do not have any specific process or procedure for evaluating such nominees. Our Board assesses
all candidates, whether submitted by management or stockholders, and makes recommendations for election or appointment.
In
recommending director nominees for appointment to our board of directors, our nominating and corporate governance committee also actively
considers diversity characteristics, including diversity of professional experience, race, ethnicity, gender, age, education, cultural
background and personal background. However, we have not adopted a formal policy regarding the consideration of specific diversity characteristic,
and instead prefer to rely on the judgment of our highly qualified committee in recommending candidates with the most appropriate mix
of experiences, skills and expertise.
There
were no fees paid or due to third parties in fiscal year 2021 to identify or evaluate, or to assist in evaluating or identifying, potential
director nominees.
Any
stockholder wishing to propose that a person be nominated for or appointed to our Board may submit such a proposal, according to the
procedure described in the stockholder proposal section on page 5 of this Proxy Statement, to:
Corporate
Secretary
Verb
Technology Company, Inc.
782
S. Auto Mall Drive
American
Fork, Utah 84003
(855)
250.2300
The
Corporate Secretary will promptly forward any such correspondence to the Chairman of the Governance and Nominating Committee for review
and consideration by the Governance and Nominating Committee in accordance with the criteria described above.
Director
Independence
Our
Board is currently composed of six members. We have determined that the following five directors qualify as independent: James P. Geiskopf,
Phillip J. Bond, Kenneth S. Cragun, Nancy Heinen, and Judith Hammerschmidt. We determined that Mr. Cutaia, our Chairman of the Board,
President, Chief Executive Officer and Secretary, is not independent. We evaluated independence in accordance with the rules of Nasdaq
and the SEC. Messrs. Geiskopf, Bond and Cragun also serve on our Audit, Compensation, Governance and Nominating, and Risk and
Disclosure Committees. Ms. Heinen serves on our Compensation, Governance and Nominating, and Risk and Disclosure Committees. Ms. Hammerschmidt
serves on our Compensation, and Governance and Nominating Committees.
Stockholder
Communications with the Board
Stockholders
and other parties interested in communicating directly with our Board, a committee thereof, or any individual director, may do so by
sending a written communication to the attention of the intended recipient(s) in care of the Corporate Secretary, Verb Technology Company,
Inc., 782 S. Auto Mall Drive American Fork, Utah 84003. The Corporate Secretary will forward all appropriate communications to the Chairman
of our Audit Committee.
Investment
in Human Capital
We
believe our people are at the heart of our success and our customers’ success. We endeavor to not only attract and retain talented
employees, but also to provide a challenging and rewarding environment to motivate and develop our valuable human capital. We look to
our talented employees to lead and foster various initiatives that support our company culture including those related to diversity,
equity and inclusion. In addition, we rely heavily on our talented team to execute our growth plans and achieve our long-term strategic
objectives.
Orientation
and Continuing Education
We
have an informal process to orient and educate new directors to the Board regarding their role on the Board, our committees and our directors,
as well as the nature and operations of our business. This process provides for an orientation with key members of the management staff,
and further provides access to materials necessary to inform them of the information required to carry out their responsibilities as
a Board member. This information includes the most recent board approved budget, the most recent annual report, copies of the audited
financial statements and copies of the interim quarterly financial statements.
The
Board does not provide continuing education for our directors. Each director is responsible to maintain the skills and knowledge necessary
to meet his or her obligations as a director.
Assessments
The
board intends that individual director assessments be conducted by other directors, taking into account each director’s
contributions at board meetings, service on committees, experience base, and their general ability to contribute to one or more of
our major needs. We conducted our first director assessment in December 2021 and intend to conduct such assessment on an
annual basis.
Compensation
Committee Interlocks and Insider Participation
No
interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other company,
nor has any interlocking relationship existed in the past.
Code
of Ethics
In
2014, our Board approved and adopted a code of ethics and business conduct for directors, senior officers, and employees, or code of
ethics, that applies to all of our directors, officers, and employees, including our principal executive officer and principal financial
officer. The code of ethics addresses such individuals’ conduct with respect to, among other things, conflicts of interests; compliance
with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure by us; competition and fair
dealing; corporate opportunities; confidentiality; protection and proper use of our assets; and reporting suspected illegal or unethical
behavior. The code of ethics is available on our website at https://www.verb.tech/investor-relations/governance/code-of-ethics.
Board
Leadership Structure and Role in Risk Oversight
Board
Leadership Structure
We
currently combine the positions of Chairman and Chief Executive Officer into one position. We believe that this structure is appropriate
at this time and is a leadership model that has served our stockholders well since our inception. We believe that this combined model
has certain advantages over other leadership structures. This combined role allows Mr. Cutaia to drive execution of our strategic plans
and facilitates effective communication between management and our Board to bring key issues to its attention, and to see that our Board’s
guidance and decisions are implemented effectively by management. Further, our Board has designated Mr. Geiskopf as its Lead Director.
Our Board believes that Mr. Geiskopf’s strong leadership and qualifications, including his prior experience as a chief executive
officer and chief financial officer and his tenure on our Board, among other factors, contribute to his ability to fulfill the role of
Lead Director effectively.
Role
of the Board in Risk Oversight
Our
Board is responsible for the oversight of our operational risk management process. Our Board has delegated authority for addressing certain
risks, and accessing the steps management has taken to monitor, control, and report such risks to our Audit Committee. Such risks include
risks relating to execution of our growth strategy, the effects of the economy and general financial condition and outlook, our ability
to expand our client base, communication with investors, certain actions of our competitors, the protection of our intellectual property,
sufficiency of our capital, security of information systems and data, integration of new information systems, credit risk, product liability,
and costs of reliance on external advisors. Our Audit Committee then reports such risks as appropriate to our Board, which then initiates
discussions with appropriate members of our senior management if, after discussion of such risks, our Board determines that such risks
raise questions or concerns about the status of operational risks then facing us.
Our
Board relies on our Compensation Committee to address significant risk exposures that we may face with respect to compensation, including
risks relating to retention of key employees, protection of partner relationships, management succession, and benefit costs, and, when
appropriate, reports these risks to the full Board.
