UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check
the appropriate box:
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Preliminary
Proxy Statement |
| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ |
Definitive
Proxy Statement |
| ☐ |
Definitive
Additional Materials |
| ☐ |
Soliciting
Material Pursuant to Sec. 240.14a-12 |
Pioneer
Power Solutions, Inc.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required. |
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title
of each class of securities to which transactions applies: |
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Aggregate
number of securities to which transaction applies: |
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3) |
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) |
Proposed
maximum aggregate value of transaction: |
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5) |
Total
fee paid: |
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Fee paid previously
with preliminary materials. |
☐
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identity the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously
Paid: |
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Form, Schedule or Registration
Statement No.: |
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Filing Party: |
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Date Filed: |
PIONEER
POWER SOLUTIONS, INC.
400
Kelby Street, 12th Floor
Fort
Lee, New Jersey 07024
Telephone:
(212) 867-0700
September
21, 2023
Dear
Stockholder:
You
are cordially invited to attend the Annual Meeting of Stockholders of Pioneer Power Solutions, Inc. to be held at 12:15 p.m., New York
time, on November 9, 2023, at our office, located at 400 Kelby Street, 12th Floor, Fort Lee, New Jersey 07024. Details regarding
the Annual Meeting and the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice of Annual
Stockholders Meeting and proxy statement.
Please
note that in order to gain admission to the site of our annual meeting, all attendees will need to present a photo identification card
and have their name previously provided to building security. As such, in order to facilitate your attendance at the annual meeting,
we strongly encourage you to advise Walter Michalec by email at info@pioneerpowersolutions.com or by phone at (212) 867-0700 if you plan
to attend the meeting prior to 5:00 p.m., New York time, on November 2, 2023, so that we can provide your name to building security.
In the event that you do not advise us ahead of time that you will be attending the annual meeting, we encourage you to arrive at the
meeting no later than 11:45 a.m., New York time, in order to ensure that you are able to pass through security prior to the start of
the meeting.
We
are distributing our proxy materials to certain stockholders via the Internet under the U.S. Securities and Exchange Commission (the
“SEC”) “Notice and Access” rules. We believe this approach allows us to provide stockholders with a timely and
convenient way to receive proxy materials and vote, while lowering the costs of delivery and reducing the environmental impact of our
Annual Meeting. We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet
Availability”) beginning on or about September 26, 2023, rather than a paper copy of the proxy statement, the proxy card and our
2022 Annual Report for the fiscal year ended December 31, 2022. The Notice of Internet Availability contains instructions on how to access
the proxy materials, vote and obtain, if desired, a paper copy of the proxy materials.
Your
vote is very important, regardless of the number of shares of our voting securities that you own. Whether or not you expect to attend
the Annual Meeting, after receiving the Notice of Internet Availability please vote as promptly as possible to ensure your representation
and the presence of a quorum at the Annual Meeting. As an alternative to voting at the Annual Meeting, you may vote via the Internet,
by telephone, or by signing, dating and returning the proxy card that is mailed to those that request paper copies of the proxy statement
and the other proxy materials. If your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials
through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided
to you by such broker or other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee
holder to attend the meeting and vote in person. Failure to do so may result in your shares not being eligible to be voted by proxy at
the meeting.
On
behalf of the board of directors, I urge you to submit your proxy as soon as possible, even if you currently plan to attend the meeting
in person.
Thank
you for your support of our company. I look forward to seeing you at the annual meeting, or if the annual meeting is held in hybrid or
virtual format, via remote communication.
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Sincerely, |
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/s/
Nathan J. Mazurek |
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Nathan J. Mazurek |
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Chairman |
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON NOVEMBER 9, 2023
Our
proxy statement, proxy card and our 2022 Annual Report
are
available at www.proxyvote.com
PIONEER
POWER SOLUTIONS, INC.
400
Kelby Street, 12th Floor
Fort
Lee, New Jersey 07024
Telephone:
(212) 867-0700
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 9, 2023
The
2023 Annual Meeting of Stockholders (the “Annual Meeting”) of Pioneer Power Solutions, Inc., a Delaware corporation (the
“Company”) will be held on November 9, 2023, at 12:15 p.m., New York time, at our office, located at 400 Kelby Street, 12th
Floor, Fort Lee, New Jersey 07024. We will consider and act on the following items of business at the Annual Meeting:
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(1) |
Election of seven directors
to serve on our board of directors until the annual meeting of the stockholders in 2024, or until their successors are elected and
qualified, for which the following are nominees: Nathan J. Mazurek, Thomas Klink, Yossi Cohn, Ian Ross, David Tesler, Jonathan Tulkoff
and Kytchener Whyte. |
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(2) |
Ratification of the appointment
of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. |
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(3) |
Approval, on an advisory
basis, of the compensation paid to our named executive officers. |
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(4) |
Such other business as
may properly come before the Annual Meeting. |
Stockholders
are referred to the proxy statement accompanying this notice (the “Proxy Statement”) for more detailed information with respect
to the matters to be considered at the Annual Meeting. After careful consideration, the board of directors recommends a vote “FOR”
each director nominee and “FOR” Proposals 2 and 3.
The
board of directors has fixed the close of business on September 19, 2023 as the record date (the “Record Date”). Only holders
of record of shares of our common stock are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting or at
any postponement(s) or adjournment(s) of the Annual Meeting. A complete list of registered stockholders entitled to vote at the Annual
Meeting will be available for inspection at the office of the Company during regular business hours for the 10 calendar days prior to
and during the Annual Meeting.
Please
note that in order to gain admission to the site of our annual meeting, all attendees will need to present a photo identification card
and have their name previously provided to building security. As such, in order to facilitate your attendance at the annual meeting,
we strongly encourage you to advise Walter Michalec by email at info@pioneerpowersolutions.com or by phone at (212) 867-0700 if you plan
to attend the meeting prior to 5:00 p.m., New York time, on November 2, 2023, so that we can provide your name to building security.
In the event that you do not advise us ahead of time that you will be attending the annual meeting, we encourage you to arrive at the
meeting no later than 11:45 a.m., New York time, in order to ensure that you are able to pass through security prior to the start of
the meeting.
YOUR
VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT. TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING,
PLEASE VOTE your shares as promptly as possible by Internet, telephone or mail. For specific
instructions on how to vote your shares, please see the section entitled “About the Annual Meeting” beginning on page 1
of the proxy statement.
STOCKHOLDERS
WHO ATTEND THE ANNUAL MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
If
your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker or
through another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker
or other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee holder to attend the Annual
Meeting and vote in person. Failure to do so may result in your shares not being eligible to be voted by proxy at the Annual Meeting.
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By Order of
the Board of Directors, |
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/s/
Nathan J. Mazurek |
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Nathan J. Mazurek |
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Chairman |
September
21, 2023
TABLE
OF CONTENTS
PIONEER
POWER SOLUTIONS, INC.
400
Kelby Street, 12th Floor
Fort
Lee, New Jersey 07024
Telephone:
(212) 867-0700
PROXY
STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 2023
Unless
the context otherwise requires, references in this Proxy Statement to “we,” “us,” “our,” the “Company,”
or “Pioneer” refer to Pioneer Power Solutions, Inc., a Delaware corporation, and its direct and indirect subsidiaries. In
addition, unless the context otherwise requires, references to “stockholders” are to the holders of our voting securities,
which consist of our common stock, par value $0.001 per share.
The
accompanying proxy is solicited by the board of directors on behalf of Pioneer Power Solutions, Inc. (the “Company”), a Delaware
corporation, to be voted at the 2023 annual meeting of stockholders of the Company (the “Annual Meeting”) to be held on November
9, 2023, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”)
and at any adjournment(s) or postponement(s) of the Annual Meeting. This proxy statement (the “Proxy Statement”) and accompanying
form of proxy are expected to be first sent or given to stockholders on or about September 26, 2023.
The
executive offices of the Company are located at, and the mailing address of the Company is, 400 Kelby Street, 12th Floor,
Fort Lee, New Jersey 07024.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON NOVEMBER 9, 2023:
As
permitted by the “Notice and Access” rules of the U.S. Securities and Exchange Commission (the “SEC”), we are
making this Proxy Statement, the proxy card and our 2022 Annual Report, which includes our annual report for the fiscal year ended December
31, 2022 available to stockholders electronically via the Internet at the following website: www.proxyvote.com. On or about September
26, 2023, we will begin mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet
Availability”) that contains instructions on how stockholders may access and review all of the proxy materials and how to vote.
Also on or about September 26, 2023, we will begin mailing printed copies of the proxy materials to stockholders that previously requested
printed copies. If you received a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy materials
in the mail unless you request a copy. If you received a Notice of Internet Availability by mail and would like to receive a printed
copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability.
ABOUT
THE ANNUAL MEETING
What
is a proxy?
A
proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document,
that document is also called a “proxy” or a “proxy card.” If you are a street name holder, you must obtain a
proxy from your broker or nominee in order to vote your shares in person at the Annual Meeting.
What
is a proxy statement?
A
proxy statement is a document that regulations of the SEC require that we give to you when we ask you to sign a proxy card to vote your
stock at the Annual Meeting.
Why
did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy materials?
We
are using the SEC’s Notice and Access model, which allows us to deliver proxy materials over the Internet, as the primary means
of furnishing proxy materials. We believe Notice and Access provides stockholders with a convenient method to access the proxy materials
and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. On or
about September 26, 2023, we expect to begin mailing to stockholders a Notice of Internet Availability containing instructions on how
to access our proxy materials on the Internet and how to vote. The Notice of Internet Availability is not a proxy card and cannot
be used to vote your shares. If you received a Notice of Internet Availability this year, you will not receive paper copies of the
proxy materials unless you request the materials by following the instructions on the Notice of Internet Availability.
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, stockholders will act upon the matters outlined in the Notice, including the following:
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(1) |
Election of seven directors
to serve on our board of directors until the annual meeting of the stockholders in 2024, or until their successors are elected and
qualified, for which the following are nominees: Nathan J. Mazurek, Thomas Klink, Yossi Cohn, Ian Ross, David Tesler, Jonathan Tulkoff
and Kytchener Whyte. |
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(2) |
Ratification of the appointment
of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. |
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(3) |
Approval, on an advisory
basis, of the compensation paid to our named executive officers. |
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(4) |
Such other business as
may properly come before the Annual Meeting. |
What
is “householding” and how does it affect me?
With
respect to eligible stockholders who share a single address, we may send a single copy of proxy materials to that address unless we receive
instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed to
reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate Proxy
Statement and other proxy materials in the future, he or she may contact Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor,
Fort Lee, New Jersey 07024, Attn: Investor Relations or call (212) 867-0700 and ask for Investor Relations. Eligible stockholders of
record receiving multiple copies of our proxy materials can request householding by contacting us in the same manner. Stockholders who
own shares through a bank, broker or other nominee can request householding by contacting the nominee.
We
hereby undertake to deliver promptly, upon written or oral request, a copy of the proxy materials to a stockholder at a shared address
to which a single copy of the document was delivered. Requests should be directed to Investor Relations at the address or phone number
set forth above.
SEC
rules permit companies to send you a notice that proxy information is available on the Internet, instead of mailing you a complete set
of materials. The Company has chosen to distribute proxy information in this manner.
What
should I do if I receive more than one set of voting materials?
You
may receive more than one Notice of Internet Availability (or, if you requested a printed copy of the proxy materials, this Proxy Statement
and the proxy card) or voting instruction card. For example, if you hold your shares in more than one brokerage account, you will receive
a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a stockholder of record
and hold shares in a brokerage account, you will receive a Notice of Internet Availability (or, if you requested a printed copy of the
proxy materials, a proxy card) for shares held in your name and a voting instruction card for shares held in street name. Please follow
the separate voting instructions that you received for your shares of Common stock held in each of your different accounts to ensure
that all your shares are voted.
