ACCESS NEWSWIRE INC.
10-Ks and 10-Qs
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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
(Amendment
No. __)
Filed
by the Registrant ☑
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
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 under Rule 14a-12
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ISSUER DIRECT CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☑
No fee required
☐
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title of each class
of securities to which transaction applies:
(2)
Aggregate number of
securities to which transaction applies:
(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):
(4)
Proposed maximum
aggregate value of transaction:
(5)
Total fee
paid:
☐
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 identify 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.
(1)
Amount Previously
Paid:
(2)
Form, Schedule or
Registration Statement No.:
(3)
Filing
Party:
(4)
Date
Filed:
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2020
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Notice of Annual Meeting of Stockholders
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Wednesday, June 17, 2020 12:00 p.m. EDT
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VIRTUALLY
https://www.issuerdirect.com/virtual-event/isdr
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Issuer Direct Corporation
1 Glenwood Avenue, Suite 1001
Raleigh NC 27603
April 28, 2020
To Our Stockholders:
We are pleased to invite you to attend our Annual Meeting of
Stockholders to be held on Wednesday, June 17, 2020, at 12:00 p.m.
EDT. In light of public health concerns regarding the coronavirus
(COVID-19) outbreak, the annual meeting will be held in a virtual
format only.
The
Board of Directors has fixed the close of business on April 21,
2020 as the record date for the determination of stockholders
entitled to receive notice of, and to vote at, the Annual
Meeting.
The
attached Proxy Statement describes the matters proposed by your
Board of Directors to be considered and voted upon by our
stockholders at our Annual Meeting. These items are more fully
described in the following pages, which are hereby made part of
this Notice.
The
Company’s Proxy Statement and Proxy Card accompany this
Notice.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to be held on June 17,
2020.
Our Proxy Statement is attached. Financial and other
information concerning the Company is contained in our Annual
Report on Form 10-K for the year ended December 31, 2019. Under
rules issued by the Securities and Exchange Commission
(“SEC”), we are providing access to our proxy materials
both by sending you this full set of proxy materials, including a
Proxy Card, and by notifying you of the availability of our proxy
materials on the Internet. The Proxy Statement and our Annual
Report on Form 10-K are available on
https://www.iproxydirect.com/ISDR
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Your vote is important
. Whether you own relatively few or a
large number of shares of our stock, it is important that your
shares be represented and voted at the Annual Meeting. Please vote
your shares online or by telephone or, if you requested and
received a printed set of proxy materials by mail, by returning the
accompanying proxy card. Further instructions on how to vote your
shares can be found in our Proxy Statement.
We
appreciate your support and continued confidence.
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Sincerely,
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/s/ William H. Everett |
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William H.
Everett
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Chairman of the Board of Directors |
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Issuer Direct Corporation
1 Glenwood Ave, Suite 1001
Raleigh NC 27603
919.481.4000
Notice of Annual Meeting of Stockholders
To Be Held on June 17, 2020
To Our Stockholders:
Our
Annual Meeting of Stockholders will be held virtually on Wednesday,
June 17, 2020, at 12:00 p.m. EDT, (the “Annual
Meeting”) for the following purposes:
1.
To elect four (4)
directors nominated buy our Board of Directors as set forth in the
proxy statement;
2.
A proposal to approve
the Second Amendment
to Issuer Direct Corporation’s 2014 Equity Incentive Plan to
increase the total number of shares of common stock authorized for
issuance under such plan by 200,000
;
3.
To ratify the
appointment of Cherry Bekaert LLP as our independent registered
public accounting firm for the year ending December 31,
2020;
4.
To transact such
other business as may properly come before the meeting or any
postponement or adjournment thereof.
You
have the right to receive notice of and to vote at the Annual
Meeting if you were a stockholder of record at the close of
business on April 21, 2020. Please complete, sign, date and return
your proxy card to us in the enclosed, postage-prepaid envelope at
your earliest convenience, even if you plan to attend the Annual
Meeting. If you prefer, you can authorize your proxy through the
Internet or by telephone as described in the Proxy Statement and on
the enclosed proxy card.
To
participate in our annual meeting, including casting your vote
during the meeting, access the meeting website at
https://www.issuerdirect.com/virtual-event/isdr
and entering in your shareholder information provided on your
ballot or proxy information previously mailed to you. If you attend
the meeting virtually, you may revoke your proxy prior to its
exercise and vote virtually at the meeting. In the event that there
are not sufficient stockholders present for a quorum or sufficient
votes to approve a proposal at the time of the Annual Meeting, the
Annual Meeting may be adjourned from time to time in order to
permit further solicitation of proxies by the Company.
Your vote is important.
If you are unable to attend the
Annual Meeting virtually and wish to have your shares voted, please
vote as soon as possible, whether online, by telephone, by fax or
by returning a proxy card sent to you in response to your request
for printed proxy materials.
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By Order of the Board of Directors, |
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/s/ William H. Everett |
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William H.
Everett
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Chairman of the
Board of Directors
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Raleigh,
North Carolina
April
28, 2020
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YOUR VOTE IS IMPORTANT IT IS IMPORTANT THAT PROXY CARDS BE RETURNED
PROMPTLY. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING VIRTUALLY, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED RETURN ENVELOPE OR VOTE OVER THE INTERNET
FOLLOWING THE INSTRUCTIONS ON THE PROXY AS SOON AS POSSIBLE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. STOCKHOLDERS
WHO EXECUTE A PROXY CARD OR VOTE OVER THE INTERNET MAY NEVERTHELESS
ATTEND THE MEETING VIRTUALLY, REVOKE THEIR PROXY AND VOTE THEIR
SHARES IN VIRTUALLY.
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Table of Contents
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Proxy Summary
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1
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2020
Annual Meeting of Stockholders
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1
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Annual
Meeting Agenda and Voting Recommendations
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1
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Director
Nominees
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2
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Proxy Statement
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3
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Questions and Answers
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3
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Delivery of Documents to Security Holders Sharing an
Address
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6
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PROPOSAL 1–ELECTION OF DIRECTORS
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7
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Nominees
for Director
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7
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Certain
Information Concerning Director Nominees
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7
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Board
and Committee Membership
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9
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Consideration
of Stockholder Nominees for Directors
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9
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Corporate Governance
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10
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Indemnification
of Directors and Officers
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10
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Directors’
and Officers’ Liability Insurance
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10
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Code
of Ethics
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10
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Director
Independence
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10
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Board
Committees
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11
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Audit Committee
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11
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Compensation
Committee
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11
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Strategic Advisory
Committee
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11
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Meetings
and Attendance
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12
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Communications
with the Board of Directors
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12
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Non-Employee
Director Compensation Agreement
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12
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2019
Non-Employee Director Compensation Table
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13
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Security Ownership of Beneficial Owners and Management
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14
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Executive Compensation
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15
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Compensation
Discussion and Analysis
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15
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Summary
Compensation Table
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15
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Brian
R. Balbirnie Employment Agreement
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15
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Steven
Knerr Employment Agreement
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16
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Philosophy
of Compensation
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16
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Components
of Compensation
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17
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Compensation
of Named Executive Officers
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17
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Risk
Considerations in our Compensation Programs
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19
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Compensation
Committee Report
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PROPOSAL 2-AMENDMENT TO 2014 EQUITY INCENTIVE PLAN
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20
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PROPOSAL
3–RATIFICATION OF AUDITORS
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25
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Ratification
of Selection of Independent Auditors
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25
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Audit
Committee Pre-Approval Policy
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26
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Report
of the Audit Committee
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26
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Certain Relationships and Related Party Transactions and Director
Independence
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27
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Related
Party Transactions
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27
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Director
Independence
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27
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Other Matters
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27
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Additional Information
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27
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Proxy Summary
2020 ANNUAL MEETING OF STOCKHOLDERS
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WHEN
Wednesday,
June 17, 2020 at 12 p.m. EDT
WHERE
Virtual –
https://www.issuerdirect.com/
virtual-event/isdr
RECORD DATE
Close
of business on April 21, 2020
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ITEMS OF BUSINESS
1.
To elect four (4)
directors nominated by our Board of Directors as set forth in the
proxy statement;
2.
A proposal to approve
the Second Amendment
to the Issuer Direct Corporation’s 2014 Equity Incentive Plan
to increase the total number of shares of common stock authorized
for issuance under such plan by 200,000
;
3.
To ratify the
appointment of Cherry Bekaert LLP as our independent registered
public accounting firm for the year ending December 31,
2020;
4.
To transact such
other business as may properly come before the meeting or any
postponement or adjournment thereof.
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PROXY VOTING
Stockholders of
record on the Record Date are entitled to vote by proxy in the
following ways:
By calling 866.752.VOTE (8683), toll free, in the United States or
Canada
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By voting online at https://www.iproxydirect.com/isdr
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By returning a properly completed, signed and dated proxy
card
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By completing the reverse side of the proxy
card and faxing it to 202.521.3464
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ANNUAL MEETING AGENDA AND VOTING RECOMMENDATIONS
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Proposal
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Voting Recommendation
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Page Reference
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1
Election of four (4)
directors
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✓
FOR each
nominee
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7
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2
Amendment to 2014 Equity
Incentive Plan
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✓
F
OR
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20
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3
Ratification of the
appointment of Cherry Bekaert LLP as our independent
auditors
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✓
FOR
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25
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1
DIRECTOR NOMINEES
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Name
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Age
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Director Since
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Occupation
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Independent Director
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Standing Committee Membership
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William H. Everett
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69
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2013
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Retired, Executive Vice President and Chief Financial Officer of
Tekelec, Inc.
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✓
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AC,
SAC
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Michael Nowlan
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61
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2017
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Executive Consultant to private companies; retired Chief Executive
Officer of Primus Telecommunications Canada Inc. and, Marketwire,
Inc.
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✓
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AC*
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J. Patrick Galleher
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47
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2014
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Managing Partner for Boxwood Partners, LLC and Managing Director
for Boxwood Capital Partners, LLC
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CC,
SAC*
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Brian R. Balbirnie
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48
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2007
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Founder and Chief Executive Officer of Issuer Direct
Corporation
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AC =
Audit Committee
CC =
Compensation Committee
SAC =
Strategic Advisory Committee
* =
Committee Chair
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PROXY STATEMENT
Questions and Answers
► WHY AM I RECEIVING THESE PROXY MATERIALS?
You are
receiving these proxy materials because you owned shares of common
stock of our company, Issuer Direct Corporation (the
“Company”), at the close of business on April 21, 2020,
and, therefore, are eligible to vote at the Company’s Annual
Meeting of Stockholders to be held virtually on Wednesday, June 17,
2020, at 12:00 p.m. EDT (the “Annual Meeting”). Our
Board of Directors (the “Board”) is soliciting your
proxy to vote at the Annual Meeting.
► ON WHAT MATTERS WILL I BE VOTING?
Stockholders
of record at the close of business on April 21, 2020 will be
entitled to vote on the following proposals:
1.
To elect four (4)
directors nominated buy our Board of Directors as set forth in the
proxy statement;
2.
A proposal to approve
the Second Amendment
to Issuer Direct Corporation’s 2014 Equity Incentive Plan to
increase the total number of shares of common stock authorized for
issuance under such plan by 200,000
;
3.
To ratify the
appointment of Cherry Bekaert LLP as our independent registered
public accounting firm for the year ending December 31,
2020;
4.
To transact such
other business as may properly come before the meeting or any
postponement or adjournment thereof.
The
Board does not know of any matters to be presented at our Annual
Meeting other than those described in this Proxy Statement.
However, if any other matters properly come before the meeting or
any adjournment thereof, it is the intention of the persons named
in the enclosed proxy to vote the shares represented by them in
accordance with their best judgment.
►
WHY IS THIS YEAR’S ANNUAL
MEETING BEING HELD IN A VIRTUAL-ONLY FORMAT?
