ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Directors
Name
of Director |
|
Age |
|
Director
Since |
General
James T. Conway |
|
74 |
|
January
6, 2015 |
Ralph
Faison |
|
63 |
|
January
1, 2020 |
Brian
K. Krolicki |
|
61 |
|
February
1, 2020 |
Carleton
M. Miller |
|
58 |
|
January
15, 2020 |
Jude
T. Panetta |
|
62 |
|
May
1, 2019 |
Susan
Swenson |
|
73 |
|
October
31, 2018 |
Carleton
M. Miller, Chief Executive Officer, President and Director
Mr.
Miller has served as Chief Executive Officer and a member of the Board since January 2020, and as President since March 2020. From 2010
to 2016, Mr. Miller was a co-founder, chief executive officer, president and a member of the board of directors of BLiNQ Networks, Inc.
(“BLiNQ”), an innovator of wireless connectivity solutions for the communications market. Mr. Miller launched BLiNQ with
a vision to create a new market category for mobile operators to build scalable high-density wireless broadband networks. He raised approximately
$35 million from venture capital and individual investors over three accretive rounds. BLiNQ was sold to Communications Components, Inc.
in November 2016.
Mr.
Miller received his B.S. in industrial engineering from the University of Missouri in 1985, his M.B.A. in finance and marketing from
Rockhurst College in 1989, and completed the corporate finance program at the London Business School in 1995.
We
believe Mr. Miller is qualified to serve on our Board based on his extensive executive officer experience with technology and networking
companies.
Susan
Swenson, Chairman of the Board
Ms.
Swenson has served as Chairman of the Board since October 2018. Ms. Swenson has several decades of operating experience in wireless telecom,
video technologies and digital media, as well as telematics and small business software. Since July 2021, Ms. Swenson has served on the
board of Faraday Future Intelligent Electric Inc. (Nasdaq: FFIE), an electric vehicle maker and a global shared intelligent mobility
ecosystem company. Since March 2019, Ms. Swenson has served on the board of Sonim Technologies Inc. (Nasdaq: SONM), where she currently
chairs the compensation committee. Since February 2012, Ms. Swenson has served on the board of Harmonic, Inc. (Nasdaq: HLIT), a video
delivery and media company, where she is chair of the governance & nominating committee. From August 2012 to August 2018, Ms. Swenson
served on the board of FirstNet, an independent authority within the NTIA/Department of Commerce responsible for establishing a single
nationwide public safety broadband network, and was chair of the board from 2014 to 2018. From December 2015 to June 2017, Ms. Swenson
served as Chairperson and Chief Executive Officer of Inseego Corporation (formerly Novatel Wireless; Nasdaq: INSG), a wireless internet
solutions and telematics provider, and served as the board chairperson from April 2014 to June 2017. From February 2004 to October 2005,
Ms. Swenson served as the President and Chief Operating Officer of T-Mobile US, Inc. From 1999 to 2004, Ms. Swenson served as President
of Leap Wireless International, Inc., and Chief Executive Officer of Cricket Communications, Inc., a prepaid wireless service provider
and subsidiary of Leap. Ms. Swenson also served as Chief Executive Officer of Sage North America from 2008 to 2011. Ms. Swenson previously
served on the board of directors of Wells Fargo from November 1994 to December 2017. Ms. Swenson received a B.A. in French from San Diego
State University.
We
believe Ms. Swenson is qualified to serve on our Board based on her extensive experience with technology and networking companies and
broad experience in the telecommunications industry.
General
James T. Conway, Director
General
Conway is a retired General in the United States Marine Corps who served as the 34th Commandant of the Marine Corps from 2006 through
his retirement in 2010 and concurrently as a member of the Joint Chiefs of Staff. Prior to being named Commandant, Mr. Conway served
as Director of Operations (J-3) on the Joint Chiefs of Staff. Among his previous postings were Commanding General of I Marine Expeditionary
Force from 2002 through 2004 (which involved two combat tours in Iraq), Commanding General of the 1st Marine Division, and President
of the Marine Corps University. Since 2011, General Conway has served on the governance and audit committees of the board of Textron
(NYSE: TXT), an American industrial conglomerate.
We
believe General Conway is qualified to serve on our Board based on his significant experience assessing and implementing military technology
operations.
Jude
T. Panetta, Director
Jude
Panetta was most recently with Hale Capital as an Operating Partner from 2017 to 2019. Prior to Hale Capital, he had a 30 plus year career
leading technology companies in the Telecommunications, Satellite, Wireless and Power Industries. From 2013 to 2017, Mr. Panetta served
as Vice President of Strategy and Technology at Comtech TCS, and prior to that he served as Vice President of Government Systems at TeleCommunication
Systems Inc.; President and Chief Executive Officer of ASC Signal Corporation; Group President of Andrew Corp.; Vice President and General
Manager of Andrew Corp’s radio frequency power amplifier business; VP of Operations at Celiant (acquired by Andrew Corp.), VP of
Operations at Adtran Corp.; and Director of Operations at Exide Electronics Corporation. During his career, Mr. Panetta has held a leading
role in over a dozen acquisitions and divestitures. He is a Graduate of GE’s Manufacturing Management Program and holds a Bachelor
of Science (BS) in Mechanical Engineering from the University of Virginia. Mr. Panetta recently retired from serving as a Lieutenant
in the St. James, NC Fire Department.
We
believe Mr. Panetta is qualified to serve on our Board based on his operating background in the satellite and telecom industries as well
as his broad experience in operations and finance.
Ralph
Faison, Director
Mr.
Faison currently serves as Chairman of Arlo Technologies, Inc., a home automation company that offers a cloud-based platform with a variety
of connected devices. Mr. Faison has served on the board of directors of Giga IO since 2017, a private company focused on memory fabric
solutions; Arlo Technologies since 2018, a wireless surveillance camera maker; and (3) Wilson Electronics since 2018, a private company
that makes wireless signal boosting devices. Mr. Faison previously served as a director of Amber Road, Inc., a cloud-based global trade
management software-as-a-service (SaaS) provider and of NETGEAR from August 2003 to August 2018. Mr. Faison currently is a private investor.