Change-of-Control
Arrangements
We
do not know of any arrangements, which may, at a subsequent date, result in a change-of-control.
Other
Board Committees
Other
than our Audit Committee, Compensation Committee, Governance and Nominating Committee, and Risk and Disclosure Committee, we have
no committees of our board of directors. We do not have any defined policy or procedure requirements for our stockholders to submit recommendations
or nominations for directors.
ITEM
11. EXECUTIVE COMPENSATION
Summary
Compensation Table
The
table and discussion below present compensation information for our executive officers as of December 31, 2021, which we refer to as
our “named executive officers”:
|
● |
Rory
J. Cutaia, our Chairman of the Board, President, Chief Executive Officer, and Secretary; and |
|
● |
Jeffrey
R. Clayborne, our former Chief Financial Officer and Treasurer. |
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards(1) ($) | | |
Option Awards(2)
($) | | |
All Other Compensation ($) | | |
Total ($) | |
Rory J. Cutaia(3) | |
| 2021 | | |
| 490,000 | | |
| 350,000 | (4) | |
| 537,000 | (5) | |
| - | | |
| - | | |
| 1,377,000 | (6) |
| |
| 2020 | | |
| 452,000 | | |
| 590,000 | (7) | |
| 722,000 | (8) | |
| - | | |
| - | | |
| 1,764,000 | (6) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Jeffrey R. Clayborne(9) | |
| 2021 | | |
| 250,000 | | |
| - | | |
| 322,000 | (10) | |
| - | | |
| - | | |
| 572,000 | (11) |
| |
| 2020 | | |
| 234,000 | | |
| 150,000 | (12) | |
| 391,000 | (13) | |
| - | | |
| - | | |
| 775,000 | (11) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Salman H. Khan(14) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1) |
For
valuation purposes, the dollar amount shown is calculated based on the market price of our common stock on the grant dates. The number
of shares granted, the grant date, and the market price of such shares for each named executive officer is set forth below. |
|
|
(2) |
For
valuation assumptions on stock option awards, refer to Note 2 of our audited consolidated financial statements for the year ended
December 31, 2021 of this Annual Report. The disclosed amounts reflect the fair value of the stock option awards that were granted
during fiscal years ended December 31, 2021 and 2020 in accordance with Financial Accounting Standards Board, or FASB, Accounting
Standards Codification, or ASC, Topic 718. |
|
|
(3) |
Mr.
Cutaia was appointed as Chairman of the Board, President, Chief Executive Officer, Secretary, and Treasurer on October 16, 2014. |
|
|
(4) |
Represents
an annual incentive bonus of $350,000. |
|
|
(5) |
Represents
an annual incentive bonus of 317,682 restricted stock units. |
|
|
(6) |
As
of December 31, 2021 and 2020, Mr. Cutaia had accrued but unpaid compensation equal to $1,031,000 and $697,000, respectively. |
|
|
(7) |
Represents
an annual incentive bonus of (i) $490,000 for the successful closing of our March 31, 2020 private placement and (ii) $100,000 for
the July 24, 2020 underwritten public offering of our common stock. |
|
|
(8) |
Represents
an annual incentive bonus of (i) 471,698 restricted stock units for the successful closing of our March 31, 2020 private placement
(ii) 166,365 restricted stock units for the July 24, 2020 underwritten public offering of our common stock, and (iii) 31,030 restricted
stock units as part of the Company’s COVID-19 Full Employment and Cash Preservation Plan. |
|
|
(9) |
Mr.
Clayborne was appointed as Chief Financial Officer and Treasurer on July 15, 2016. Mr. Clayborne resigned from these roles effective
January 20, 2022. |
|
|
(10) |
Represents
an annual incentive bonus of 190,609 restricted stock units. |
(11) |
As
of December 31, 2021 and 2020, Mr. Clayborne had accrued but unpaid compensation equal to $77,000 and $125,000, respectively. |
|
|
(12) |
Represents
an annual incentive bonus of (i) $125,000 for the successful closing our March 31, 2020 private placement and (ii) $25,000 for the
July 24, 2020 underwritten public offering of our common stock. |
|
|
(13) |
Represents
an annual incentive bonus of (i) 283,019 restricted stock units for the successful closing of our March 31, 2020 private placement
(ii) 63,085 restricted stock units for the July 24, 2020 underwritten public offering of our common stock, and (iii) 16,303 restricted
stock units as part of the Company’s COVID-19 Full Employment and Cash Preservation Plan. |
|
|
(14) |
On
January 20, 2022, the Company appointed Salman H. Khan as Interim Chief Financial Officer, Treasurer, Principal Financial Officer
and Principal Accounting Officer. On March 30, 2022, the Company’s Board of Directors approved Mr. Khan’s appointment
as the Company’s permanent Chief Financial Officer. |
Narrative
Disclosure to Summary Compensation Table
The
following is a discussion of the material information that we believe is necessary to understand the information disclosed in the foregoing
Summary Compensation Table.
Rory
J. Cutaia
On
December 20, 2019, we entered into an executive employment agreement with Mr. Cutaia. The employment agreement is for a four-year term
and can be extended for additional one-year periods. In addition to certain payments due to Mr. Cutaia upon termination of employment,
the employment agreement contains customary non-competition, non-solicitation, and confidentiality provisions. Mr. Cutaia is entitled
to an annual base salary of $430,000, which shall not be subject to reduction during the initial term, but will be subject to annual
reviews and increases, if and as approved in the sole discretion of our board of directors, after it has received and reviewed advice
from the Compensation Committee (who may or may not utilize the services of its outside compensation consultants, as it shall determine
under the circumstances). In addition, Mr. Cutaia is eligible to receive performance-based cash and/or stock bonuses upon attainment
of performance targets established by our board of directors in its sole discretion, after it has received and reviewed advice from the
Compensation Committee (who may or may not utilize the services of its outside compensation consultants, as it shall determine under
the circumstances). We must make annual equity grants to Mr. Cutaia as determined by our board of directors in its sole discretion, after
it has received and reviewed advice from the Compensation Committee (who may or may not utilize the services of its outside compensation
consultants, as it shall determine under the circumstances). Finally, Mr. Cutaia is eligible for certain other benefits, such as health,
vision, and dental insurance, life insurance, and 401(k) matching.