Our
preference is to have held an in-person annual meeting of
shareholders. However, due to public health concerns resulting from
the coronavirus (COVID-19), and the related protocols that federal,
state, and local governments have implemented, our Board of
Directors has determined to hold our annual meeting solely by means
of remote communication via webcast. This is often referred to as a
“virtual annual meeting.” The webcast will allow all
shareholders to join the meeting, regardless of location. Our
decision to hold the annual meeting in a virtual format relates
only to the 2020 Annual Meeting at this time, however the Board of
Directors may decide to continue this format or introduce it as an
option for subsequent meetings of the shareholders.
►
HOW CAN I PARTICIPATE IN THE ANNUAL
MEETING?
You can
join the annual meeting by accessing the meeting URL at
https://www.issuerdirect.com/virtual-event/is
dr
and entering in your shareholder information provided on your
ballot or proxy information previously mailed to you.
Online
access will be available prior to the meeting for you to obtain
your information and to vote your shares should you not have done
so previously. We encourage you to access the meeting webcast prior
to the start time.
Rules
for the virtual meeting will be no different than if it was in
person, professional conduct is appreciated and all Q&A
sessions will be conducted at the appropriate time during the
meeting.
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HOW CAN I ASK QUESTIONS DURING THE
ANNUAL MEETING?
You can
submit questions in writing to the virtual meeting website during
the annual meeting in the Q&A tab on the virtual platform. You
must first join the meeting as described above in “How can I
participate in the annual meeting?” no questions will be
taken in any other manner the day of the meeting.
► WHO IS SOLICITING MY PROXY?
Our
Board is soliciting your proxy to vote at our Annual Meeting. By
completing and returning a proxy card, you are authorizing the
proxy holder to vote your shares at our Annual Meeting as you have
instructed.
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► HOW MANY VOTES MAY I CAST?
Each
holder of common stock is entitled to one vote, virtually or by
proxy, for each share of our common stock held of record on the
record date.
► HOW MANY VOTES CAN BE CAST BY ALL
STOCKHOLDERS?
Our
common stock is the only class of security entitled to vote at our
Annual Meeting. As of the record date, we had 3,772,700 shares of
common stock outstanding, each of which is entitled to one
vote.
► HOW MANY SHARES MUSTS BE PRESENT TO HOLD THE
MEETING?
Our
bylaws provide that thirty-three and one-third (33.3%) of the total
number of shares of common stock outstanding constitutes a quorum
and must be virtually present or have voted prior to the Annual
Meeting to conduct a meeting of our stockholders.
► WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A
STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
If
your shares are registered directly in your name with our transfer
agent, Direct Transfer LLC, you are considered, with respect to
those shares, the “stockholder of record.” Proxy
Materials have been directly sent to you by us.
If
your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the “beneficial
owner” of shares held in “street name.” Proxy
Materials have been forwarded to you by your broker, bank, or
nominee who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right
to direct your broker, bank, or nominee how to vote your shares by
following their instructions which are included with this proxy, if
applicable.
► CAN MY SHARES BE VOTED IF I DO NOT RETURN THE PROXY CARD
AND DO NOT ATTEND THE MEETING IN PERSON?
If
you hold shares in street name and you do not provide voting
instructions to your broker, bank, or nominee, your shares will not
be voted on any proposal for which your broker does not have
discretionary authority to vote (a “broker non-vote”).
Brokers generally have discretionary authority to vote shares held
in street name on “routine” matters but not on
“non-routine” matters. Proposals to ratify the
appointment of the independent auditor are generally considered
“routine” matters. Proposals to elect directors are
“non-routine” matters.
If
you do not vote the shares held in your name, your shares will not
be voted. However, the Company may vote your shares if you have
returned a blank or incomplete proxy card.
► HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I
VOTE?
Our Board of Directors recommends that you vote
FOR each of the director nominees set forth in this proxy
statement, FOR the
proposal to approve
the Second Amendment to Issuer Direct
Corporation’s 2014 Equity Incentive Plan to increase the
total number of shares of common stock authorized for issuance
under such plan by 200,000
and
FOR the ratification of the appointment of Cherry Bekaert LLP as
our independent registered public accounting firm for the fiscal
year ending December 31, 2020.
► HOW DO I VOTE?
You
may vote using any of the following methods:
Virtually at the Annual Meeting:
You may
vote at the Annual Meeting either by virtually attending the
meeting yourself or authorizing a representative to virtually
attend the meeting on your behalf by providing them your virtual
Annual Meeting code. If you are a street holder of shares, you must
obtain a proxy from your broker, bank, or nominee naming you as the
proxy holder and present it to the inspector of election with your
ballot when you vote at the Annual Meeting.
Other ways to vote:
You
may also vote by telephone or online as instructed in our proxy, or
by returning a proxy card or voting instruction form sent to you in
response to your request for printed proxy materials.
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MAIL:
Please mark, sign, date, and return this proxy card
promptly using the enclosed envelope.
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FAX:
Complete the reverse portion of this proxy card and fax
to (202) 521-3464.
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INTERNET:
https://www.iproxydirect.com/isdr
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PHONE:
866.752.VOTE (8683)
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► ONCE I DELIVER MY PROXY, CAN I REVOKE OR CHANGE MY
VOTE?
Yes.
You may revoke or change your proxy at any time before it is voted
by giving a written revocation notice to our corporate secretary,
by delivering a new revised proxy no later than the end of the day
prior to the Annual Meeting, or by voting virtually at the
meeting.
► WHO PAYS FOR SOLICITING PROXIES?
We
are paying for all costs of soliciting proxies. Our directors,
officers, and employees may request the return of proxies by mail,
telephone, internet, telefax, telegram, or personal interview. We
are also requesting that banks, brokerage houses, and other
nominees or fiduciaries forward the soliciting material to their
principals and that they obtain authorization for the execution of
proxies. We will reimburse them for their expenses.
► COULD OTHER MATTERS BE CONSIDERED AND VOTED UPON AT THE
MEETING?
Our
Board does not expect to bring any other matter before the Annual
Meeting and is not aware of any other matter that may be considered
at the meeting. However, if any other matter does properly come
before the meeting, the proxy holders will vote the proxies as the
Board may recommend.
► WHAT HAPPENS IF THE MEETING IS POSTPONED OR
ADJOURNED?
Your
proxy will still be good and may be voted at the postponed or
adjourned meeting. You will still be able to change or revoke your
proxy at any time until it is voted.
► HOW CAN I CONTACT ISSUER DIRECT TO REQUEST
MATERIALS
By
mail addressed to: Issuer Direct Corporation, 1 Glenwood Ave, Suite
1001, Raleigh NC 27603 Attn: Chairman of the Board. By phone, call
919.481.4000 or 866.752.VOTE (8683), by fax, 202.521.3464, or by
email at proxy@iproxydirect.com.
5
Delivery of Documents to Security Holders Sharing an
Address
We will only deliver one set of materials to multiple stockholders
sharing an address, unless we have received contrary instructions
from one or more of the stockholders. Also, we will promptly
deliver a separate copy of these materials and future stockholder
communication documents to any stockholder at a shared address to
which a single copy of these materials was delivered, or deliver a
single copy of these materials and future stockholder communication
documents to any stockholder or stockholders sharing an address to
which multiple copies are now delivered, upon written request to us
at our address noted above. Stockholders may also address future
requests regarding delivery of proxy materials and/or annual
reports by contacting us at the address noted above.
6
Proposal 1–Election of Directors
ELECTION OF THE FOUR DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL
MEETING OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND
QUALIFIED
NOMINEES FOR DIRECTOR
At our
Annual Meeting, stockholders will elect four directors, each to
serve a term of one year or until his or her successor is elected
and qualified. Our Board of Directors is currently comprised of
five directors. Our Board of Directors is not divided into classes
of directors, meaning all of our directors are voted on every year
at our Annual Meeting of Stockholders.
All of
the director nominees currently serve as members of our
Board.
Mr.
Eric Frank, who is currently a member of the Board of Directors as
well as the Chairman of the Technology Oversight Committee and
member of the Compensation Committee, will not stand for
re-election at the Annual Meeting. Mr. Frank, who has served as a
member of our Board for three years, has decided not to stand for
re-election due to other business commitments, and not the result
of any disagreement with us, our Board of Directors, or our
management. The Board does not intend to replace Mr. Frank in the
immediate future.
Unless
otherwise instructed on the proxy card, each of the persons named
as proxies on the proxy card intends to vote the shares represented
thereby in favor of the four nominees listed under “Certain
Information Concerning Director Nominees” below.
All
nominees have consented to being named in this Proxy Statement and
to serve if elected. If, however, any nominee should become unable
or unwilling to serve, the persons named as proxies on the proxy
card will vote the shares represented by the proxy for another
person duly nominated by our Board.
CERTAIN INFORMATION CONCERNING DIRECTOR NOMINEES
Certain information concerning the nominees for election as
directors is set forth below. This information was furnished to us
by the nominees. No family relationship exists between any of our
directors or executive officers.
The four directors have been nominated for election to the Board of
Directors at the Annual Meeting to be held on June 17,
2020.
The names of the nominees and certain information about them as of
April 28, 2020 are set forth below:
|
Nominee
|
Age
|
Position
|
Director Since
|
|
William H. Everett
|
69
|
Director, Chairman of the Board, Member of Audit Committee &
Strategic Advisory Committee
|
2013
|
|
Brian R. Balbirnie
|
48
|
Director, President and Chief Executive Officer
|
2007
|
|
J. Patrick Galleher
|
47
|
Director, Chairman of Compensation Committee and Strategic Advisory
Committee
|
2014
|
|
Michael Nowlan
|
61
|
Director, Chairman of Audit Committee
|
2017
|
7
|
William H. Everett
|
|
|
|
Age 69
Director Since 2013
● Chairman of the Board
● Member of the Audit Committee
● Member of the Strategic Advisory Committee
|
|
Professional Background and Qualifications
Mr.
Everett joined the Board of Directors of Issuer Direct Corporation
on October 2, 2013. Mr. Everett has had more than thirty years of
management experience and currently serves as a director of Hakisa
SAS in Strasbourg France. In addition, Mr. Everett served on the
Board of NeoNova Network Services until it was acquired in July
2013. In April 2010, Mr. Everett retired as Executive Vice
President and CFO of Tekelec, a publicly traded telecom equipment
supplier. Since that time, he has served as a corporate director
and provided consulting services to public company and private
equity clients. From 2011 through 2015, he served as an Executive
in Residence and a member of the Board of Advisors at the Poole
College of Management at NC State University. He has significant
experience as both a Chief Financial Officer and a general manager
working with a variety of multi-national technology companies over
his career, including Epsilon Data Management, Chemfab Inc.,
Eastman Software and Steleus SAS. He was the Co-founder and
President of Maps a la Carte, an internet mapping and spatial data
company, which was acquired by Demand Media Inc. Mr. Everett
received his BA in Political Science from Middlebury College and
his MBA from the University of New Hampshire. He also practiced as
Certified Public Accountant with Price Waterhouse for seven years
before joining Epsilon Data Management.
|
|
Brian R. Balbirnie
|
|
|
|
Age 48
Director Since 2007
● President and Chief Executive Officer
|
|
Professional Background and Qualifications
Mr. Balbirnie is
a member of the Board and our President and Chief Executive
Officer. Mr. Balbirnie established Issuer Direct in 2006 with a
vision of creating a technology driven back-office compliance
platform that would reduce costs as well as increase the
efficiencies of the most complex tasks, today the company calls it
Platform id. Mr. Balbirnie is responsible for the strategic
leadership of the company and oversees day-to-day operations. Under
Mr. Balbirnie’s direction, the Company has grown and in 2018
worked with approximately 4,000 customers. Mr. Balbirnie is an
entrepreneur with more than 20 years of experience in emerging
industries. Prior to Issuer Direct, Mr. Balbirnie was the founder
and managing partner of Catapult Company, a compliance and
consulting practice focused on the Sarbanes Oxley Act. During 2002
and 2003, Mr. Balbirnie also served as the Vice President and Chief
Financial Officer of Mobile Reach International, Inc., a publicly
traded company, and as the President and Chief Technology Officer
of IVUE Corporation, a private company. Prior to and with Catapult,
Mr. Balbirnie also advised several companies on their public market
strategies, merger & acquisitions as well as their financial
reporting requirements.
|
|
J. Patrick Galleher
|
|
|
|
Age 47
Director Since 2014
● Chairman of the Compensation Committee
● Chairman of the Strategic Advisory Committee
|
|
Professional Background and Qualifications
Mr. Galleher
joined the Board of Directors of Issuer Direct Corporation on March
11, 2014. Mr. Galleher is
a Managing
Partner for Boxwood Partners, a merchant bank in Richmond,
Virginia, where he leads transactions for Boxwood’s M&A
advisory services and private equity group. In this capacity, he
has led sell-side, buyout and capital raising transactions. Prior
to joining Boxwood, Mr. Galleher was CEO of WILink plc (WLK: LSE),
a global financial communications business with operations in the
U.S., Canada, U.K., Continental Europe, and Sweden. In 2006, as
CEO, he successfully led the company through a public-to-private
transaction and sale to SVIP, a NYC-based private equity
group.
