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
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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Legacy Education Alliance,
Inc.
(Name of Registrant as Specified in Its Charter)
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
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 240.0-11 and identify the filing for
which the offsetting fee was paid previously. Identify the previous
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Legacy Education
Alliance, Inc.
1612 Cape Coral Parkway East
Cape Coral, Florida 33904
Notice of Annual Meeting of
Stockholders
April 27, 2017
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of
Stockholders of Legacy Education Alliance, Inc., which will be held
Wednesday, May 31, 2017, at 9:00 a.m. Eastern Time, at the Hampton
Inn & Suites — Cape Coral/Fort Myers Area, FL, 619 S.E.
47
th
Terrace, Cape Coral, FL 33904.
The following pages include a formal notice of the meeting and our
proxy statement. The proxy statement describes various matters on
the agenda for the meeting. Please read these materials so that you
will know what we plan to do at the meeting.
It is important that your shares be represented at our Annual
Meeting regardless of whether you plan to attend the meeting in
person. Please vote your shares as soon as possible using the
options available to you as described in our proxy statement.
At the meeting, you will be asked to:
•
Elect the individuals that have been nominated by the Nominating
and Corporate Governance Committee of our Board of Directors to
serve on our Board of Directors, subject to the provisions of our
Bylaws, until our next Annual Meeting or until their respective
successors are duly elected;
•
Ratify the appointment of MaloneBailey LLP as our independent
registered public accounting firm for our 2017 fiscal year ending
December 31, 2017; and
•
Approve the compensation of the Company’s named executive
officers on an advisory, non-binding basis (say-on-pay).
Our Board of Directors has fixed the close of business on April 20,
2017 as the record date for determining those stockholders who are
entitled to notice of, and to vote at, the Annual Meeting of
Stockholders. A list of such stockholders will be open to
examination by any stockholder at the annual meeting and for a
period of ten days prior to the date of the annual meeting during
ordinary business hours at our executive offices located at 1612
Cape Coral Parkway East, Cape Coral, Florida, 33904. We will mail a
copy of our Proxy Materials and our 2016 Annual Report on or about
May 1, 2017.
On behalf of management and the board of directors, we thank you
for your continued interest in Legacy Education Alliance, Inc.
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Very truly yours,
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Anthony C. Humpage
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Chief Executive Officer and Director
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PROXY SUMMARY
This summary contains
highlights of important information you will find elsewhere in our
proxy statement and is qualified in its entirety by the more
detailed information included elsewhere in our proxy statement.
This summary does not contain all of the information you should
consider before voting, and you should read the entire proxy
statement before voting.
In this Proxy
Statement, references to the “Company,”
“LEAI,” “we,” “our” or
“us” are to Legacy Education Alliance, Inc., a Nevada
corporation (“Legacy”), which was formerly known as
Priced In Corp., and, unless the context otherwise requires,
together with its wholly-owned subsidiary, Legacy Educational
Alliance Holdings, Inc., a Colorado corporation (“Legacy
Holdings”), other operating subsidiaries and any predecessor
of Legacy Holdings, including Tigrent Inc., a Colorado
corporation.
ANNUAL MEETING
INFORMATION
Time and Date:
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Wednesday, May 31, 2017, at 9:00 a.m. Eastern
Time
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Location:
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Hampton Inn & Suites — Cape Coral/Fort
Myers Area, FL, 619 S.E. 47
th
Terrace, Cape Coral, FL 33904
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Record Date:
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April 20, 2017
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Voting:
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Each share of our Common Stock outstanding at
the close of business on April 20, 2017 has one vote on each matter
that is properly submitted for a vote at the 2017 Annual
Meeting
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AGENDA AND VOTING
RECOMMENDATION
•
To elect the individuals that have been nominated by the Nominating
and Corporate Governance Committee of our Board of Directors to
serve on our Board of Directors, subject to the provisions of our
Bylaws, until our next Annual Meeting or until their respective
successors are duly elected;
•
To ratify the appointment by our Board of Directors of MaloneBailey
LLP as our independent registered public accounting firm for our
2017 fiscal year ending December 31, 2017; and
•
To approve the compensation of our named executive officers on an
advisory, non-binding basis (say-on-pay).
PROXY
STATEMENT
TABLE OF
CONTENTS
I.
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Annual Meeting Information
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1
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II.
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Proposal I
–
Election of Directors – Nominees
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4
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III.
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Corporate Governance
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6
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Board Leadership Structure
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6
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Code of Business Conduct and Ethics
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6
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Director Independence
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6
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Board Meetings and Committees
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7
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Director Nomination Process
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8
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•
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Risk Oversight
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8
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Related Transactions
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8
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Communications with Directors
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9
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Compensation Committee Interlock and Insider
Participation
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IV.
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Director Compensation
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V.
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Securities Ownership of Management, Directors
and Certain Other Persons
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Executive Officers
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Change in Control
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VI.
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Proposal II
–
Ratification of Independent Registered Public Accounting
Firm
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Fees to Independent Auditor for Fiscal Year
2016
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Audit Fees
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Audit-Related Fees
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Audit Committee Report
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Tax Fees
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VII.
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Proposal III
–
Advisory Vote on Executive Compensation (Say-on-Pay)
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VIII.
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Compensation Discussion and Analysis
(“CD&A”)
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Executive Compensation Program
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Executive Employment Agreements
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Executive Compensation Program Objectives and
Overview
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Role of Compensation Committee and Executive
Officers in Compensation Decisions
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Setting Executive Compensation
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Base Salary
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Annual Incentive Compensation
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Equity Incentive Compensation
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Deferred Compensation Plans
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Retirement Benefits
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Medical, Dental, Life Insurance and Disability
Coverage
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Deductibility of Executive
Compensation
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Executive Compensation Tables
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Outstanding Equity Awards Table
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Potential Payments Upon Termination or Change in
Control
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Compensation Committee Report
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IX.
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Other Matters
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Cost of Soliciting Your Proxy
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Other Business
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Stockholder Proposals for the 2018 Annual
Meeting
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Stockholders Sharing an Address
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Disclaimer
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i
PROXY
STATEMENT
We are making this Proxy Statement available in connection with the
solicitation of proxies by our Board of Directors for the 2017
Annual Meeting of Stockholders. This Proxy Statement is being made
available to our stockholders on or about April 27, 2017. In this
Proxy Statement, references to the “Company,”
“we,” “our” or “us” are to
Legacy Education Alliance, Inc., a Nevada corporation
(“Legacy”), which was formerly known as Priced In
Corp., and, unless the context otherwise requires, together with
its wholly-owned subsidiary, Legacy Educational Alliance Holdings,
Inc., a Colorado corporation (“Legacy Holdings”), other
operating subsidiaries and any predecessor of Legacy Holdings,
including Tigrent Inc., a Colorado corporation.
I. ANNUAL MEETING
INFORMATION
When and where is the
Annual Meeting?
We will hold the annual
meeting on Wednesday, May 31, 2017 at 9:00 a.m. Eastern Time, at
the Hampton Inn & Suites — Cape Coral/Fort Myers Area,
FL, 619 S.E. 47
th
Terrace, Cape Coral, FL 33904.
What is the admissions
process?
Only record or beneficial owners of our Common Stock, par value
$0.0001 per share (our “Common Stock”) as of the Record
Date, as defined below, or their proxies, may attend the annual
meeting in person. When you arrive at the annual meeting, you must
present personal identification, such as a driver’s license.
Beneficial owners must also provide evidence of stock holdings,
such as a recent brokerage account or bank statement.
What am I voting
on?
At the Annual Meeting you will be asked to vote on the following
proposals. Our Board recommendation for each of these proposals is
set forth below:
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1. To elect the individuals that have been
nominated by our Nominating and Corporate Governance Committee to
serve on our Board of Directors, subject to the provisions of our
Bylaws, until the next Annual Meeting or until their respective
successors are duly elected.
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FOR
each Director Nominee
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2. To ratify the appointment of
MaloneBailey LLP as our independent registered public accounting
firm for our 2017 fiscal year ending December 31, 2017.
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FOR
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3. To approve the compensation of our named
executive officers on an advisory, non-binding basis
(say-on-pay).
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FOR
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You may vote to “withhold” on all or any of the
director nominees, and you may vote “abstain” for any
other proposal. Shares voting “withheld” or
“abstain” will be counted as present at the annual
meeting for purposes of that proposal and your abstention will have
the effect of a vote against the proposal. Broker non-votes will
not be counted in determining the results of the votes on the
director nominees or the say-on-pay proposal but will be counted in
determining the results of the vote on the proposal to ratify
MaloneBailey as the Company’s independent auditor for 2017
and will be counted as present at the annual meeting for purposes
of determining a quorum.