What
is the record date and what does it mean?
The
record date to determine the stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on September
19, 2023 (the “Record Date”). The Record Date is established by the board of directors as required by Delaware law. On the
Record Date, 10,047,104 shares of common stock were issued and outstanding.
Who
is entitled to vote at the Annual Meeting?
Holders
of common stock at the close of business on the Record Date may vote at the Annual Meeting.
What
are the voting rights of the stockholders?
Each
holder of common stock is entitled to one vote per share of common stock on all matters to be acted upon at the Annual Meeting.
The
presence, in person or by proxy, of the holders of one-third of the outstanding shares of stock entitled to vote at the Annual Meeting
is necessary to constitute a quorum to transact business. If a quorum is not present or represented at the Annual Meeting, the stockholders
entitled to vote at the Annual Meeting, present in person or by proxy, by vote of the holders of a majority of the shares represented
thereat, may adjourn the Annual Meeting from time to time without notice or other announcement until a quorum is present or represented.
What
is the difference between a stockholder of record and a “street name” holder?
If
your shares are registered directly in your name with Securities Transfer Corporation, our stock transfer agent, you are considered the
stockholder of record with respect to those shares. The Notice of Internet Availability has been sent directly to you by us.
If
your shares are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those
shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” The Notice of
Internet Availability has been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning
how to vote your shares by using the voting instructions they included in the mailing or by following their instructions for voting by
telephone or the Internet.
What
is a broker non-vote?
Broker
non-votes occur when shares are held indirectly through a broker, bank or other intermediary on behalf of a beneficial owner (referred
to as held in “street name”) and the broker submits a proxy but does not vote for a matter because the broker has not received
voting instructions from the beneficial owner and (i) the broker does not have discretionary voting authority on the matter or (ii) the
broker chooses not to vote on a matter for which it has discretionary voting authority. Under the rules of the New York Stock Exchange
(the “NYSE”) that govern how brokers may vote shares for which they have not received voting instructions from the beneficial
owner, brokers are permitted to exercise discretionary voting authority only on “routine” matters when voting instructions
have not been timely received from a beneficial owner. Proposal 2 is considered a “routine matter.” Therefore, if you do
not provide voting instructions to your broker regarding such proposal, your broker will be permitted to exercise discretionary voting
authority to vote your shares on such proposal. In the absence of specific instructions from you, your broker does not have discretionary
authority to vote your shares with respect to Proposal 1 or Proposal 3.
How
do I vote my shares?
If
you are a record holder, you may vote your voting securities at the Annual Meeting in person or by proxy. To vote in person, you must
attend the Annual Meeting and obtain and submit a ballot. The ballot will be provided at the Annual Meeting. To vote by proxy, you must
do one of the following:
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Via Internet: as prompted
by the menu found at www.proxyvote.com, follow the instructions to obtain your records and submit an electronic ballot. Please have
your Stockholder Control Number, which can be found on your Notice of Internet Availability or proxy card, when you access this voting
site. You may vote via the Internet until 11:59 p.m., Eastern Time on November 8, 2023. |
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Via telephone: call 1-800-690-6903 and then
follow the voice instructions. Please have your Stockholder Control Number, which can be found on your Notice of Internet Availability
or proxy card, when you call. You may vote by telephone until 11:59 p.m., Eastern Time on November 8, 2023. |
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Via mail: if you requested printed proxy materials
as provided in the Notice of Internet Availability and would like to vote by mail, complete and sign the enclosed proxy card and
return it in the postage-paid envelope. If you submit a signed proxy without indicating your vote, the person voting the proxy will
vote your shares according to the Board’s recommendation. |
The
telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow you to vote your shares
and to confirm that your instructions have been properly recorded. Please refer to your Notice of Internet Availability or proxy card
or the information forwarded by your bank, broker or other nominee to see which options are available to you. The proxy is fairly simple
to complete, with specific instructions on the electronic ballot, telephone or card. By completing and submitting it, you will direct
the designated persons (known as “proxies”) to vote your stock at the Annual Meeting in accordance with your instructions.
The board of directors has appointed Nathan J. Mazurek, president and chief executive officer, and Walter Michalec, chief financial officer,
secretary and treasurer, to serve as the proxies for the Annual Meeting.
Your
proxy will be valid only if you complete and return it before the Annual Meeting. If you complete all of the proxy but do not provide
voting instructions with respect to a proposal, then the designated proxies will vote your shares as to which you provide no voting instructions
in the manner described under “What if I do not specify how I want my shares voted?” below. We do not anticipate that any
other matters will come before the Annual Meeting, but if any other matters properly come before the meeting, then the designated proxies
will vote your shares in accordance with applicable law and their judgment.
If
you hold your shares in “street name,” your bank, broker or other nominee should provide to you a request for voting instructions
along with the Company’s proxy solicitation materials. By completing the voting instruction card, you may direct your nominee how
to vote your shares. If you complete the voting instruction card except one or more of the voting instructions, then your broker may
be unable to vote your shares with respect to the proposal as to which you provide no voting instructions. See “What is a broker
non-vote?” Alternatively, if you want to vote your shares in person at the Annual Meeting, you must contact your nominee directly
in order to obtain a proxy issued to you by your nominee holder. Note that a broker letter that identifies you as a stockholder is not
the same as a nominee issued proxy. If you fail to bring a nominee-issued proxy to the Annual Meeting, you will not be able to vote your
nominee-held shares in person at the Annual Meeting.
Even
if you currently plan to attend the Annual Meeting, we recommend that you also submit your proxy as described above so that your votes
will be counted if you later decide not to attend the Annual Meeting or are unable to attend.
Who
counts the votes?
All
votes will be tabulated by Walter Michalec, the Company’s chief financial officer, secretary and treasurer, the inspector of election
appointed for the Annual Meeting. Each proposal will be tabulated separately.
Can
I vote my shares at the Annual Meeting?
Yes.
If you are a stockholder of record, you may vote your shares during the meeting by submitting your vote at the Annual Meeting.
If
you hold your shares in “street name,” you may vote your shares during the Annual Meeting only if you obtain a proxy issued
by your bank, broker or other nominee giving you the right to vote the shares.
Even
if you currently plan to attend the Annual Meeting, we recommend that you also return your proxy or voting instructions as described
above so that your votes will be counted if you later decide not to attend the Annual Meeting or are unable to attend.
What
are my choices when voting?
When
you cast your vote on:
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Proposal
1: |
You
may vote for all director nominees or may withhold your vote as to one or more director nominees. |
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Proposal
2: |
You
may vote for the proposal, against the proposal or abstain from voting on the proposal. |
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Proposal
3: |
You
may vote for the proposal, against the proposal or abstain from voting on the proposal. |
What
are the board of directors’ recommendations on how I should vote my shares?
The
board of directors recommends that you vote your shares as follows:
“FOR”
each director nominee listed in Proposal 1 and “FOR” Proposals 2 and 3.
What
if I do not specify how I want my shares voted?
If
you are a record holder who returns a completed proxy that does not specify how you want to vote your shares on one or more proposals,
the proxies will vote your shares for each proposal as to which you provide no voting instructions, and such shares will be voted in
the following manner:
“FOR”
each director nominee listed in Proposal 1 and “FOR” Proposals 2 and 3.
If
you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other
nominee will be unable to vote those shares with respect to Proposals 1 and 3 but will be able to vote those shares at their discretion
with respect to Proposal 2. See “What is a broker non-vote?”
Can
I change my vote?
Yes.
If you are a record holder, you may revoke your proxy at any time by any of the following means:
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● |
Attending the Annual Meeting
and voting in person. Your attendance at the Annual Meeting will not by itself revoke a proxy. You must vote your shares by ballot
at the Annual Meeting to revoke your proxy. |
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Completing and submitting
a new valid proxy bearing a later date. |
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● |
Giving written notice of
revocation to the Company addressed to Walter Michalec, the Company’s chief financial officer, treasurer and secretary, at
Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor, Fort Lee, New Jersey 07024, which notice must be received before noon,
New York time, on November 8, 2023. |
If
you are a “street name” holder, your bank, broker or other nominee should provide instructions explaining how you may change
or revoke your voting instructions.
What
percentage of the vote is required to approve each proposal?
Assuming
the presence of a quorum, with respect to Proposal 1, the seven director nominees who receive the most votes cast in the election of
directors will be elected. Assuming the presence of a quorum, approval of Proposals 2 and 3 will require the affirmative vote of the
holders of a majority of the shares of our common stock represented in person or by proxy at the Annual Meeting.
How
are abstentions and broker non-votes treated?
Abstentions
or votes withheld are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at
the meeting. Votes withheld will have no effect with respect to the election of directors (Proposal 1). Abstentions will have the same
effect as a vote against the ratification of the independent registered public accounting firm (Proposal 2) and the approval of the advisory
vote on executive compensation (Proposal 3).
Broker
non-votes are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting.
Broker non-votes will have no effect upon Proposals 1 and 3 and are not applicable to Proposal 2.
Do
I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting?
No.
None of our stockholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual Meeting.
When
will the next stockholder advisory vote on executive compensation occur?
At
our 2020 annual meeting of stockholders, we submitted to our stockholders an advisory vote on whether an advisory vote on executive compensation
should be held every one, two or three years, as required by Section 14A, “Three years” was the frequency that received the
highest number of votes. In light of such outcome, we are holding an advisory vote on executive compensation every three years (including
this year). The next stockholder advisory vote on executive compensation and the next stockholder advisory vote on the frequency of how
often such advisory votes on executive compensation should be taken will occur at the annual meeting of our stockholders in 2026.
What
are the solicitation expenses and who pays the cost of this proxy solicitation?
Our
board of directors is asking for your proxy and we will pay all of the costs of asking for stockholder proxies. We will reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material
to the beneficial owners of common stock and collecting voting instructions. We may use officers and employees of the Company to ask
for proxies, as described below.
Is
this Proxy Statement the only way that proxies are being solicited?
No.
In addition to the solicitation of proxies by use of the mail, officers and employees of the Company may solicit the return of proxies,
either by mail, telephone, fax, e-mail or through personal contact. These officers and employees will not receive additional compensation
for their efforts but will be reimbursed for out-of-pocket expenses. Brokerage houses and other custodians, nominees and fiduciaries,
in connection with shares of the common stock registered in their names, will be requested to forward solicitation material to the beneficial
owners of shares of common stock.
Are
there any other matters to be acted upon at the Annual Meeting?
Management
does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the Notice of Internet Availability
and has no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held
by them in accordance with applicable law and their judgment on such matters.
Where
can I find voting results?
The
Company expects to publish the voting results in a current report on Form 8-K, which it expects to file with the SEC within four business
days following the Annual Meeting.
Who
can help answer my questions?
The
information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the
information contained in this Proxy Statement. We urge you to carefully read this entire Proxy Statement, including the documents we
refer to in this Proxy Statement. If you have any questions, or need additional material, please feel free to contact Walter Michalec
by email at walter@pioneerpowersolutions.com or phone at (212) 867-0700.
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS MATTERS
Director
Independence
Our
board of directors has determined that each of Yossi Cohn, Ian Ross, David Tesler, Thomas Klink, and Jonathan Tulkoff, each an incumbent
director and director nominee, satisfies the requirements for independence set out in Section 5605(a)(2) of the Nasdaq Stock Market (“Nasdaq”)
rules and that each of these director nominees has no material relationship with us (other than being a director and/or a stockholder).