Mr. Galleher holds a
B.S. in Business Administration from the University of Richmond and
a degree from the London Business School as well as attending the
Centre for Creative Leadership in Belgium. He is a board member and
founder of the Virginia Chapter of Young President’s
Organization (YPO) and the Midlothian Athletic Club. He formerly
served as chairman of the board for sweetFrog and Shockoe Commerce
Group, both of which are private
companies.
|
8
|
Michael Nowlan
|
|
|
|
Age 61
Director Since 2017
● Chairman of the Audit Committee
|
|
Professional Background and Qualifications
Mr. Nowlan joined the Board of
Directors of Issuer Direct Corporation on September 28, 2017. Mr.
Nowlan currently provides executive consulting services to private
companies. Mr. Nowlan was Chief Executive Officer of Primus
Telecommunications Canada Inc. (and its related US operating
companies Primus Telecommunications Inc. and Lingo Inc.) from late
2013 to 2016. Primus was a private company whose principal business
was re-selling of residential and commercial telecommunications
services within Canada and the United States. Mr. Nowlan supervised
the sale of the Primus assets after it filed for CCAA creditor
protection in Canada and related recognition under Chapter 15 of
the US Bankruptcy Code in January 2016 as a result of liquidity
challenges due to competitive margin pressures and over-leverage.
Mr. Nowlan led Marketwired, a leading newswire service, from 2001
to 2013 as President and Chief Executive Officer. Under his
leadership, Marketwired executed several successful strategic
acquisitions. He transitioned the business to a SaaS business model
and set the strategy for the company to embrace the emerging
technology trends in the communication industry. Prior to joining
Marketwired in 1999 as its Chief Financial Officer, Mr. Nowlan had
wide financial management experience including starting his career
in 1982 at PricewaterhouseCoopers where he remained until 1988. Mr.
Nowlan is a member of the Institute of Corporate Directors with the
ICD.D Certification and a CPA-CA since 1984. Mr. Nowlan has a
Bachelor of Commerce degree from Queen’s
University.
|
BOARD AND COMMITTEE MEMBERSHIP
The
table below provides committee membership of each Board member as
of April 28, 2020.
|
Board Member
|
|
Audit Committee
|
|
|
Compensation Committee
|
|
|
Strategic Advisory
Committee
|
|
|
Technology Oversight
Committee
|
|
|
Independent Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
H. Everett *
|
|
X
|
|
|
|
|
|
X
|
|
|
|
|
|
J.
Patrick Galleher *
|
|
|
|
|
C
|
|
|
C
|
|
|
|
|
|
Eric
Frank *
(1)
|
|
|
|
|
X
|
|
|
|
|
|
C
|
|
|
Michael
Nowlan *
|
|
C
|
|
|
|
|
|
|
|
|
|
|
|
Internal Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian R
Balbirnie
|
|
|
|
|
|
|
|
|
|
|
|
|
C=
Committee Chairman X = Committee Member * =
Independent
(1)
As noted above, Mr.
Eric Frank will not stand for re-election at the Annual
Meeting.
CONSIDERATION OF STOCKHOLDER NOMINEES FOR DIRECTOR
Pursuant
to our bylaws, stockholders who wish to nominate persons for
election to the Board of Directors at the 2021 Annual Meeting must
be a stockholder of record, both when they give us notice and at
the 2021 Annual Meeting, must be entitled to vote at the 2021
Annual Meeting, and must comply with the notice provisions in our
bylaws. A stockholder’s notice must be delivered to our
Corporate Secretary not less than 75 nor more than 105 days before
the anniversary date of the immediately preceding Annual Meeting.
For our 2021 Annual Meeting, the notice must be delivered between
March 4, 2021 and April 3, 2021. However, if our 2021 Annual
Meeting is not within 30 days of June 17, 2021, the notice must be
delivered no later than the close of business on the 10th day
following the earlier of the day on which the first public
announcement of the date of the 2021 Annual Meeting or 120 days
prior to such meeting. The public announcement of an adjournment or
postponement of the 2021 Annual Meeting will not trigger a new time
period (or extend any time period) for the giving of a stockholder
notice as described in this proxy statement. The
stockholder’s notice must be updated and supplemented as set
forth in our bylaws.
|
The Board of Directors recommends a vote "FOR" the election of four
(4) directors, until the next Annual Meeting or until their
successors are duly elected and qualified.
|
9
Corporate Governance
Our Directors will serve until our next Annual Meeting of
stockholders or until their resignation or removal.
Our directors are elected at the Annual Meeting of stockholders,
with vacancies filled by the Board of Directors, and serve until
their successors are elected and qualified, or their earlier
resignation or removal. Officers are appointed by the Board of
Directors and serve at the discretion of the Board of Directors or
until their earlier resignation or removal. Under the General
Corporation Law of the State of Delaware, any action which is
required to be taken or may be taken at any annual or special
meeting of stockholders may also be taken without a meeting,
without prior notice and without a vote, if consent in writing
setting forth the action so taken, shall be signed by the holders
of the outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the corporation by delivery to
its registered office, its principle place of business, or an
officer or agent of the corporation having custody of the book in
which the proceedings of meetings are recorded.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
provides, in general, that a corporation incorporated under the
laws of the State of Delaware, as we are, may indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other
than a derivative action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person’s conduct was
unlawful. In the case of a derivative action, a Delaware
corporation may indemnify any such person against expenses
(including attorneys’ fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification will
be made in respect of any claim, issue or matter as to which such
person will have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of the
State of Delaware or any other court in which such action was
brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.
Our certificate of incorporation and bylaws provide that we will
indemnify our directors, officers, employees and agents to the
extent and in the manner permitted by the provisions of the General
Corporation Law of the State of Delaware, as amended from time to
time, subject to any permissible expansion or limitation of such
indemnification, as may be set forth in any stockholders’ or
directors’ resolution or by contract. Any repeal or
modification of these provisions approved by our stockholders will
be prospective only and will not adversely affect any limitation on
the liability of any of our directors or officers existing as of
the time of such repeal or modification.
We are also permitted to apply for insurance on behalf of any
director, officer, employee or other agent for liability arising
out of his actions, whether or not the General Corporation Law of
the State of Delaware would permit indemnification.
DIRECTORS’ AND OFFICERS’ LIABILITY
INSURANCE
We have directors’ and officers’ liability insurance
insuring our directors and officers against liability for acts or
omissions in their capacities as directors or
officers.
CODE OF ETHICS
We have adopted a code of ethics that applies to our officers,
directors and employees, including our principal executive officer
and principal accounting officer, which is posted on our website
at
www.issuerdirect.com
.
DIRECTOR INDEPENDENCE
The
Board has determined that Messrs. Everett, Frank, Galleher and
Nowlan satisfy the requirement for independence set out in Section
303A.02 of the NYSE American rules and Section 10A(m) of the
Exchange Act (collectively, the “Independence Rules”),
and that each of these directors 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, his immediate family or
affiliates and our company and our affiliates and did not rely on
categorical standards other than those contained in the NYSE
American rule referenced above
. As
noted above, Mr. Eric Frank will not stand for re-election at the
Annual Meeting.
10
BOARD COMMITTEES
Our
Board of Directors has established an Audit Committee, a
Compensation Committee and a Strategic Advisory Committee, each of
which has the composition and responsibilities described
below.
|
Audit Committee
|
|
|
|
Members:
● Michael Nowlan (Chairman)
● William H. Everett
Meetings in 2019: 4
|
|
Our
Audit Committee was implemented on October 23, 2013 and is
currently comprised of Messrs. Everett and Nowlan, each of whom our
Board has determined to be financially literate and qualify as an
independent director under the Independence Rules.
On
March 2, 2018, Mr. Nowlan replaced Mr. Everett as the chairman of
our Audit Committee. Mr. Everett remained as a member of the Audit
Committee. Both Messrs. Nowlan and Everett qualify as a financial
expert, as defined in Item 407(d)(5)(ii) of Regulation
S-K.
Responsibilities
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 will review the scope, timing and
fees for the annual audit and the results of audit examinations
performed by the independent public accountants, including their
recommendations to improve the system of accounting and internal
controls. During the year ended December 31, 2019, our Audit
Committee held four meetings.
|
|
Compensation Committee
|
|
|
|
Members:
● J. Patrick Galleher (Chairman)
● Eric Frank
Meetings in 2019:
4
|
|
Our
Compensation Committee was implemented on October 23, 2013 and is
currently comprised of Messrs. Frank and Galleher, each of whom our
Board has determined to qualify as an independent director under
the Independence Rules. Mr. Galleher is the chairman of our
Compensation Committee. As noted above, Mr. Eric Frank will not
stand for re-election at the Annual Meeting and will be replaced by
Mr. Everett, on our Compensation Committee.
Responsibilities
The
Compensation Committee reviews and approves our salary and benefits
policies, including compensation of executive officers and
directors. The Compensation Committee also administers our stock
compensation plans and recommends and approves grants of stock
compensation under such plans. During the year ended December 31,
2019, our Compensation Committee held four meetings.
|
|
Strategic Advisory Committee
|
|
|
|
Members:
● J. Patrick Galleher (Chairman)
● William H. Everett
Meetings in 2019: 6
|
|
Our
Strategic Advisory Committee was implemented on January 25, 2016
and is currently comprised of Messrs. Everett and Galleher. Mr.
Galleher is the chairman of our Strategic Advisory
Committee.
Responsibilities
The
Strategic Advisory Committee assists our Board of Directors and
management in evaluating areas such as joint ventures,
partnerships, strategic acquisitions and mergers and acquisitions.
During the year ended December 31, 2019, our Strategic Advisory
Committee held six meetings.
|
11
The Board of Directors has also established a Technology Oversight
Committee, which currently consists solely of Eric Frank. As a
result of Mr. Frank not standing for re-election at the Annual
Meeting, the Board of Directors intends to dissolve the Technology
Oversight Committee and the entire Board of Directors will address
any issues which would otherwise be delegated to the Technology
Oversight Committee.