From January 2011 to July 2014, Mr. Faison served as the President and Chief Executive Officer and chair of the board of directors of
Pulse (“Pulse”), a public company and manufacturer of electronic components. From February 2003 through December 2007, Mr.
Faison served as Chief Executive Officer of Andrew Corporation, a public company and a manufacturer of communications equipment and systems.
He also served at various times as President, Chief Operating Officer, and Director at Andrew Corporation. From June 2001 to June 2002,
Mr. Faison was President and Chief Executive Officer of Celiant Corporation, a manufacturer of power amplifiers and wireless radio frequency
systems, which was acquired by Andrew Corporation. From October 1997 to June 2001, Mr. Faison was Vice President of the New Ventures
Group at Lucent Technologies, a communications service provider, and from 1995 to 1997, he was Vice President of advertising and brand
management at Lucent. Prior to joining Lucent, Mr. Faison also held various positions at AT&T, a voice and data communications company,
including as Vice President and General Manager of AT&T’s wireless business unit and manufacturing Vice President for its consumer
products unit in Bangkok, Thailand. Mr. Faison received an undergraduate degree from Georgia State University and a graduate degree from
Stanford University.
We
believe Mr. Faison is qualified to serve on our Board due to his extensive experience in leading and managing large international companies;
he is well versed in the complex manufacturing and distribution systems that today’s multinational companies implement. Based on
Mr. Faison’s recent public company chair and chief executive officer experience, we believe he is able to advise the Company on
many aspects of public company governance and management.
Brian
Krolicki, Director
Mr.
Krolicki has extensive experiences in both the public and private sectors, and has served as a director or member of the advisory board
in various companies. Mr. Krolicki was the Lieutenant Governor of the State of Nevada from 2007 to 2014 and the State Treasurer of the
State of Nevada from 1999 to 2006. Mr. Krolicki also served in a wide variety of critical positions, including Chairman of the Nevada
Commission on Economic Development and President of the Nevada State Senate. During his tenure as State Treasurer, Nevada became the
first state treasury to receive the Certificate of Excellence in Investment Policy. In 2004, Brian was honored with the prestigious Award
for Excellence in Public Finance and, in the same year, earned the distinction the nation’s “Most Outstanding State Treasurer.”
Since May 2020, Mr. Krolicki has been a member of the board of Faraday Future Intelligent Electric Inc. (Nasdaq: FFIE), an electric vehicle
maker and a global shared intelligent mobility ecosystem company). Since February 2016, he has been a member of the board (and audit
committee chair) of Nevada Nanotech Systems. He is also the director of government relations of Customer Engagement Technologies, a payment
solutions company in partnership with JPMorgan Chase. Mr. Krolicki holds a B.A. degree in Political Science from Stanford University.
Mr.
Krolicki is qualified to serve on our Board based on his extensive experience in the financial and public contracting sectors. Our Board
has nominated Mr. Krolicki to continue to serve as a director due to, among other things, his knowledge of the political process on both
the state and federal level and his public company board service.
Executive
Officers
Set
forth below is the name, age, and certain biographical information for each of our current executive officers:
Name |
|
Position |
|
Age |
Carleton
M. Miller |
|
Chief
Executive Officer and President |
|
58 |
Michael
Bond |
|
Chief
Financial Officer and Treasurer |
|
65 |
Biographies
The
biography for Carleton M. Miller can be found above under Directors.
Michael
Bond
Mr.
Bond has served as our Chief Financial Officers and Treasurer since April 1, 2020. Prior thereto, he was a consultant to several companies
since 2016, including to the Company since January 27, 2020. He was the Chief Financial Officer of Pulse Electronics Corporation
(“Pulse”) from 2013 until 2016. Prior to such time, Mr. Bond held the positions of Vice President and Treasurer of
Pulse from 2011 to 2013. From 2008 to 2011, Mr. Bond was Senior Consultant and Principal at Clear Strategic Solutions, Inc., a
financial and corporate development consulting firm. Mr. Bond is an experienced financial executive with over 30 years of experience,
including as Head of Corporate Development and Mergers and Acquisitions at Lucent Technologies, and held similar roles at Avaya and AT&T.
Mr. Bond has also held the positions of Senior Auditor at Deloitte, and Corporate Controller and VP of Finance at the Brookwood Companies,
Inc. and at Bellwether, Inc.
CORPORATE
GOVERNANCE
Board
of Directors
The
Board oversees our business affairs and monitors the performance of our management. In accordance with our corporate governance principles,
the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Chief
Executive Officer, other key executives and by reading the reports and other materials sent to them and by participating in Board and
committee meetings. Our directors hold office until the next Annual Meeting of Stockholders and until their successors are elected and
qualified or until their earlier resignation or removal, or if for some other reason they are unable to serve in the capacity of director.
Our
Board currently consists of six members: General James T. Conway, Ralph Faison, Brian K. Krolicki, Carleton M. Miller, Jude T. Panetta
and Susan Swenson (Chairman). All of our directors will serve until our next Annual Meeting of Stockholders and until their successors
are duly elected and qualified.
Board
Diversity
Each
of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity Matrix |
Board Size: | |
| | |
| | |
| | |
| |
Total Number of Directors | |
6 | | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Gender: | |
| Male | | |
| Female | | |
| Non-Binary | | |
| Gender Undisclosed | |
| |
| 5 | | |
| 1 | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Number of directors who identify in any of the categories below: | |
| | | |
| | | |
| | | |
| | |
African American or Black | |
| — | | |
| — | | |
| — | | |
| — | |
Alaskan Native or American Indian | |
| — | | |
| — | | |
| — | | |
| — | |
Asian | |
| — | | |
| — | | |
| — | | |
| — | |
Hispanic or Latinx | |
| — | | |
| — | | |
| — | | |
| — | |
Native Hawaiian or Pacific Islander | |
| — | | |
| — | | |
| — | | |
| — | |
White | |
| 5 | | |
| 1 | | |
| — | | |
| — | |
Two or more races or ethnicities | |
| — | | |
| — | | |
| — | | |
| — | |
Of
our six current directors, one identify (16.66%) as having at least one diversity characteristic (i.e. female, non-binary, LGBTQ+ and/or
race or ethnicity other than white).