Mr.
Cutaia earned total cash compensation for his services to us in the amount of $490,000 and $452,000 for the fiscal years ending December
31, 2021 and 2020, respectively.
In
fiscal 2021, Mr. Cutaia earned an annual incentive bonus totaling $350,000.
On
January 4, 2021, we granted Mr. Cutaia a restricted stock unit totaling $537,000 payable in 317,682 shares of our common stock. The restricted
stock unit is subject to a four-year vesting period, with 25% of the award vesting on the first, second, third, and fourth anniversaries
from the grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.69 and was used to calculate
fair market value.
In
fiscal 2020, Mr. Cutaia earned an annual incentive bonus totaling $490,000.
On
April 10, 2020, we granted Mr. Cutaia a restricted stock unit totaling $37,000 payable in 31,030 shares of our common stock as part of
the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the completion
of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq Capital Market.
The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate fair market value.
On
July 29, 2020, Mr. Cutaia earned an incentive bonus totaling $100,000 for the successful closing of our March 31, 2020 private placement
and the July 24, 2020 underwritten public offering of our common stock, respectively.
On
July 29, 2020, we granted Mr. Cutaia a restricted stock unit totaling $500,000 payable in 471,698 shares of our common stock. The restricted
stock unit is subject to a four-year vesting period, with 25% of the award vesting on the first, second, third, and fourth anniversaries
from the grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.06 and was used to calculate
fair market value.
On
July 29, 2020, we granted Mr. Cutaia a restricted stock unit totaling $176,000 payable in 166,365 shares of our common stock. The restricted
stock unit vested on grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.06 and was
used to calculate fair market value.
As
of December 31, 2021 and 2020, Mr. Cutaia had accrued but unpaid compensation equal to $1,031,000 and $697,000, respectively.
Jeffrey
R. Clayborne
Mr.
Clayborne earned total cash compensation for his services to us in the amount of $250,000 and $234,000 for the fiscal years ending December
31, 2021 and 2020, respectively.
On
January 4, 2021, we granted Mr. Clayborne a restricted stock unit totaling $322,000 payable in 190,609 shares of our common stock. The
restricted stock unit is subject to a four-year vesting period, with 25% of the award vesting on the first, second, third, and fourth
anniversaries from the grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.69 and
was used to calculate fair market value.
In
fiscal 2020, Mr. Clayborne earned an annual incentive bonus totaling $125,000.
On
April 10, 2020, we granted Mr. Clayborne a restricted stock unit totaling $20,000 payable in 16,303 shares of our common stock as part
of the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the
completion of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq
Capital Market. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate
fair market value.
On
July 29, 2020, Mr. Clayborne earned an incentive bonus totaling $25,000 for the successful closing of our March 31, 2020 private placement
and the July 24, 2020 underwritten public offering of our common stock, respectively.
On
July 29, 2020, we granted Mr. Clayborne a restricted stock unit totaling $300,000 payable in 283,019 shares of our common stock. The
restricted stock unit is subject to a four-year vesting period, with 25% of the award vesting on the first, second, third, and fourth
anniversaries from the grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.06 and
was used to calculate fair market value.
On
July 29, 2020, we granted Mr. Clayborne a restricted stock unit totaling $67,000 payable in 63,288 shares of our common stock. The restricted
stock unit vested on grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.06 and was
used to calculate fair market value.
As
of December 31, 2021 and 2020, Mr. Clayborne had accrued but unpaid compensation equal to $77,000 and $125,000, respectively.
Mr.
Clayborne resigned as our Chief Financial Officer and Treasurer effective January 20, 2022.
2019
Omnibus Incentive Plan
On
November 11, 2019, our board of directors approved our 2019 Omnibus Incentive Plan, or Incentive Plan, and on December 20, 2019, our
stockholders approved and adopted the Incentive Plan. The material terms of the Incentive Plan are summarized below.
On
September 2, 2020, our board of directors approved an additional 8,000,000 shares of our common stock to be authorized for awards granted
under the Incentive Plan, and on October 16, 2020, our stockholders approved the additional 8,000,000 shares of our common stock to be
authorized for awards granted under the Incentive Plan.
General
The
purpose of the Incentive Plan is to enhance stockholder value by linking the compensation of our officers, directors, key employees,
and consultants to increases in the price of our common stock and the achievement of other performance objections and to encourage ownership
in our company by key personnel whose long-term employment is considered essential to our continued progress and success. The Incentive
Plan is also intended to assist us in recruiting new employees and to motivate, retain, and encourage such employees and directors to
act in our stockholders’ interest and share in our success.
Term
The
Incentive Plan became effective upon approval by our stockholders and will continue in effect from that date until it is terminated in
accordance with its terms.
Administration
The
Incentive Plan may be administered by our board of directors, a committee designated by it, and/or their respective delegates. Currently,
our Compensation Committee administers the Incentive Plan. The administrator has the power to determine the directors, employees, and
consultants who may participate in the Incentive Plan and the amounts and other terms and conditions of awards to be granted under the
Incentive Plan. All questions of interpretation and administration with respect to the Incentive Plan will be determined by the administrator.
The administrator also will have the complete authority to adopt, amend, rescind, and enforce rules and regulations pertaining to the
administration of the Incentive Plan; to correct administrative errors; to make all other determinations deemed necessary or advisable
for administering the Incentive Plan and any award granted under the Incentive Plan; and to authorize any person to execute, on behalf
of us, all agreements and documents previously approved by the administrator, among other items.
Eligibility
Any
of our directors, employees, or consultants, or any directors, employees, or consultants of any of our affiliates (except that with respect
to incentive stock options, only employees of us or any of our subsidiaries are eligible), are eligible to participate in the Incentive
Plan.
Available
Shares
Subject
to the adjustment provisions included in the Incentive Plan, a total of 16,000,000 shares of our common stock are authorized for awards
granted under the Incentive Plan. Shares subject to awards that have been canceled, expired, settled in cash, or not issued or forfeited
for any reason (in whole or in part), will not reduce the aggregate number of shares that may be subject to or delivered under awards
granted under the Incentive Plan and will be available for future awards granted under the Incentive Plan.