MEETINGS AND ATTENDANCE
During
the year ended December 31, 2019, the Board of Directors held eight
meetings and the respective committees held fourteen total
meetings, and each director attended all of (i) Board meetings held
during the period for which he was a director and (ii) committee
meetings held during the period for which he was a committee
member. We do not have a policy requiring director attendance at
stockholder meetings, but members of our Board of Directors are
encouraged to attend.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
A stockholder who wishes to communicate with our Board of
Directors, any committee of our Board of Directors, the
non-management directors or any particular director, may do so by
writing to such director or directors in care of the Secretary, c/o
Issuer Direct Corporation,
1 Glenwood Avenue, Suite 1001,
Raleigh, NC 27603
. Our secretary will
forward such communication to the full Board of Directors, to the
appropriate committee or to any individual director or directors to
whom the communication is addressed, unless the communication is
unrelated to the duties and responsibilities of our Board of
Directors (such as spam, junk mail and mass mailings, ordinary
course disputes over fees or services, personal employee
complaints, business inquiries, new product or service suggestions,
resumes and other forms of job inquiries, surveys, business
solicitations or advertisements) or is unduly hostile, threatening,
illegal, or harassing, in which case our secretary has the
authority to discard the communication or take appropriate legal
action regarding the communication.
NON-EMPLOYEE DIRECTOR COMPENSATION ARRANGEMENT
Effective
as of January 20, 2020, our Board, upon the recommendation of our
Compensation Committee, determined to compensate our non-employee
directors as set forth below.
Initial Equity Grant
.
Each non-employee director appointed
to our Board and not by a vote of the stockholders at an annual
meeting is automatically granted an initial grant of 6,000
restricted stock units (the “RSUs”) on the date of his
or her appointment to our Board (with such amount pro-rated based
on the number of days between the date of such director’s
appointment and the date of our first annual meeting of
stockholders following the date of grant (or to the extent that we
have not determined the date of the next annual meeting of
stockholders on or before the date of grant, June 15 following the
date of grant)). The RSU’s will fully vest on the date of our
first annual meeting of stockholders following the date of grant or
immediately prior to the consummation of a change of control event.
If an individual is appointed as a non-employee director at an
annual meeting of stockholders, he or she will be granted an annual
equity grant, as described below, in lieu of the initial equity
grant. None of the nominees for the Board contained in this Proxy
Statement would be entitled to this initial equity
grant.
Annual Equity Grant
.
On the date of each annual meeting of
stockholders, each non-employee director who is serving on our
Board on the date of such annual meeting or who is elected by the
stockholders at such annual meeting will be automatically granted
6,000 restricted stock units (the “RSUs”). The RSUs
will fully vest on the earlier of (i) the date of the following
year’s annual meeting of stockholders (but only for a
non-employee director who ceases to be a member of our Board at
such annual meeting as a result of not standing for re-election or
not being re-elected), (ii) the date that is one year following the
date of grant, or (iii) immediately prior to the consummation of a
change of control event. Each of the nominees for the Board
contained in this Proxy Statement would be entitled to this equity
grant if elected by the stockholders.
Monthly Cash Payment
.
During 2020, each
non-employee director will receive a monthly cash retainer of
$3,000 for service on our Board and our Chairman of our Board will
receive an additional monthly cash retainer of $1,500.
12
2019 NON-EMPLOYEE DIRECTOR COMPENSATION TABLE
The following table shows amounts earned by each non-employee
director in fiscal 2019:
|
Director
|
Fees Earned or Paid in Cash
|
Stock Awards
|
Warrant Awards
|
Non-Equity Incentive Plan Compensation
|
Change in Pension Value and Non-qualified Deferred Compensation
Earnings
|
All Other Compensation
|
Total
|
|
|
|
|
|
|
|
|
|
|
William
H. Everett
|
$
54,000
(1)
|
$
67,620
(2)
|
-
|
-
|
-
|
-
|
$
121,620
|
|
Eric Frank
(3)
|
$
36,000
|
67,620
(2)
|
-
|
-
|
-
|
-
|
$
103,620
|
|
J.
Patrick Galleher
|
$
36,000
|
$
67,620
(2)
|
-
|
-
|
-
|
-
|
$
103,620
|
|
Michael
Nowlan
|
$
36,000
|
$
67,620
(2)
|
-
|
-
|
-
|
-
|
$
103,620
|
(1)
In addition to the
$3,000 per month paid to all members of the Board, this amount
includes an additional $1,500 per month for Mr. Everett’s
service as the Chairman of our Board.
(2)
The amounts shown
in this column represent the grant date fair value of the awards
determined in accordance with ASC 718. RSUs are valued based on the
closing price of Issuer Direct’s ordinary shares on the date
of grant, which was $11.27. On June 13, 2019, each non-employee
director was granted 6,000 restricted stock units with a vesting
date of June 13, 2020.
(3)
As noted above, Mr.
Frank will not stand for re-election at the Annual
Meeting.
13
Security Ownership of Beneficial Owners
and
Management
The
following table sets forth certain information as of April 28,
2020, regarding the beneficial ownership of our common stock by (i)
each person or entity who, to our knowledge, beneficially owns more
than 5% of our common stock; (ii) each executive officer and named
officer; (iii) each director; and (iv) all of our officers and
directors as a group. Unless otherwise indicated in the footnotes
to the following table, each of the stockholders named in the table
has sole voting and investment power with respect to the shares of
our common stock beneficially owned. Except as otherwise indicated,
the address of each of the stockholders listed below is: c/o Issuer
Direct Corporation, 1 Glenwood Ave, Suite 1001, Raleigh NC
27603.
|
Name of Beneficial Owner
|
Number of Shares Owned
(1)
|
Percentage Owned
(1)
|
|
|
|
|
|
Brian R. Balbirnie
(2)(3)
|
620,329
(6)
|
16.44
%
|
|
Steven Knerr
(2)
|
45,000
(7)
|
1.18
%
|
|
William H. Everett
(3)
|
51,228
(8)
|
1.35
%
|
|
Eric Frank
(3) (4)
|
26,000
(8)
|
0.69
%
|
|
J. Patrick Galleher
(3)
|
53,000
(8)
|
1.40
%
|
|
Michael Nowlan
(3)
|
26,000
(8)
|
0.69
%
|
|
James Michael
(5)
|
230,550
(9)
|
6.11
%
|
|
All
officers, directors, and management as a group (7
persons)
|
1,052,107
|
27.03
%
|
|
|
|
|
|
Other Beneficial
Owners
|
|
|
|
Polar
Asset Management Partners
|
327,397
|
8.68
%
|
|
Yorkmont
Capital Partners, LP
|
250,000
|
6.63
%
|
|
Forager Capital
Management, LLC
|
230,543
|
6.11
%
|
|
Richard H.
Witmer
|
190,454
|
5.05
%
|
____________________
(1)
Applicable
percentage of ownership is based on a total of 3,892,450 shares of
common stock, which consist of 3,772,700 shares of common stock
outstanding on April 28, 2020, plus shares that are beneficially
owned as of that date. Beneficial ownership is determined in
accordance with rules of the Securities and Exchange Commission and
means voting or investment power with respect to securities. Shares
of our common stock issuable upon restricted stock units and the
exercise of stock options exercisable currently or within 60 days
of April 28, 2020 are deemed outstanding and to be beneficially
owned by the person holding such option for purposes of computing
such person’s percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership
of any other person.
(2)
Officer.
(3)
Director.
(4)
As noted above, Mr.
Frank will not stand for re-election at the Annual
Meeting.
(5)
Management.
(6)
Includes options
issued to spouse to purchase 500 shares of common stock that are
currently exercisable or exercisable within 60 days of April 28,
2020.
(7)
Includes options to
purchase 30,000 shares of common stock that are currently
exercisable or exercisable within 60 days of April 28,
2020.
(8)
Includes 6,000
restricted stock units which vest on June 13, 2020 and options to
purchase 16,000 shares of common stock that are currently
exercisable or exercisable within 60 days of April 28,
2020.
(9)
Includes options to
purchase 1,250 shares of common stock that are currently
exercisable or exercisable within 60 days of April 28,
2020.
14
Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
We
formed a Compensation Committee on October 23, 2013. Prior to that
date, all compensation decisions for our named executive officers
were made by our Board of Directors.
The
Compensation Committee of our Board of Directors will review at
least annually and determine (or recommend to the Board of
Directors as the case may be) the executive compensation for Mr.
Balbirnie and any other named executive officers, including
approving any grants of stock options or other equity incentive
awards in accordance with the philosophy and components described
in this Proxy Statement. To date, neither the Board of Directors
nor the Compensation Committee has retained the services of a
compensation consultant. The Compensation Committee does not intend
to retain such services for 2020 but may decide to do so in the
future.
SUMMARY COMPENSATIONTABLE
The
following table shows amounts earned by each officer in the years
ended December 31, 2019 and 2018:
|
Name
and
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-equity
incentive plan compensation
|
Change in
Pension Value and Nonqualified deferred compensation
earnings
|
All Other
Compensation
|
Total
|
|
Principal
Position
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian R.
Balbirnie
|
2019
|
200,000
|
—
|
—
|
—
|
—
|
—
|
—
|
200,000
|
|
(Chief Executive
Officer)
|
2018
|
200,000
|
18,000
|
—
|
—
|
—
|
—
|
—
|
218,000
|
|
Steven
Knerr
|
2019
|
165,000
|
—
|
66,050
|
—
|
—
|
—
|
—
|
231,050
|
|
(Chief Financial
Officer)
|
2018
|
165,000
|
11,550
|
—
|
—
|
—
|
—
|
—
|
176,550
|
We currently have employment agreements with Brian Balbirnie and
Steven Knerr. The terms are summarized below:
BRIAN R. BALBIRNIE EMPLOYMENT AGREEMENT
On
April 30, 2014, Issuer Direct Corporation (the
“Company”) entered into an Executive Employment
Agreement (the “Balbirnie Agreement”) with Brian R.
Balbirnie to serve as the Company’s President and Chief
Executive Officer. Mr. Balbirnie had served as the Company’s
most senior executive officer since 2006 without a formal
employment agreement. The Balbirnie Agreement will continue until
terminated pursuant to its terms as described below.
On May
1, 2017, the Company and Mr. Balbirnie agreed to amend the
Balbirnie Agreement as follows: (i) to increase Mr.
Balbirnie’s annual base salary from $185,000 to $200,000 and
(ii) to decrease Mr. Balbirnie’s eligibility to receive an
annual cash bonus from 45% to 40% of his annual base salary upon
the achievement of reasonable target objectives and performance
goals. However, for fiscal years 2019 and 2020, our Board has
decided to increase Mr. Balbirnie’s bonus potential to the
previous 45% level. The revised base salary will be reviewed
annually by the Company’s Board of Directors for increase as
part of its annual compensation review. The cash bonus goals will
continue to be determined by the Board in consultation with Mr.
Balbirnie on or before the end of the first quarter of the fiscal
year to which the bonus relates. In addition, Mr. Balbirnie is
eligible to receive such additional bonus or incentive compensation
as the Board may establish from time to time in its sole
discretion.
Pursuant
to the Balbirnie Agreement, if Mr. Balbirnie’s employment is
terminated upon his disability, by Mr. Balbirnie for good reason
(as such term is defined in Balbirnie Agreement), or by us without
cause (as such term is defined in Balbirnie Agreement), Mr.
Balbirnie will be entitled to receive, in addition to other unpaid
amounts owed to him (e.g., for base salary, accrued personal time
and business expenses): (i) to the then base salary for a period of
twelve months (in accordance with the Company’s general
payroll policy) commencing on the first payroll period following
the fifteenth day after termination of employment and (ii)
substantially similar coverage under the Company’s
then-current medical, health and vision insurance coverage for a
period of twelve months. Additionally, if Mr. Balbirnie’s
employment is terminated for disability, the vesting of any option
grants will continue to vest pursuant to the schedule and terms
previously established during the twelve-month severance period.
Subsequent to the twelve-month severance period the vesting of any
option grants will immediately cease. If Mr. Balbirnie’s
employment is terminated without cause, vesting of any option
grants will immediately cease upon termination except as described
below relating to a Corporate Transaction.
15
If the
Company terminates Mr. Balbirnie’s employment for cause or
employment terminates as a result of Mr. Balbirnie’s
resignation or death, Mr. Balbirnie will only be entitled to unpaid
amounts owed to him and the vesting of any option grants will
immediately cease.