Director
Independence
As
we are listed on the Nasdaq Capital Market, our determination of independence of directors is made using the definition of ”independent
director” contained in Rule 5605(a)(2) of the Marketplace Rules of the Nasdaq Stock Market LLC (“Nasdaq”) (“Nasdaq
Rule 5605(a)(2)”). As of the date of this Amendment, our Board affirmatively determined that Susan Swenson, General James T. Conway,
Jude T. Panetta, Ralph Faison and Brian K. Krolicki are “independent directors” within the meaning of Nasdaq Rule 5605(a)(2).
As of the date of this Amendment, we intend the six (6) director nominees to constitute a majority independent board under Rule 5605(b)(1)
of the Marketplace Rules of Nasdaq and as such, we will be in compliance with the Marketplace Rules of Nasdaq.
Board
Meetings and Attendance
|
1. |
During
fiscal year 2021, the Board held five physical and telephonic meetings. No incumbent director attended, either in person or via telephone,
fewer than 75% of the aggregate of all meetings of the Board and the committees of the Board on which such director served during
the period the director was on the Board or committee. The Board also approved certain actions by unanimous written consent. |
Annual
Meeting Attendance
It
is the Company’s policy to invite and encourage directors and director nominees to attend the Annual Meeting. The 2021 annual meeting
of stockholders was attended by each of the directors.
Board
Committees
Our
Board has an Audit Committee, a Compensation Committee and a Governance and Nomination Committee. Each committee has a written charter
and has the composition and responsibilities described below.
Audit
Committee |
|
Compensation
Committee |
|
Governance
and Nomination Committee |
Susan
Swenson* |
|
Ralph
Faison* |
|
General
James T. Conway* |
Ralph
Faison |
|
Brian
K. Krolicki |
|
Jude
T. Panetta |
General
James T. Conway |
|
Jude
T. Panetta |
|
|
*
Denotes Chairman of Committee.
Audit
Committee
We
have an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The members of our Audit Committee are Susan Swenson, Ralph Faison and General James T. Conway. Susan Swenson, Ralph Faison
and General James T. Conway are “independent directors” within the meaning of Rule 10A-3 under the Exchange Act and Nasdaq
Rule 5605(a)(2). Susan Swenson serves as chairman of our Audit Committee. The Board has determined that each of Susan Swenson and Ralph
Faison is an “audit committee financial expert” as defined under Item 5(a)(ii) and (iii) of Regulation S-K.
The
Audit Committee oversees our accounting and financial reporting processes and oversees the audit of our financial statements and the
effectiveness of our internal control over financial reporting. The specific functions of the Audit Committee include:
|
● |
Selecting
an independent registered public accounting firm and overseeing the engagement of such firm; |
|
|
|
|
● |
Approving
the fees to be paid to the independent registered public accounting firm; |
|
|
|
|
● |
Reviewing
the independence of our independent registered public accounting firm; |
|
|
|
|
● |
Overseeing
the integrity of our financial statements; |
|
|
|
|
● |
Reviewing
any significant changes to our accounting principles and practices; |
|
|
|
|
● |
Reviewing
and approving all related party transactions; and |
|
|
|
|
● |
Overseeing
our compliance with legal and regulatory requirements. |
In
2021, the Audit Committee held four physical and telephonic meetings.
Compensation
Committee
The
members of our Compensation Committee are Ralph Faison, Brian K. Krolicki and Jude T. Panetta. Each member of the Compensation Committee
is “independent” within the meaning of Nasdaq Rule 5605(a)(2). In addition, each member of our Compensation Committee qualifies
as a “non-employee director” under Rule 16b-3 of the Exchange Act. Our Compensation Committee assists the Board in the discharge
of its responsibilities relating to the compensation of the members of the Board and our executive officers. Ralph Faison serves as Chairman
of our Compensation Committee.
The
Compensation Committee’s compensation-related responsibilities include:
|
● |
Reviewing
approving and recommending to our Board on an annual basis the compensation of our Chief Executive Officer, including relevant corporate
goals and objectives; |
|
|
|
|
● |
Reviewing
and approving on an annual basis the performance and compensation of our other executive officers; |
|
|
|
|
● |
Reviewing
our incentive compensation and other stock-based plans, recommending to our Board any necessary changes, and administering such plans
on behalf of the Board; |
|
|
|
|
● |
Reviewing
and recommending to our Board the compensation of independent directors, including incentive and equity-based compensation; and |
|
|
|
|
● |
Selecting
and retaining compensation consultants, outside counsel and other advisors as it deems necessary or appropriate. |
For
executive officers other than the Chief Executive Officer, the compensation committee solicits and considers evaluations and recommendations
submitted to the compensation committee by the Chief Executive Officer with respect to individual employee performance. In the case of
the Chief Executive Officer, the evaluation of his performance is conducted by the compensation committee with input from other independent
Board members, which determines any adjustments to his compensation as well as awards to be granted. For all executives and directors
as part of its deliberations, the compensation committee may review and consider, as appropriate, materials such as financial reports
and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become
payable to executives in various hypothetical scenarios, executive and director share ownership information, stock performance data,
analyses of historical executive compensation levels and current Company-wide compensation levels and recommendations of a compensation
consultant, including analyses of executive and director compensation paid at other companies identified by the consultant to be comparable
to us.
In
2021, the Compensation Committee held four physical and telephonic meetings.