Types
of Awards
We
may grant the following types of awards under the Incentive Plan: stock awards; options; stock appreciation rights; stock units; or other
stock-based awards.
Stock
Awards. The Incentive Plan authorizes the grant of stock awards to eligible participants. The administrator determines (i) the number
of shares subject to the stock award or a formula for determining such number, (ii) the purchase price of the shares, if any, (iii) the
means of payment for the shares, (iv) the performance criteria, if any, and the level of achievement versus these criteria, (v) the grant,
issuance, vesting, and/or forfeiture of the shares, (vi) restrictions on transferability, and such other terms and conditions determined
by the administrator.
Options.
The Incentive Plan authorizes the grant of non-qualified and/or incentive options to eligible participants, which options give the participant
the right, after satisfaction of any vesting conditions and prior to the expiration or termination of the option, to purchase shares
of our common stock at a fixed price. The administrator determines the exercise price for each share subject to an option granted under
the Incentive Plan, which exercise price cannot be less than the fair market value (as defined in the Incentive Plan) of our common stock
on the grant date. The administrator also determines the number of shares subject to each option, the time or times when each option
becomes exercisable, and the term of each option (which cannot exceed ten (10) years from the grant date).
Stock
Appreciation Rights. The Incentive Plan authorizes the grant of stock appreciation rights to eligible participants, which stock appreciation
rights give the participant the right, after satisfaction of any vesting conditions and prior to the expiration or termination of the
stock appreciation right, to receive in cash or shares of our common stock the excess of the fair market value (as defined in the Incentive
Plan) of our common stock on the date of exercise over the exercise price of the stock appreciation right. All stock appreciation rights
under the Incentive Plan shall be granted subject to the same terms and conditions applicable to options granted under the Incentive
Plan. Stock appreciation rights may be granted to awardees either alone or in addition to or in tandem with other awards granted under
the Incentive Plan and may, but need not, relate to a specific option granted under the Incentive Plan.
Stock
Unit Awards and Other Stock-Based Awards. In addition to the award types described above, the administrator may grant any other type
of award payable by delivery of our common stock in such amounts and subject to such terms and conditions as the administrator determines
in its sole discretion, subject to the terms of the Incentive Plan. Such awards may be made in addition to or in conjunction with other
awards under the Incentive Plan. Such awards may include unrestricted shares of our common stock, which may be awarded, without limitation
(except as provided in the Incentive Plan), as a bonus, in payment of director fees, in lieu of cash compensation, in exchange for cancellation
of a compensation right, or upon the attainment of performance goals or otherwise, or rights to acquire shares of our common stock from
us.
Award
Limits
Subject
to the terms of the Incentive Plan, the aggregate number of shares that may be subject to all incentive stock options granted under the
Incentive Plan cannot exceed the total aggregate number of shares that may be subject to or delivered under awards under the Incentive
Plan. Notwithstanding any other provisions of the Incentive Plan to the contrary, the aggregate grant date fair value (computed as specified
in the Incentive Plan) of all awards granted to any non-employee director during any single calendar year shall not exceed 300,000 shares
during 2019 and, thereafter, 200,000 shares.
New
Plan Benefits
The
amount of future grants under the Incentive Plan is not determinable, as awards under the Incentive Plan will be granted at the sole
discretion of the administrator. We cannot determinate at this time either the persons who will receive awards under the Incentive Plan
or the amount or types of such any such awards.
Transferability
Unless
determined otherwise by the administrator, an award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by beneficiary designation, will, or by the laws of descent or distribution, including but not limited to any attempted
assignment or transfer in connection with the settlement of marital property or other rights incident to a divorce or dissolution, and
any such attempted sale, assignment, or transfer shall be of no effect prior to the date an award is vested and settled.
Termination
of Employment or Board Membership
At
the grant date, the administrator is authorized to determine the effect a termination from membership on the board of directors by a
non-employee director for any reason or a termination of employment (as defined in the Incentive Plan) due to disability (as defined
in the Incentive Plan), retirement (as defined in the Incentive Plan), death, or otherwise (including termination for cause (as defined
in the Incentive Plan)) will have on any award. Unless otherwise provided in the award agreement:
|
● |
Upon
termination from membership on our board of directors by a non-employee director for any reason other than disability or death, any
option or stock appreciation right held by such director that (i) has not vested and is not exercisable as of the termination effective
date will be subject to immediate cancellation and forfeiture or (ii) is vested and exercisable as of the termination effective date
shall remain exercisable for one year thereafter, or the remaining term of the option or stock appreciation right, if less. Any unvested
stock award, stock unit award, or other stock-based award held by a non-employee director at the time of termination from membership
on our board of directors for a reason other than disability or death will immediately be cancelled and forfeited. |
|
● |
Upon
termination from membership on our board of directors by a non-employee director due to disability or death will result in full vesting
of any outstanding option or stock appreciation rights and vesting of a prorated portion of any stock award, stock unit award, or
other stock based award based upon the full months of the applicable performance period, vesting period, or other period of restriction
elapsed as of the end of the month in which the termination from membership on our board of directors by a non-employee director
due to disability or death occurs over the total number of months in such period. Any option or stock appreciation right that vests
upon disability or death will remain exercisable for one year thereafter, or the remaining term of the option or stock appreciation
right, if less. In the case of any stock award, stock unit award, or other stock-based award that vests on the basis of attainment
of performance criteria (as defined in the Incentive Plan), the pro rata vested amount will be based upon the target award. |
|
● |
Upon
termination of employment due to disability or death, any option or stock appreciation right held by an employee will, if not already
fully vested, become fully vested and exercisable as of the effective date of such termination of employment due to disability or
death, or, in either case, the remaining term of the option or stock appreciation right, if less. Termination of employment due to
disability or death shall result in vesting of a prorated portion of any stock award, stock unit award, or other stock based award
based upon the full months of the applicable performance period, vesting period, or other period of restriction elapsed as of the
end of the month in which the termination of employment due to disability or death occurs over the total number of months in such
period. In the case of any stock award, stock unit award, or other stock-based award that vests on the basis of attainment of performance
criteria, the pro-rata vested amount will be based upon the target award. |
|
● |
Any
option or stock appreciation right held by an awardee at retirement that occurs at least one year after the grant date of the option
or stock appreciation right will remain outstanding for the remaining term of the option or stock appreciation right and continue
to vest; any stock award, stock unit award, or other stock based award held by an awardee at retirement that occurs at least one