In making its independence determinations, the board of directors sought to identify and analyze all of the facts and circumstances relating
to any relationship between a director nominee, his immediate family or affiliates and our company and our affiliates and did not rely
on categorical standards other than those contained in the Nasdaq rule referenced above.
Board
Committees
Our
board of directors currently has three standing committees: the audit committee, the nominating and corporate governance committee, and
the compensation committee, each of which is described below. All standing committees operate under a charter that has been approved
by the board of directors.
Audit
Committee. Our board of directors established an audit committee on March 24, 2011, which has the composition and responsibilities
described below.
The
audit committee consists of Messrs. Cohn, Ross and Tulkoff, each of whom our board of directors has determined to be financially literate
and qualify as an independent director under Section 5605(a)(2) of the rules of the Nasdaq Stock Market. In addition, Mr. Ross is the
chairman of the audit committee and has been determined by our board of directors to be a financial expert as defined in Item 407(d)(5)(ii)
of Regulation S-K. The audit committee’s duties are to recommend to our board of directors the engagement of independent auditors
to audit our financial statements and to review our accounting and auditing principles. The audit committee reviews the scope, timing
and fees for the annual audit and the results of audit examinations performed by internal auditors and independent public accountants,
including their recommendations to improve the system of accounting and internal controls. The audit committee held a total of four meetings
during the fiscal year ended December 31, 2022.
The
audit committee operates under a formal charter adopted by the board of directors that governs its duties and conduct. Copies of the
charter can be obtained free of charge from the Company’s web site, www.pioneerpowersolutions.com, by contacting the Company by
mail at the address appearing on the first page of our 2022 Annual Report on Form 10-K to the attention of Investor Relations, or by
telephone at (212) 867-0700.
Compensation
Committee. On January 18, 2022, the board of directors designated a compensation committee (the “compensation committee”).
Our compensation committee is composed of Messrs. Tesler and Cohn, each of whom our board of directors has determined to qualify as an
independent director under Section 5605(a)(2) of the rules of the Nasdaq Stock Market. Pursuant to its charter, the compensation committee
shall be comprised of at least two (2) “independent” members of the board of directors who shall also satisfy such other
criteria imposed on members of the compensation committee pursuant to the federal securities laws and the rules and regulations of the
SEC and the Nasdaq Stock Market. The compensation committee’s duties are to discharge the responsibilities of the board of directors
relating to compensation of the Company’s directors and executive officers, to assist the board of directors in establishing appropriate
incentive compensation and equity-based plans and to administer such plans, to oversee the annual process of evaluation of the performance
of the Company’s management, and to perform such other duties and responsibilities as enumerated in and consistent with its charter.
The compensation committee may designate one or more subcommittees, each subcommittee to consist of at least two members of the compensation
committee. Any such subcommittee, to the extent provided in the resolutions of the compensation committee and to the extent not limited
by applicable law, shall have and may exercise all the powers and authority of the compensation committee. The compensation committee
has authority to retain or obtain the advice of compensation consultants, legal counsel, experts and other advisors as the compensation
committee may deem appropriate in its sole discretion. The compensation committee is directly responsible for the appointment, compensation
and oversight of its consultants, legal counsel, experts and advisors and has sole authority to approve their fees and retention terms,
and the Company will provide funding for such fees and related expenses. Our compensation committee has not retained the services of
any compensation consultants. The compensation committee held a total of two meetings during the fiscal year ended December 31, 2022.
The
compensation committee operates under a formal charter adopted by the board of directors that governs its duties and conduct. A copy
of the charter is attached as Appendix A to our proxy statement for the 2022 Annual Meeting of Stockholders of the Company, filed with
the SEC on September 27, 2022 (the “Prior Proxy Statement”).
Nominating
Committee. On January 18, 2022, the board of directors designated a nominating and corporate governance committee (the “nominating
committee”). Our nominating committee is composed of Messrs. Tesler and Tulkoff, each of whom our board of directors has determined
to qualify as an independent director under Section 5605(a)(2) of the rules of the Nasdaq Stock Market. Pursuant to its charter, the
nominating committee shall be comprised of at least two (2) “independent” members of the board of directors who shall also
satisfy such other criteria imposed on members of the nominating committee pursuant to the federal securities laws and the rules and
regulations of the SEC and the Nasdaq Stock Market. The nominating committee’s duties are to assist the board of directors by identifying
potential qualified nominees for director and recommend to the board of directors for nomination candidates for the board of directors,
developing the Company’s corporate governance guidelines and additional corporate governance policies, exercising such other powers
and authority as are set forth in the charter of the nominating committee and exercising such other powers and authority as shall from
time to time be assigned to such committee by resolution of the board of directors. The nominating committee held a total of three meetings
during the fiscal year ended December 31, 2022.
The
nominating committee operates under a formal charter adopted by the board of directors that governs its duties and conduct. A copy of
the charter is attached as Appendix B to the Prior Proxy Statement.
Director
Nomination Policies
Our
nominating and corporate governance committee considers all qualified candidates identified by members of the Board and by stockholders.
The nominating and corporate governance committee follows the same process and uses the same criteria for evaluating candidates proposed
by stockholders and members of the Board. We did not pay fees to any third party to assist in the process of identifying or evaluating
director candidates during the year ended December 31, 2022.
Our
nominating and corporate governance committee will review and evaluate qualifications of any bona fide shareholder proposed director
nominees, and conduct any inquiries it deems appropriate. Pursuant to the Policy on Shareholder Recommendation of Candidates for Election
as Directors (the “Shareholder Recommendation Policy”), the nominating and corporate governance committee will only consider
recommendations of director nominees who represent the interests of all shareholders and not serve for the purpose of favoring or advancing
the interests of any particular shareholder group or other constituency. The nominating and corporate governance committee will also
consider the extent to which the shareholder making the nominating recommendation intends to maintain its ownership interest in the Company.
A copy of the Shareholder Recommendation Policy is attached as an appendix to the nominating and corporate governance committee’s
charter, a copy of which is attached as Appendix B to the Prior Proxy Statement. The Shareholder Recommendation Policy may be revised
or revoked by the Board or the nominating and corporate governance committee at any time.
Our
nominating and corporate governance committee believes that members of our Board must possess certain basic personal and professional
qualities in order to properly discharge their fiduciary duties to shareholders, provide effective oversight of the management of the
Company and monitor the Company’s adherence to principles of sound corporate governance. It is therefore the policy of the nominating
and corporate governance committee that all persons nominated to serve as a director of the Company should possess the minimum qualifications
described in the Nominating and Governance Committee Policy Regarding Qualifications of Directors (the “Policy”). A copy
of the Policy is attached as an appendix to the nominating and corporate governance committee’s charter, a copy of which is attached
as Appendix B to the Prior Proxy Statement. The Policy contains only threshold criteria, however, and the nominating and corporate governance
committee will also consider the contributions that a candidate can be expected to make to the collective functioning of the Board based
upon the totality of the candidate’s credentials, experience and expertise, the composition of the Board at the time, and other
relevant circumstances. The Policy may be modified by the nominating and corporate governance committee from time to time.
Meetings
and Attendance
During
the fiscal year ended December 31, 2022, the board of directors held five meetings, and (i) five out of six directors attended
all board meetings held during the period for which they were directors (five), (ii) one out of six directors attended four board
meetings held during the period for which he was a director (five), and (iii) each director attended all committee meetings
held during the period for which he was a committee member (four). We do not have a policy requiring director attendance at stockholder
meetings, but members of our board of directors are encouraged to attend. All of the directors attended the Annual Meeting of
Stockholders held on November 17, 2022; one director attended in person and rest of the directors attended virtually.
Board
Leadership Structure
The
board of directors is committed to promoting effective, independent governance of the Company. The board of directors strongly believes
it is in the best interests of the stockholders and the Company for the board of directors to have the flexibility to select the best
director to serve as chairman at any given time, regardless of whether that director is an independent director or the chief executive
officer. Consequently, we do not have a policy governing whether the roles of chairman of the board and chief executive officer should
be separate or combined. This decision is made by our board of directors, based on the best interests of the Company considering the
circumstances at the time.
Currently,
the board of directors has determined that it is in the best interests of the stockholders and the Company for Nathan J. Mazurek to serve
as our chairman as well as our chief executive officer and president.
The
board of directors believes that this structure has been effective for the Company and continues to be best for the Company at this point
in time for several reasons. The board of directors believes that as the Company’s founder and as a significant equity holder,
Mr. Mazurek is well qualified to serve as our chairman and chief executive officer and president, and his interests are sufficiently
aligned with the stockholders he represents. Mr. Mazurek has extensive experience in the electrical equipment and components industry
and a long tenure of executive leadership with us. The board of directors believes the Company has been well-served by this leadership
structure and by Mr. Mazurek’s service. Mr. Mazurek is the person with primary responsibility for our day-to-day operations and
the execution of our strategies. Since our performance is one of the most important topics at board meetings, it makes sense for Mr.
Mazurek to chair such discussions. This allows him to highlight important issues without unnecessary procedural delay. It also allows
him to provide the proper context and background, including access to members of management and Company and industry reports, for each
issue considered by the board of directors. Mr. Mazurek adheres to an “open door” policy in his communications with board
members and talks frequently with board members. Furthermore, board members are encouraged to freely communicate with any member of management
at any time. The board believes it has been beneficial, in terms of its relationship with employees, stockholders, customers, business
partners, lenders and other, to provide a single voice for the Company through Mr. Mazurek. Having one person serve as both our chairman
and chief executive officer and president demonstrates for our employees, stockholders, customers, business partners, lenders and others
that the Company is under strong leadership, with a single person setting the tone and having primary responsibility for managing our
operations. Having a single leader for both the Company and the board of directors eliminates the potential for confusion or duplication
of efforts, and provides clear leadership for our Company. Although not required, a number of our board seats are held by independent
directors. Each such director is highly qualified, with extensive experience in the industry, in finance and in other relevant fields.
In Mr. Mazurek, the board of directors has found an effective leader who is able to facilitate open and productive discussion, effectively
utilize each individual director’s unique perspective and expertise, lead the board of directors in innovative and creative problem
solving and, by virtue of his personal ownership in the Company, to represent the interests of our stockholders as a whole.
The
board of directors has not appointed a lead independent director. As described above, the board of directors currently believes that
Mr. Mazurek is able to facilitate open and productive discussion and decision-making, and elicit input, including dissent, from independent
directors. Furthermore, the board of directors believes that its independent directors have a strong voice and ample opportunity to meet
and discuss Company matters outside the presence of Mr. Mazurek and the other employee directors without needing a formal leader to instigate
such discussions or facilitate communication with Mr. Mazurek and other members of management.
Role
in Risk Oversight
The
board of directors takes a practical role in overseeing management of the Company’s risks through its review of risks associated
with our operations and strategic initiatives and through the board’s committees. Each committee is comprised solely of independent
directors and has responsibility to review certain risks as defined in its governing charter. The audit committee reviews and discusses
with management our major financial risks, including any risk assessment or risk management policies. The audit committee provides input
regarding such risk on a quarterly basis in connection with its review and approval of our quarterly Form 10-Q and annual Form 10-K filings.
The compensation committee reviews all compensation policies and practices for all employees to determine whether such policies and practices
create risks that are reasonably likely to have a material adverse effect on the Corporation. The board of directors also reviews information
concerning other risks, including cybersecurity, through updates from the members of our committees and from our employees at board meetings
and via telephone calls scheduled on an as-needed basis.
Communications
with the Board of Directors
We
have no formal procedures to follow for stockholders to communicate with the board of directors. Any stockholder who wishes to communicate
with our board of directors, any committee of our board of directors or any individual director, may do so by mailing or delivering a
written communication to c/o Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor, Fort Lee, New Jersey 07024, Attention: Secretary
or by emailing us at info@pioneerpowersolutions.com. All appropriate communications received from stockholders at the designated address
will be forwarded to the full board of directors, any committee thereof or individual director to whom the communication is addressed.