Governance
and Nomination Committee
The
members of our Governance and Nomination Committee are General James T. Conway and Jude T. Panetta. Each member of the Governance and
Nomination Committee is “independent” within the meaning of Nasdaq Rule 5605(a)(2). The purpose of the Governance and Nomination
Committee is to recommend to the Board nominees for election as directors and persons to be elected to fill any vacancies on the Board,
develop and recommend a set of corporate governance principles and oversee the performance of the Board. General James T. Conway serves
as chairman of our Governance and Nomination Committee.
The
Governance and Nomination Committee’s responsibilities include:
|
● |
Recommending
to the Board nominees for election as directors at any meeting of stockholders and nominees to fill vacancies on the Board; |
|
|
|
|
● |
Annually
reviewing the director selection criteria contained in the Company’s Corporate Governance Guidelines and recommending to our
Board any necessary changes. |
|
|
|
|
● |
Annually
recommending to the Board the directors to be appointed to each committee of the Board; and |
|
|
|
|
● |
Oversee
the implementation of and monitor compliance with, the Company’s Corporate Governance Guidelines, and periodically review and
recommend any necessary or appropriate changes thereto. |
The
Governance and Nominations Committee may delegate any of its responsibilities to subcommittees as it deems appropriate. The Governance
and Nominations Committee is authorized to retain independent legal and other advisors and conduct or authorize investigations into any
matter within the scope of its duties.
The
Governance and Nomination Committee will consider candidates proposed by stockholders and will apply the same criteria and follow substantially
the same process in considering such candidates as it does when considering other candidates. The Governance and Nomination Committee
may adopt, in its discretion, separate procedures regarding director candidates proposed by our stockholders. Director recommendations
by stockholders must be in writing, include a resume of the candidate’s business and personal background and include a signed consent
that the candidate would be willing to be considered as a nominee to the Board and, if elected, would serve. Such recommendation must
be sent to the Company’s Secretary at the Company’s executive offices. When it seeks nominees for directors, our Governance
and Nomination Committee takes into account a variety of factors including (a) ensuring that the Board, as a whole, is diverse and consists
of individuals with varied and relevant career experience, relevant technical skills, industry knowledge and experience, financial expertise
(including expertise that could qualify a director as a “financial expert”, as that term is defined by the rules of the SEC),
local or community ties and (b) minimum individual qualifications, including strength of character, mature judgment, familiarity with
the Company’s business and industry, independence of thought and an ability to work collegially. The Company is of the view that
the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to the ability of the
Board to work as a collective body, while giving the Company the benefit of the familiarity and insight into the Company’s affairs
that its directors have accumulated during their tenure. Accordingly, the process of the Governance and Nominations Committee for identifying
nominees reflects the Company’s practice of re-nominating incumbent directors who continue to satisfy the committee’s criteria
for membership on the Board whom the committee believes continue to make important contributions to the Board and who consent to continue
their service on the Board. The Board has not adopted a formal policy with respect to its consideration of diversity and does not follow
any ratio or formula to determine the appropriate mix; rather, it uses its judgment to identify nominees whose backgrounds, attributes
and experiences, taken as a whole, will contribute to the high standards of Board service. The Governance and Nominations Committee may
adopt, and periodically review and revise as it deems appropriate, procedures regarding director candidates proposed by stockholders.
In
2021, the Governance and Nominations Committee held four physical and telephonic meetings.
Family
Relationships
There
are no family relationships between any of the officers or directors of the Company.
Leadership
Structure of the Board
The
Board does not currently have a policy on whether the same person should serve as both the Chief Executive Officer and Executive Chairman
of the Board or, if the roles are separate, whether the Executive Chairman of the Board should be selected from the non-employee directors
or should be an employee. The Board believes that it should have the flexibility to make these determinations at any given point in time
in the way that it believes best to provide appropriate leadership for the Company at that time.
Risk
Oversight
The
Board oversees risk management directly and through its committees associated with their respective subject matter areas. Generally,
the Board oversees risks that may affect the business of the Company as a whole, including operational matters. The Audit Committee is
responsible for oversight of the Company’s accounting and financial reporting processes and also discusses with management the
Company’s financial statements, internal controls and other accounting and related matters. The Compensation Committee oversees
certain risks related to compensation programs and the Governance and Nominations Committee oversees certain corporate governance risks.
As part of their roles in overseeing risk management, these committees periodically report to the Board regarding briefings provided
by management and advisors as well as the committees’ own analysis and conclusions regarding certain risks faced by the Company.
Management is responsible for implementing the risk management strategy and developing policies, controls, processes and procedures to
identify and manage risks.
Code
of Ethics
The
Board has adopted a Code of Business Ethics and Conduct (the “Code of Conduct”) which constitutes a “code of ethics”
as defined by applicable SEC rules and a “code of conduct” as defined by applicable rules of Nasdaq. We require all employees,
directors and officers, including our principal executive officer and principal financial officer, to adhere to the Code of Conduct in
addressing legal and ethical issues encountered in conducting their work. The Code of Conduct requires that these individuals avoid conflicts
of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with
integrity. The Code of Conduct contains additional provisions that apply specifically to our Chief Executive Officer, Chief Financial
Officer and other finance department personnel with respect to accurate reporting. The Code of Conduct is available on our website at
www.vislink.com. Information contained in our website does not form part of this Amendment and is intended for informational purposes
only. The Company will post any amendments to the Code of Conduct, as well as any waivers that are required to be disclosed by
the rules of the SEC on such website. Information contained on our website is not a part of, and is not incorporated into, this
Amendment, and the inclusion of our website address in this Amendment is an inactive textual reference only.