year after the grant date of the award shall also continue to vest and remain outstanding for the remainder of the term of the award. |
|
● |
Any
other termination of employment shall result in immediate cancellation and forfeiture of all outstanding awards that have not vested
as of the effective date of such termination of employment, and any vested and exercisable options and stock appreciation rights
held at the time of such termination of such termination of employment shall remain exercisable for 90 days thereafter or the remaining
term of the option or stock appreciation right, if less. Notwithstanding the foregoing, all outstanding and unexercised options and
stock appreciation rights will be immediately cancelled in the event of a termination of employment for cause. |
Change
of Control
In
the event of a change of control (as defined in the Incentive Plan), unless other determined by the administrator as of the grant date
of a particular award, the following acceleration, exercisability, and valuation provisions apply:
|
● |
On
the date that a change of control occurs, all options and stock appreciation rights awarded under the Incentive Plan not previously
exercisable and vested will, if not assumed, or substituted with a new award, by the successor to us, become fully exercisable and
vested, and if the successor to us assumes such options or stock appreciation rights or substitutes other awards for such awards,
such awards (or their substitutes) shall become fully exercisable and vested if the participant’s employment is terminated
(other than a termination for cause) within two years following the change of control. |
|
● |
Except
as may be provided in an individual severance or employment agreement (or severance plan) to which an awardee is a party, in the
event of an awardee’s termination of employment within two years after a change of control for any reason other than because
of the awardee’s death, retirement, disability, or termination for cause, each option and stock appreciation right held by
the awardee (or a transferee) that is vested following such termination of employment will remain exercisable until the earlier of
the third anniversary of such termination of employment (or any later date until which it would have remained exercisable under such
circumstances by its terms) or the expiration of its original term. In the event of an awardee’s termination of employment
more than two years after a change of control, or within two years after a change of control because of the awardee’s death,
retirement, disability, or termination for cause, the regular provisions of the Incentive Plan regarding employment termination (described
above) will govern (as applicable). |
|
● |
On
the date that a change of control occurs, the restrictions and conditions applicable to any or all stock awards, stock unit awards,
and other stock-based awards that are not assumed, or substituted with a new award, by the successor to us will lapse and such awards
will become fully vested. Unless otherwise provided in an award agreement at the grant date, upon the occurrence of a change of control
without assumption or substitution of the awards by the successor, any performance-based award will be deemed fully earned at the
target amount as of the date on which the change of control occurs. All stock awards, stock unit awards, and other stock-based awards
shall be settled or paid within 30 days of vesting. Notwithstanding the foregoing, if the change of control would not qualify as
a permissible date of distribution under Section 409A(a)(2)(A) of the Internal Revenue Code, and the regulations thereunder, the
awardee shall be entitled to receive the award from us on the date that would have applied, absent this provision. If the successor
to us does assume (or substitute with a new award) any stock awards, stock unit awards, and other stock-based awards, all such awards
shall become fully vested if the participant’s employment is terminated (other than a termination for cause) within two years
following the change of control, and any performance based award will be deemed fully earned at the target amount effective as of
the termination of employment. |
|
|
|
|
● |
The
administrator, in its discretion, may determine that, upon the occurrence of a change of control of us, each option and stock appreciation
right outstanding will terminate within a specified number of days after notice to the participant, and/or that each participant
receives, with respect to each share subject to such option or stock appreciation right, an amount equal to the excess of the fair
market value of such share immediately prior to the occurrence of such change of control over the exercise price per share of such
option and/or stock appreciation right; such amount to be payable in cash, in one or more kinds of stock or property (including the
stock or property, if any, payable in the transaction), or in a combination thereof, as the administrator, in its discretion, determines
and, if there is no excess value, the administrator may, in its discretion, cancel such awards. |
|
|
|
|
● |
An
option, stock appreciation right, stock award, stock unit award, or other stock-based award will be considered assumed or substituted
for if, following the change of control, the award confers the right to purchase or receive, for each share subject to the option,
stock appreciation right, stock award, stock unit award, or other stock-based award immediately prior to the change of control, the
consideration (whether stock, cash, or other securities or property) received in the transaction constituting a change of control
by holders of shares for each share held on the effective date of such transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that, if such consideration
received in the transaction constituting a change of control is not solely shares of common stock of the successor company, the administrator
may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an
option, stock appreciation right, stock award, stock unit award, or other stock-based award, for each share subject thereto, will
be solely shares of common stock of the successor company with a fair market value substantially equal to the per-share consideration
received by holders of shares in the transaction constituting a change of control. The determination of whether fair market value
is substantially equal shall be made by the administrator in its sole discretion and its determination will be conclusive and binding. |
Tax
and Accounting Considerations
Among
the factors it considers when making executive compensation decisions, the Compensation Committee considers the anticipated tax and accounting
impact to us (and to our executive officers) of various payments, equity awards and other benefits.
The
Compensation Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code, or the Code, as amended
by the Tax Cuts and Jobs Act, or the TCJA. That section generally limits the deductibility of compensation paid by a publicly held company
to “covered employees” for a taxable year to $1.0 million. Effective for taxable years beginning on and after January 1,
2018, “covered employees” generally include our Chief Executive Officer, Chief Financial Officer and other highly compensated
executive officers. Effective for taxable years beginning prior to January 1, 2018, an exception to this deduction limit applied to “performance-based
compensation,” such as cash incentive and stock option awards, that satisfied certain criteria. This exception to the Section 162(m)
deduction limit for “performance-based compensation” was repealed by the TCJA. Thus, except for certain “performance-based
compensation” payable pursuant to written contracts that were in effect on November 2, 2017 and that are not modified in any material
respect on or after that date, effective for taxable years beginning on and after January 1, 2018 our tax deduction with regard to compensation
of “covered employees” is limited to $1.0 million per taxable year with respect to each executive officer. With respect to
cash and equity awards that were in effect on November 2, 2017, and that are not modified in any material respect on or after that date,
the Committee is mindful of the benefit to us and our stockholders of the full deductibility of compensation and have taken steps so
that both the cash incentive and stock option awards that we granted may qualify for deductibility under Section 162(m) of the Code.