Mr.
Balbirnie has no specific right to terminate the employment
agreement or right to any severance payments or other benefits
solely as a result of a Corporate Transaction (as defined in the
Company’s 2014 Equity Incentive Plan). However, if within
twelve months following a corporate transaction, Mr. Balbirnie
terminates his employment for good reason or the Company terminates
his employment without cause, the severance period discussed above
will be increased from twelve to eighteen months and any then
unvested options held by Mr. Balbirnie will immediately vest and
become exercisable for a period equal to the earlier of (i) six
months from termination or (ii) the expiration of such option grant
pursuant to its original terms.
The
Balbirnie Agreement also contains certain non-competition, no
solicitation, confidentiality, and assignment of inventions
requirements for Mr. Balbirnie.
STEVEN KNERR EMPLOYMENT AGREEMENT
On November 19, 2015, the Company entered into an Executive
Employment Agreement (the “Knerr Agreement”) with
Steven Knerr to serve as the Company’s Chief Financial
Officer. Mr. Knerr had served as the Company’s Controller
since August 22, 2013 and as its interim Chief Financial Officer
and interim Principal Financial Officer since May 8, 2015. The
Knerr Agreement will continue until terminated pursuant to its
terms as described below.
On May 1, 2017, the Company and Mr. Knerr agreed to amend the Knerr
Agreement as follows: (i) to increase Mr. Knerr’s annual base
salary from $151,000 to $165,000 and (ii) to decrease Mr.
Knerr’s eligibility to receive an annual cash bonus from 35%
to 30% of his annual base salary upon the achievement of reasonable
target objectives and performance goals.
However, for fiscal
years 2019 and 2020, our Board has decided to increase Mr.
Knerr’s bonus potential to the previous 35% level.
The revised base salary will be
reviewed annually by the Company’s Board of Directors for
increase as part of its annual compensation review. The cash bonus
goals will continue to be determined by the Board in consultation
with Mr. Knerr on or before the end of the first quarter of the
fiscal year to which the bonus relates. In addition, Mr. Knerr is
eligible to receive such additional bonus or incentive compensation
as the Board may establish from time to time in its sole
discretion.
Pursuant to the Knerr Agreement, if Mr. Knerr’s employment is
terminated upon his disability, by Mr. Knerr for good reason (as
such term is defined in Knerr Agreement), or by us without cause
(as such term is defined in Knerr Agreement), Mr. Knerr will be
entitled to receive, in addition to other unpaid amounts owed to
him (e.g., for base salary, accrued personal time and business
expenses): (i) to the then base salary for a period of six months
(in accordance with the Company’s general payroll policy)
commencing on the first payroll period following the fifteenth day
after termination of employment and (ii) substantially similar
coverage under the Company’s then-current medical, health and
vision insurance coverage for a period of six months. Additionally,
if Mr. Knerr’s employment is terminated for disability, the
vesting of any option grants will continue to vest pursuant to the
schedule and terms previously established during the six-month
severance period. Subsequent to the six-month severance period the
vesting of any option grants will immediately cease. If Mr.
Knerr’s employment is terminated without cause, vesting of
any option grants will immediately cease upon termination except as
described below relating to a Corporate Transaction.
If the Company terminates Mr. Knerr’s employment for cause or
employment terminates as a result of Mr. Knerr’s resignation
or death, Mr. Knerr will only be entitled to unpaid amounts owed to
him and the vesting of any option grants will immediately
cease.
Mr. Knerr has no specific right to terminate the employment
agreement or right to any severance payments or other benefits
solely as a result of a Corporate Transaction (as defined in the
Company’s 2014 Equity Incentive Plan).
The Knerr Agreement also contains certain non-competition, no
solicitation, confidentiality, and assignment of inventions
requirements for Mr. Knerr.
PHILOSOPHY OF COMPENSATION
The goals of our compensation policy are to ensure that executive
compensation rewards management for helping us achieve our
financial goals (increased sales, profitability, etc.), meet our
product development milestone and align management’s overall
goals and objectives with those of our stockholders. To achieve
these goals, our Compensation Committee and Board of Directors aim
to achieve the following:
|
►
|
provide competitive compensation packages that enable us to attract
and retain superior management personnel;
|
|
►
|
relate compensation to the Company’s overall performance, the
individual officer’s performance and our assessment of the
officer’s future potential;
|
|
►
|
reward our officers fairly for their role in our achievements;
and
|
|
►
|
align executive’s objectives with the objectives of
stockholders, including through the grant of equity
awards.
|
16
We have determined that in order to best meet these objectives, our
executive compensation program should balance fixed and bonus
compensation, as well as cash and equity compensation, as discussed
below. Historically, there has been no pre-established policy or
target for the allocation between either cash and non-cash or
short-term and long-term incentive compensation for our executive
officers.
COMPONENTS OF COMPENSATION
The
four principal components of our compensation program for our named
executive officers are base salary, personal benefits (such as
health and dental insurance), cash bonuses and or equity based
grants. As noted below, cash bonuses and equity grants are not
necessarily earned or granted every year.
Base Salary.
The
primary component of compensation for our named executive officers
is base salary. Base salary levels for our named executive officers
have historically been determined based upon an evaluation of a
number of factors, including the individual officer’s level
of responsibility and our overall performance. The Compensation
Committee intends to review each named executive officer’s
base salary on an annual basis and adjust such salaries as deemed
appropriate.
Cash Bonus.
For the
year ended December 31, 2019, Mr. Balbirnie and Mr. Knerr did not
earn any bonuses.
We
intend to consider the amount of cash bonus that each of our named
executive officers should be entitled to receive in connection with
our annual compensation review, taking into account each
executive’s total compensation package, and any more formal
data we obtain regarding the compensation levels of similarly
situated executives. We will also consider in connection with such
review whether to designate certain financial or operational
metrics or other objective or subjective criteria in determining
the final amounts of such awards.
Equity Based Grants.
An additional principal component of
our compensation policy for named executive officers consists of
grants of stock options and other equity awards. Prior to 2015, all
equity incentive awards were made either (i) in accordance with
negotiated terms at levels deemed necessary to attract or retain
the executive at the time of such negotiations and determined
taking into account the recipient’s overall compensation
package and the goal of aligning such
executive’s interest with that of
our stockholders, or (ii) at the discretion of the Board of
Directors without reference to any formal targets or objectives,
when deemed appropriate in connection with extraordinary efforts or
results or necessary in order to retain the executive in light of
the executive’s overall compensation
package.
On April 1, 2015, the Compensation Committee granted Mr. Knerr
10,000 restricted stock units, half of which vested on April 1,
2016 and the other half on April 1, 2017. Additionally, the
Compensation Committee granted Mr. Knerr an incentive stock option
to purchase 10,000 shares of our common stock, as further described
above under the heading "Steven Knerr Employment Agreement." On
February 28, 2019, Mr. Knerr was also granted 5,000 restricted
stock units which vested on February 28, 2020.
Other than the grants to Mr. Knerr, the Compensation Committee has
not made any equity awards to the named executive officers since
its inception in October 2013 but may do so in 2020. Our
Compensation Committee and our Board of Directors intends to
consider during our annual compensation review whether to grant
equity incentive awards to our named executive officers, and the
terms of any such awards, including whether to set any performance
targets or other objective or subjective criteria related to the
final grant or vesting of such awards. The Compensation Committee
will also retain the flexibility to make additional grants
throughout the year if deemed necessary or appropriate in order to
retain our named executive officers or reward extraordinary efforts
or achievements
.
Neither
the Compensation Committee nor the Board of Directors has approved
any additional equity based grants for our named executive officer
during the fiscal year 2019, other than the grant noted above to
Mr. Knerr.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
Compensation of Chief Executive Officer.
During the twelve months ended
December 31, 2019, Mr. Balbirnie’s total compensation was
$200,000. Mr. Balbirnie’s total compensation was comprised of
salary payments from January 1, 2019 through December 31, 2019 of
$200,000.
2019 Bonus Plan.
On
February 28, 2019, our Board, based on recommendations from our
Compensation Committee, implemented a 2019 cash bonus plan for Mr.
Balbirnie based on the following criteria:
|
►
|
Cash
bonus target was 45% of annualized base salary of
$200,000.
|
|
►
|
Cash
bonus plan
was based (i) 80% upon the
achievement of target financial numbers during the fiscal year 2019
and (ii) 20% based upon the achievement of certain management
objectives during the fiscal year 2019 as determined by the
Board
.
|
|
►
|
Bonus targets for solely the target financial numbers would have
been scaled as follows:
(i) below 90% of target results in
no bonus paid; (ii) 90% of target results in 50% of bonuses paid;
(iii) 100% of target results in 100% of bonuses paid; (iv) 120% and
greater of target results in 120% of bonuses paid. The payout is a
maximum of 120% of target bonus.
|
17
Based
on these criteria and as noted above, Mr. Balbirnie did not receive
a cash bonus for the year ended 2019.
2020 Bonus Plan.
On
January 20, 2020, the Compensation Committee of the Board, based on
recommendations from the Compensation Committee, implemented a 2020
cash bonus plan for Mr. Balbirnie based on the following
criteria:
|
►
|
Cash
bonus target is 45% of annualized base salary of
$200,000.
|
|
►
|
Cash
bonus plan
is based entirely upon the
achievement of target financial numbers during the fiscal year
2020.
|
|
►
|
Bonus targets for solely the target financial numbers were scaled
as follows:
(i) below 90% of target results in no bonus
paid; (ii) 90% of target results in 50% of bonuses paid; (iii) 100%
of target results in 100% of bonuses paid; (iv) 120% and greater of
target results in 120% of bonuses paid. The payout is a maximum of
120% of target bonus.
|
Compensation of Chief Financial
Officer.
For the twelve months ended December 31, 2019, Mr.
Knerr’s total compensation was $231,050. Mr. Knerr’s
total compensation was comprised of salary payments from January 1,
2019 through December 31, 2019 of $165,000, as well as, $66,050 for
the grant-date fair value of 5,000 restricted stock units, which
vested on February 28, 2020.
2019 Bonus Plan.
On
February 28, 2019, our Board, based on
recommendations from our Compensation Committee, implemented a 2019
cash bonus plan for Mr. Knerr based on the following
criteria:
|
►
|
Cash
bonus target was 35% of annualized base salary of
$165,000.
|
|
►
|
Cash
bonus plan
was based (i) 80% upon the
achievement of target financial numbers during the fiscal year 2019
and (ii) 20% based upon the achievement of certain management
objectives during the fiscal year 2019 as determined by the
Board
.
|
|
►
|
Bonus targets for solely the target financial numbers would be
scaled as follows:
(i) below 90% of target results in no
bonus paid; (ii) 90% of target results in 50% of bonuses paid;
(iii) 100% of target results in 100% of bonuses paid; (iv) 120% and
greater of target results in 120% of bonuses paid. The payout is a
maximum of 120% of target bonus.
|
Based
on these criteria and as noted above, Mr. Knerr did not received a
cash bonus for the year ended December 31, 2019.
2020 Bonus Plan.
On
January 20, 2020, the Compensation Committee of the Board
implemented a 2020 cash bonus plan for Mr. Knerr based on the
following criteria:
|
►
|
Cash
bonus target is 35% of annualized base salary of
$165,000.
|
|
►
|
Cash
bonus plan
is based entirely upon the
achievement of target financial numbers during the fiscal year
2020
.
|
|
►
|
Bonus targets for solely the target financial numbers will be
scaled as follows:
(i) below 90% of target results in no
bonus paid; (ii) 90% of target results in 50% of bonuses paid;
(iii) 100% of target results in 100% of bonuses paid; (iv) 120% and
greater of target results in 120% of bonuses paid. The payout is a
maximum of 120% of target bonus.
|
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information regarding equity awards that
have been previously awarded to each of the named executive
officers and which remained outstanding as of December 31,
2019.
|
Name
|
Number of
securities underlying unexercised options (#)
exercisable
|
Number of
securities underlying unexercised options (#)
unexercisable
|
Option exercise
price ($)
|
Option
expiration date
|
Number of Shares
or Units of Stock that have not Vested (#)
|
Market Value of
Shares of Units That Have Not Vested ($)
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights that
Have Not Vested (#)
|
Equity Incentive
Plan Awards: Market of Payout Value of Unearned Shares, Units or
Other Rights that Have Not Vested ($)
|
|
|
|
|
|
|
|
|
|
|
|
Brian R.