Who are Record and
Beneficial Owners?
If your shares are registered directly in your name with our
transfer agent, VStock Transfer, LLC, you are considered, with
respect to those shares, to be a stockholder of record, and our
annual meeting materials are being
1
sent to you directly by us. As the stockholder of record, you have
the right to grant your voting proxy or to attend the meeting and
vote in person. If your shares are held in a brokerage account or
by a bank or other nominee, you are considered a beneficial owner
of those shares held in “street name” and your broker
or nominee is considered, with respect to those shares, to be the
stockholder of record. As the beneficial owner, you have the right
to direct your broker or nominee on how to vote your shares.
What is the Record
Date?
The Record Date for the annual meeting is April 20, 2017. Record
and beneficial owners may vote all shares of our Common Stock they
owned as of the close of business on that date. Each share of
Common Stock entitles you to one vote on the election of each of
the Directors nominated for election and one vote on each other
matter voted on at the annual meeting. On the Record Date
22,630,927 shares of Common Stock were outstanding. We need a
quorum consisting of a ten percent (10%) of the shares of Common
Stock outstanding on the Record Date present, in person or by
proxy, to hold the annual meeting.
How do I submit voting
instructions for stock held through a broker?
If you hold shares of Common Stock through a broker, bank or other
nominee, you must follow the voting instructions you receive from
your broker, bank or nominee. If you hold shares of Common Stock
through a broker, bank or other nominee and you want to vote in
person at the Annual Meeting, you must obtain a legal proxy from
the record holder of your shares and present it at the Annual
Meeting. If you do not vote in person at the Annual Meeting or
submit voting instructions to your broker, your broker may still be
permitted to vote your shares on certain routine matters. If your
shares are held by a broker on your behalf and you do not instruct
the broker as to how to vote these shares on each Company’s
proposal to elect director(s), the broker may not exercise
discretion to vote for or against such proposal. These shares will
not be counted as having been voted on such proposal. With respect
to the Company’s proposal to ratify the independent
registered public accounting firm, the broker may exercise its
discretion to vote for or against that proposal in the absence of
your instruction. With respect to the Company’s say-on-pay
proposal, the broker may not exercise its discretion to vote for or
against that proposal in the absence of your instruction. Please
instruct your bank, broker or nominee so your vote can be
counted.
How do I submit voting
instructions for stock held in my name?
If you hold shares as a record holder, you may vote by submitting a
proxy for your shares by mail or by voting in person at the annual
meeting as described on the proxy card. Submitting your proxy will
not limit your right to vote in person at the annual meeting. A
properly completed and submitted proxy will be voted in accordance
with your instructions, unless you subsequently revoke your
instructions. If you submit a signed proxy card without indicating
your vote, the person voting the proxy will vote your shares
according to the Board’s recommendations.
How do I revoke my
proxy?
You can revoke your proxy at any time before your shares are voted
by (1) delivering a written revocation notice prior to the annual
meeting to Legacy Education Alliance, Inc., 1612 Cape Coral Parkway
East, Cape Coral, Florida 33904, attention: Assistant Corporate
Secretary; (2) submitting a later proxy that we receive no later
than the conclusion of voting at the annual meeting; or (3) voting
in person at the annual meeting. Attending the annual meeting does
not revoke your proxy unless you vote in person at the meeting.
If I plan to attend the
Annual Meeting, should I still vote by proxy?
Yes. Casting your vote in advance does not affect your right to
attend the 2017 Annual Meeting or revoke or change your vote that
has been indicated on your proxy. If you send in your proxy card
and also attend the meeting, you do not need to vote again at the
meeting unless you want to change your vote. Written ballots will
be available at the 2017 Annual Meeting for stockholders of
record.
2
What are the
requirements to elect the director nominees and to approve each of
the proposals in this proxy statement?
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1. Election of Directors
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Majority of Shares Present and Eligible to
Vote
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2. Ratification
of Independent Registered Public Accounting Firm
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Majority of Shares Present and Eligible to
Vote
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3. Say-on-Pay
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Majority of Shares Present and Eligible to
Vote
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Are there any
controlling stockholders?
As of the Record Date, there were no stockholders owning a majority
of shares of the Common Stock. Your vote is important to our Board
of Directors and we are providing this proxy statement to solicit
your vote.
3
II. Proposal I
—
ELECTION OF
DIRECTORS
Our Board of Directors is elected on an annual basis. The number of
our directors is specified by our Bylaws as at least one. As of the
date of our Annual Meeting, our Board of Directors will consist of
four (4) members and each director who is elected will be elected
for a term of one (1) year. Each director will hold his or her
office, subject to the provisions of our Bylaws, until his or her
successor has been duly elected or appointed and qualified or their
earlier resignation, death, or removal.
Our Board of Directors believes that the qualifications of the
nominees, as set forth in their biographies which are provided
below, give them the qualifications and skills to serve as a
director of our Company. All of the nominees as directors have
strong business backgrounds. Our Board of Directors also believes
that each of the nominees has other key attributes that are
important to an effective Board of Directors: integrity and
demonstrated high ethical standards; sound judgment; analytical
skills; the ability to engage management and each other in a
constructive and collaborative fashion, and the commitment to
devote significant time and energy to service on our Board of
Directors and its committees.
Each nominee’s principal occupation and other pertinent
information about the particular experience, qualifications,
attributes and skills that led our Board of Directors to conclude
that such person should serve as a director appears on the
following pages.
An affirmative vote of the majority of the shares present in person
or represented by proxy at the Annual Meeting is required to elect
a Director. The election for each director will be in sequence so
that there are four (4) elections, each for one director. Each
stockholder may cast any or all of their votes in each such
election for each director. Shares voting
“withhold
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will
have the same effect as a vote “against” this proposal,
and broker non-votes will have no effect on the vote for this
proposal.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR
THE ELECTION OF
EACH
OF THE FOLLOWING
DIRECTOR NOMINEES
Nominees for Election at
the 2017 Annual Meeting
James
K. Bass
Age 60
Director since 2010
Chairman of the Board
Board Committee(s):
– Compensation Committee (Chair)
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Mr. Bass has served as a Director since November
10, 2014, and as a director of Tigrent Inc. since May 3, 2010. He
has served as Chairman of the Board of Directors since July 2015.
From September 2005 to June 2009, Mr. Bass served as the Chief
Executive Officer and a director of Piper Aircraft, Inc., a general
aviation manufacturing company. He served as the Chief Executive
Officer and a director of Suntron Corporation, a provider of high
mix electronic manufacturing services, from its incorporation in
May 2001 until May 2005, and as Chief Executive Officer of EFTC
Corporation, a subsidiary of Suntron Corporation, from July 2000
until April 2001. From 1992 to July 2000, Mr. Bass was a Senior
Vice President of Sony Corporation. Prior to that, Mr. Bass spent
15 years in various manufacturing management positions at the
aerospace group of General Electric Corporation. Since September
2000, Mr. Bass has served on the Board of Directors of TTM
Technologies, Inc., a manufacturer of complex printed circuit
boards used in sophisticated electronic equipment, where he serves
as Chairman of the Compensation Committee. Additionally, since
October 2010, Mr. Bass has been a director at Mercury Computer
Systems, a provider of open, commercially developed,
application-ready, multi-INT subsystems for the Intelligence,
Surveillance and Reconnaissance (ISR) market. Mr. Bass holds a
B.S.M.E. degree from Ohio State University (1979).
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Peter
W. Harper
Age 55
Director since 2015
Board Committee(s):
– Audit Committee (Chair)
– Compensation Committee (Member)
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Mr. Harper was appointed to the Board and
chairman of the Company’s Audit Committee on December 1,
2015. He has more than 30 years of public, private-equity backed
and global company experience in the retail, insurance, electronic
manufacturing and consumer products industries. He is currently the
Chief Financial Officer at DEI Holdings and Sound United, a global
manufacturer and distributor of high end home audio products. Prior
to joining DEI/Sound United in January of 2017, Mr. Harper was the
President and CFO of Twin-Star International from 2013 to 2016, CFO
at Scottsdale Insurance from 2005 to 2012 and Suntron Corporation
from 2000 to 2005. Prior to that he had senior finance positions at
Iomega Corporation and General Electric. Mr. Harper received a BS
from San Jose State University in 1983.
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Anthony C. Humpage
Age
61
Director since 2012
Board Committee(s):
– Nominating & Corporate
Governance Committee (Member)
– Chief Executive Officer
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Mr. Humpage has served as our Chief Executive
Officer and Director since November 10, 2014 and a director of
Tigrent Inc. since November 10, 2014. Mr. Humpage has been the CEO
of our predecessor since September 4, 2012 and has been a member of
the Board of Directors of our predecessor since May 23, 2012. Mr.