However, awards that we granted that were intended to qualify as “performance-based compensation” may not necessarily qualify
for such status under Section 162(m) of the Code. With respect to cash incentive and equity awards that we may grant in the future, we
do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our
results of operations.
The
Compensation Committee also considers the impact of Section 409A of the Code, and in general, our executive plans and programs are designed
to comply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance.
We
account for equity awards in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification,
or FASB ASC, Topic 718, Stock Compensation.
Our
change-of-control and severance Agreements do not allow for excise tax gross up payments.
Amendment
and Termination
The
administrator may amend, alter, or discontinue the Incentive Plan or any award agreement, but any such amendment is subject to the approval
of our stockholders in the manner and to the extent required by applicable law. In addition, without limiting the foregoing, unless approved
by our stockholders and subject to the terms of the Incentive Plan, no such amendment shall be made that would (i) increase the maximum
aggregate number of shares that may be subject to awards granted under the Incentive Plan, (ii) reduce the minimum exercise price for
options or stock appreciation rights granted under the Incentive Plan, or (iii) reduce the exercise price of outstanding options or stock
appreciation rights, as prohibited by the terms of the Incentive Plan without stockholder approval.
No
amendment, suspension, or termination of the Incentive Plan will impair the rights of any participant with respect to an outstanding
award, unless otherwise mutually agreed between the participant and the administrator, which agreement must be in writing and signed
by the participant and us, except that no such agreement will be required if the administrator determines in its sole discretion that
such amendment either (i) is required or advisable in order for us, the Incentive Plan, or the award to satisfy any applicable law or
to meet the requirements of any accounting standard or (ii) is not reasonably likely to diminish the benefits provided under such award
significantly, or that any such diminution has been adequately compensated, except that this exception shall not apply following a change
of control. Termination of the Incentive Plan will not affect the administrator’s ability to exercise the powers granted to it
hereunder with respect to awards granted under the Incentive Plan prior to the date of such termination.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth, for each named executive officer, certain information concerning outstanding restricted stock awards as of
December 31, 2021:
Name | |
Number of securities underlying unvested restricted stock awards (#) | | |
Fair Value ($) | | |
Vest date |
Rory J. Cutaia | |
| 176,413 | | |
| 1.36 | | |
December 23, 2023(1) |
| |
| 50,000 | | |
| 1.36 | | |
December 23, 2022(2) |
| |
| 353,774 | | |
| 1.06 | | |
July 29, 2024(3) |
| |
| 317,682 | | |
| 1.69 | | |
January 4, 2025(4) |
| |
| | | |
| | | |
|
Jeffrey R. Clayborne(5) | |
| 132,310 | | |
| 1.36 | | |
December 23, 2023(1) |
| |
| 25,000 | | |
| 1.36 | | |
December 23, 2022(2) |
| |
| 212,265 | | |
| 1.06 | | |
July 29, 2024(3) |
| |
| 190,609 | | |
| 1.69 | | |
January 4, 2025(4) |
(1)
|
25%
vesting on the first, second, third, and fourth anniversaries from the grant date. |
|
|
(2)
|
25%
on grant date and 25% vesting on the first, second, and third anniversaries from the grant date |
|
|
(3)
|
25%
vesting on the first, second, third, and fourth anniversaries from the grant date. |
|
|
(4)
|
25%
vesting on the first, second, third, and fourth anniversaries from the grant date. |
|
|
(5)
|
Mr.
Clayborne resigned as our Chief Financial Officer and Treasurer effective January 20, 2022. |
The
following table sets forth, for each named executive officer, certain information concerning outstanding option awards as of December
31, 2021:
Name | |
Number of securities underlying unexercised options (exercisable) (#) | | |
Number of securities underlying unexercised options (unexercisable) (#) | | |
Option Exercise price ($) | | |
Option expiration date |
Rory J. Cutaia | |
| - | | |
| 189,645 | | |
| 1.13 | | |
January 10, 2022(1) |
| |
| - | | |
| 143,085 | | |
| 1.13 | | |
January 10, 2022(2) |
| |
| 16,667 | | |
| - | | |
| 4.35 | | |
January 8, 2024(5) |
| |
| 16,667 | | |
| - | | |
| 1.16 | | |
December 18, 2022(5) |
| |
| 133,333 | | |
| - | | |
| 1.20 | | |
January 9, 2022(5) |
| |
| | | |
| | | |
| | | |
|
Jeffrey R. Clayborne(6) | |
| - | | |
| 55,129 | | |
| 1.13 | | |
January 10, 2022(3) |
| |
| - | | |
| 71,542 | | |
| 1.13 | | |
January 10, 2022(4) |
| |
| 33,333 | | |
| - | | |
| 5.33 | | |
May 3, 2022(5) |
| |
| 133,333 | | |
| - | | |
| 1.20 | | |
January 9, 2022(5) |
| |
| 12,876 | | |
| - | | |
| 1.35 | | |
January 21, 2023(5) |
(1)
|
189,645
shares will vest on January 10, 2022. |
|
|
(2)
|
143,085
shares will vest on January 10, 2022. |
|
|
(3)
|
55,129
shares will vest on January 10, 2022. |
|
|
(4)
|
71,542
shares will vest on January 10, 2022. |
|
|
(5)
|
All
shares have fully vested. |
|
|
(6)
|
Mr.
Clayborne resigned as our Chief Financial Officer and Treasurer effective January 20, 2022. |
Resignation,
Retirement, Other Termination, or Change-of-Control Arrangements
Other
than as disclosed below, we have no contract, agreement, plan, or arrangement, whether written or unwritten, that provides for payments
to our directors or executive officers at, following, or in connection with the resignation, retirement, or other termination of our
directors or executive officers, or a change of control of our company or a change in our directors’ or executive officers’
responsibilities following a change of control.