Employee,
Officer and Director Hedging
The
Company has adopted a written Insider Trading Policy applicable to all directors, officers and employees. The policy prohibits
subject individuals from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange
funds) that are designed to hedge or offset any decrease in the market value of Company securities.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent (10%)
of the Common Stock, to file with the SEC the initial reports of ownership and reports of changes in ownership of Common Stock. Officers,
directors and greater than ten percent (10%) stockholders are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Specific due dates for such reports have been established by the SEC, and the Company is required to disclose
in this Amendment any failure to file reports by such dates during fiscal year 2021. Based solely on its review of the copies
of such reports received by it, or written representations from certain reporting persons that no Forms 5 were required for such persons,
the Company believes that during the fiscal year ended December 31, 2021, there was no failure to comply with Section 16(a) filing requirements
applicable to its executive officers, directors or greater than ten percent (10%) stockholders.
ITEM
11. | EXECUTIVE
COMPENSATION |
Named
Executive Officers Summary Compensation Table
The
following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served
as the Company’s principal executive officer (“PEO”) or acted in a similar capacity and the Company’s two other
most highly compensated executive officers during the last completed fiscal year, as required by Item 402(m)(2) of Regulation S-K of
the Securities Act. We refer to all of these individuals collectively as our “Named Executive Officers.”
Name and Principal Position | |
Fiscal Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($)(1) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Non-qualified Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Carleton M. Miller | |
| 2021 | | |
| 337,072 | | |
| 660,000 | | |
| 5,547,608 | | |
| | | |
| — | | |
| — | | |
| 11,779 | (2) | |
| 6,556,459 | |
Chief Executive Officer | |
| 2020 | | |
| 225,923 | | |
| — | | |
| — | | |
| 614,312 | | |
| — | | |
| — | | |
| 1,568 | | |
| 841,803 | |
Michael C. Bond | |
| 2021 | | |
| 155,106 | | |
| 250,000 | | |
| — | | |
| | | |
| — | | |
| — | | |
| 15,855 | (3) | |
| 420,961 | |
Chief Financial Officer | |
| 2020 | | |
| 158,229 | | |
| — | | |
| 494,078 | | |
| 154,437 | | |
| — | | |
| — | | |
| 5,758 | | |
| 812,502 | |
|
(1) |
Amounts
relate to grants of stock options made under the 2015 and 2016 Incentive Compensation Plans. With respect to each stock option
grant, the amounts disclosed generally reflect the grant date fair value computed in accordance with FASB ASC Topic 718 “Stock
Compensation.” |
|
|
|
|
(2) |
$9,248
of medical insurance premiums and $2,531 of other insurance premiums were paid by the Company during fiscal year 2021 for the benefit
of Mr. Miller. |
|
|
|
|
(3) |
$12,951
of medical insurance premiums and $2,904 of other insurance premiums were paid by the Company during fiscal year 2021 for the benefit
of Mr. Bond. |
Employment
Agreements
Carleton
M. Miller
On
January 22, 2020, the Company entered into an employment agreement with Carleton M. Miller in connection with his appointment as Chief
Executive Officer of the Company (the “Miller Employment Agreement”). Pursuant to the Miller Employment Agreement,
Mr. Miller will receive an annual base salary of $330,000 per year, and an annual cash bonus in accordance with the terms of any annual
cash bonus incentive plan maintained for the Company’s key executive officers. In February 2022, the Board approved a salary
increase for Mr. Miller from $330,000 to $353,000. Pursuant to the Miller Employment Agreement, Mr. Miller received an inducement award
of a time-based option to purchase 359,247 shares of Common Stock under Nasdaq Listing Rule 5653(c)(4) outside of the Company’s
existing equity compensation plans (the “Miller Time-Based Option”), 25% of which vested on January 22, 2021 and the remaining
75% of which vest in substantially equal monthly installments over the 36-month period following such date, subject to Mr. Miller’s
continued employment by the Company on the applicable vesting date. Pursuant to the Miller Employment Agreement, Mr. Miller also
received an inducement award of a performance-based option to purchase 250,000 shares of Common Stock under Nasdaq Listing Rule 5653(c)(4)
outside of the Company’s existing equity compensation plans (the “Miller Performance-Based Option”). The Miller
Performance-Based Option will vest in three equal tranches of 83,333 shares upon the Company’s attainment, on or before the fifth
anniversary of January 22, 2020, of specified cumulative EBITDA performance conditions, subject in each case to Mr. Miller’s continued
employment by the Company on the applicable vesting date. The Miller Time-Based Option and the Miller Performance-Based Option
both have exercise prices of $1.71 per share.
As
Mr. Miller’s employment is on an “at-will” basis, the Company or Mr. Miller may terminate the employment relationship
at any time, with or without Cause (as defined in the Miller Employment Agreement). Upon Mr. Miller’s termination of employment
for any reason, Mr. Miller will be entitled to receive a lump sum payment equal to the sum of his earned but unpaid base salary through
his termination date plus his accrued but unused vacation days through his termination date, and any other benefits or rights Mr. Miller
has accrued or earned through his termination date in accordance with the terms of the applicable fringe or employee benefit plans and
programs of the Company (the “Accrued Obligations”).
Michael
Bond
On
February 27, 2020, the Company entered into an employment agreement with Michael Bond in connection with his contemplated employment
as Chief Financial Officer of the Company, effective as of April 1, 2020 (the “Bond Employment Agreement”). Pursuant
to the Bond Employment Agreement, Mr. Bond will receive an annual base salary of $250,000 per year, and an annual cash bonus in accordance
with the terms of any annual cash bonus incentive plan maintained for the Company’s key executive officers. In February
2022, the Board approved a salary increase for Mr. Bond from $250,000 to $267,500 Pursuant to the Bond Employment Agreement, Mr. Bond
received an inducement award of stock options to purchase a quantity of shares equal to one percent of the Company’s fully diluted
outstanding shares of its Common Stock as of April 1, 2020 under Nasdaq Listing Rule 5635(c)(4) outside of the Company’s existing
equity compensation plans (the “Bond Inducement Options”). The per share exercise price of the Bond Inducement Options
is $0.96. 25% of the Bond Inducement Options vested and became exercisable on April 1, 2021 and the remaining 75% of the Bond Inducement
Options vest in substantially equal monthly installments over the thirty-six (36) month period thereafter, provided that Mr. Bond remains
in continuous employment with the Company through the respective vesting date.