Humpage was previously Executive Vice President and Chief Financial
Officer of Government Liquidation, the leading online auction
website for federal government surplus and scrap assets, from 1998
to 2011. Earlier in his career, he worked in the construction
materials, manufacturing and professional service industries
specializing in early-stage and troubled organizations. A certified
public accountant and a British chartered accountant,
Mr. Humpage holds a MBA Finance degree from
Western International University (1995)
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Cary
Sucoff
Age 65
Director since 2015
Board Committee(s):
– Nominating & Corporate
Governance Committee (Chair)
– Audit Committee (Member)
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Mr. Sucoff was first elected to the Board on
July 16, 2015 and has over 30 years of securities industry
experience encompassing supervisory, banking and sales
responsibilities. Mr. Sucoff currently owns and operates Equity
Source Partners, LLC an advisory and consulting firm. He has
participated in the financing of hundreds of public and private
companies. Mr. Sucoff currently serves on the following Boards of
Directors: Contrafect Corp. (CFRX), root9B Technologies (RTNB),
Legacy Education Alliance, Inc. (LEAI), Greenwood Hall, Inc. (ELRN)
and First Wave Technologies. In addition, Mr. Sucoff currently
serves as a consultant to Sapience Therapeutics. Mr. Sucoff is past
President of New England Law/Boston and has been a member of the
Board of Trustees for over 25 years. He is the Chairman of the
Endowment Committee. Mr. Sucoff received a B.A. from SUNY
Binghamton (1974) and a J.D. from New England School of Law (1977)
where he was the Managing Editor of the Law Review and graduated
Magna Cum Laude. Mr. Sucoff has been a member of the Bar of the
State of New York since 1978.
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5
III. CORPORATE
GOVERNANCE
Board Leadership
Structure
We have determined that having an independent director serve as the
Chairman of the Board of Directors is in the best interests of our
stockholders at this time, and that separation of the positions of
Chairman of the Board and Chief Executive Officer reinforces the
independence of the Board in its oversight of our business and
affairs. This structure ensures a greater role for the independent
directors in the oversight of us and active participation of the
independent directors in setting agendas and establishing
priorities and procedures for the work of the Board. We are not
required to have any independent directors under federal securities
laws, state law or under the rules of any exchange; nevertheless,
we maintain a majority of our board of directors as independent
directors as a matter of good corporate practice.
Our Board of Directors operates by majority vote. In the 2016
fiscal year, our Board of Directors held twelve meetings at which
each of the directors then in office attended. Any director may
call a special meeting of our Board of Directors upon proper
notice. In addition, our Board of Directors may take action by
written consent in accordance with our Bylaws.
Our Board of Directors oversees and monitors our operations and
develops and directs the implementation of our business strategy.
In connection with these endeavors, our Board of Directors will
rely on information, opinions, reports, books of account or
statements, including financial statements and other financial
data, that are prepared or presented by one or more of our
directors, officers, or employees reasonably believed to be
reliable and competent in the matters prepared or presented;
counsel, public accountants, financial advisers, valuation
advisers, investment bankers, or other persons as to matters
reasonably believed to be within the preparer’s or
presenter’s professional or expert competence; or a committee
on which the director or officer relying thereon does not serve, as
to matters within the committee’s designated authority and
matters on which the committee is reasonably believed to merit
confidence, but a director is not entitled to rely on such
information, opinions, reports, books of account or statements if
the director has knowledge concerning the matter in question that
would cause reliance thereon to be unwarranted.
Code of Business Conduct
and Ethics
On November 10, 2014, we adopted a Code of Business Conduct and
Ethics that applies to its directors, officers and employees,
including the Company’s principal executive officer,
principal financial officer and principal accounting officer. This
Code of Business Conduct and Ethics may be found on our website at
www.legacyeducationalliance.com
.
Director
Independence
The Board of Directors has determined that each of our directors,
except our Chief Executive Officer, Anthony C. Humpage, qualifies
as an “independent director.” Currently, our
independent directors are
James K. Bass, Peter W. Harper and Cary
Sucoff. If the nominees proposed in this proxy are elected, James
K. Bass,
Peter W. Harper and Cary Sucoff will serve as our
independent directors. Because our Common Stock is not currently
listed on a national securities exchange, we have used the
definition of independence of The NASDAQ Stock Market to make this
determination. NASDAQ Listing Rule 5605(a)(2) provides that an
independent director is a person other than an officer or employee
of the Company or any other individual having a relationship with
the Company that, in the opinion of the Company’s Board,
would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. The NASDAQ listing
rules provide that a director cannot be independent if:
•
The director is, or at any time during the past three years was, an
employee of the Company;
•
The director or a family member of the director accepted any
compensation from the Company in excess of $120,000 during any
period of 12 consecutive months within the three years preceding
the independence determination (subject to certain exclusions,
including, among other things, compensation for board or board
committee service);
•
A family member of the director is, or at any time during the past
three years was, an executive officer of the Company;
6
•
The director or a family member of the director is a partner in,
controlling stockholder of, or an executive officer of an entity to
which the Company made, or from which the Company received,
payments in the current or any of the past three fiscal years that
exceed 5% of the recipient’s consolidated gross revenue for
that year or $200,000, whichever is greater (subject to certain
exclusions);
•
The director or a family member of the director is employed as an
executive officer of an entity where, at any time during the past
three years, any of the executive officers of the Company served on
the compensation committee of such other entity; or
•
The director or a family member of the director is a current
partner of the Company’s outside auditor, or at any time
during the past three years was a partner or employee of the
Company’s outside auditor, and who worked on the
Company’s audit.
Board Meetings and
Committees
We are not required under the Exchange Act to maintain any
committees of our Board of Directors. We have formed certain
committees of our board as a matter of preferred corporate
practice. We have an Audit Committee, a Compensation Committee and
a Nominating and Corporate Governance Committee.
Audit
Committee.
The purpose of the Audit Committee is to
assist the Board in fulfilling its responsibility to oversee the
quality and integrity of the accounting, auditing, and reporting
practices of the Company. The Committee shall also oversee the
Company’s systems of internal controls regarding finance,
accounting, information technology, legal and regulatory compliance
and ethical behavior, the audits of the Company’s financial
statements, the qualifications of the accounting firm engaged as
the Company’s independent auditor, and the performance of the
Company’s independent auditors.
The members of our Audit Committee are Mr. Harper and Mr. Sucoff,
with Mr. Harper serving as the Chairman. The Board of Directors has
determined that each director serving on the Audit Committee
qualifies as “independent” under the NASDAQ listing
rules, and that Mr. Harper further qualifies as an “audit
committee financial expert,” as such term is defined in the
applicable rules of the Exchange Act. Our Audit Committee has a
written charter available on our website at
www.legacyeducationalliance.com
.
Number of Meetings in fiscal 2016: 4
Compensation
Committee.
The purpose of the Compensation Committee is
to oversee the Company’s compensation and benefits programs;
establish, review, revise and interpret the Company’s
compensation philosophy, policies and objectives; and evaluate the
performance of the Company’s executive officers and set
compensation levels for all executive officers, including any
performance-based compensation.
The members of our Compensation Committee are Mr. Bass and Mr.
Harper, with Mr. Bass serving as the Chairman. The Board of
Directors has determined that each director serving on the
Compensation Committee qualifies as “independent” under
the NASDAQ listing rules. Our Compensation Committee has a written
charter available on our website at
www.legacyeducationalliance.com
.
Number of Meetings in fiscal 2016: 2
Nominating and Corporate
Governance Committee.
The purpose of the Nominating and
Corporate Governance Committee is to provide support for the
governance role of the Board in reviewing and making
recommendations on the composition of the Board, oversee the
evaluation of the Board and management of the Company, periodically
assess the functioning of the Board and its committees and make
recommendations to the Board regarding corporate governance matters
and practices.
The members of our Nominating and Corporate Governance Committee
are Mr. Humpage and Mr. Sucoff, with Mr. Sucoff serving as the
Chairman. The Board of Directors has determined that Mr. Sucoff
qualifies as “independent” under the NASDAQ listing
rules. Our Nominating and Corporate Governance Committee has a
written charter available on our website at
www.legacyeducationalliance.com
.
7
Number of Meetings in fiscal 2016: 2
Director Nomination
Process
The Nominating and Corporate Governance Committee will consider
director candidates who have relevant business experience, are
accomplished in their respective fields, and who possess the skills
and expertise to make a significant contribution to the Board of
Directors, the Company and its stockholders. The Nominating and
Corporate Governance Committee will consider nominees for election
to the Board of Directors who are recommended by stockholders,
provided that a complete description of the nominees’
qualifications, experience and background, together with a
statement signed by each nominee in which he or she consents to act
as such, accompany the recommendations.