Rory
J. Cutaia
Pursuant
to Mr. Cutaia’s employment agreement dated December 20, 2019, Mr. Cutaia is entitled to the following severance package in the
event he is “terminated without cause,” “terminated for good reason,” or “terminated upon permanent disability”:
(i) monthly payments of $35,833 or such sum equal to his monthly base compensation at the time of the termination, whichever is higher,
for a period of 36 months from the date of such termination and (ii) reimbursement for COBRA health insurance costs for 18 months from
the date of such termination and, thereafter, reimbursement for health insurance costs for Mr. Cutaia and his family during the immediately
subsequent 18-month period. In addition, all of Mr. Cutaia’s then-unvested restricted stock awards or other awards will immediately
vest, without restriction, and any unearned and unpaid bonus compensation, expense reimbursement, and all accrued vacation, personal,
and sick days, and related items shall be deemed earned, vested, and paid immediately. For purposes of the employment agreement, “terminated
without cause” means if Mr. Cutaia were to be terminated for any reason other than a discharge for cause or due to Mr. Cutaia’s
death or permanent disability. For purposes of the employment agreement, “terminated for good reason” means the voluntary
termination of the employment agreement by Mr. Cutaia if any of the following were to occur without his prior written consent, which
consent cannot be unreasonably withheld considering our then-current financial condition, and, in each case, which continues uncured
for 30 days following receipt by us of Mr. Cutaia’s written notice: (i) there is a material reduction by us in (A) Mr. Cutaia’s
annual base salary then in effect or (B) the annual target bonus, as set forth in the employment agreement, or the maximum additional
amount up to which Mr. Cutaia is eligible pursuant to the employment agreement; (ii) we reduce Mr. Cutaia’s job title and position
such that Mr. Cutaia (A) is no longer our Chief Executive Officer; (B) is no longer our Chairman of the Board; or (C) is involuntarily
removed from our board of directors; or (iii) Mr. Cutaia is required to relocate to an office location outside of Orange County, California,
or outside of a 30-mile radius of Newport Beach, California. For purposes of the employment agreement, “terminated upon permanent
disability” means if Mr. Cutaia were to be terminated because he is then unable to perform his duties due to a physical or mental
condition for (i) a period of 120 consecutive days or (ii) an aggregate of 180 days in any 12-month period.
Director
Compensation Table
The
table below summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31, 2021:
Name(1) | |
Fees earned or paid in cash ($) | | |
Stock awards ($) | | |
Total ($) | |
James P. Geiskopf | |
| 175,000 | | |
| 172,000 | (2) | |
| 347,000 | |
| |
| | | |
| | | |
| | |
Philip J. Bond | |
| 75,000 | | |
| 86,000 | (3) | |
| 161,000 | |
| |
| | | |
| | | |
| | |
Kenneth S. Cragun | |
| 75,000 | | |
| 86,000 | (3) | |
| 161,000 | |
| |
| | | |
| | | |
| | |
Nancy Heinen | |
| 75,000 | | |
| 86,000 | (3) | |
| 161,000 | |
| |
| | | |
| | | |
| | |
Judith Hammerschmidt | |
| 75,000 | | |
| 86,000 | (3) | |
| 161,000 | |
(1) |
Rory
J. Cutaia, our Chairman of the Board, Chief Executive Officer, President, and Secretary during the fiscal year ending December 31,
2021, is not included in this table as he was an employee, and, thus, received no compensation for his services as a director. The
compensation received by Mr. Cutaia as an employee is disclosed in the section entitled “Executive Compensation –
Summary Compensation Table” appearing elsewhere in this Annual Report. |
|
|
(2) |
Represents
a restricted stock unit totaling 101,658 shares of our common stock valued at $1.69 per share, which was the closing price reported
on The Nasdaq Capital Market. The restricted stock unit vested on the first anniversary from the grant date. |
|
|
(3) |
Represents
a restricted stock unit totaling 50,829 shares of our common stock valued at $1.69 per share, which was the closing price reported
on The Nasdaq Capital Market. The restricted stock unit vested on the first anniversary from the grant date. |
Narrative
Disclosure to Director Compensation Table
The
annual board fee payable in cash and our common stock for our Lead Director and directors is 175,000 and 75,000, respectively. In addition,
we intend to provide a restricted stock unit based on recommendations from our compensation consultants. Our directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board
of directors. Our board of directors may award special remuneration to any director undertaking any special services on their behalf
other than services ordinarily required of a director.
James
P. Geiskopf
Mr.
Geiskopf earned total cash compensation for his services to us in the amount of $175,000 and $152,000 for fiscal years 2021 and 2020,
respectively.
On
January 4, 2021, we granted Mr. Geiskopf a restricted stock unit totaling $172,000 payable in 101,658 shares of our common stock. The
restricted stock award vests on the first anniversary from the grant date. The price per share as reported by the Nasdaq Capital Market
on the day of issuance was $1.69 and was used to calculate fair market value.
On
April 10, 2020, we granted Mr. Geiskopf a restricted stock unit totaling $12,000 payable in 9,782 shares of our common stock as part
of the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the
completion of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq
Capital Market. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate
fair market value.
On
July 29, 2020, we granted Mr. Geiskopf a restricted stock unit totaling $160,000 payable in 150,943 shares of our common stock. The restricted
stock award vests on the first anniversary from the grant date. The price per share as reported by The Nasdaq Capital Market on the day
of issuance was $1.06 and was used to calculate fair market value.
On
July 29, 2020, we granted Mr. Geiskopf a restricted stock unit totaling $35,000 payable in 33,078 shares of our common stock. The restricted
stock unit vested on grant date. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.06 and was
used to calculate fair market value.
Philip
J. Bond
Mr.
Bond earned total cash compensation for his services to us in the amount of $75,000 and $70,000 for the fiscal years ending December
31, 2021 and 2020, respectively.
On
January 4, 2021, we granted Mr. Bond a restricted stock unit totaling $86,000 payable in 50,829 shares of our common stock. The restricted
stock award vests on the first anniversary from the grant date. The price per share as reported by the Nasdaq Capital Market on the day
of issuance was $1.69 and was used to calculate fair market value.