Certain
Related Transactions and Relationships
Generally,
we do not enter into related party transactions unless the members of the board who do not have an interest in the potential transaction
have reviewed the transaction and determined that (i) we would not be able to obtain better terms by engaging in a transaction with a
non-related party and (ii) the transaction is in our best interest. This policy applies generally to any transaction in which we are
to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year
end for the previous two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.
This policy is not currently in writing. In addition, our audit committee, which was established on March 24, 2011, is required to pre-approve
any related party transactions pursuant to its charter.
In connection with the employment agreement entered
into between the Company and Mr. Michalec, effective April 25, 2022, the Company granted Mr. Michalec an award of restricted stock units (“RSUs”) under the 2021 Pioneer Power Solutions, Inc. Long-Term Incentive Plan (as amended, the “2021 Plan”)
pursuant to that certain Restricted Stock Unit Award Agreement (the “RSU Award”) covering 375,000 shares of the Company’s
common stock, vesting in three equal installments on each of May 1st of 2022, 2023, and 2024. In connection with the vesting of the RSUs,
we paid on Mr. Michalec’s behalf an aggregate amount of $481,220.28 to satisfy his income and payroll tax obligations, to be reimbursed
from payroll withholding, and the Company had been reimbursed $34,000.00 from payroll withholding as of September 20, 2023. On September
20, 2023, we and Mr. Michalec entered into a letter agreement pursuant to which Mr. Michalec agreed to surrender and cancel 72,719 shares
of common stock issued to him upon settlement of his vested RSUs, in order to reimburse us for the remaining amount of the tax payment
we made on his behalf. Upon the surrender and cancellation of the shares, we will be fully reimbursed.
In addition, on September 20, 2023, Mr. Michalec’s
RSU Award was amended to provide that his future tax withholding obligations in connection with the RSU Award can be satisfied, among
others, by us withholding the shares to be delivered upon conversion of the RSUs having an aggregate fair market value that equals the
required tax withholding payment, in our sole discretion.
On May 16, 2023, the Company granted Mr. Mazurek
an award of RSUs under the 2021 Plan covering 100,000 shares of the Company’s common stock. In connection with the vesting of the
RSUs, we paid on Mr. Mazurek’s behalf an aggregate amount of $272,829.32 to satisfy his income and payroll tax obligations, to
be reimbursed from payroll withholding, which had not yet occurred. On September 20, 2023, we and Mr. Mazurek entered into a letter agreement
pursuant to which Mr. Mazurek agreed to surrender and cancel 44,363 shares of common stock issued to him upon settlement of his vested
RSUs, in order to reimburse us for the tax payment we made on his behalf. Upon the surrender and cancellation of the shares, we will
be fully reimbursed.
On
July 31, 2015, Pacific Power Systems Integration Inc., a California corporation (“Pacific”), and Pioneer Custom Electrical
Products Corp., a Delaware corporation (“PCEP”) and a wholly-owned subsidiary of the Company, entered into an Asset Purchase
Agreement for the purchase and sale of substantially all of the assets of Pacific (the “Transaction”). In connection with
the Transaction, Kytchener Whyte, a current director and a director nominee for reelection, entered into a consulting agreement with
PCEP as the sole stockholder and president of Pacific, pursuant to which he agreed to provide service and consultation with respect to
the business and operations of PCEP and its affiliates, as may be requested from time to time by PCEP (the “Consulting Agreement”).
Mr. Whyte has remained a consultant of PCEP since July 31, 2015. The initial term ended on July 31, 2017, and which has been renewed
annually thereafter. The Consulting Agreement automatically renews unless either party gives written notice of termination to the other
party at least thirty days prior to the expiration of the renewal term thereof. In consideration for the consulting services Mr. Whyte
performs as a consultant of PCEP, he receives a monthly consulting fee of $16,666.67, as well as a 4% commission payment for product
sales generated by new customer accounts solicited by him, through his solely owned personal business Blue Mountain Industries, Inc.
Effective January 1, 2023, Mr. Whyte’s monthly consulting fee was reduced to $5,000 with a 2% commission payment. Pursuant to the
consulting agreement, for the fiscal years ended December 31, 2022 and December 31, 2021, the Company paid Blue Mountain Industries,
Inc. an aggregate amount of $397,323.25 and $423,333.37, respectively. During the current fiscal year ending December 31, 2023,
as of September 21, 2023, Blue Mountain Industries, Inc. has received an aggregate amount of $210,455.98 in connection with Mr.
Whyte’s consulting services and an additional $6,000 for board of directors meeting fees.
REPORT
OF THE AUDIT COMMITTEE
The
audit committee has reviewed and discussed the Company’s audited financial statements and related footnotes for the fiscal year
ended December 31, 2022, and Marcum LLP’s report on those financial statements, with management and with Marcum LLP, our independent
registered public accounting firm. The audit committee has also discussed with Marcum LLP the matters required to be discussed by the
statement on Auditing Standards No. 16, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The audit
committee has also received the written disclosures and the letter from Marcum LLP required by applicable requirements of the Public
Company Accounting Oversight Board regarding Marcum LLP’s communications with the audit committee concerning independence, and
has discussed with Marcum LLP that firm’s independence.
Based
on the review and the discussions referred to in the preceding paragraph, the audit committee recommended to the board of directors that
the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 that was filed with the SEC.
| |
The Audit Committee: |
| |
|
| |
Ian Ross (Chairman) |
| |
Yossi Cohn |
| |
Jonathan Tulkoff |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of our common stock as of September 19, 2023 by:
| |
● |
each
person known by us to beneficially own more than 5.0% of our common stock; |
| |
● |
each
of our directors; |
| |
● |
each
of the named executive officers; and |
| |
● |
all
of our directors and executive officers as a group. |
The
percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the
power to dispose of or to direct the disposition of the security. Except as indicated in the footnotes to this table, each beneficial
owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s
address, unless otherwise specified in the notes below, is c/o Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor, Fort Lee,
New Jersey 07024. As of September 19, 2023, we had 10,047,104 shares outstanding.
| Name of Beneficial Owner | |
Number of Shares
Beneficially
Owned (1) |
| |
Percentage Beneficially Owned (1) | |
| Officers and Directors | |
| |
| |
| | |
| Nathan J. Mazurek | |
| 2,274,026 |
(2) | |
| 22.06 | % |
| Walter Michalec | |
| 319,000 |
(3) | |
| 3.15 | % |
| Thomas Klink | |
| 230,500 |
(4) | |
| 2.27 | % |
| Jonathan Tulkoff | |
| 37,500 |
(5) | |
| * | |
| David Tesler | |
| 31,250 |
(6) | |
| * | |
| Yossi Cohn | |
| 27,500 |
(7) | |
| * | |
| Ian Ross | |
| 27,500 |
(8) | |
| * | |
| Kytchener Whyte | |
| 15,000 |
(9) | |
| * | |
| All directors and executive officers as a group (8 persons) | |
| 2,962,276 |
| |
| 28.86 | % |
*
represents ownership of less than 1%.
| |
(1) |
Shares
of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of
all options, warrants, restricted stock units and other securities convertible into common stock beneficially owned by such person
or entity currently exercisable or exercisable within 60 days of September 19, 2023. Shares issuable pursuant to the exercise
of stock options and warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants
for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing
the percentage of outstanding common stock beneficially owned by any other person. |
| |
(2) |
Includes
2,010,859 shares of common stock and 263,167 shares subject to stock options which are exercisable within 60 days of September 19,
2023. |
| |
(3) |
Includes
250,000 shares of common stock and 69,000 shares subject to stock options which are exercisable
within 60 days of September 19, 2023. |
| |
(4) |
Includes 114,000 shares of common stock and 116,500 shares subject to stock
options which are exercisable within 60 days of September 19, 2023. |
| |
(5) |
Includes
11,000 shares of common stock and 26,500 shares subject to stock options which are exercisable within 60 days of September 19,
2023. |
| |
(6) |
Includes
15,750 shares of common stock and 15,500 shares subject to stock options which are exercisable within 60 days of September 19,
2023. |
| |
(7) |
Includes
1,000 shares of common stock and 26,500 shares subject to stock options which are exercisable
within 60 days of September 19, 2023.
|
| |
(8) |
Includes
1,000 shares of common stock and 26,500 shares subject to stock options which are exercisable within 60 days of September 19,
2023. |
| |
(9) |
Includes
15,000 shares subject to stock options which are exercisable within 60 days of September 19, 2023. |
PROPOSAL
1
ELECTION
OF DIRECTORS
The
board of directors currently consists of seven members, each of whom has been nominated for reelection as a director by the board of
directors to serve for a term of office to expire at the annual meeting of our stockholders in 2024, or until his successor has been
duly elected and qualified. Stockholders will be unable to vote for more than seven persons. The seven director nominees who receive
the most votes cast in the election of directors will be elected. Should any of the director nominees become unable or unwilling to accept
nomination or election, the proxy holders may vote the proxies for the election, in his stead, of any other person the board of directors
may nominate or designate. Each of the director nominees has expressed his intention to serve the entire term for which election is sought.
Directors
and Nominees
The
following table sets forth the name, age and positions of the director nominees and each director:
| Name |
|
Age |
|
Position
with the Company |
| Nathan
J. Mazurek |
|
61 |
|
President,
Chief Executive Officer and Chairman of the Board of Directors |
| Thomas
Klink |
|
61 |
|
Director |
| Yossi
Cohn |
|
45 |
|
Director |
| Ian
Ross |
|
79 |
|
Director |
| David
Tesler |
|
49 |
|
Director |
| Jonathan
Tulkoff |
|
61 |
|
Director |
| Kytchener
Whyte |
|
71 |
|
Director
|
The
following sets forth biographical information and the qualifications and skills for each director nominee:
Nathan
J. Mazurek. Mr. Mazurek has served as our chief executive officer, president and chairman of the board of directors since December
2, 2009. From December 2, 2009 through August 12, 2010, Mr. Mazurek also served as our chief financial officer, secretary and treasurer.
Mr. Mazurek has over 25 years of experience in the electrical equipment and components industry. Mr. Mazurek has served as the chief
executive officer, president, vice president, sales and marketing and chairman of the board of directors of Pioneer Transformers Ltd.
since 1995. Mr. Mazurek has served as the president of American Circuit Breaker Corp., a former manufacturer and distributor of circuit
breakers, since 1988. From 1999 through 2017, Mr. Mazurek served as director of Empire Resources, Inc., a distributor of semi-finished
aluminum and steel products. From 2002 through 2007, Mr. Mazurek served as president of Aerovox, Inc., a manufacturer of AC film capacitors.
Mr. Mazurek received his BA from Yeshiva College in 1983 and his JD from Georgetown University Law Center in 1986. Mr. Mazurek brings
to the board of directors extensive experience with our company and in our industry. Since he is responsible for, and familiar with,
our day-to-day operations and implementation of our strategy, his insights into our performance and into the electrical equipment and
components industry are critical to board discussions and to our success.
Thomas
Klink. Mr. Klink has served as a director since April 30, 2010. Mr. Klink served as our chief financial officer, secretary and
treasurer from January 7, 2016 until April 15, 2020. Since 1996, he has served in various positions at Jefferson Electric, Inc., including
as its chief executive officer, chief financial officer, vice president, treasurer, secretary and chairman of the board of directors.