The Board of Directors considers a number of diversity factors in
evaluating director candidates including, without limitation,
professional experience, education, race, sex, and national origin,
but does not assign any particular weight or priority to any
particular factor.
In identifying prospective director candidates, the Nominating and
Corporate Governance Committee may seek referrals from other
members of the Board of Directors, management, stockholders and
other sources. The Nominating and Corporate Governance Committee
also may, but need not, retain a search firm in order to assist it
in identifying candidates to serve as directors of the Company. The
Nominating and Corporate Governance Committee utilizes the same
criteria for evaluating candidates regardless of the source of the
referral. When considering director candidates, the Nominating and
Corporate Governance Committee seeks individuals with backgrounds
and qualities that, when combined with those of our incumbent
directors, provide a blend of skills and experience to further
enhance the Board of Director’s effectiveness.
In connection with its annual recommendation of a slate of
nominees, the Nominating and Corporate Governance Committee may
also assess the contributions of those directors recommended for
re-election in the context of the Board of Directors evaluation
process and other perceived needs of the Board of Directors.
Risk
Oversight
The Board of Directors takes an active role in risk oversight. The
Board of Directors exercises its risk oversight function through
the full Board of Directors and each of its committees. The Audit
Committee of the Board of Directors takes an active risk oversight
role by meeting with the Company’s senior management team on
a regular basis and reviewing and approving key risk policies and
risk tolerances. The Audit Committee is responsible for ensuring
that the Company has in place a process for identifying,
prioritizing, managing, and monitoring its critical risks.
Furthermore, the Board of Directors, with input from the Audit
Committee, regularly evaluates our management infrastructure,
including personnel competencies and technologies and
communications, to ensure that key risks are being properly
evaluated and managed. Finally, the Compensation Committee of the
Board of Directors reviews any risks associated with the
Company’s compensation practices. In the Compensation
Committee’s view, our compensation policies encourages a
balanced approach to risk-taking, by structuring compensation
packages that includes both long-term vesting equity awards in
addition to cash bonuses.
Related
Transactions.
Transactions with Related Persons.
There were no transactions during 2016 between the Company and its
executive officers, directors, nominees, principal stockholders and
other related parties involving amounts in excess of $120,000.
Related Person Transactions Policy.
Our Board has adopted a written policy for the review and the
approval or ratification of any related person transaction. Under
the policy, a “related person” is any (1) director,
nominee for director or executive officer of the Company and any
Immediate Family Member of such person, and (2) any holder of 5% or
more of any class of outstanding equity securities of the Company
and any Immediate Family Member such person. The policy defines an
“Interested Transaction” is any transaction,
arrangement or relationship or series of similar transactions,
arrangements or relationships (including any indebtedness or
guarantee of indebtedness) in which (1) the aggregate
8
amount involved will or may reasonably be expected to exceed
$120,000 in any calendar year, (2) the Company or its subsidiaries
or affiliates is a participant, and (3) any Related Person has or
will have a direct or indirect interest (other than solely as a
result of being a director or a less than 10% beneficial owner of
another entity).
The policy requires the Audit Committee will review the material
facts of all Interested Transactions that require the
Committee’s approval and either approve or disapprove of the
entry into the Interested Transaction, subject to certain
exceptions described in the Policy.
Communications with
Directors
All communications directed to the Board of Directors will be
delivered to the Board of Directors. Stockholders may contact the
Board of Directors by writing to them c/o Assistant Corporate
Secretary, 1612 Cape Coral Parkway East, Cape Coral, Florida
33904.
Compensation Committee
Interlock and Insider Participation
None.
9
IV. DIRECTOR
COMPENSATION
We use a combination of cash and stock-based incentive compensation
to attract and retain qualified candidates to serve on the Board of
Directors. In setting director compensation, we consider the
significant amount of time that directors expend in fulfilling
their duties to the Company as well as the skill-level required of
members of the Board. We also consulted with an independent
compensation consultant and this compensation reflects his
recommendations.
Our employee directors do not receive any additional compensation
for serving on the Board. During 2016, our only employee director
was Anthony C. Humpage.
Each non-employee director received a quarterly retainer of $12,500
each of the quarters in fiscal year 2016. Non-employee directors
are reimbursed for expenses incurred in attending Board
meetings.
James K. Bass received an additional $5,000 per quarter for his
services as Chairman of our Board of Directors in 2016 and received
an additional $3,750 per quarter for fiscal year 2016 for his
services as Chairman of our Compensation Committee.
Peter Harper received an additional $3,750 per quarter for his
services as Chairman of our Audit Committee in 2016 and received an
additional $20,000 in 2016 for his services as Chairman of a
special committee which the Company formed to consider a potential
merger with Tigrent Inc.
Cary Sucoff received an additional $3,750 per quarter for his
services as Chairman of our Nominating and Corporate Governance
Committee during 2016.
In addition to receiving quarterly retainers, directors have been
generally eligible to receive sign-on and annual equity awards
through stock or options. We have adopted an equity incentive plan
that was approved by the stockholders at our annual meeting of
stockholders on July 16, 2015 for equity based incentives under the
Company’s 2015 Equity Plan (the “2015 Incentive
Plan”).
Total compensation attributable to each non-employee director
during 2016, which excludes reimbursable expenses, was as
follows:
|
|
Fees
earned or
paid
in cash
($)
|
|
|
|
|
James K. Bass
|
|
$
|
85,000
|
|
$
|
6,300
|
|
$
|
91,300
|
Peter Harper
|
|
$
|
85,000
|
|
$
|
6,300
|
|
$
|
91,300
|
Cary Sucoff
|
|
$
|
65,000
|
|
$
|
6,300
|
|
$
|
71,300
|
On March 17, 2017, and upon the recommendation of the Nominating
and Governance Committee, the Board of Directors voted to increase
the annual equity component of Director compensation to a number of
shares having a Fair Market Value (as defined by the
Company’s Incentive Plan approved by stockholders on July 16,
2015) from $15,000 to $20,000. The Nominating and Governance
Committee determined that the increase was appropriate after
consultation with the Company’s outside compensation
consultant and assessment of the National Association of Corporate
Directors annual Director Compensation Report. The amount of the
cash stipend payable to directors remained unchanged.
10
V. SECURITIES OWNERSHIP
OF MANAGEMENT, DIRECTORS
AND CERTAIN OTHER PERSONS
The following table sets forth the beneficial common stock
ownership as of April 26, 2017 (i) of each person known by us to be
the beneficial owner of five percent or more of our common stock,
(ii) by each of our directors and Named Executive Officers and
directors and (iii) by all directors and executive officers as a
group.
As used herein, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act
of 1934 as consisting of sole or shared voting power (including the
power to vote or direct the vote) and/or sole or shared investment
power (including the power to dispose or direct the disposition of)
with respect to the security through any contract, arrangement,
understanding, relationship or otherwise, including a right to
acquire such power(s) during the next 60 days.
Unless otherwise noted, beneficial ownership consists of sole
ownership, voting and investment rights. This table is based upon
information supplied to us by our Named Executive Officers,
directors and principal stockholders and/or contained in reports
filed by these persons with the SEC.
|
|
Amount of
Beneficial
Ownership of
Common
Stock
|
|
Percent of
Common
Stock
(1)
|
Christian Baeza
(2)
|
|
198,750
|
|
*
|
James K. Bass
(3)
|
|
177.611
|
|
*
|
Iain Edwards
(2)
|
|
314,375
|
|
1.4
|
Peter W. Harper
(3)
|
|
195,000
|
|
*
|
Anthony C. Humpage
(2)(4)
|
|
3,802,312
|
|
16.8
|
James E. May
(2)
|
|
530,206
|
|
2.3
|
Cary Sucoff
(3)
|
|
373,750
|
|
1.7
|
All directors and executive officers as a
group
|
|
5,822,913
|
|
25.7
|
|
|
|
|
|
Other
owners of more than 5% of outstanding Common
Stock
|
|
|
|
|
Day One LLC
(5)
|
|
2,279,530
|
|
10.1
|
Ingrid Whitney
(
6)
|
|
2,279,799
|
|
10.1
|
Lazarus Investment Partners LLLP
(7)
|
|
1,352,760
|
|
6.0
|
Lazarus Macro Micro Partners LLP
(7)
|
|
6,507
|
|
6.0
|
Executive
Officers
Anthony C.
Humpage
Mr. Humpage, 61, has served as our Chief Executive Officer and
Director since November 10, 2014. Mr. Humpage has been the CEO of
our predecessor since September 4, 2012 and has been a member of
the Board of Directors of our predecessor since May 23, 2012. Mr.