On
April 10, 2020, we granted Mr. Bond a restricted stock unit totaling $6,000 payable in 4,891 shares of our common stock as part of the
Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the completion
of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq Capital Market.
The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate fair market value.
On
July 29, 2020, we granted Mr. Bond a restricted stock unit totaling $80,000 payable in 75,472 shares of our common stock. The restricted
stock unit vests on the first anniversary from the grant date. The price per share as reported by The Nasdaq Capital Market on the day
of issuance was $1.06 and was used to calculate fair market value.
Kenneth
S. Cragun
Mr.
Cragun earned total cash compensation for his services to us in the amount of $75,000 and $70,000 for the fiscal years ending December
31, 2021 and 2020, respectively.
On
January 4, 2021, we granted Mr. Cragun a restricted stock unit totaling $86,000 payable in 50,829 shares of our common stock. The restricted
stock award vests on the first anniversary from the grant date. The price per share as reported by the Nasdaq Capital Market on the day
of issuance was $1.69 and was used to calculate fair market value.
On
April 10, 2020, we granted Mr. Cragun a restricted stock unit totaling $6,000 payable in 4,891 shares of our common stock as part of
the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the completion
of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq Capital Market.
The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate fair market value.
On
July 29, 2020, we granted Mr. Cragun a restricted stock unit totaling $80,000 payable in 75,472 shares of our common stock. The restricted
stock unit vests on the first anniversary from the grant date. The price per share as reported by The Nasdaq Capital Market on the day
of issuance was $1.06 and was used to calculate fair market value.
Nancy
Heinen
Ms.
Heinen earned total cash compensation for his services to us in the amount of $75,000 and $64,000 for the fiscal years ending December
31, 2021 and 2020 respectively.
On
January 4, 2021, we granted Ms. Heinen a restricted stock unit totaling $86,000 payable in 50,829 shares of our common stock. The restricted
stock award vests on the first anniversary from the grant date. The price per share as reported by the Nasdaq Capital Market on the day
of issuance was $1.69 and was used to calculate fair market value.
On
April 10, 2020, we granted Ms. Heinen a restricted stock unit totaling $6,000 payable in 4,891 shares of our common stock as part of
the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the completion
of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq Capital Market.
The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate fair market value.
On
July 29, 2020, we granted Ms. Heinen a restricted stock unit totaling $80,000 payable in 75,472 shares of our common stock. The restricted
stock unit vests on the first anniversary from the grant date. The price per share as reported by The Nasdaq Capital Market on the day
of issuance was $1.06 and was used to calculate fair market value.
Judith
Hammerschmidt
Ms.
Hammerschmidt earned total cash compensation for his services to us in the amount of $75,000 and $64,000 for the fiscal years ending
December 31, 2021 and 2020, respectively.
On
January 4, 2021, we granted Ms. Hammerschmidt a restricted stock unit totaling $86,000 payable in 50,829 shares of our common stock.
The restricted stock award vests on the first anniversary from the grant date. The price per share as reported by the Nasdaq Capital
Market on the day of issuance was $1.69 and was used to calculate fair market value.
On
April 10, 2020, we granted Ms. Hammerschmidt a restricted stock unit totaling $6,000 payable in 4,891 shares of our common stock as part
of the Company’s COVID-19 Full Employment and Cash Preservation Plan. The restricted stock unit vested on July 15, 2020 at the
completion of the plan. The price per share was $1.198, which was the 21-day volume weighted average price as reported by The Nasdaq
Capital Market. The price per share as reported by The Nasdaq Capital Market on the day of issuance was $1.47 and was used to calculate
fair market value.
On
July 29, 2020, we granted Ms. Hammerschmidt a restricted stock unit totaling $80,000 payable in 75,472 shares of our common stock. The
restricted stock unit vests on the first anniversary from the grant date. The price per share as reported by The Nasdaq Capital Market
on the day of issuance was $1.06 and was used to calculate fair market value.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth, for each non-employee director, certain information concerning outstanding restricted stock awards as of
December 31, 2021:
Name | |
Number of securities underlying unvested restricted stock awards (#) | | |
Fair Value ($) | | |
Vest date |
James P. Geiskopf | |
| 101,658 | | |
| 1.69 | | |
January 4, 2022(1) |
| |
| | | |
| | | |
|
Philip J. Bond | |
| 50,829 | | |
| 1.69 | | |
January 4, 2022(1) |
| |
| | | |
| | | |
|
Kenneth S. Cragun | |
| 50,829 | | |
| 1.69 | | |
January 4, 2022(1) |
| |
| | | |
| | | |
|
Nancy Heinen | |
| 29,403 | | |
| 1.36 | | |
December 23, 2022(2) |
| |
| 50,829 | | |
| 1.69 | | |
January 4, 2022(1) |
| |
| | | |
| | | |
|
Judith Hammerschmidt | |
| 29,403 | | |
| 1.36 | | |
December 23, 2022(2) |
| |
| 50,829 | | |
| 1.69 | | |
January 4, 2022(1) |
(1)
|
Fully
vests on the first anniversary from the grant date. |
|
|
(2)
|
33%
vesting on the first, second, and third anniversaries from the grant date. |
The
following table sets forth, for each non-employee director, certain information concerning outstanding option awards as of December 31,
2021:
Name | |
Number of securities underlying unexercised options (exercisable) (#) | | |
Number of securities underlying unexercised options (unexercisable) (#) | | |
Option exercise price ($) | | |
Option expiration date |
James P. Geiskopf | |
| 133,333 | | |
| - | | |
| 1.20 | | |
January 9, 2022(1) |
| |
| | | |
| | | |
| | | |
|
Philip J. Bond | |
| 50,000 | | |
| 16,667 | | |
| 7.50 | | |
August 27, 2023(2) |
| |
| | | |
| | | |
| | | |
|
Kenneth S. Cragun | |
| 50,000 | | |
| 16,667 | | |
| 7.50 | | |
August 27, 2023(2) |
(1)
|
All
shares have fully vested. |
|
|
(2)
|
25%
vest on the grant date and 25% vest on the first, second, and third anniversaries from the grant date. |