Balbirnie
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Steven
Knerr
|
10,000
|
—
|
6.80
|
11/19/2025
|
—
|
——
|
—
|
—
|
|
|
20,000
|
—
|
7.76
|
9/27/2023
|
—
|
—
|
—
|
—
|
|
|
—
|
—
|
—
|
—
|
5,000
|
58,450
|
—
|
—
|
18
Issuer Direct Corporation 2014 Equity Incentive Plan
On
March 31, 2014, our Board adopted the Issuer Direct Corporation
2014 Equity Incentive Plan (the “2014 Plan”), which
provides for the grant of stock options, stock appreciation rights,
restricted stock and restricted stock units to employees, directors
and consultants, to be granted from time to time as determined by
our Board or its designees. Our stockholders approved the 2014 Plan
on May 23, 2014. The 2014 Plan was amended as of June 10, 2016 to
increase the number of shares of our common stock authorized under
the plan. As of April 28, 2020, the number of shares available for
issuance under the 2014 Plan are 38,583 as compared to 23,500 as of
December 31, 2019 as a result of certain employees leaving the
Company and the shares becoming available for reissuance under the
2014 Plan. The 2014 Plan will expire by its terms on March 31,
2024. For description of the 2014 Plan, see “Proposal 2:
Amendment to 2014 Equity Incentive Plan.”
Equity Compensation Plan Information
The
following table provides certain information as of December 31,
2019, with respect to our equity compensation plans under which our
equity securities are authorized for issuance:
|
Plan
Category
|
Number of
securities to be issued upon exercise of outstanding
options
(a)
|
Weighted-
average exercise price of
Outstanding
options
(b)
|
Securities
remaining available for future issuance under equity compensation
plans (excluding securities reflected in column (a))
(c)
|
|
|
|
|
|
|
Equity compensation
plan approved by security holders
|
127,563(1)
|
$
12.63
|
23,500
|
|
Equity compensation
plan not approved by security holders
|
-
|
$
-
|
-
|
|
Total
|
127,563(1)
|
$
12.63
|
23,500
|
(1)
20,313 of this number represents stock options outstanding which
were granted under the Issuer Direct Corporation 2010 Equity
Incentive Plan, which has terminated pursuant to its
terms.
RISK CONSIDERATIONS IN OUR COMPENSATION PROGRAMS
Our Compensation Committee believes that risks arising from our
policies and practices for compensating employees are not
reasonably likely to have a material adverse effect on us and do
not encourage risk taking that is reasonably likely to have a
material adverse effect on us. Our Compensation Committee believes
that the structure of our executive compensation program mitigates
risks by avoiding any named executive officer placing undue
emphasis on any particular performance metric at the expense of
other aspects of our business.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with the members of management
of the Company and, based on such review and discussions, the
Compensation Committee recommended to the Board of Directors that
the Compensation Discussion and Analysis be included in this Proxy
Statement.
The Compensation Committee
J. Patrick Galleher (Chairman)
19
Proposal 2–Amendment to 2014 Equity Incentive
Plan
APPROVAL TO ADOPT
THE SECOND
AMENDMENT TO THE ISSUER DIRECT CORPORATION’S 2014 EQUITY
INCENTIVE PLAN TO INCREASE THE TOTAL NUMBER OF SHARES OF COMMON
STOCK AUTHORIZED FOR ISSUANCE UNDER SUCH PLAN BY
200,000
General
The
Board has approved an amendment to the Issuer Direct Corporation
2014 Equity Incentive Plan, as amended (the “2014
Plan”), to increase the number of shares of common stock
available for issuance thereunder by 200,000 shares. The proposed
amendment is attached hereto as
Exhibit A
.
The
amendment to the 2014 Plan is intended to ensure that we can
continue to provide an incentive to our employees, directors and
consultants by enabling them to share in our future growth. If
approved by the stockholders, all of the additional shares will be
available for grant as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), or as nonqualified stock options,
restricted stock awards, stock appreciation rights, or other kinds
of equity based compensation available under the 2014 Plan. If the
stockholders do not approve the amendment, no shares will be added
to the number of shares available for issuance under the 2014
Plan.
Background
The
2014 Plan was adopted on March 31, 2014, and approved by the
stockholders of the Company at an annual meeting of the
Company’s stockholders on May 23, 2014 and subsequently
amended on June 10, 2016 by a vote of the Company’s
stockholders to increase the number of shares reserved under the
plan from 200,000 to 400,000. The purposes of the 2014 Plan are to
create incentives which are designed to motivate eligible
employees, directors, and consultants to put forth maximum effort
toward the success and growth of the Company, and to enable the
Company to attract and retain experienced individuals who by their
position, ability and diligence are able to make important
contributions to the Company’s success.
The
Plan currently authorizes for issuance a maximum of only 400,000
shares. As of April 28, 2020, we had 38,583 shares available for
issuance under future awards under the 2014 Plan. We use
equity-based incentive compensation as a component of our
pay-for-performance philosophy. Our Board believes we must increase
the number of shares available for issuance under the 2014 in light
of our compensation strategy.
The
increase represents approximately 5% of the total number of
outstanding shares of common stock as of April 28, 2020. After
giving effect to such increase, the 152,480 shares of common stock
subject to outstanding equity awards and the 238,583 shares
available for issuance pursuant to future awards will represent an
aggregate of 391,063 shares, or approximately 9% of our 3,772,700
total issued and outstanding shares of common stock plus the
391,063 shares subject to outstanding equity awards and available
for future award issuances.
Summary of the Key Terms of the 2014 Plan
The
following is a brief description of the 2014 Plan. A copy of the
2014 Plan is attached as Annex A to our 2014 Proxy Statement filed
with the Securities and Exchange Commission on April 2, 2016, and
the following description is qualified in its entirety by reference
to the 2014 Plan.
Purpose
. The purpose of the 2014 Plan
is to enable the Company and its subsidiaries and affiliates to
remain competitive and innovative in our ability to attract,
motivate, reward, and retain the services of key employees, key
contractors, and outside directors. The 2014 Plan provides for the
granting of incentive stock options, nonqualified stock options,
restricted stock, restricted stock units, performance awards and
other awards which may be granted singly, in combination, or in
tandem, and which may be paid in cash, shares of common stock, or a
combination of cash and shares of common stock. The 2014 Plan is
expected to provide flexibility to our compensation methods in
order to adapt the compensation of employees, contractors, and
outside directors to a changing business environment, after giving
due consideration to competitive conditions and the impact of U.S.
tax laws.
Effective Date and Expiration
. The 2014
Plan became effective on March 31, 2014, subject to and conditioned
upon stockholder approval of the 2014 Plan, and will terminate on
March 31, 2024. No award may be made under the 2014 Plan after its
expiration date, but awards made prior thereto may extend beyond
that date.
20
Authorization
. Subject to certain
adjustments, the maximum number of shares of our common stock that
may be delivered pursuant to awards under the 2014 Plan is
currently 400,000 shares (after giving effect to all amendments),
100% of which may be delivered pursuant to incentive stock options.
If the amendment is approved, the maximum number of shares which
may be delivered will increase to 600,000; provided, however,
361,417 shares will have already been issued under the 2014 Plan
such that only an additional 238,583 shares may be issued in the
future. Subject to certain adjustments, the maximum number of the
shares of common stock with respect to which stock options,
restricted stock, or restricted stock units may be granted to any
officer of the Company subject to Section 16 of the Securities
Exchange Act of 1934 or a “covered employee” as defined
in Section 162(m)(3) of the Code during any calendar year is 50,000
shares. In addition, to the extent Section 162(m) of the Code
applies to awards granted under the 2014 Plan and we intend to
comply with Section 162(m) of the Code, no participant may receive
in any calendar year performance-based awards with an aggregate
value of more than $5,000,000 (based on the fair market value of
shares of the common stock at the time of the grant of the
performance-based award).
Assuming this
proposal is approved, the board of directors expects that the
amended number of shares reserved under the 2014 Plan should
satisfy the Company’s needs to attract, motivate, reward, and
retain the services of key employees, key contractors, and outside
directors for the next three to four years absent a significant
corporate event, including the hiring or loss of a key management
employee.
Shares
to be issued may be made available from authorized but unissued
shares of common stock. During the term of the 2014
Plan, we will at all times reserve and keep enough shares available
to satisfy the requirements of the 2014 Plan. If an award under the
2014 Plan is cancelled, forfeited, or expires, in whole or in part,
the shares subject to such forfeited, expired, or cancelled award
may again be awarded under the 2014 Plan. In the event that
previously acquired shares are delivered to us in full or partial
payment of the option price for the exercise of a stock option
granted under the 2014 Plan, the number of shares available for
future awards under the 2014 Plan shall be reduced only by the net
number of shares issued upon the exercise of the stock option or
settlement of an award. Awards that may be satisfied either by the
issuance of common stock or by cash or other consideration shall be
counted against the maximum number of shares that may be issued
under the 2014 Plan only during the period that the award is
outstanding or to the extent the award is ultimately satisfied by
the issuance of shares. Only shares forfeited back to the Company;
shares cancelled on account of termination, expiration, or lapse of
an award; shares surrendered in payment of the option price of an
option; or shares withheld for payment of applicable employment
taxes and/or withholding obligations resulting from the exercise of
a stock option shall again be available for grant of incentive
stock options under the 2014 Plan, but shall not increase the
maximum number of shares described above as the maximum number of
shares that may be delivered pursuant to incentive stock
options.
Administration
. The 2014 Plan may be
administered by the board of directors or a committee of the board
of directors consisting of two or more members. The compensation
committee or Board of Directors will determine the persons to whom
awards are to be made; determine the type, size, and terms of
awards; interpret the 2014 Plan; establish and revise rules and
regulations relating to the 2014 Plan; and make any other
determinations that it believes necessary for the administration of
the 2014 Plan.
Eligibility
. Employees (including any
employee who is also a director or an officer), contractors, and
outside directors of the Company whose judgment, initiative and
efforts contributed to or may be expected to contribute to the
successful performance of the Company are eligible to participate
in the 2014 Plan. As of April 28, 2020, there were approximately 85
employees, directors, and contractors who would be eligible for
awards under the 2014 Plan.
Stock Options
. For persons subject to
U.S. income tax, the compensation committee or Board of Directors
may grant either incentive stock options (“ISOs”)
qualifying under Section 422 of the Code or nonqualified stock
options, provided that only employees of the Company and its
subsidiaries (excluding subsidiaries that are not corporations) are
eligible to receive ISOs. Stock options may not be granted with an
option price less than 100% of the fair market value of a share of
common stock on the date the stock option is granted. If an ISO is
granted to an employee who owns or is deemed to own more than 10%
of the combined voting power of all classes of stock of the Company
(or any parent or subsidiary), the option price shall be at least
110% of the fair market value of a share of common stock on the
date of grant. The compensation committee or Board of Directors
will determine the terms of each stock option at the time of grant,
including without limitation, the methods by or forms in which
shares will be delivered to participants. The maximum term of each
option, the times at which each option will be exercisable, and
provisions requiring forfeiture of unexercised options at or
following termination of employment or service generally are fixed
by the compensation committee or Board of Directors, except that
the compensation committee or Board of Directors may not grant
stock options with a term exceeding ten years.