As
Mr. Bond’s employment is on an “at-will” basis, the Company or Mr. Bond may terminate the employment relationship at
any time, with or without Cause (as defined in the Bond Employment Agreement). Upon Mr. Bond’s termination of employment
for any reason, Mr. Bond will be entitled to receive a lump sum payment equal to the sum of his earned but unpaid base salary through
his termination date plus his accrued but unused vacation days through his termination date, and any other benefits or rights that Mr.
Bond has accrued or earned through his termination date in accordance with the terms of the applicable fringe or employee benefit plans
and programs of the Company (the “Accrued Obligations”).
Outstanding
Equity Awards as of December 31, 2021
The
following table presents information regarding the outstanding options and awards held by our Named Executive Officers as of December
31, 2021:
| |
Option Awards | | |
| |
Stock Awards | |
| |
Number of Securities Underlying Unexercised Options (#) Exercisable | | |
Number of Securities Underlying Unexercised Options (#) Unexercisable | | |
Option Exercise Price ($) | | |
Option Expiration Date | |
Number of shares or units of stock that have not vested (#) | | |
Market value of shares of units of stock that have not vested ($) | |
Carleton M. Miller(1) | |
| 172,134 | | |
| 187,102 | | |
| 1.71 | | |
1/22/2030 | |
| 1,497,330 | | |
| 1,766,849 | |
Michael C. Bond (2) | |
| 67,038 | | |
| 93,854 | | |
| 0.96 | | |
4/1/2030 | |
| 368,715 | | |
| 435,084 | |
|
(1) |
25%
of Mr. Miller’s inducement award of options vested on January 22, 2021 and the remaining 75% vests in substantially equal monthly
installments over the 36-month period following such date, subject to Mr. Miller’s continued employment by the Company on each
applicable vesting date. |
|
|
|
|
(2) |
25%
of Mr. Bond’s inducement award of options vested on April 1, 2021 and the remaining 75% vests in substantially equal monthly
installments over the thirty-six (36) month period following such date, subject to Mr. Bond’s continued employment by the Company
on each applicable vesting date. |
The
Company reviews compensation annually for all executive officers. The Company’s executive compensation philosophy is centered around
two key tenets: (1) driving employee engagement and performance; and (2) accomplishing the foregoing through pay elements that are designed
to create alignment with the long-term interest of the Company’s stockholders, as well as fostering a culture of ownership among
management.
With
respect to the restricted stock unit awards for our named executive officers, 50% of the awards vest on the basis of time and the other
50% on the basis of Company revenue or specified cumulative EBITDA performance. The time-based awards vest 25% on the anniversary of
the grants and the remainder in equal monthly installments over the 36-month period after the one year anniversary of the grant date,
subject to the officer’s continued employment by the Company on the applicable vesting date. The performance awards vest in three
equal tranches upon achievement of designated target revenue numbers or specified cumulative EBITDA of the Company in any trailing four-quarter
fiscal period. If the Company does not achieve these revenue targets, the performance based shares do not vest. Notwithstanding the foregoing,
all such time and performance awards become fully vested if, during the 13-month period commencing on a Change In Control of the Company,
the Company terminates the officer’s employment without Cause or he terminates his employment for Good Reason (as such terms are
defined in the officer employment agreement).
Potential
Payments upon Termination or Change in Control
Carleton
M. Miller
if
Mr. Miller’s employment with the Company is terminated by the Company without Cause (as defined in the Miller Employment Agreement),
or by Mr. Miller for Good Reason (as defined in the Miller Employment Agreement), then in addition to the Accrued Obligations, Mr. Miller
will receive the following, subject to his execution of a release of the Company: (i) the annual bonus, if any, Mr. Miller earned (based
on actual performance) for the fiscal year ended prior to his termination date; (ii) the annual bonus, if any, that Mr. Miller would
have earned (based on actual performance) for the fiscal year that includes his termination date, pro-rated to reflect services performed
for the portion of the fiscal year that precedes his termination date; (iii) base salary continuation (determined without regard to any
reduction in base salary that constitutes Good Reason) in accordance with the Company’s payroll practices for a period of 18 months
following Mr. Miller’s termination date, provided that if Mr. Miller’s employment is terminated by the Company without Cause
or he resigns for Good Reason within 13 months after a Change in Control of the Company (as defined in the Miller Employment Agreement)
Mr. Miller will receive 1.5 times the sum of his base salary and target annual bonus, payable in installments over 18 months in accordance
with the Company’s payment practices; and (iv) reimbursement for COBRA premiums, if any, paid by Mr. Miller for such continuation
coverage for himself, his spouse and dependents under the Company’s group health, dental and vision plans for 18 months or until
such COBRA continuation coverage otherwise expires.
Michael
Bond
if
Mr. Bond’s employment with the Company is terminated by the Company without Cause (as defined in the Bond Employment Agreement),
or by Mr. Bond for Good Reason (as defined in the Bond Employment Agreement), then in addition to the Accrued Obligations, Mr. Bond will
receive the following, subject to his execution of a release of the Company: (i) the annual bonus, if any, that Mr. Bond earned (based
on actual performance) for the fiscal year ended prior to his termination date; (ii) the annual bonus, if any, that Mr. Bond would have
earned (based on actual performance) for the fiscal year that includes his termination date, pro-rated to reflect services performed
for the portion of the fiscal year that precedes his termination date; (iii) base salary continuation (determined without regard to any
reduction in base salary that constitutes Good Reason) in accordance with the Company’s payroll practices for a period of 12 months
following Mr. Bond’s termination date, provided that if Mr. Bond’s employment is terminated by the Company without Cause
or he resigns for Good Reason within 13 months after a Change in Control of the Company (as defined in the Bond Employment Agreement)
Mr. Bond will receive the sum of his base salary and target annual bonus, payable in installments over 12 months in accordance with the
Company’s payment practices; and (iv) reimbursement for COBRA premiums, if any, paid by Mr. Bond for such continuation coverage
for himself, his spouse and dependents under the Company’s group health, dental and vision plans for 12 months or until such COBRA
continuation coverage otherwise expires.