Humpage was previously Chief Financial Officer of the Rich
11
Dad Operating Company, LLC, which licenses its Rich Dad® brand
to us. Mr. Humpage was previously Executive Vice President and
Chief Financial Officer of Government Liquidation, the leading
online auction website for federal government surplus and scrap
assets, from 1998 to 2011. Earlier in his career, he worked in the
construction materials, manufacturing and professional service
industries specializing in early-stage and troubled organizations.
A certified public accountant and a British chartered accountant,
Mr. Humpage holds a MBA Finance degree from Western International
University (1995).
Iain Edwards
Mr. Edwards, 49, has served as our Chief Operating Officer since
November 10, 2014. Mr. Edwards has served as the Chief Operating
Officer of our predecessor since May 2013. Mr. Edwards joined the
Company in 2002 as general manager of our U.K. office, and was
promoted to U.K. Managing Director in 2004 and to President of
International Operations in 2006. From 1997 until 2002, Mr. Edwards
worked for and subsequently owned Jongor Limited, a single London
Depot operation. Between 1991 and 1997, Mr. Edwards served time in
the British Army in various capacities. Mr. Edwards holds a B.A. in
Business Studies from the University of Greenwich, London
(1991).
Christian
Baeza
Mr. Baeza, 54, joined Legacy
Education Alliance in April 2015. Prior to joining the company, Mr.
Baeza held various senior finance positions including Director of
Financial Reporting and Assistant Corporate Controller at Kraton
Performance Polymers, Inc. From 2003 to 2008 he held various
finance positions at Spectra Energy Corporation. Mr. Baeza began
his career as a member of the accounting and auditing practice at
Arthur Andersen LLP from 1995 to 1998. Mr. Baeza earned his B.B.A.
degree in accounting from Florida International
University.
James E. May
Mr. May, 62, has served as our Chief Administrative Officer and
General Counsel since November 10, 2014. Mr. May has served as the
Chief Administrative Officer of our predecessor since September
2009, and as the General Counsel of our predecessor since May 2009.
Mr. May joined the Company in June 2007 as Assistant General
Counsel. In his current role he is responsible for the
Company’s Legal, Human Resources, and Compliance functions.
Prior to joining the Company, he held the position of Associate
General Counsel with Gateway Computers, where he was, at various
times, the chief legal counsel for the Gateway Country Stores
retail division and for the Business and Government Sales division,
where he managed the Contract Management organization. Prior to
that, he was Vice President, Deputy General Counsel with
Blockbuster Videos, Inc. in Ft. Lauderdale, Florida and Dallas,
Texas where he was the chief legal counsel for domestic store
operations, including litigation management. Mr. May has a B.A.
degree from American University (1981) and a J.D. degree from
Catholic University Law School (1984).
Martin Foster
Mr. Foster, 44, joined the Company in April 2002 as Event Manager
of the UK division. During his time with the Company he has held
several positions including UK Operations Manager, UK General
Manager and most recently Managing Director of the UK and
International divisions. Prior to joining the Company Mr. Foster
lived and worked in South Africa where he held the position of
Sales and Solutions Manager (Africa) for a global internet
solutions company. Mr. Foster studied Business through UNISA and IT
through both Microsoft and Compaq.
Martin
Ehrhard
Mr. Ehrhard has served as the Vice President of Information
Technology since November 2016. Mr. Ehrhard joined the company in
October 1998 and is an accomplished IT professional with two
decades of security, engineering, and technology management
experience. Mr. Ehrhard is an avid student of technology and
studied professionally through Microsoft Learning and Oracle
Education.
Stacey
Perkins
Mrs. Perkins, 37, began serving as Vice President of Global
Marketing in 2016. She joined the company in 2004 and has managed
various departments in the company including Marketing, Event
Planning, Product Development, Corporate Communications, and
Shipping and Logistics. She has over a decade of experience in
the
12
educational training seminar and services industry. A natural
leader, her greatest strengths include communication, brand
psychology, brand strategy and creative marketing. Mrs. Perkins
studied Business Management at Santa Fe College.
Change in
Control
On October 4, 2016, the Board of Directors of Tigrent authorized
and approved a distribution to its shareholders of 15,999,838
shares of the Company’s Common Stock. As a result of the
distribution, Tigrent’s shareholders became direct owners of
Legacy common stock. Prior to the distribution, Tigrent owned more
than 70% of the issued and outstanding shares of Legacy’s
common stock. Subsequent to the Tigrent distribution, no person has
power to direct or cause the direction of the management and
polices of Legacy by virtue of ownership of voting securities.
13
VI. PROPOSAL II —
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
The Audit Committee of our Board of Directors has appointed
MaloneBailey LLP (“MaloneBailey”) as our independent
registered public accounting firm for our fiscal year ending
December 31, 2017. Services provided to Legacy Education Alliance,
Inc. by MaloneBailey for fiscal year 2016 are described under
“
Fees to Independent
Registered Public Accounting Firm for Fiscal Years
2016
” below.
Stockholder ratification of the appointment of MaloneBailey as our
independent registered public accounting firm is not required by
our Bylaws or otherwise. However, the Board of Directors is
submitting the appointment of MaloneBailey to the stockholders for
ratification as a matter of good corporate governance practice. If
the stockholders fail to ratify the appointment, the Audit
Committee will reconsider whether or not to retain that firm. Even
if the appointment is ratified, the Audit Committee, in its
discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of
Legacy Education Alliance, Inc. and our stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at
the Annual Meeting will be required to ratify the selection of
MaloneBailey. Abstentions and broker non-votes will have the effect
of a vote against the proposal.
No representative of MaloneBailey will be present at the Annual
Meeting of Stockholders.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR
THE RATIFICATION
OF
THE AUDIT COMMITTEE’S APPOINTMENT OF MALONEBAILEY AS
OUR
INDEPENDENT AUDITOR FOR 2017
Fees to Independent
Auditor for Fiscal Year
2016
The following table presents fees for professional audit services
rendered by MaloneBailey, our current independent auditor for the
audit of our Consolidated Financial Statements for 2016, and fees
billed for other services rendered.
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Audit fees – MaloneBailey LLP
(1)
|
|
$
|
274
|
|
$
|
240
|
Audit fees – Crowe Horwath LLP
|
|
|
47
|
|
|
44
|
Professional Tax Services – Crowe Horwath
LLP
|
|
|
13
|
|
|
8
|
Total Fees
|
|
$
|
334
|
|
$
|
292
|
Audit Fees
This category includes the review of three interim quarterly
financial statements and the audit of Legacy Education Alliance,
Inc.’s annual financial statements, for the twelve month
periods ended December 31, 2016. This category also includes advice
on audit and accounting matters that arose during, or as a result
of, the audit or the review of interim financial statements, and
the preparation of an annual “management letter” on
internal control matters.
Audit-Related Fees
This category consists of assurance and related services by the
auditors that are reasonably related to the performance of the
audit or review of Legacy Education Alliance, Inc.’s
financial statements that are not reported above under “Audit
Fees.”
The Audit Committee has
implemented a policy for the pre-approval of financial statement
audit and review services to be provided to the Company by its
independent auditors. In considering pre-approvals, the
Audit
14
Committee reviews a
description of the scope of services falling within pre-designated
services and imposes specific budgetary guidelines. Pre-approvals
of designated services are generally effective for the succeeding
12 months. The Audit Committee pre-approved all audit-related fees
for the fiscal years ended December 31, 2015 and December 31,
2016.
Any incremental audit or permitted non-audit services which are
expected to exceed the relevant budgetary guideline must be
pre-approved. Pre-approval of any individual engagement may be
granted not more than one year before commencement of the relevant
service unless the Audit Committee approves a longer period.
Tax Fees
This category consists of fees for professional services for tax
compliance, tax advice and tax planning. These services include
assistance regarding federal, state and international tax
compliance, return preparation, tax audits and customs and
duties.
Audit Committee
Report
The Audit Committee operates under a written charter adopted by the
Board. The Audit Committee Charter is available on our website at
the “Corporate Governance” link under the
“Investors” link at
www.legacyeducationalliance.com
.
The purpose of the Audit Committee is to assist the Board in
fulfilling its responsibility to oversee the quality and integrity
of the accounting, auditing, and reporting practices of the
Company. The Committee also oversees the Company’s systems of
internal controls regarding finance, accounting, information
technology, legal and regulatory compliance and ethical behavior,
the audits of the Company’s financial statements, the
qualifications of the accounting firm engaged as the
Company’s independent auditor, and the performance of the
Company’s independent auditors. The Audit Committee has the
sole authority and responsibility to appoint, compensate, evaluate
and, when appropriate, replace the Company’s independent
auditor. In making such determinations, the Audit Committee
considers, among other things, the recommendations of management of
the Company. The Board has determined that all of the Audit
Committee’s members are independent under the applicable
independence standards of the Exchange Act.