Restricted Stock and Restricted Stock
Units
. The compensation committee or Board of Directors is
authorized to grant restricted stock and restricted stock units.
Restricted stock consists of shares of common stock that may not be
sold, transferred, pledged, hypothecated, encumbered, or otherwise
disposed of, and that may be forfeited in the event of certain
terminations of employment or service, prior to the end of a
restricted period as specified by the compensation committee or
Board of Directors. Restricted stock units are the right to receive
shares of common stock at a future date in accordance with the
terms of such grant upon the attainment of certain conditions
specified by the compensation committee or Board of Directors,
which include substantial risk of forfeiture and restrictions on
their sale or other transfer by the participant. The compensation
committee or Board of Directors determines the eligible
participants to whom, and the time or times at which, grants of
restricted stock or restricted stock units will be made, the number
of shares or units to be granted, the price to be paid, if any, the
time or times within which the shares covered by such grants will
be subject to forfeiture, the time or times at which the
restrictions will terminate, and all other terms and conditions of
the grants. Restrictions or conditions could include, but are not
limited to, the attainment of performance goals (as described
below), continuous service with us, the passage of time, or other
restrictions and conditions. The value of the restricted stock
units may be paid in shares, cash, or a combination of both, as
determined by the compensation committee or Board of
Directors.
21
Performance Awards
. The compensation
committee or Board of Directors may grant performance awards
payable in shares of common stock or other consideration at the end
of a specified performance period. Payment will be contingent upon
achieving pre-established performance goals (as discussed below) by
the end of the performance period. The compensation committee or
Board of Directors will determine the length of the performance
period, the maximum payment value of an award, and the minimum
performance goals required before payment will be made, so long as
such provisions are not inconsistent with the terms of the 2014
Plan, and to the extent an award is subject to Section 409A of the
Code, are in compliance with the applicable requirements of Section
409A of the Code and any applicable regulations or
guidance.
Other Awards
. The compensation
committee or Board of Directors may grant other forms of awards
payable in cash or shares if the compensation committee or Board of
Directors determines that such other form of award is consistent
with the purpose and restrictions of the 2014 Plan. The terms and
conditions of such other form of award shall be specified by the
grant. Such other awards may be granted for no cash consideration,
for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the
grant.
Vesting, Forfeiture, Assignment
. The
compensation committee or Board of Directors, in its sole
discretion, may determine that an award will be immediately vested
in whole or in part, or that all or any portion may not be vested
until a date, or dates, subsequent to its date of grant, or until
the occurrence of one or more specified events, subject in any case
to the terms of the 2014 Plan. If the compensation committee or
Board of Directors imposes conditions upon vesting, then subsequent
to the date of grant, the compensation committee or Board of
Directors may, in its sole discretion, accelerate the date on which
all or any portion of the award may be vested.
The
compensation committee or Board of Directors may impose on any
award at the time of grant or thereafter, such additional terms and
conditions as the compensation committee or Board of Directors
determines, including, without limitation, terms requiring
forfeiture of awards in the event of a participant’s
termination of service. The compensation committee or Board of
Directors will specify the circumstances on which performance
awards may be forfeited in the event of a termination of service by
a participant prior to the end of a performance period or
settlement of awards. Except as otherwise determined by the
compensation committee or Board of Directors, restricted stock will
be forfeited upon a participant’s termination of service
during the applicable restriction period. Awards granted
under the 2014 Plan generally are not assignable or transferable
except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order.
Amendment or Discontinuance of the 2014
Plan. The board of directors may at any time and from time to time,
without the consent of the participants, alter, amend, revise,
suspend, or discontinue the 2014 Plan in whole or in part, except,
that no amendment for which stockholder approval is required
either: (i) by any securities exchange or inter-dealer quotation
system on which the common stock is listed or traded, or (ii) in
order for the 2014 Plan and incentives awarded under the 2014 Plan
to continue to comply with Sections 162(m), 421, and 422 of the
Code, including any successors to such Sections, or other
applicable law, shall be effective unless such amendment is
approved by the requisite vote of our stockholders entitled to vote
thereon. Any amendments made shall, to the extent deemed necessary
or advisable by the compensation committee or Board of Directors,
be applicable to any outstanding awards theretofore granted under
the 2014 Plan, notwithstanding any contrary provisions contained in
any award agreement. In the event of any such amendment to the 2014
Plan, the holder of any award outstanding under the 2014 Plan
shall, upon request of the compensation committee or Board of
Directors and as a condition to the exercisability thereof, execute
a conforming amendment in the form prescribed by the compensation
committee or Board of Directors to any award agreement relating
thereto. Notwithstanding anything contained in the 2014 Plan to the
contrary, unless required by law, no action regarding amendment or
discontinuance shall adversely affect any rights of participants or
obligations of the Company to participants with respect to any
awards granted under the 2014 Plan without the consent of the
affected participant.
U.S. Federal Income Tax Consequences
The
following is a brief summary of certain U.S. federal income tax
consequences relating to the transactions described under the 2014
Plan as set forth below. This summary does not purport to address
all aspects of U.S. federal income taxation and does not describe
state, local, or foreign tax consequences. This discussion is based
upon provisions of the Code and the treasury regulations issued
thereunder, and judicial and administrative interpretations under
the Code and treasury regulations, all as in effect as of the date
hereof, and all of which are subject to change (possibly on a
retroactive basis) or different interpretation.
Law Affecting Deferred Compensation
. In
2004, Section 409A was added to the Code to regulate all types of
deferred compensation. If the requirements of Section 409A of the
Code are not satisfied, deferred compensation and earnings thereon
will be subject to tax as it vests, plus an interest charge at the
underpayment rate plus 1% and a 20% penalty tax. Certain
performance awards, stock options, restricted stock units, and
certain types of restricted stock are subject to Section 409A of
the Code.
22
Incentive Stock Options
. A participant
will not recognize income at the time an ISO is granted. When a
participant exercises an ISO, a participant also generally will not
be required to recognize income (either as ordinary income or
capital gain). However, to the extent that the fair market value
(determined as of the date of grant) of the shares with respect to
which the participant’s ISOs are exercisable for the first
time during any year exceeds $100,000, the ISOs for the shares over
$100,000 will be treated as nonqualified stock options, and not
ISOs, for federal tax purposes, and the participant will recognize
income as if the ISOs were nonqualified stock options. In addition
to the foregoing, if the fair market value of the shares received
upon exercise of an ISO exceeds the exercise price, then the excess
may be deemed a tax preference adjustment for purposes of the
federal alternative minimum tax calculation. The federal
alternative minimum tax may produce significant tax repercussions
depending upon the participant’s particular tax
status.
The tax
treatment of any shares acquired by exercise of an ISO will depend
upon whether the participant disposes of his or her shares prior to
two years after the date the ISO was granted or one year after the
shares were transferred to the participant (referred to as the
“Holding Period”). If a participant disposes of shares
acquired by exercise of an ISO after the expiration of the Holding
Period, any amount received in excess of the participant’s
tax basis for such shares will be treated as short-term or
long-term capital gain, depending upon how long the participant has
held the shares. If the amount received is less than the
participant’s tax basis for such shares, the loss will be
treated as short-term or long-term capital loss, depending upon how
long the participant has held the shares.
If the
participant disposes of shares acquired by exercise of an ISO prior
to the expiration of the Holding Period, the disposition will be
considered a “disqualifying disposition.” If the amount
received for the shares is greater than the fair market value of
the shares on the exercise date, then the difference between the
ISO’s exercise price and the fair market value of the shares
at the time of exercise will be treated as ordinary income for the
tax year in which the “disqualifying disposition”
occurs. The participant’s basis in the shares will be
increased by an amount equal to the amount treated as ordinary
income due to such “disqualifying disposition.” In
addition, the amount received in such “disqualifying
disposition” over the participant’s increased basis in
the shares will be treated as capital gain. However, if the price
received for shares acquired by exercise of an ISO is less than the
fair market value of the shares on the exercise date and the
disposition is a transaction in which the participant sustains a
loss which otherwise would be recognizable under the Code, then the
amount of ordinary income that the participant will recognize is
the excess, if any, of the amount realized on the
“disqualifying disposition” over the basis of the
shares.
Nonqualified Stock Options
. A
participant generally will not recognize income at the time a
nonqualified stock option is granted. When a participant exercises
a nonqualified stock option, the difference between the option
price and any higher market value of the shares of common stock on
the date of exercise will be treated as compensation taxable as
ordinary income to the participant. The participant’s tax
basis for the shares acquired under a nonqualified stock option
will be equal to the option price paid for such shares, plus any
amounts included in the participant’s income as compensation.
When a participant disposes of shares acquired by exercise of a
nonqualified stock option, any amount received in excess of the
participant’s tax basis for such shares will be treated as
short-term or long-term capital gain, depending upon how long the
participant has held the shares. If the amount received is less
than the participant’s tax basis for such shares, the loss
will be treated as short-term or long-term capital loss, depending
upon how long the participant has held the shares.
Special Rule if Option Price is Paid for in
Shares
. If a participant pays the option price of a
nonqualified stock option with previously-owned shares of our
common stock and the transaction is not a disqualifying disposition
of shares previously acquired under an ISO, the shares received
equal to the number of shares surrendered are treated as having
been received in a tax-free exchange. The participant’s tax
basis and holding period for these shares received will be equal to
the participant’s tax basis and holding period for the shares
surrendered. The shares received in excess of the number of shares
surrendered will be treated as compensation taxable as ordinary
income to the participant to the extent of such shares’ fair
market value. The participant’s tax basis in such shares will
be equal to their fair market value on the date of exercise, and
the participant’s holding period for such shares will begin
on the date of exercise.
If the
use of previously acquired shares to pay the exercise price of a
nonqualified stock option constitutes a disqualifying disposition
of shares previously acquired under an ISO, the participant will
have ordinary income as a result of the disqualifying disposition
in an amount equal to the excess of the fair market value of the
shares surrendered, determined at the time such shares were
originally acquired on exercise of the ISO, over the aggregate
option price paid for such shares. As discussed above, a
disqualifying disposition of shares previously acquired under an
ISO occurs when the participant disposes of such shares before the
end of the Holding Period. The other tax results from paying the
exercise price with previously-owned shares are as described above,
except that the participant’s tax basis in the shares that
are treated as having been received in a tax-free exchange will be
increased by the amount of ordinary income recognized by the
participant as a result of the disqualifying
disposition.
Restricted Stock
. A participant who
receives a grant of restricted stock generally will recognize as
ordinary income the excess, if any, of the fair market value of the
shares granted as restricted stock at such time as the shares are
no longer subject to forfeiture or restrictions, over the amount
paid, if any, by the participant for such shares. However, a
participant who receives restricted stock may make an election
under Section 83(b) of the Code within 30 days of the date of
transfer of the shares to recognize ordinary income on the date of
transfer of the shares equal to the excess of the fair market value
of such shares (determined without regard to the restrictions on
such shares) over the purchase price, if any, of such shares. If a
participant does not make an election under Section 83(b) of the
Code, then the participant will recognize as ordinary income any
dividends received with respect to such shares. At the time of the
sale of such shares, any gain or loss realized by the participant
will be treated as either short-term or long-term capital gain (or
loss) depending on the holding period. For purposes of determining
any gain or loss realized, the participant’s tax basis will
be the amount previously taxable as ordinary income, plus the
purchase price paid by the participant, if any, for such
shares.
23
Other Awards
. In the case of an award
of restricted stock units, performance awards, dividend equivalent
rights, or other stock or cash awards, the recipient will generally
recognize ordinary income in an amount equal to any cash received
and the fair market value of any shares received on the date of
payment or delivery, provided that the award is exempt from or
complies with Section 409A of the Code. In that taxable year, we
will receive a U.S. federal income tax deduction in an amount equal
to the ordinary income which the participant has
recognized.