Previously, from 1994 to 1996, Mr. Klink served as a division controller at MagneTek, Inc., a company listed on NASDAQ at that time,
reporting to the corporate controller. Mr. Klink also previously served as a controller for U.S. Music Corporation, a manufacturer of
musical instruments from 1990 through 1994. Mr. Klink received his BBA in Accounting from the University of Wisconsin - Milwaukee in
1984. Mr. Klink brings extensive industry and leadership experience to our board, including over 25 years of experience in the electrical
equipment industry. Mr. Klink is currently employed by Spire Power Solutions L.P. as their CFO and President.
Yossi
Cohn. Mr. Cohn has served as a director since December 2, 2009. Mr. Cohn founded EastSky Properties, LLC in June 2019 and L3C
Capital Partners, LLC in June 2009, both an investor in multi-family residential properties, and serves as a partner in both firms. Mr.
Cohn served as a director of investor relations at IDT Corporation, a NYSE-listed telecommunications company, from September 2005 through
May 2007. Prior to joining IDT Corporation, Mr. Cohn was a director of research at SAGEN Asset Management, an asset manager of funds
of hedge funds, from January 2005 through May 2005. Mr. Cohn began his career as an analyst in the funds-of-funds investment group of
Millburn Ridgefield Corporation, where he worked from 2001 through January 2005. Our board believes Mr. Cohn’s background at these
and other companies, particularly in areas of capital markets, financial, strategic and investment management experience, makes him an
effective member of our board of directors.
Ian
Ross. Mr. Ross has served as a director since March 24, 2011. In 2000, Mr. Ross co-founded and has since served as president
of Omniverter Inc., a company specializing in electrical power quality solutions for industrial producers and electrical utilities in
the U.S. and Canada. He has also served as the president of KIR Resources Inc. and KIR Technologies Inc. since 1999, companies engaged
in management consulting and import/export activities in the electrical equipment industry, respectively. Mr. Ross previously held positions
in Canada as vice president technology with Schneider Canada, a specialist in energy management, and vice president of the distribution
products business at Federal Pioneer Ltd., now part of Schneider Canada. Previously, Mr. Ross held a number of successive board level
positions in UK engineering companies, culminating in five years as managing director, Federal Electric, Ltd., before moving to Canada
in 1986 at the request of Federal Pioneer Ltd. He received an MA in mechanical sciences (electrical and mechanical engineering) from
Cambridge University and subsequently qualified as an accountant ACMA. Our board of directors believes that Mr. Ross’ relationships
and broad experience in the electrical transmission and distribution equipment industry will assist us in continuing to grow our business
and realizing our strategic goals.
David
Tesler. Mr. Tesler has served as a director since December 2, 2009. Mr. Tesler is President of LeaseProbe, LLC, a provider of
lease abstracting services, since he founded the company in 2004. In 2008, LeaseProbe, LLC acquired Real Diligence, LLC, a provider of
financial due diligence services. The combined company does business as Real Diligence and operates as an integrated outsourced provider
of legal and commercial due diligence services for the commercial real estate industry. Prior to 2004, Mr. Tesler practiced law at Skadden
Arps Slate Meager & Flom LLP and at Jenkens & Gilchrist, Parker Chapin LLP. Mr. Tesler received his BA from Yeshiva College,
an MA in medieval history from Bernard Revel Graduate School and a JD from Benjamin A. Cardozo School of Law. Mr. Tesler brings extensive
legal, strategic and executive leadership experience to our board of directors.
Jonathan
Tulkoff. Mr. Tulkoff has served as director since December 2, 2009. Mr. Tulkoff began his career as a currency trader at Marc
Rich & Co, he then joined Forest City enterprises, a publicly traded real estate development company, and was a VP in the acquisition
and development division. In 2016, Mr. Tulkoff founded Commodity Asset Management, an industrial materials investment fund. For the last
twenty years, Mr. Tulkoff has been involved in trading, marketing and financing of physical commodities, with distinct expertise in ferrous
metals. Mr. Tulkoff is Series 3 licensed. Our board of directors believes Mr. Tulkoff’s extensive strategic, international and
executive leadership experience, particularly in commodity markets for metal products which represent one of the largest components of
our company’s cost of manufacture, make him an effective member of our board of directors.
Kytchener
Whyte. Mr. Whyte has served as a director since November 17, 2022. Mr Whyte has over 45 years of extensive experience in the
Electrical Power Distribution & Controls industries with an emphasis on manufacturing, sales and marketing. Since July 31, 2015,
Mr. Whyte has been a consultant and served as President of Pioneer Custom Electrical Products Corp. Since January 2016, Mr. Whyte has
been President of Blue Mountain Industries, Inc., a consulting, electrical engineering and marketing consultancy firm concentrating on
the electrical utility, petrochemical and marine markets. From 1999 to 2015, Mr. Whyte was the President and owner of Pacific, based
in Southern California. Pacific manufactured electrical power distribution and control products such as its trailblazing Integrated Power
Center units for applications in the petroleum, refining, electric transit and utility industries. Mr. Whyte served as General Manager
for CGI, Inc., a manufacturer of Electrical Power Distribution and Controls products from 1993 to 1999. Prior to his time at CGI, Inc.,
Mr. Whyte was the Vice President for Electrical Power Products between 1985 and 1993. A native of Jamaica, Mr. Whyte is a graduate of
Prospect College in St. Mary, Jamaica, and a graduate of Los Angeles Trade Technical College. Mr. Whyte is a United States Air Force
Vietnam era veteran, a private pilot and the builder of experimental aircrafts. With his many years of experience in manufacturing, sales,
marketing, product design and implementation, Mr. Whyte brings to the board invaluable insights and expertise, and the ability to turn
problems into opportunities.
The
board of directors regards all of the individuals above as competent professionals with many years of experience in the business community.
The board of directors believes that the overall experience and knowledge of the members of the board of directors will contribute to
the overall success of our business.
Mr.
Mazurek is a party to a certain agreement related to his service as executive officer and director described in the “Agreements
with Executive Officers” section of this Proxy Statement. Mr. Whyte is a party to a certain agreement related to his service as
a consultant described in “Certain Related Transactions and Relationships” section of this Proxy Statement.
Unless
otherwise directed in the proxy, it is the intention of the persons named in the proxy to vote the shares represented by such proxy for
the election of the director nominees. Seven of the director nominees are presently directors of the Company.
Family
Relationships
There
are no family relationships among any of our directors and executive officers, or person nominated or chosen by the Company to become
a director or executive officer.
Delinquent
Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors and officers, and persons
who own more than ten percent of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership
of our common stock. Directors, officers and persons who own more than ten percent of our common stock are required by SEC regulations
to furnish us with copies of all Section 16(a) forms they file.
To
our knowledge, based solely on a review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2022,
each of our directors, officers and greater than ten percent stockholders complied with all Section 16(a) filing requirements applicable
to our directors, officers and greater than ten percent stockholders, except for the following reporting persons:
| ● | One
Form 4 was filed late for Mr. Cohn with respect to one transaction; and |
| ● | One
Form 4 was filed late for Mr. Tesler with respect to three transactions. |
Vote
Required
The
seven director nominees who receive the most votes cast in the election of directors will be elected.
| The
board of directors recommends a vote FOR each of the director nominees. |
EXECUTIVE
COMPENSATION
Executive
Officers
The
following table sets forth the names, ages and positions of our executive officers as of September 21, 2023:
| Name |
|
Age |
|
Position
with the Company |
| Nathan
J. Mazurek |
|
61 |
|
President,
Chief Executive Officer and Chairman of the Board of Directors |
| Walter
Michalec |
|
35 |
|
Chief
Financial Officer, Treasurer and Secretary |
Please
see the biography of Mr. Mazurek on page 10 of this Proxy Statement.
Walter
Michalec. Mr. Michalec was appointed by our board of directors to act as the Interim Chief Financial Officer of the Company,
effective as of April 15, 2020, replacing Mr. Klink after his resignation as Chief Financial Officer. On May 13, 2021, the board of directors
assigned Mr. Michalec the title of Chief Financial Officer of the Company and removed the title of Interim Chief Financial Officer, effective
May 16, 2021. Mr. Michalec also serves as the Company’s principal accounting officer, principal financial officer, treasurer and
secretary. Mr. Michalec has served various positions at the Company, most recently as its corporate controller from August 2019 to April
2020. Before becoming the corporate controller, Mr. Michalec served as the Company’s operations controller from March 2016 to August
2019, reporting to the Chief Financial Officer, and as the Company’s senior accountant from May 2012 to February 2016, reporting
to the Company’s corporate controller. Prior to working for the Company, Mr. Michalec served as a public accountant for Mendonca
& Partners Certified Public Accountants, LLC in Union, NJ. Mr. Michalec received his Bachelor of Science in Accounting and a Minor
in Criminal Justice from Kean University in 2011.
Compensation
Philosophy and Process
Since
January 18, 2022, the responsibility for establishing, administering and interpreting our policies governing the compensation and benefits
for our executive officers lies with our compensation committee. Our compensation committee has not retained the services of any compensation
consultants.
The
goals of our executive compensation program are to attract, motivate and retain individuals with the skills and qualities necessary to
support and develop our business within the framework of our size and available resources. In 2018, we designed our executive compensation
program to achieve the following objectives:
| |
● |
attract
and retain executives experienced in developing and delivering products such as our own; |
| |
● |
motivate
and reward executives whose experience and skills are critical to our success; |
| |
● |
reward
performance; and |
| |
● |
align
the interests of our executive officers and other key employees with those of our stockholders by motivating our executive officers
and other key employees to increase stockholder value. |
We
appointed a compensation committee in January 2022 when we no longer qualified as a “controlled company” under the corporate
governance rules of the Nasdaq stock market. We did not engage any compensation consultants to determine or recommend the amount and
form of executive and director compensation during and for the year ended December 31, 2022. At this time, our compensation committee
has, and previously our board of directors had, determined that the financial and administrative burden of engaging compensation consultants
is not justified in light of our Company’s size, its resources and our relatively small number of executive officers and directors.
Rather, we anticipate that the recommended level, components and rationale for our compensation program will be developed and presented
in future years by our compensation committee to the board of directors for its consideration and approval.
2022
and 2021 Summary Compensation Table
The
following table summarizes, for each of the last two fiscal years ended December 31, 2022 and 2021, the compensation paid to (i) Nathan
J. Mazurek, our chief executive officer, president and chairman of the board of directors, and (ii) Walter Michalec, our chief financial
officer, secretary and treasurer from May 16, 2021, and prior to that, our interim chief financial officer, secretary and treasurer from
April 15, 2020 to May 15, 2021, whom we refer to collectively herein as the “named executive officers.”
| |
| | |
| | |
| | |
Stock | | |
Option | | |
All
Other | | |
| |
| Name and Principal | |
| | |
Salary | | |
Bonus | | |
Awards (1) | | |
Awards (1) | | |
Compensation | | |
Total | |
| Position | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
| Nathan
J. Mazurek (i) | |
| 2022 | | |
| 535,500 | | |
| - | | |
| - | | |
| 7,085 | | |
| 15,000
| (2) | |
| 557,585 | |
| President,
Chief Executive Officer, Chairman of the Board of Directors | |
| 2021 | | |
| 430,375 | | |
| - | | |
| - | | |
| 59,817 | | |
| 18,000
| (2) | |
| 508,192 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Walter
Michalec (ii) | |
| 2022 | | |
| 200,000 | | |
| 27,000 | | |
| 1,631,250 | | |
| 3,270 | | |
| - | | |
| 1,861,520 | |
| Chief
Financial Officer, Secretary, and Treasurer | |
| 2021 | | |
| 167,500 | | |
| 22,000 | | |
| - | | |
| 53,350 | | |
| - | | |
| 242,850 | |
| (1) | Amounts
represent the aggregate grant date fair value, as determined in accordance with FASB ASC
Topic 718, with the exception that the amounts shown assume no forfeitures. The assumptions
used to calculate the value of share based awards are set forth in “Item 8. Financial
Statements and Supplementary Data – Note 11. Stock-Based Compensation” contained
in our 2022 Annual Report. These amounts do not represent the actual value that may be realized
by our named executive officers, as that is dependent on the long-term appreciation in our
common stock. |
| (2) | Comprised
of board of directors meeting fees. |
Agreements
with Executive Officers
Nathan
J. Mazurek
We
entered into an employment agreement with Mr. Mazurek, dated as of December 2, 2009, pursuant to which Mr. Mazurek was to serve as our
chief executive officer for a term of three years. Pursuant to this employment agreement, Mr. Mazurek was entitled to receive an annual
base salary of $250,000 from December 2, 2009 through December 2, 2010, which was increased to $275,000 on December 2, 2010 and to $300,000
on December 2, 2011. Mr. Mazurek was entitled to receive an annual cash bonus at the discretion of our board of directors, or a committee
thereof, of up to 50% of his annual base salary, which percentage was permitted to be increased in the discretion of the board.