COMPENSATION
OF DIRECTORS
Director
Compensation Table
The
following table sets forth the compensation received by each of the Company’s non-employee directors for the year ended December
31, 2021.
Name | |
Fees earned or paid in cash ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Non-equity incentive plan compensation ($) | | |
Change in pension value and nonqualified deferred compensation earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Jude T. Panetta | |
| 33,300 | | |
| 40,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 73,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
General James T. Conway | |
| 36,000 | | |
| 40,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 76,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Susan Swenson | |
| 58,500 | | |
| 40,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 98,500 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ralph Faison | |
| 38,250 | | |
| 40,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 78,250 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Brian K. Krolicki | |
| 30,600 | | |
| 40,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 70,600 | |
Narrative
to Director Compensation Table
The
Company’s director compensation policy is intended to provide a total compensation package that enables the Company to attract
and retain qualified and experienced individuals to serve as directors and to align its directors’ interests with those of its
stockholders.
Annual
Cash Compensation
The
Company pays each of its non-employee directors a cash retainer for service on the Board. The chairman of the Board and of each committee
and each committee member receives an additional retainer for such service. The retainers paid to non-employee directors for service
on the Board and for service on each committee of the Board on which the director is a member are as follows:
Annual Board Service Retainer | |
| | |
All non-employee directors | |
$ | 30,000 | |
Non-executive Chairman of the Board | |
$ | 25,000 | |
Annual Committee Chair Service Retainer (in place of Annual Committee Member Service Retainer below) | |
| | |
Chair of the Audit Committee | |
$ | 10,000 | |
Chair of the Compensation Committee | |
$ | 7,500 | |
Chair of the Governance & Nominations Committee | |
$ | 5,000 | |
Annual Committee Member Service Retainer | |
| | |
Audit Committee | |
$ | 5,000 | |
Compensation Committee | |
$ | 4,000 | |
Governance & Nominations Committee | |
$ | 3,000 | |
Annual
Equity Compensation
Each
non-employee director receives an annual equity award of restricted stock valued at $40,000. All annual awards vest in a single installment
on the next annual meeting of stockholders, subject to earlier vesting in the case of a change of control. However, for 2022, the Board
unanimously determined that it would be in the best interests of the Company and its stockholders to provide for a grant of 200,000 shares
with ratable annual vesting over a five-year period and a double trigger change-of-control provision for each non-employee director.
ITEM
13. | CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Certain
Relationships and Related Party Transactions
Other
than compensation arrangements for our directors and executive officers, we engaged in no reportable transactions with related persons
since the years ended December 31, 2021 and 2020 that involved an amount that exceeds the lesser of $120,000 or one percent of the average
of the Company’s total assets at year-end for the last two completed fiscal years, other than below. See also “Executive
Compensation” for additional information regarding compensation of related parties.
Our
Audit Committee considers and approves or disapproves any related person transaction as required by Nasdaq regulations.
MB
Technology Holdings, LLC and MB Merchant Group, LLC
On
April 29, 2014, the Company entered into a management agreement (the “Management Agreement”) with MB Technology Holdings,
LLC (“MBTH”), pursuant to which MBTH agreed to provide certain management and financial services to the Company. The
Management Agreement was effective January 1, 2014. Roger G. Branton, the Company’s former Chief Executive Officer and current
Chief Financial Officer and a member of the Board of Directors of the Company (who is not standing for re-election), was previously a
director of MBTH, George F. Schmitt, a member of the Board of Directors of the Company (who is not standing for re-election) and former
Chief Executive Officer and Executive Chairman of the Board, is a director of MBTH, and Richard Mooers, a member of the Board of Directors
of the Company (who is not standing for re-election), was previously a director of MBTH. Effective December 31, 2018, Mr. Branton
and Mr. Mooers are no longer affiliated with MBTH. The Company agreed to award MBTH a 3% cash success fee if MBTH arranges financing,
a merger, consolidation or sale by the Company of substantially all of its assets. On November 29, 2016, the Company and MBTH
entered into an acquisition services agreement (the ‘‘M&A Services Agreement’’) pursuant to which the Company
engaged MBTH to provide services in connection with merger and acquisition searches, negotiating and structuring deal terms and other
related services. The M&A Services Agreement incorporated by reference the terms of the Management Agreement, as well as the
Company’s agreement with MBTH on January 12, 2013 to pay MBTH a 3% success fee on any financing arranged for the Company, merger
or consolidation of the Company or sale by the Company of substantially all of its assets. The M&A Services Agreement also
provided for additional fees owed to MBTH.
On
February 16, 2017, the Board amended the terms of the Block Purchase Option in the M&A Services Agreement to allow MBTH the option
to acquire 25% of the fully diluted outstanding shares of common stock and warrants of the Company at a price of $2.10 per share and
for a five-year term (the “Dilutive Option”).
On
December 31, 2018, MBTH terminated the foregoing agreements and services provided to the Company. In connection therewith, we
entered into an acquisition services agreement, dated December 29, 2018 (the “MBMG Agreement”) with MB Merchant Group, LLC
(“MBMG”). Under the MBMG Agreement, MBMG will continue to provide the services provided by MBTH to the Company.