The Audit Committee serves in an oversight capacity and is not part
of the Company’s managerial or operational decision-making
process. Management is responsible for the financial reporting
process, including the system of internal controls, and the
preparation of consolidated financial statements in accordance with
accounting principles generally accepted in the United States. The
Company’s independent auditor, MaloneBailey, LLP, is
responsible for auditing those financial statements and expressing
an opinion as to their conformity with accounting principles
generally accepted in the United States and expressing an opinion
on the effectiveness of the Company’s internal control over
financial reporting. The Audit Committee’s responsibility is
to oversee the financial reporting process and the Company’s
internal control over financial reporting. The Audit Committee
relies, without independent verification, on the information
provided to it and on the representations made by management, the
internal auditor and the independent auditor.
The Audit Committee held four meetings during 2016, and met in 2017
to discuss the Company’s financial statements for the year
ended December 31, 2016. With respect to the year ended December
31, 2016, the Audit Committee, among other things:
•
reviewed and discussed the Company’s quarterly and fiscal
year earnings releases;
•
reviewed and discussed (i) the quarterly unaudited consolidated
financial statements and related notes and (ii) the audited
consolidated financial statements and related notes for the year
ended December 31, 2016 with management and MaloneBailey, LLP;
•
reviewed and discussed the annual plan and scope of work of the
internal auditor and summaries of significant reports to management
by the internal auditor;
•
met with MaloneBailey, LLP, the internal auditor, and Company
management in executive sessions;
•
reviewed and discussed certain critical accounting policies;
and
15
•
reviewed business and financial market conditions, including an
assessment of risks posed to the Company’s operations and
financial condition.
The Audit Committee discussed with MaloneBailey, LLP matters that
independent registered public accounting firms must discuss with
audit committees under generally accepted auditing standards and
standards of the Public Company Accounting Oversight Board,
including, among other things, matters related to the conduct of
the audit of the Company’s consolidated financial statements
and the matters required to be discussed by Public Company
Accounting Oversight Board AU 380 (Communications with Audit
Committees). These reviews included discussions with management and
the independent auditor of the quality (not merely the
acceptability) of the Company’s accounting principles, the
reasonableness of significant estimates and judgments, and the
disclosures in the Company’s consolidated financial
statements, including the disclosures relating to critical
accounting policies.
MaloneBailey, LLP also provided to the Audit Committee the written
disclosures and the letter required by applicable requirements of
PCAOB Ethics and Independence Rule 3526, Communication with Audit
Committees Concerning Independence, regarding its communications
with the Audit Committee concerning independence, and represented
that it is independent from the Company. The Audit Committee
discussed with MaloneBailey, LLP their independence from the
Company and considered if services they provided to the Company
beyond those rendered in connection with their audit of the
Company’s consolidated financial statements, and reviews of
the Company’s interim condensed consolidated financial
statements included in its Quarterly Reports on Form 10-Q
compromise independence.
During 2016, the Audit Committee received regular updates on the
amount of fees and scope of audit and audit-related services
provided. In addition, the Audit Committee reviewed and approved
audit and non-audit services provided by MaloneBailey, LLP pursuant
to the preapproval policies and procedures set forth in the Audit
Committee Charter related to the provision of audit and non-audit
services by the independent auditors.
Based on the Audit Committee’s review and these meetings,
discussions and reports discussed above, and subject to the
limitations on our role and responsibilities referred to above and
in the Audit Committee charter, the Audit Committee recommended to
the Board that the Company’s audited consolidated financial
statements for the year ended December 31, 2016 be included in the
Company’s Annual Report on Form 10-K. The Audit Committee
also appointed MaloneBailey, LLP as the Company’s independent
auditor for 2017 and are presenting the appointment to the
stockholders for ratification.
The Audit
Committee
Peter W. Harper,
Chair
Cary Sucoff
16
VII. PROPOSAL III
— ADVISORY VOTE ON EXECUTIVE COMPENSATION
(SAY-ON-PAY)
The following proposal, commonly known as a say-on-pay proposal,
gives our stockholders the opportunity to vote to approve or not
approve, on an advisory basis, the compensation of our named
executive officers. This vote is not intended to address any
specific item of compensation or the compensation of any particular
officer, but rather the overall compensation of our named executive
officers and our compensation philosophy, policies and practices,
as discussed in this proxy statement. This vote is advisory, and
therefore not binding on us, our Compensation Committee, or our
Board of Directors. However, our Board of Directors and our
Compensation Committee value the opinions of our stockholders and
intend to take into account the outcome of the vote when
considering future compensation decisions for our named executive
officers.
The compensation program for our named executive officers is
designed to attract, retain and motivate our executives who are
critical to our success and to align the interests of our
executives with those of our stockholders. They receive a mix of
cash and non-cash compensation. The compensation program was
created and evaluated against market analysis conducted by an
independent compensation consultant against our peer groups. For
additional information on the compensation program for our named
executive officers, including specific information about
compensation in 2016, please see the information in this proxy
statement under the heading “Compensation Discussion and
Analysis,” along with the compensation tables and narrative
descriptions that follow.
Accordingly, we will ask our stockholders to vote on the following
resolutions at the 2017 Annual Meeting:
BE IT RESOLVED, that the compensation paid to the
Corporation’s named executive officers, as disclosed in this
proxy statement pursuant to the compensation disclosure rules of
the Securities and Exchange Commission, including Compensation
Discussion and Analysis, compensation tables and narrative
discussion, is hereby ratified, confirmed, adopted and
approved.
Approval of this proposal requires the affirmative vote of a
majority of the shares present in person or represented by proxy at
the Annual Meeting. Abstentions will have the effect of a vote
against the proposal and broker non-votes will have no effect on
the vote for this proposal.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR
APPROVAL OF SAY-ON-PAY
.
17
VIII. COMPENSATION
DISCUSSION AND ANALYSIS (“CD&A”)
Executive Compensation
Program
Our executive compensation program is determined and proposed by
our Compensation Committee and is approved by our Board of
Directors. None of the Named Executive Officers are members of the
Compensation Committee or otherwise had any role in determining the
compensation of other Named Executive Officers, although the
Compensation Committee does consider the recommendations of our
Chief Executive Officer in setting compensation levels for our
other executive officers.
Executive Employment
Agreements
In October 2013, we entered into an employment agreement with
Anthony C. Humpage, our Chief Executive Officer, with no specific
term. Each party has the right to terminate the agreement within
the parameters outlined in the agreement. In exchange for services
rendered, Mr. Humpage is entitled to receive a base salary of
$375,000 per year, subject to annual increases, and be eligible for
an annual incentive bonus based on defined performance targets, of
up to 120% of the annual base salary. The Company can terminate the
agreement with cause, or upon a change in control, as defined in
the agreement and under certain circumstances, Mr. Humpage may be
eligible to receive termination benefits.
In addition to the annual incentive bonus, Mr. Humpage is eligible
to receive:
•
Other incentives based on the achievement of goals specified by our
Compensation Committee;
•
Additional discretionary bonuses from time to time as determined by
our Compensation Committee; and
•
Reimbursement for certain specified expenses.
Executive Compensation
Program Objectives and Overview
The Compensation Committee
conducts an annual review of our executive compensation programs to
ensure that:
•
The program is designed to
achieve our goals of promoting financial and operational success by
attracting, motivating and facilitating the retention of key
employees with outstanding talent and ability; and
•
The program adequately rewards performance which is tied to
creating stockholder value.
Our current executive compensation program is based on three
components, which are designed to be consistent with our
compensation philosophy: (1) base salary; (2) annual incentive
bonuses; and (3) grants of stock options and restricted stock.
In structuring executive compensation packages, the Compensation
Committee considers how each component promotes retention and/or
motivates performance by the executive. Base salaries, perquisites
and personal benefits, and severance and other termination benefits
are primarily intended to attract and retain highly qualified
executives. We believe that in order to attract and retain top
executives, we need to provide them with compensation levels that
reward their continued productive service. Annual incentive bonuses
are primarily intended to motivate our executive officers to
achieve specific strategies and operating objectives, although we
believe they also help us to attract and retain top executives. Our
long-term equity incentives are primarily intended to align
executive officers’ long-term interests with
stockholders’ long-term interests, although we believe they
also play a role in helping us to attract and retain top
executives. Annual bonuses and stock option or restricted stock
grants are the elements of our executive compensation program
designed to reward performance and thus the creation of stockholder
value.