This
agreement prohibited Mr. Mazurek from competing with us for a period of four years following the date of termination, unless he was terminated
without cause or due to disability or he voluntarily resigned following a breach by us of this agreement, in which case he was prohibited
from competing with us for a period of only two years.
We
entered into a new employment agreement with Mr. Mazurek, dated as of March 30, 2012, pursuant to which Mr. Mazurek will serve as our
chief executive officer for a three year term ending on March 31, 2015. Pursuant to this new employment agreement, Mr. Mazurek was entitled
to receive an annual base salary of $350,000 during the remainder of the 2012 calendar year, which increased to $365,000 during the 2013
calendar year and then to $380,000 for the remainder of his employment term. The other material terms of the new employment agreement
are substantially similar to those under his previous agreement, except that Mr. Mazurek has agreed not to compete with us for a period
of one year following the termination of his employment for any reason.
On
November 11, 2014, we entered into a first amendment to our employment agreement with Mr. Mazurek, pursuant to which the term of the
employment agreement was extended by a period of three years ending on March 31, 2018. In addition, pursuant to this employment agreement,
as amended, Mr. Mazurek became entitled to receive an annual base salary of $410,000 beginning on the amendment effective date and ending
on December 31, 2015, which increased to $425,000 during the 2016 calendar year.
On
June 30, 2016, we entered into a second amendment to our employment agreement with Mr. Mazurek, pursuant to which the term of the employment
agreement was extended by a period of five years ending on March 31, 2021. In addition, pursuant to this employment agreement, as amended,
Mr. Mazurek became entitled to receive an annual base salary of $425,000 for the period beginning on January 1, 2016 and ending on December
31, 2016, $440,000, for the period beginning on January 1, 2017 and ending on December 31, 2017, $465,000, for the period beginning on
January 1, 2018 and ending on December 31, 2018, $490,000, for the period beginning on January 1, 2019 and ending on December 31, 2019,
and $515,000 per annum, for the period beginning on January 1, 2020 and ending on March 31, 2021.
On
March 30, 2020, the Company and Mr. Mazurek entered into a third amendment in order to (i) extend the termination date of the agreement
from December 31, 2020, to March 31, 2023, and (ii) set Mr. Mazurek’s annual base salary at $415,000 for the period beginning on
April 1, 2020 and ending on March 31, 2021; $435,500, for the period beginning on April 1, 2021 and ending on March 31, 2022; and $457,500,
for the period beginning on April 1, 2022 and ending on March 31, 2023.
On
April 25, 2022, the Company and Mr. Mazurek entered into a fourth amendment in order to (i) extend the termination date of the Mazurek
Agreement from March 31, 2023, to December 31, 2024, and (ii) adjust Mr. Mazurek’s annual base salary at $535,500, for the period
beginning on January 1, 2022 and ending on December 31, 2022, $562,500, for the period beginning on January 1, 2023 and ending on December
31, 2023, and $590,500, for the period beginning on January 1, 2024 and ending on December 31, 2024.
If
Mr. Mazurek is terminated without cause, he is entitled to receive (i) any unpaid base salary accrued through the date of his termination,
(ii) any unreimbursed expenses properly incurred prior to the date of his termination, and (iii) severance pay equal to the base salary
that would have been payable to Mr. Mazurek for the remainder of the term of his executive employment agreement, which expires on December
31, 2024, less applicable withholdings and taxes. As a precondition to receiving severance pay, Mr. Mazurek is required to execute and
deliver within sixty (60) days following his termination a general release of claims against the us and our subsidiaries and affiliates
that may have arisen on or before the date of the release.
For
purposes of Mr. Mazurek’s executive employment agreement, “cause” generally means termination because of: (i) an act
or acts of willful or material misrepresentation, fraud or willful dishonesty by Mr. Mazurek; (ii) any willful misconduct by Mr. Mazurek
with regard to the Company; (iii) any violation by Mr. Mazurek of any fiduciary duties owed by him to the Company; (iv) Mr. Mazurek’s
conviction of, or pleading nolo contendere or guilty to, a felony (other than a traffic infraction) or (v) any other material breach
by Mr. Mazurek of the executive employment agreement that is not cured by him within twenty (20) days after his receipt of a written
notice from the Company of such breach specifying the details thereof.
On
May 16, 2023, the Company granted Mr. Mazurek an award of RSUs under the 2021 Plan covering 100,000 shares of the Company’s common
stock, with such RSUs being subject to the terms and conditions of the 2021 Plan and a Restricted Stock Unit Award Agreement, which agreement
provided, among other things, that (a) the RSUs shall vest as of the date of grant, and (b) such vested RSUs shall be converted into
shares of the Company’s common stock no later than March 15, 2024. The award had a grant date fair value of $525,000. We paid income
and payroll taxes on behalf of Mr. Mazurek in connection with the vesting of the RSUs, which will be fully reimbursed upon
the surrender and cancellation of certain shares of the Company’s common stock issued upon settlement of the vested RSUs. See
the “CORPORATE GOVERNANCE AND BOARD OF DIRECTORS MATTERS—Certain Related Transactions and Relationships” section
in this Proxy Statement.
Walter
Michalec
Mr.
Michalec was appointed by our board of directors to act as the interim Chief Financial Officer of the Company, effective as of April
15, 2020, replacing Mr. Klink after his resignation as Chief Financial Officer. On May 13, 2021, our board of directors assigned Mr.
Michalec the title of Chief Financial Officer of the Company and removed the title of Interim Chief Financial Officer, effective May
16, 2021. Mr. Michalec also serves as the Company’s principal accounting officer, principal financial officer, treasurer and secretary.
On
April 25, 2022, the Company and Mr. Michalec entered into an employment agreement under which the Company agreed to employ Mr. Michalec
as its Chief Financial Officer, Secretary and Treasurer for a term of three (3) years, commencing on January 1, 2022 and ending on December
31, 2024, unless such employment is terminated earlier in accordance with the agreement. Mr. Michalec is entitled to an annualized base
salary at a rate of $200,000 per annum for the period of January 1, 2022 through December 31, 2022, $220,000 per annum for the period
of January 1, 2023 through December 31, 2023, and $240,000 per annum for the period of January 1, 2023 through the end of the employment
period. Mr. Michalec’s employment may be terminated upon his death or disability, upon the occurrence of certain events that constitute
“cause,” and without cause. If terminated without cause, Mr. Michalec will be entitled to receive as severance an amount
equal to his base salary for the remainder of the employment period under the agreement.
In
connection with the employment agreement, the Company granted Mr. Michalec an award of RSUs under the 2021 Plan, covering 375,000 shares
of the Company’s common stock, with such RSUs being subject to the terms and conditions of the 2021 Plan and RSU Award, which agreement
provided, among other things, that (a) the RSUs shall vest in three equal installments on each of May 1st of 2022, 2023, and 2024, provided
that Mr. Michalec has remained continuously employed by the Company through the applicable vesting date, and (b) such vested RSUs shall
be converted into shares of the Company’s common stock no later than March 15th of the calendar year following the calendar year
in which such RSUs vested. The award had a grant date fair value of $1,631,250, which is being recognized over the vesting period. We
paid income and payroll taxes on behalf of Mr. Michalec in connection with the vesting of the RSUs, which had been partially
reimbursed from payroll withholding and will be fully reimbursed upon the surrender and cancellation of certain shares
of the Company’s common stock issued upon settlement of the vested RSUs. See the “CORPORATE GOVERNANCE AND BOARD OF
DIRECTORS MATTERS—Certain Related Transactions and Relationships” section in this Proxy Statement. On September 20,
2023, Mr. Michalec’s RSU Award was amended to provide that his future tax withholding obligations in connection with RSU Award
can be satisfied, among others, by us withholding the shares to be delivered upon conversion of the RSUs having an aggregate fair market
value that equals the required tax withholding payment, in our sold discretion.
Outstanding
Equity Awards at Fiscal Year End
The
following table provides information on stock options previously awarded to each of the named executive officers and which remained outstanding
as of December 31, 2022. This table includes unexercised and unvested options awards. Each outstanding award is shown separately for
each named executive officer.
| | |
Option
Awards |
| | |
| |
Number
of | | |
Number
of | | |
| | |
|
| | |
| |
Securities | | |
Securities | | |
| | |
|
| | |
| |
Underlying | | |
Underlying | | |
| | |
|
| | |
| |
Unexercised | | |
Unexercised | | |
Option | | |
|
| | |
| |
Options | | |
Options | | |
Exercise | | |
Option |
| | |
Date | |
(#) | | |
(#) | | |
Price | | |
Expiration |
| Name | |
of
Grant | |
Exercisable | | |
Unexercisable | | |
($) | | |
Date |
| Nathan
J. Mazurek | |
03/20/2013 | |
| 25,000 | (3) | |
| - | | |
| 5.60 | | |
03/20/2023 |
| | |
03/20/2013 | |
| 1,000 | (5) | |
| - | | |
| 5.60 | | |
03/20/2023 |
| | |
3/06/2014 | |
| 50,000 | (3) | |
| - | | |
| 10.21 | | |
3/06/2024 |
| | |
3/06/2014 | |
| 1,000 | (5) | |
| - | | |
| 10.21 | | |
3/06/2024 |
| | |
03/30/2015 | |
| 1,000 | (5) | |
| - | | |
| 8.98 | | |
03/30/2025 |
| | |
03/10/2016 | |
| 1,000 | (5) | |
| - | | |
| 3.68 | | |
03/10/2026 |
| | |
03/30/2017 | |
| 1,000 | (5) | |
| - | | |
| 7.30 | | |
03/30/2027 |
| | |
03/30/2017 | |
| 130,000 | (4) | |
| - | | |
| 7.30 | | |
03/30/2027 |
| | |
4/03/2018 | |
| 1,000 | (5) | |
| - | | |
| 5.60 | | |
4/03/2028 |
| | |
03/31/2020 | |
| 10,000 | (5) | |
| - | | |
| 1.68 | | |
03/31/2030 |
| | |
05/13/2021 | |
| 10,000 | (5) | |
| | | |
| 3.31 | | |
05/13/2031 |
| | |
05/13/2021 | |
| 51,667 | (4) | |
| | | |
| 3.31 | | |
05/13/2031 |
| | |
05/13/2022 | |
| - | | |
| 1,500 | (5) | |
| 3.17 | | |
05/13/2032 |
| | |
05/13/2022 | |
| - | | |
| 5,000 | (4) | |
| 3.17 | | |
05/13/2032 |
| | |
| |
| | | |
| | | |
| | | |
|
| Walter
Michalec | |
03/06/2014 | |
| 1,000 | (2) | |
| - | | |
| 10.21 | | |
03/06/2024 |
| | |
03/31/2020 | |
| 10,000 | (6) | |
| - | | |
| 1.68 | | |
03/31/2030 |
| | |
05/13/2021 | |
| 55,000 | (4) | |
| - | | |
| 3.31 | | |
05/13/2031 |
| | |
05/13/2022 | |
| - | | |
| 3,000 | (4) | |
| 3.17 | | |
05/13/2032 |
| (1) | Incentive
stock options granted for service as a president. Vests in equal annual installments upon
each of the first three anniversaries of the grant date. |
| (2) | Incentive
stock options granted for service prior to becoming an executive officer. Vests in equal
annual installments upon each of the first three anniversaries of the grant date. |
| (3) | Non-qualified
stock options granted for service as an executive officer. Vests in equal annual installments
upon each of the first three anniversaries of the grant date. |
| (4) | Non-qualified
stock options granted for service as an executive officer. Vests on the first anniversary
of the grant date. |
| (5) | Non-qualified
stock options granted for service as a director. Vests on the first anniversary of the grant
date. |
| (6) | Non-qualified
stock options granted for service prior to becoming an executive officer. Vests on the first
anniversary of the grant date. |
| Stock
Awards |
| | |
Number
of shares
or units of
stock that have not
vested | | |
Market
value of shares
or units of
stock that have not
vested | | |
Equity
incentive plan awards:
number of unearned
shares, units or other
rights that have not vested | | |
Equity
incentive plan awards:
market or payout value
of unearned shares, units
or other rights that have
not vested | |
| Name | |
(#) | | |
(#) | | |
(#) | | |
($) | |
| Walter
Michalec | |
| 250,000 | | |
$ | 670,000 | | |
| 250,000 | | |
$ | 670,000 | |
Option
and Warrant Exercises
During
the year ended December 31, 2022, Nathan J. Mazurek exercised an option to purchase 1,000 shares of common stock at an exercise price
of $4.11 per share.