The term of the MBMG Agreement commenced on January 1, 2019 and will renew automatically annually thereafter until sooner terminated
by either party on thirty (30) days’ prior written notice. Roger G. Branton and Richard Mooers are the only members and
partners of MBMG. Principally, MBMG will receive the following fees and compensation under the MBMG Agreement:
|
1. |
An
acquisition fee comprised of the greater of $250,000 or 6% of the total acquisition price for all deals where the total consideration
for the acquisition paid by the Company is less than $10 million. For deals which are $10 million to $100 million, the Company
will pay MBMG a fee of $600k (for the first $10 million) plus a 4% fee of the excess value over $10 million. For deals which
are $100 million to $400 million, the Company will pay MBMG a fee of $4.2 million (for the first $100 million) plus a 2% fee of the
excess over $100 million. For deals which are over $400 million, the Company will pay MBMG a fee of $10.2 million plus a 1.1%
fee of the excess over $400 million. |
|
|
|
|
2. |
A
success-based due diligence fee of $250,000, only on successfully closed deals, in addition to any other fees. |
|
3. |
The
3% success fee referred to with respect to MBTH above shall be waived on a case by case basis whenever an acquisition fee is more
than $1 million. The waiver should be for that part of the financing which is for the acquisition and should not relate to
any additional fees raised for the Company above the acquisition price. And such 3% fee was decreased to 2% beginning January
1, 2019. |
|
|
|
|
4. |
Should
the Company engage an external, independent advisor to value the acquisition, and the result is a higher value than the price MBMG
negotiated, then MBMG will receive an additional fee of 5% of such gain. This is to further incent MBMG to help the Company
achieve the best value in acquisitions. |
|
|
|
|
5. |
Reimbursement
for certain expenses. |
Pursuant
to the MBMG Agreement, MBMG shall have the option to convert up to 50% of its fees into common shares of the Company so long as the receivable
remains outstanding. The conversion price will be fixed at 110% of the price of the shares on the day of closing or the price
in connection with any acquisition financing, whichever is lower. Provided MBMG converts at least 25% of its fees, then the Company
agrees to register all of shares in the Company held by MBMG.
MBMG
and MBTH separately agreed to split the Dilutive Option effective January 1, 2019. The split was based on present ownership in
MBTH and provided that MBMG be willing to accept this assignment to continue such merger and acquisition services to the Company.
The Company agreed to allow both MBTH and MBMG to amend the strike price of said options based on any financing consummated in 2019
and such reset to be at the lowest and same price as the Company may agree to in any of its 2019 financings.
Additionally,
MBMG would receive a monthly fee of $50,000, and the Company at its sole discretion will have the option to credit such fees against
future acquisition fees due each year to the extent it deems that appropriate based on all services received from MBMG.
On
February 25, 2020, the Company and MBMG entered into a letter agreement (the “MBMG Letter Agreement”), pursuant to which
the Company and MBMG agreed to amend and restate certain of the foregoing service agreements previously entered into with MBMG as well
as its predecessor entity (the “MBMG Agreements”). Pursuant to the MBMG Letter Agreement, MBMG has agreed to provide
only the following services to the Company: (i) to conduct merger and acquisition searches, negotiating and structuring deal terms and
other related services in connection with closing suitable acquisitions for the Company, and (ii) to seek and secure financing for the
Company, except in those regions in which the Company had previously appointed a business representative to exclusively seek such opportunities,
and subject in each case to prior approval by the Company’s Chief Executive Officer on a case-by-case basis (collectively, the
“MBMG Services”). Pursuant to the MBMG Letter Agreement, MBMG will no longer provide strategic planning and financial
structuring services or technical consulting services, review patent applications or provide consulting services with respect to certain
legal matters.
Pursuant
to the MBMG Letter Agreement, in consideration for the MBMG Services, the Company agreed to compensate MBMG through payment of: (i) an
acquisition fee equal to (A) the greater of $250,000 or 6% of the total acquisition price for deals in which the total consideration
paid by the Company is less than $50 million; (B) $3,000,000 plus 4% of the consideration paid by the Company in excess of $50 million
for deals in which the total consideration paid by the Company is between $50 million and $100 million; (C) $5,000,000 plus 2% of the
consideration paid by the Company in excess of $100 million for deals in which the total consideration paid by the Company is between
$100 million and $400 million; or (D) $10,200,000 plus 1.1% of the consideration paid by the Company in excess of $400 million for deals
in which the total consideration paid by the Company exceeds $400 million; (ii) a success-based due diligence fee of $250,000 on successfully
closed deals, (iii) a waivable success-based finance fee of 2% of the acquisition price and (iv) an incentive fee of 5% of an external
advisor’s higher valuation of an acquisition, with such fees subject to a customary 12-month tail period in the event of termination
of the MBMG Letter Agreement. The MBMG Letter Agreement further provides that (x) MBMG shall have the option to convert up to
50% of all such fees into the Company’s common stock so long as a receivable remains outstanding, convertible at a fixed price
of 110% of the lower of the price of such shares on the day of closing or such price in connection with any acquisition financing, as
applicable; (y) the Company will no longer compensate MBMG through, among other discontinued fees, a $50,000 monthly consulting fee that
would have been due pursuant to the MBMG Agreements and (z) in full satisfaction of specified claims arising out of the MBMG Agreements,
the Company shall pay MBMG $420,000, with $200,000 to be paid within three days of the execution of the MBMG Letter Agreement and $220,000
to be paid within 30 days of such execution.
In
connection with the Mobile Viewpoint acquisition in August 2021, we paid a fee for due diligence, valuation and related services pursuant
to a tail provision under our prior arrangement with MBMG of $1.35 million.
DELINQUENT
16(a) REPORTS
Section
16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent (10%)
of the Common Stock, to file with the SEC the initial reports of ownership and reports of changes in ownership of Common Stock. Officers,
directors and greater than ten percent (10%) stockholders are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Specific due dates for such reports have been established by the SEC, and the Company is required to disclose
in this Amendment any failure to file reports by such dates during fiscal year 2021. Based solely on its review of the copies
of such reports received by it, or written representations from certain reporting persons that no Forms 5 were required for such persons,
the Company believes that during the fiscal year ended December 31, 2021, there was no failure to comply with Section 16(a) filing requirements
applicable to its executive officers, directors or greater than ten percent (10%) stockholders.