We view our current executive compensation program as one in which
the individual components combine together to create a total
compensation package for each executive officer that we believe
achieves our compensation objectives. In determining our current
executive compensation program and the amounts of compensation for
each component of our program, the Compensation Committee evaluates
the current executive compensation data for companies in our
industry. The Compensation Committee believes that our current
executive compensation program is appropriate based on the
evaluation of the compensation paid by companies in our industry
for similarly situated employees.
18
Role of Compensation
Committee and Executive Officers in Compensation
Decisions
The role of our Compensation Committee is to oversee our
compensation programs and retirement plans and policies and review
and approve all compensation decisions relating to the
Company’s Named Executive Officers, including our Chief
Executive Officer. Our Compensation Committee reviews, and in
consultation with the entire Board of Directors and our Chief
Executive Officer (other than with respect to his own
compensation), makes all compensation decisions for the Named
Executive Officers. The Compensation Committee reviews and
recommends and the independent members of the Board of Directors
approves the annual compensation package of our Chief Executive
Officer.
Our Compensation Committee intends to meet with our Chief Executive
Officer at least annually to review the performance of the other
executive officers, receive the recommendations of the Chief
Executive Officer on the executive officers compensation and
approve their annual compensation packages. This meeting is
intended to include a review by the Chief Executive Officer of the
performance of each Named Executive Officer who reports directly to
our Chief Executive Officer.
Setting Executive
Compensation
In furtherance of the philosophy and objectives described above, in
setting compensation for our executive officers, our Compensation
Committee considered data obtained from the consulting firm of
Pearl Meyer & Partners, in addition to other factors, to assess
competitive pay levels and establish compensation targets for base
salary, annual incentives and long-term incentives. The data from
the Pearl Meyer & Partners surveys reflects compensation
practices of companies in the education industry with annual
revenue and free cash flow that are comparable to our own, and
includes data for executives with responsibilities cutting across
the entire enterprise (“
Survey
Group
”).
Base Salary
We provide our executive officers and other employees with a base
salary designed to compensate them for the day-to-day services
rendered to us during the fiscal year. Our Compensation Committee
reviews each executive officer’s salary and performance
annually. Market data from the Survey Group is used to determine
base salary ranges for our executive officers based on the position
and responsibility. An executive officer’s actual salary
relative to this competitive salary range varies based on the level
of his or her responsibility, experience, individual performance
and internal pay-equity considerations. Specific salary increases
take into account these factors and the current market for
management talent. Salary increases are considered by the
Compensation Committee each year.
Annual Incentive
Compensation
We have an Executive Incentive Plan (the “
Bonus
Plan
”) for our executive officers and other
participating employees. The Bonus Plan, administered by the
Compensation Committee, provides that the Compensation Committee
will determine the total amount of performance incentive bonuses to
be paid to participants under the Bonus Plan. Bonuses are based
upon specific measures of our financial performance and achievement
of each participant’s agreed upon annual goals.
Specifically, the Bonus Plan provides for target bonuses as a
percent of each participant’s yearly salary.
The target bonuses for our executive officers are as follows:
Chief Executive Officer — 100%
Senior Executive Officers — 50%
Vice Presidents and key employees — 20% to 50, as
specified
Junior employees may participate in the plan as designated.
Payouts under the Bonus Plan are subject to the approval of the
Compensation Committee following the finalization of our annual
financial results and are based upon the following metrics: (i)
Total Annual Cash Sales, (ii) Overall Adjusted EBITDA, (iii)
increase in Adjusted EBITDA and (iv) achievement of the
participant’s individual goals.
19
Equity Incentive
Compensation
The Company’s 2015 Incentive Plan was approved by the
stockholders at our annual meeting of stockholders on July 16,
2015. The 2015 Incentive Plan reserves 5,000,000 shares of our
Common Stock for stock options, restricted stock, and a variety of
other types of equity awards. We believe that long-term incentive
compensation programs align the interests of management, employees
and the stockholders to create long-term stockholder value. We
believe that equity based incentive compensation plans, such as the
Incentive Plan, increase our ability to achieve this objective,
and, by allowing for several different forms of long-term equity
based incentive awards, help us to recruit, reward, motivate and
retain talented employees and other service providers. The text of
the 2015 Incentive Plan is included in the attachment marked as
Appendix B to the Company’s Proxy Statement on Schedule 14A
filed with the Securities and Exchange Commission on June 16,
2015.
Deferred Compensation
Plans
We do not have a deferred compensation plan.
Retirement
Benefits
We have a 401(k) employee savings plan for eligible employees that
provides for a matching contribution from us, determined each year
at our discretion. The Company made no matching contributions in
2016.
Medical, Dental, Life
Insurance and Disability Coverage
We provide other benefits such as medical, dental and life
insurance, and disability coverage to each Named Executive Officer
in benefits plans that are also provided to all eligible U.S. based
salaried employees. Eligible employees can purchase additional
life, dependent life and accidental death and dismemberment
coverage as part of their employee benefits package.
Deductibility of
Executive Compensation
Under the Omnibus Budget Reconciliation Act of 1993, provisions
were added to the Internal Revenue Code under Section 162(m) that
limits the tax deduction for compensation in excess of $1.0 million
paid to certain executive officers. However, performance based
compensation can be excluded from the limit so long as it meets
certain requirements. To qualify as “performance based”
under Section 162(m), compensation payments must be determined
pursuant to a plan, by a committee of at least two
“outside” directors (as defined in the regulations
promulgated under the Code) and must be based on achieving
objective performance goals. In addition, the material terms of the
plan must be disclosed to and approved by stockholders and the
outside directors or the Compensation Committee, as applicable,
must certify that the performance goals were achieved before
payments can be awarded. The Compensation Committee believes that
the restricted stock grants previously awarded by the Company
qualify as performance based compensation and satisfy the
requirements for exemption under the Internal Revenue Code Section
162(m).
For 2016, none of our Named Executive Officers was paid an annual
salary in excess of $1.0 million. Restricted stock granted under
the terms of long-term incentives are exempt as performance based
compensation for purposes of calculating the $1.0 million limit. To
maintain flexibility in compensating the Named Executive Officers
in a manner designed to promote varying corporate goals, the
Compensation Committee reserves the right to recommend and award
compensation that is not deductible under Section 162(m).
20
Executive Compensation Tables
The following table sets forth information regarding compensation
earned by, awarded to or paid to our Named Executive Officers
during the two fiscal years ended December 31, 2016 and 2015:
Summary Executive
Compensation Table
For the Years Ended December 31, 2016 and December 31,
2015
Name
and Principal Position
|
|
|
|
|
|
Non-Equity
Incentive
Compensation
($)
(1)
|
|
|
|
|
Anthony C. Humpage
|
|
2016
|
|
$
|
375,000
|
|
$
|
150,000
|
|
$
|
78,750
|
|
$
|
603,750
|
Chief Executive Officer and Director
|
|
2015
|
|
$
|
325,000
|
|
$
|
292,500
|
|
|
—
|
|
$
|
617,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian A. J. Baeza
|
|
2016
|
|
$
|
200,000
|
|
$
|
33,000
|
|
$
|
16,800
|
|
$
|
249,800
|
Chief Financial Officer
|
|
2015
|
|
$
|
200,000
|
|
$
|
56,280
|
|
$
|
45,000
|
|
$
|
301,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iain Edwards
(2)
|
|
2016
|
|
$
|
206,020
|
|
$
|
20,602
|
|
$
|
16,800
|
|
$
|
243,422
|
Chief Operating Officer
|
|
2015
|
|
$
|
225,000
|
|
$
|
123,750
|
|
$
|
112,500
|
|
$
|
461,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. May
|
|
2016
|
|
$
|
260,000
|
|
$
|
44,200
|
|
$
|
16,800
|
|
$
|
321,000
|
Executive Vice President and General
Counsel
|
|
2015
|
|
$
|
240,000
|
|
$
|
78,200
|
|
$
|
120,000
|
|
$
|
438,200
|
Outstanding Equity
Awards Table
For the Year Ended 12/31/2016
Name
and Principal Position
|
|
Number of
Unvested
Shares
|
|
Market
Value of
Unvested
Shares ($)
|
Anthony C. Humpage
|
|
375,000
|
|
157,500
|
Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
|
Christian A. J. Baeza
|
|
142,500
|
|
59,850
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
Iain Edwards
(2)
|
|
236,250
|
|
99,225
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
James E. May
|
|
246,667
|
|
103,600
|
Executive Vice President and General
Counsel
|
|
|
|
|
As of December 31, 2016, there were no outstanding option awards
for any of our Named Executive Officers.