Change
of Control Agreements
We
do not currently have plans providing for the payment of retirement benefits to our officers or directors, other than as described under
“Agreements with Executive Officers” above.
We
do not currently have any change-of-control or severance agreements with any of our executive officers or directors, other than as described
under “Agreements with Executive Officers” above. In the event of the termination of employment of the named executive officers,
any and all unexercised stock options shall expire and no longer be exercisable after a specified time following the date of the termination,
other than as described under “Agreements with Executive Officers” above.
2011
Long-Term Incentive Plan
On
May 11, 2011, our board of directors adopted the 2011 Long-Term Incentive Plan (the “2011 Plan”), subject to stockholder
approval, which was obtained on May 31, 2011. The 2011 Plan replaced and superseded the 2009 Equity Incentive Plan. Our outside directors
and our employees, including the principal executive officer, principal financial officer and other named executive officers, and certain
contractors are all eligible to participate in the 2011 Plan. The 2011 Plan allowed for the granting of incentive stock options, non-qualified
stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and
other awards, which could have been granted singly, in combination, or in tandem, and upon such terms as were determined by the board
or a committee of the board that was designated to administer the 2011 Plan. Subject to certain adjustments, the maximum number of shares
of the Company’s common stock that could have been delivered pursuant to awards under the 2011 Plan is 700,000 shares. As of December
31, 2022, there were no shares available for future grants under the Company’s 2011 Plan. The 2011 Plan expired on May 11, 2021,
but any awards granted prior to May 11, 2021 that are still outstanding are subject to the 2011 Plan.
2021
Long-Term Incentive Plan
On
October 13, 2021, our board of directors adopted the 2021 Plan, subject to stockholder approval, which was obtained on November 11, 2021.
Our outside directors and our employees, including the principal executive officer, principal financial officer and other named executive
officers, and certain contractors are all eligible to participate in the 2021 Plan. The 2021 Plan allows for the granting of incentive
stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards,
dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and upon such terms as are determined
by the board or a committee of the board that is designated to administer the 2021 Plan. Subject to certain adjustments, the maximum
number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan is 900,000 shares.
As of December 31, 2022, there were 498,000 shares available for future grants under the Company’s 2021 Plan. The 2021 Plan was
initially administered by our board of directors, but it has been administered by the compensation committee following the creation of
such committee in the first quarter of 2022. On September 20, 2023, the Board approved the First Amendment to the 2021 Plan to
amend the 2021 Plan adding that the Company may, in its sole discretion, may withhold shares to be delivered upon the receipt,
vesting, conversion, or exercise of awards granted under the 2021 Plan having an aggregate fair market value that equals the required
tax withholding payment.
Equity
Compensation Plan Information
The
following table provides certain information as of December 31, 2022 with respect to our equity compensation plans under which our equity
securities are authorized for issuance:
| | |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | | |
Weighted average exercise price of outstanding options,
warrants
and rights | | |
Number of securities remaining available for future issuance under equity compensation plans | |
| Equity compensation plans approved by security holders | |
| 670,667 | | |
$ | 5.45 | | |
| 498,000 | |
| Equity compensation plans not approved by security holders | |
| - | | |
| - | | |
| - | |
| Total | |
| 670,667 | | |
$ | 5.45 | | |
| 498,000 | |
PAY
VERSUS PERFORMANCE
The
following table sets forth compensation information for our principal executive officer (“PEO”), and our other named executive
officers (“NEOs”), for purposes of comparing their compensation to the value of our shareholders’ investments and our
net income, calculated in accordance with SEC regulations, for fiscal years 2022 and 2021.
| Year | |
Summary Compensation Table Total for PEO(1) | | |
Compensation Actually Paid to PEO(2) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(3) | | |
Average Compensation Actually Paid to Non-PEO NEOs(4) | | |
Value of Initial Fixed $100 Investment Based on Total Shareholder Return(5) | | |
Net Income (Loss) | |
| 2022 | |
$ | 557,585 | | |
$ | 329,972 | | |
$ | 1,861,520 | | |
$ | 1,191,966 | | |
$ | 69.25 | | |
$ | (3,637,902 | ) |
| 2021 | |
$ | 508,192 | | |
$ | 834,737 | | |
$ | 242,850 | | |
$ | 535,047 | | |
$ | 193.80 | | |
$ | (2,167,642 | ) |
| (1) |
The
dollar amounts reported are the amounts of total compensation reported for our PEO, Nathan J. Mazurek, in the Summary Compensation
Table for fiscal years 2022 and 2021. |
| (2) |
The
dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules.
The dollar amounts reported are the amounts of total compensation reported for Mr. Mazurek during the applicable year, but also include
(i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were
unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year,
and (iii) value of equity awards issued and vested during the reported fiscal year. See Table below for further information. |
| (3) |
The
dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEO, namely Mr. Michalec
for fiscal years 2022 and 2021. Mr. Michalec has served as the Company’s Chief Financial Officer since May 16, 2021. |
| (4) |
The
dollar amounts reported represent the average amount of “compensation actually paid”, as computed in accordance with
SEC rules, for our NEOs, other than our PEO. The dollar amounts reported are the average of the total compensation reported for our
NEOs, other than our PEO in the Summary Compensation Table for fiscal years 2022 and 2021, but also include (i) the year-end value
of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of
the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, and (iii) value of equity
awards issued and vested during the reported fiscal year. |
| (5) |
Assumes
an investment of $100 for the period starting on December 31, 2020 through the end of the listed fiscal year. The closing prices of the Company’s
common stock as reported on Nasdaq, as applicable, on the following trading days were: (i) $3.87 on December 31, 2020; (ii) $7.50
on December 31, 2021; and (iii) $2.68 on December 30, 2022. |
To
calculate the amounts in the “Compensation Actually Paid to PEO” column in the table above, the following amounts were deducted
from and added to (as applicable) our PEO’s “Total” compensation as reported in the Summary Compensation Table:
| Year | |
Summary Compensation Table
Total for PEO | | |
Reported Value of Equity Awards for PEO(1) | | |
Fair Value as of Year End for Unvested Awards Granted During the Year | | |
Fair Value Year over Year Increase or Decrease in Unvested Awards Granted in Prior Years | | |
Fair Value of Awards Granted and Vested During the Year | | |
Fair Value Increase or Decrease from Prior Year end for Awards that Vested during the Year | | |
Compensation Actually Paid to PEO | |
| 2022 | |
$ | 557,585 | | |
$ | (7,085 | ) | |
$ | 13,588 | | |
$ | - | | |
$ | - | | |
$ | (234,116 | ) | |
$ | 329,972 | |
| 2021 | |
$ | 508,192 | | |
$ | (59,817 | ) | |
$ | 377,522 | | |
$ | - | | |
$ | - | | |
$ | 8,840 | | |
$ | 834,737 | |
| |
(1) |
Represents
the grant date fair value of the equity awards to our PEO, as reported in the Summary Compensation Table |
To
calculate the amounts in the “Compensation Actually Paid to Non-PEO NEOs” column in the table above, the following amounts
were deducted from and added to (as applicable) the average “Total” compensation of our Non-PEO NEOs as reported in the Summary
Compensation Table:
| Year | |
Summary Compensation Table Total for Non-PEO NEOs | | |
Reported Value of Equity Awards for Non- PEO NEOs(1) | | |
Fair Value as of Year End for Unvested Awards Granted During the Year | | |
Fair Value Year over Year Increase or Decrease in Unvested Awards Granted in Prior Years | | |
Fair Value for Awards Granted and Vested During the Year | | |
Fair Value Increase or Decrease from Prior Year end for Awards that Vested during the Year | | |
Compensation Actually
Paid to Non-PEO NEOs | |
| 2022 | |
$ | 1,861,520 | | |
$ | (1,634,520 | ) | |
$ | 676,271 | | |
$ | - | | |
$ | 497,500 | | |
$ | (208,805 | ) | |
$ | 1,191,966 | |
| 2021 | |
$ | 242,850 | | |
$ | (53,350 | ) | |
$ | 336,706 | | |
$ | - | | |
$ | - | | |
$ | 8,840 | | |
$ | 535,047 | |
| (1) |
Represents
the grant date fair value of the equity awards to our Non-PEO NEOs, as reported in the Summary Compensation Table |
Compensation
Actually Paid and Net Income
The
following chart sets forth the relationship between “compensation actually paid” to our PEO, the average of “compensation
actually paid” to our NEOs, other than our PEO, and our net income during the two most recently completed fiscal years.
Compensation
Actually Paid and Cumulative TSR
The
following chart sets forth the relationship between “compensation actually paid” to our PEO, the average of “compensation
actually paid” to our NEOs, other than our PEO, and our cumulative Total Shareholder Return over the two most recently completed
fiscal years.