21
Potential Payments Upon
Termination or Change in Control
The employment agreement with our Chief Executive Officer provides
for payments upon termination without “cause”, as
defined in the agreement, of six months base salary plus a prorated
termination bonus. Upon termination of the CEO’s employment
without Cause within 18 months following a Change in Control (as
such terms are defined in the agreement,) the CEO shall receive
amounts earned by him but not yet paid as of the termination date,
one year of base salary, and a pro-rated portion of the CEO’s
annual incentive bonus and is eligible to receive certain basic
employee benefits for twelve additional months after
termination.
Our U.S. based Named Executive Officers have also signed our
standard confidentiality and non-competition agreement that applies
for certain time periods following the employee’s termination
of employment for any reason. The non-competition time period after
termination of employment is generally one to two years.
Compensation Committee
Report
We, the members of the Compensation Committee, have reviewed and
discussed the foregoing Compensation Discussion and Analysis with
management. Based on our review and discussion with management, we
have recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
The Compensation
Committee
James K. Bass,
Chair
Peter W. Harper
22
IX. OTHER
MATTERS
Cost of Soliciting Your
Proxy.
We will pay the expenses for the preparation and mailing of the
proxy materials and the solicitation by the Board of your proxy.
Our directors, officers and employees, who will receive no
additional compensation for soliciting, may solicit your proxy, in
person or by telephone, mail, facsimile or other means of
communication.
Other
Business.
We do not know of any other matters that may be presented for
action at the meeting other than those described in this Proxy
Statement. If any other matter is properly brought before the
meeting, the proxy holders will vote on such matter in their
discretion.
Stockholder Proposals
for the 2018 Annual Meeting.
Stockholders intending to present a proposal at the 2018 annual
meeting and have it included in our proxy statement for that
meeting must submit the proposal in writing to Legacy Education
Alliance, Inc., 1612 Cape Coral Parkway East, Cape Coral, Florida
33904, attention: Assistant Corporate Secretary. We must receive
the proposal no later than March 2, 2018.
Stockholders of record wishing to present a proposal or nomination
at the 2018 annual meeting, but not requiring the proposal be
included in our proxy statement must comply with the requirements
set forth in our Bylaws. Our Bylaws require, among other things,
that our Secretary receive written notice from the record
stockholder of intent to present such proposal or nomination no
more than 120 days and no less than 90 days prior to the first
anniversary of the date on which the Company first mailed its proxy materials for the 2017 annual meeting, provided, however, that in
the event that the date of the 2018 annual meeting is changed by
more than thirty (30) days from the anniversary date of the 2017
annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than one hundred and twenty (120) days prior
to such annual meeting and not later than the close of business on
the later of the ninetieth (90
th
)
day prior to such annual meeting or the tenth (10
th
)
day following the day on which public announcement of the date of
such meeting is first made. The notice must contain the information
required by the Bylaws, a copy of which is available upon request
to our Secretary.
Stockholders Sharing an
Address.
Consistent with notices sent to record stockholders sharing a
single address, we are sending only one Notice, Annual Report and
Proxy Statement to that address unless we received contrary
instructions from any stockholder at that address. This
“householding” practice reduces our printing and
postage costs. Stockholders may request or discontinue
householding, or may request a separate copy of the Notice, Annual
Report or Proxy Statement as follows:
•
Record stockholders wishing to discontinue or begin householding,
should contact our Assistant Corporate Secretary, Legacy Education
Alliance, Inc., 1612 Cape Coral Parkway East, Cape Coral, Florida
33904.
•
Stockholders owning their shares through a bank, broker or other
holder of record who wish to either discontinue or begin
householding should contact their record holder.
•
Any householded stockholder may request prompt delivery of a copy
of the Annual Report or Proxy Statement by contacting our or may
write to our Assistant Corporate Secretary at: Legacy Education
Alliance, Inc., 1612 Cape Coral Parkway East, Cape Coral, Florida
33904. Instructions for requesting such materials are also included
in the Notice.
Disclaimer.
Information contained on our website is not incorporated by
reference into this Proxy Statement or any other report filed with
the SEC.
23
Legacy Education
Alliance, Inc.
ANNUAL MEETING OF
STOCKHOLDERS
Wednesday, May 31,
2017
9:00 am EDT
Hampton Inn & Suites
619 S.E. 47
th
Terrace, Cape Coral,
FL 33904 ADMISSION TICKET
LEGACY EDUCATION ALLIANCE, INC.’s 2017 ANNUAL MEETING OF
STOCKHOLDERS WILL BE HELD AT 9:00am (EASTERN TIME) ON WEDNESDAY,
MAY 31, 2017, AT THE HAMPTON INN & SUITES – CAPE
CORAL/FORT MYERS AREA, FL, 619 S.E. 47
TH
TERRACE, CAPE CORAL, FL 33904
.
If you
plan to attend the Annual Meeting of Stockholders, keep this form
as your ticket for admission to our Annual Meeting. Please also
remember to bring personal identification as you may be required to
present appropriate identification together with this admission
ticket to be able to attend our annual meeting. YOUR VOTE IS
IMPORTANT. The proxy voting instruction card below covers the
voting of all shares of Common Stock of Legacy Education
Alliance, Inc., which you are entitled to vote or to direct
the voting of.
Please date and sign the proxy card and return it promptly in the
enclosed business reply envelope. If you do not sign and return a
proxy or attend the Annual Meeting and vote by ballot, your shares
cannot be voted.
(PLEASE DETACH PROXY CARD)
LEGACY EDUCATION
ALLIANCE, INC.
c/o Assistant Corporate
Secretary
1612 Cape Coral Parkway
East
Cape Coral, Florida
33904
BALLOT INSTRUCTIONS FOR
REGISTERED STOCKHOLDERS
Your vote is important.
Please vote immediately.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Legacy
Education Alliance, Inc., c/o Assistant Corporate Secretary,
1612 Cape Coral Parkway East, Cape Coral, Florida 33904.
ALL PROXIES MUST BE
RECEIVED PRIOR TO
THE CONCLUSION OF VOTING
AT THE ANNUAL MEETING
KEEP THIS PORTION FOR YOUR RECORDS
LEGACY EDUCATION
ALLIANCE, INC.
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Anthony C. Humpage, our CEO and
Christian Baeza, our CFO, or either of them, as proxy with full
power of substitution, to vote as designated on the reverse side,
for director substitutes if any nominees become unavailable, and in
their discretion, on matters properly brought before the Annual
Meeting and on matters incident to the conduct of the Annual
Meeting, all of the shares of common stock, par value $0.0001, of
Legacy Education Alliance, Inc. that the undersigned has the
power to vote at the Annual Meeting of Stockholders to be held on
Wednesday, May 31, 2017, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
PROPOSALS
1, 2 and 3.
This Proxy when properly executed will be voted as directed. If no
direction is indicated, this Proxy will be voted as follows:
•
FOR
the
election of the four nominees for directors named in the Proxy
Statement
(James K. Bass, Peter W. Harper, Anthony C. Humpage and Cary Sucoff);
•
FOR
the
ratification of the appointment of MaloneBailey, LLP as our
independent auditors for the year ending December 31, 2017;
and
•
FOR
the
approval of Say-on-Pay.
(CONTINUED
,
and To Be Signed and Dated, on the
REVERSE
SIDE)
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED
.
Legacy Education
Alliance, Inc.
The Board of Directors
recommends a vote FOR Proposals 1, 2 and 3
Your vote with respect
to any of the matters indicated below is for, against or to
withhold or to abstain (as you indicate below) the resolutions that
are set out in full in the proxy statement on the page
indicated.
PROPOSAL NO. 1 — ELECTION OF DIRECTORS:
To withhold authority to vote for any individual nominee(s), mark
the box for such nominee(s) under the column “For All
Except” below.
|
For
All
|
Withhold
All
|
For All
Except
|
(01) James K. Bass
|
|
|
¨
|
(02) Peter W. Harper
|
|
|
¨
|
(03) Anthony C. Humpage
|
|
|
¨
|
(04) Cary Sucoff
|
|
|
¨
|
(Page 4 of the Proxy Statement)
|
¨
|
¨
|
|
Vote
on proposals
|
For
|
Against
|
Abstain
|
PROPOSAL NO. 2.—Ratification of the
Appointment of MaloneBailey, LLP as our independent auditors for
the year ending December 31, 2017
(Page 14 of the Proxy Statement)
|
¨
|
¨
|
¨
|
|
|
|
|
PROPOSAL NO. 3.—Approval of
Say-on-Pay
(Page 17 of the Proxy Statement)
|
¨
|
¨
|
¨
|
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
|
Dated:
________________
, 2017
|
|
|
|
|
|
Signature
|
|
|
|
Print Name
|
|
|
|
PLEASE MARK, SIGN, AND DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
|
|
|
|
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE
ANNUAL MEETING OF STOCKHOLDERS.
¨
|