DIRECTOR
COMPENSATION
The
following table provides compensation information for the one year period ended December 31, 2022 for each non-employee member of our
board of directors:
| | |
Fees
Earned or | | |
Option | | |
| |
| | |
Paid
in Cash | | |
Awards | | |
Total | |
| Name | |
($) | | |
($) | | |
($) | |
| Yossi
Cohn (7) | |
| 23,000 | (4) | |
| 1,635 | | |
| 24,635 | |
| Thomas
Klink (6) | |
| 15,000 | (2) | |
| 1,635 | | |
| 16,635 | |
| Ian
Ross (8) | |
| 19,000 | (1) | |
| 1,635 | | |
| 20,635 | |
| David
Tesler (9) | |
| 20,000 | (3) | |
| 1,635 | | |
| 21,635 | |
| Jonathan
Tulkoff (10) | |
| 23,000 | (5) | |
| 1,635 | | |
| 24,635 | |
| Kytchener
Whyte (11) | |
| - | | |
| - | | |
| - | |
| (1) | Comprised
of board of directors and audit committee meeting fees. |
| (2) | Comprised
of board of directors meeting fees. |
| (3) | Comprised
of board of directors, compensation and nominating and governance committee meeting fees. |
| (4) | Comprised
of board of directors, audit and compensation committee meeting fees. |
| (5) | Comprised
of board of directors, audit and nominating and governance committee meeting fees. |
| (6) | As
of December 31, 2022, Mr. Klink had outstanding options representing the right to purchase
119,000 shares of our common stock and outstanding stock awards of 1,500 shares of our common
stock. |
| (7) | As
of December 31, 2022, Mr. Cohn had outstanding options representing the right to purchase
26,000 shares of our common stock and outstanding stock awards of 1,500 shares of our common
stock. |
| (8) | As
of December 31, 2022, Mr. Ross had outstanding options representing the right to purchase
26,000 shares of our common stock and outstanding stock awards of 1,500 shares of our common
stock. |
| (9) | As
of December 31, 2022, Mr. Tesler had outstanding options representing the right to purchase
15,000 shares of our common stock and outstanding stock awards of 1,500 shares of our common
stock. |
| (10) | As
of December 31, 2022, Mr. Tulkoff had outstanding options representing the right to purchase
26,000 shares of our common stock and outstanding stock awards of 1,500 shares of our common
stock. |
| (11) | Mr.
Whyte began serving as a director in November 2022 and did not receive any director compensation
during the year ended December 31, 2022. |
All
of our directors, including our employee directors, are paid cash compensation in connection with their attendance at the meetings of
the board of directors. Our directors are also reimbursed for reasonable out-of-pocket expenses incurred in connection with their attendance
at such meetings. For the year ended December 31, 2022, our directors and chief financial officer were paid cash compensation of $3,000
per meeting for attendance. The members of our audit committee and our chief financial officer received a fee of $1,000 per meeting for
attendance at a meeting of our audit committee for the year ended December 31, 2022. Additionally, the members of our nominating and
governance committee and our compensation committee received a fee of $2,000 per meeting for attendance at a meeting of our nominating
and governance committee and compensation committee for the year ended December 31, 2022. Mr. Whyte, a current director, entered into
a consulting agreement with PCEP as the sole stockholder and president of Pacific, pursuant to which he agreed to provide service and
consultation with respect to the business and operations of PCEP and its affiliates, as may be requested from time to time by PCEP. See
the “Certain Related Transactions and Relationships” section of this Proxy Statement.
PROPOSAL
2
RATIFICATION
OF APPOINTMENT OF MARCUM LLP AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audit committee of our board of directors has appointed Marcum LLP as the independent registered public accounting firm for the fiscal
year ending December 31, 2023, subject to stockholder ratification. Marcum LLP served as our independent registered public accounting
firm for the fiscal year ended December 31, 2022. The audit committee of our board has reviewed the independence of Marcum LLP as auditor
and its performance over the fiscal year ended December 31, 2022. The audit committee of our board of directors has concluded that Marcum
LLP is independent and that it is in the best interests of the Company and its shareholders to retain Marcum LLP as independent auditor
for the fiscal year ending December 31, 2023.
BDO
USA, LLP (n/k/a BDO USA, P.C.) served as our independent registered public accounting firm for the fiscal year ended December 31, 2021.
On April 25, 2022, the audit committee of our board of directors approved the dismissal of BDO USA, LLP (n/k/a BDO USA, P.C.) as the
Company’s independent registered public accounting firm, effective as of April 25, 2022, and informed BDO USA, LLP (n/k/a BDO USA,
P.C.) of such dismissal on the date thereof. On May 9, 2022, the Company entered into an engagement agreement with Marcum LLP in which
Marcum LLP agreed to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31,
2022. The audit committee concluded that independence of Marcum LLP was not impaired for the fiscal year ended December 31, 2021.
The
following table presents aggregate fees for professional services rendered by Marcum LLP and BDO USA, LLP (n/k/a BDO USA, P.C.) during
the fiscal years ended December 31, 2022 and 2021, respectively:
| | |
Year
Ended December 31, | |
| | |
2022 | | |
2021 | |
| Audit
fees (1) | |
$ | 179 | | |
$ | 335 | |
| Audit-related
fees (2) | |
| - | | |
| - | |
| Tax
fees (3) | |
| - | | |
| - | |
| All
other fees (4) | |
| - | | |
| - | |
| Total
fees | |
$ | 179 | | |
$ | 335 | |
| (1) | Audit
fees consisted primarily of fees for the annual audit of our consolidated financial statements,
the interim reviews of the quarterly consolidated financial statements, review of a registration
statement and normal, recurring accounting consultations. |
| (2) | The
Company did not incur any audit-related fees for the years ended December 31, 2022 and 2021. |
| (3) | The
Company did not incur any tax fees for the years ended December 31, 2022 and 2021. |
| (4) | The
Company did not have any other fees for the years ended December 31, 2022 and 2021. |
Dismissal
of Previous Independent Registered Public Accounting Firm
On
April 25, 2022, the audit committee of our board of directors approved the dismissal of BDO USA, LLP as the Company’s independent
registered public accounting firm, effective as of April 25, 2022, and informed BDO USA, LLP of such dismissal on the date thereof.
The
reports of BDO USA, LLP on the Company’s consolidated financial statements for the fiscal year ended December 31, 2021 did not
contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting
principles.
During
the fiscal year ended December 31, 2021, and the subsequent interim period through April 25, 2022, there were no disagreements (as defined
in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with BDO USA, LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of BDO USA, LLP, would have caused BDO USA, LLP to make reference to the subject matter of the disagreements in connection
with its report on the Company’s consolidated financial statements for such year. Also during this time, there were no “reportable
events,” as defined in Item 304(a)(1)(v) of Regulation S-K.
The
Company provided BDO USA, LLP with a copy of the above disclosures and requested that BDO USA, LLP furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made above. A copy of BDO’s
letter dated April 25, 2022 is attached as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the SEC on April
25, 2022.
Appointment
of New Independent Registered Public Accounting Firm
On
May 9, 2022, the Company entered into an engagement agreement with Marcum LLP in which Marcum LLP agreed to serve as the Company’s
independent registered public accounting firm for the fiscal year ending December 31, 2022. During the fiscal year ended December 31,
2021, and the subsequent interim period through May 9, 2022, neither the Company nor anyone on its behalf consulted with Marcum LLP regarding
(i) the application of accounting principles to any specified transaction, either completed or proposed or the type of audit opinion
that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided
to the Company that Marcum LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting,
auditing, or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement,” as defined in
Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,” as defined in Item 304(a)(1)(v) of Regulation S-K.
The
audit committee of our board has reviewed the independence of Marcum LLP and has concluded that Marcum LLP is independent and that it
is in the best interests of the Company and its shareholders to retain Marcum LLP as independent auditor for the fiscal year ending December
31, 2023.
Neither
representatives of Marcum LLP nor BDO USA, LLP will be present at the Annual Meeting; and therefore, they will not have the
opportunity to make a statement or respond to appropriate questions.
Pre-Approval
of Independent Registered Public Accounting Firm Fees and Services Policy
Our
audit committee pre-approves all auditing and permitted non-audit services to be performed for us by our independent auditor against
estimates submitted by the auditor, except for de minimis non-audit services that are approved by the audit committee prior to the completion
of the audit. The audit committee has pre-established limits that require audit committee approval in advance of any additional funds
that may be required in excess of the auditor’s estimate. The audit committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services.
The audit committee pre-approved all of the fees set forth in the table above.
Approval
of Independent Registered Public Accounting Firm Services and Fees
The
board of directors requests that stockholders ratify the appointment of Marcum LLP as the independent registered public accounting firm
to conduct the audit of our financial statements for the fiscal year ending December 31, 2023. In the event that the stockholders fail
to ratify the selection, the board of directors will reconsider whether or not to retain that firm. Even if the selection is ratified,
the board of directors, in its discretion, may direct the appointment of a different independent registered public accounting firm at
any time during the fiscal year if the board of directors determines that such a change could be in the best interest of our stockholders.
Vote
Required
The
affirmative vote of the holders of a majority of the shares of our common stock represented in person or by proxy at the Annual Meeting
is required to adopt the proposal to ratify the appointment of Marcum LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2023. Abstentions will have the same effect as a vote against the approval of this proposal.
| The
board of directors recommends a vote FOR the ratification of the appointment of Marcum LLP. |
PROPOSAL
3
APPROVAL,
ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS
Pay
that reflects performance and alignment of pay with the long-term interests of our stockholders are key principles that underlie our
compensation program. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables
our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement
in accordance with the SEC’s rules. The proposal, commonly known as a “say-on-pay” proposal, is required under Section
14A of the Exchange Act (which was put in place by the Dodd-Frank Act) and gives our stockholders the opportunity to express their views
on the Company’s executive compensation. Because this vote is an advisory vote, this proposal is not binding upon the Company,
our board of directors or upon a designated compensation committee of the board; however, the board of directors values the opinions
expressed by stockholders in their vote on this proposal and will review the voting results. To the extent there is any significant vote
against the compensation of our named executive officers as disclosed in this Proxy Statement, we will consider our stockholders’
concerns and the board of directors will evaluate whether any actions are necessary to address these concerns.
We
are asking our stockholders to indicate their support for our named executive officer compensation program as described in this Proxy
Statement in accordance with the compensation disclosure rules of the SEC. This vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this Proxy
Statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including
the compensation tables and the related narrative discussion in this Proxy Statement, is hereby APPROVED.”
As
required by the Dodd-Frank Act, this vote does not overrule any decisions by our board of directors and will not create or imply any
change to or any additional fiduciary duties of the board of directors.
We
currently expect to hold future advisory votes on executive compensation every three years, and the next “say-on-pay” vote
is expected to occur at the annual meeting of our stockholders in 2026.
Required
Vote and Board Recommendation
The
affirmative vote of a majority of the shares present cast for or against the proposal is required for approval of, on an advisory basis,
the executive compensation. This is a non-binding advisory vote. If your shares are held by a broker and you do not give the broker specific
instructions on how to vote your shares, your broker may not vote your shares at its discretion. Abstentions will have the same effect
as a vote against the approval of this proposal, and broker non-votes will have no effect on the proposal.
The
board of directors recommends that you vote “FOR” the advisory vote on
executive compensation disclosed in this
Proxy
Statement, including the compensation tables and the related narrative disclosure.
OTHER
BUSINESS
The
board of directors knows of no other business to be brought before the Annual Meeting. If, however, any other business should properly
come before the Annual Meeting, the persons named in the accompanying proxy will vote the proxy in accordance with applicable law and
as they may deem appropriate in their discretion, unless directed by the proxy to do otherwise.
SUBMISSION
OF FUTURE STOCKHOLDER PROPOSALS
Pursuant
to Rule 14a-8 under the Exchange Act, a stockholder who intends to present a proposal at the 2024 annual meeting of stockholders and
who wishes the proposal to be included in the proxy statement for such meeting must submit the proposal to us in writing to the attention
of the Secretary at Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor, Fort Lee, New Jersey 07024. The proposal must be received
not less than 120 calendar days before the anniversary of the mailing or release of the proxy statement for the Annual Meeting, or May
29, 2024, after which date such stockholder proposal will be considered untimely. With respect to other shareholder proposals, management
will be able to vote proxies in its discretion without advising shareholders in the 2023 proxy statement about the nature of the matter
and how management intends to vote if notice of the proposal is not received by us at our principal executive offices before May 28,
2024.
A
copy of our 2022 Annual Report on Form 10-K, is available without charge (except for exhibits, which are available upon payment of a
reasonable fee) upon written request to Pioneer Power Solutions, Inc., 400 Kelby Street, 12th Floor, Fort Lee, New Jersey 07024, Attn:
Secretary.
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