U.S. Federal Tax Withholding
. Any
ordinary income realized by a participant upon the exercise of an
award under the 2014 Plan is subject to withholding of U.S.
federal, state, and local income tax and to withholding of the
participant’s share of tax under the Federal Insurance
Contribution Act and the Federal Unemployment Tax Act. To satisfy
federal income tax withholding requirements, we will have the right
to require that, as a condition to delivery of any certificate for
shares of common stock or the registration of the shares in the
participant’s name, the participant remit to us an amount
sufficient to satisfy the withholding requirements. Alternatively,
we may withhold a portion of the shares (valued at fair market
value) that otherwise would be issued to the participant to satisfy
all or part of the withholding tax obligations or may, if we
consent in writing, accept delivery of shares with an aggregate
fair market value that equals or exceeds the required tax
withholding payment. Withholding does not represent an increase in
the participant’s total income tax obligation, since it is
fully credited toward his or her tax liability for the year.
Additionally, withholding does not affect the participant’s
tax basis in the shares. Compensation income realized and tax
withheld will be reflected on Forms W-2 supplied by us to employees
by January 31 of the succeeding year. Deferred compensation that is
subject to Section 409A of the Code will be subject to certain
federal income tax withholding and reporting
requirements.
Tax Consequences to the Company
. To the
extent that a participant recognizes ordinary income in the
circumstances described above, we will be entitled to a
corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and
necessary business expense, is not an “excess parachute
payment” within the meaning of Section 280G of the Code, and
is not disallowed by the $1,000,000 limitation on certain executive
compensation under Section 162(m) of the Code.
Million Dollar Deduction Limit and Other Tax
Matters
. We may not deduct compensation of more than
$1,000,000 that is paid to an individual who, on the last day of
the taxable year, is either our principal executive officer or an
individual who is among the three highest compensated officers for
the taxable year (other than the principal executive officer or the
principal financial officer). The limitation on deductions does not
apply to certain types of compensation, including qualified
performance-based compensation, and only applies to compensation
paid by a publicly-traded corporation (and not compensation paid by
non-corporate entities). To the extent that we determine that
Section 162(m) of the Code will apply to any awards granted
pursuant to the 2014, we intend that such awards will be
constructed so as to constitute qualified performance-based
compensation and, as such, will be exempt from the $1,000,000
limitation on deductible compensation.
If an
individual’s rights under the 2014 Plan are accelerated as a
result of a change in control and the individual is a
“disqualified individual” under Section 280G of the
Code, the value of any such accelerated rights received by such
individual may be included in determining whether or not such
individual has received an “excess parachute payment”
under Section 280G of the Code, which could result in (i) the
imposition of a 20% federal excise tax (in addition to federal
income tax) payable by the individual on the value of such
accelerated rights; and (ii) the loss by us of a compensation
deduction.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE APPROVAL
TO ADOPT
THE SECOND AMENDMENT
TO THE ISSUER DIRECT CORPORATION’S 2014 EQUITY INCENTIVE PLAN
TO INCREASE THE TOTAL NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
FOR ISSUANCE UNDER SUCH PLAN BY 200,000
24
Proposal 3–Ratification of Auditors
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The
Audit Committee of the Board of Directors has appointed the firm of
Cherry Bekaert LLP, independent registered public accounting firm,
to audit and report on our financial statements for the year ending
December 31, 2020. We have engaged Cherry Bekaert LLP as our
independent registered public accounting firm since June 2010. We
expect that a representative of Cherry Bekaert LLP will be present
at the Annual Meeting of Stockholders to answer questions of
stockholders and will have the opportunity, if desired, to make a
statement.
For the
years ended December 31, 2019 and 2018, Cherry Bekaert LLP, billed
us the fees set forth below, including expenses, in connection with
services rendered by that firm to us.
|
|
Year Ended December 31,
|
|
|
|
2019
|
2018
|
|
Audit
fees
|
$
128,100
|
$
121,475
|
|
Audit
related fees
|
83,100
|
35,300
|
|
Tax
fees
|
---
|
---
|
|
All
other fees
|
---
|
---
|
|
Total
fees
|
$
211,200
|
$
156,775
|
Audit Fees.
Audit fees include
fees billed for the annual audit of the Company’s financial
statements and quarterly reviews for the fiscal years ended
December 31, 2019 and 2018, and for services normally provided by
Cherry Bekaert LLP in connection with routine statutory and
regulatory filings or engagements.
Audit-Related Fees.
Audit-related fees include fees billed for
assurance and related services that are reasonably related to the
performance of the annual audit or reviews of the Company’s
financial statements and are not reported under “Audit
Fees.” During our fiscal year ended December 31, 2019, Cherry
Bekaert LLP billed the Company $83,100 for audit-related services
related to certain assets acquired by us during 2019. During our
fiscal year ended December 31, 2018, Cherry Bekaert LLP billed the
Company $21,000 for services related to a consent for the use of
its audit opinion in the Company’s filing of a Registration
Statement on Form S-3 that incorporated by reference the
Company’s audited financial statements for the fiscal years
ended December 31, 2017 and 2016 and also billed the Company
$14,300 for other audit-related services related to a business
acquired by us during 2018.
Tax Fees.
Tax fees include fees
for professional services for tax compliance, tax advice and tax
planning for the tax years ended December 31, 2019 and 2018. During
our fiscal years ended December 31, 2019and 2018, no such fees were
billed by Cherry Bekaert LLP.
All Other Fees.
All other fees
include fees for products and services other than those described
above. During our fiscal years ended December 31, 2019 and 2018, no
such fees were billed by Cherry Bekaert LLP.
The Audit Committee of the Board of Directors has considered
whether the provision of services described above under
"Audit-related fees" and "Other fees" is compatible with
maintaining the independence of Cherry Bekaert LLP and has
concluded that it is compatible.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The
Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the independent registered
accounting firm retained to audit our financial statements. The
Audit Committee has appointed Cherry Bekaert LLP as our independent
external auditor for the year ending December 31, 2020. Cherry
Bekaert LLP has served as our independent registered accounting
firm continuously since June 2010. The Audit Committee is
responsible for the audit fee negotiations associated with the
retention of Cherry Bekaert LLP. In order to assure continuing
auditor independence, the Audit Committee periodically considers
whether there should be a regular rotation of the independent
registered accounting firm. Further, in conjunction with the
rotation of the auditing firm's lead engagement partner, the Audit
Committee and its Chairperson has and will continue to be directly
involved in the selection of Cherry Bekaert LLP's new lead
engagement partner, who was selected in 2020. The members of the
Audit Committee and the Board believe that the continued retention
of Cherry Bekaert LLP to serve as our independent external auditor
is in the best interests of the Company and its
stockholders.
Stockholder ratification of the selection of Cherry Bekaert LLP as
our independent registered public accounting firm is not required
but is being presented as a matter of good corporate practice.
Notwithstanding stockholder ratification of the appointment of the
independent registered public accounting firm, the Audit Committee,
in its discretion, may direct the appointment of a new independent
registered public accounting firm if the Audit Committee believes
that such a change would be in our best interests and the best
interests of our stockholders. The Audit Committee has not
determined what action it would take if the stockholders do not
ratify the appointment, but may reconsider the
appointment.
25
AUDIT COMMITTEE PRE-APPROVAL POLICY
The
Audit Committee's policy is that all audit and non-audit services
provided by its independent registered public accounting firm shall
either be approved before the independent registered public
accounting firm is engaged for the particular services or shall be
rendered pursuant to pre-approval proceduresestablished by the
Audit Committee. These services may include audit services and
permissible audit-related services, tax services and other
services. Pre-approval spending limits for audit services are
established on an annual basis, detailed as to the particular
service or category of services to be performed and implemented by
our financial officers. Any audit or non-audit service fees that
may be incurred by us during a quarter that fall outside the limits
pre-approved by the Audit Committee for a particular service or
category of services must be reviewed and approved by the
Chairperson of the Audit Committee prior to the performance of
services. On an annual basis, the Audit Committee reviews and
itemizes all fees paid to its independent registered public
accounting firm in the prior quarter (including fees approved by
the Chairperson of the Audit Committee between regularly scheduled
meetings and fees approved by our financial officers pursuant to
the pre-approval policies described above) and further reviews and
itemizes all fees expected to be paid in the upcoming quarter. The
Audit Committee may revise its pre-approval spending limits and
policies at any time. None of the fees paid to the independent
registered public accounting firm were approved by the Audit
Committee after the services were rendered pursuant to the
"
de minimis
" exception
established by the SEC for the provision of non-audit
services.
|
The Board of Directors recommends a vote "FOR" the ratification of
the appointment of Cherry Bekaert LLP as the independent registered
public accounting firm.
|
REPORT OF THE AUDIT COMMITTEE
On
October 23, 2013, the Company established an Audit Committee of the
Board of Directors. The Audit Committee consists of two members,
Messrs. Everett and Nowlan. All the members are independent
directors under the NYSE and SEC Audit Committee structure and
membership requirements. The Audit Committee has certain duties and
powers as described in its written charter, a copy of which can be
found on the company’s website at
http://cdn.irdirect.net/IR/432/1220/Audit-Committee-Charter-Final-Exhibit-A%20(1).pdf
.
The
Audit Committee has reviewed and discussed the Company’s
audited financial statements and related footnotes for the fiscal
year ended December 31, 2019, and the independent auditor’s
report on those financial statements, with management and with our
independent auditor, Cherry Bekaert LLP (“Cherry
Bekaert”). The Audit Committee has also discussed with Cherry
Bekaert the matters required to be discussed by the statement on
Auditing Standard No. 16, “Communications with Audit
Committees” issued by the Public Company Accounting Oversight
Board. The Audit Committee has also received the written
disclosures and the letter from Cherry Bekaert required by
applicable requirements of the Public Company Accounting Oversight
Board regarding Cherry Bekaert’s communications with the
Audit Committee concerning independence, and has discussed with
Cherry Bekaert 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, 2019 that were filed with the
SEC.
The Audit Committee
Michael Nowlan (Chairman)
William H. Everett
26
Certain Relationships and Related Party Transactions and Director
Independence
RELATED PARTY TRANSACTIONS
None.
DIRECTOR INDEPENDENCE
As of
April 28, 2020, we had four independent directors on our Board,
William H. Everett, Eric Frank, J. Patrick Galleher and Michael
Nowlan. We evaluate independence by the standards for director
independence established by applicable laws, rules, and listing
standards including, without limitation, the standards for
independent directors established by NYSE American and the SEC. As
noted above, Mr. Frank will not be standing for re-election at this
Annual Meeting.
Subject
to some exceptions, these standards generally provide that a
director will not be independent if (a) the director is, or in the
past three years has been, an employee of ours; (b) a member of the
director’s immediate family is, or in the past three years
has been, an executive officer of ours; (c) the director or a
member of the director’s immediate family has received more
than $120,000 per year in direct compensation from us other than
for service as a director (or for a family member, as a
non-executive employee); (d) the director or a member of the
director’s immediate family is, or in the past three years
has been, employed in a professional capacity by our independent
public accountants, or has worked for such firm in any capacity on
our audit; (e) the director or a member of the director’s
immediate family is, or in the past three years has been, employed
as an executive officer of a company where one of our executive
officers serves on the Compensation Committee; or (f) the director
or a member of the director’s immediate family is an
executive officer of a company that makes payments to, or receives
payments from, us in an amount which, in any twelve-month period
during the past three years, exceeds the greater of $1,000,000 or
two percent of that other company’s consolidated gross
revenues.
Other Matters
We know of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention
of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may
recommend.
Additional Information
A copy
of our 2019 Annual Report on Form 10-K is available to each
stockholder in connection with this Proxy Statement. The 2019
Annual Report on Form 10-K is not a part of the proxy solicitation
materials.
We file
reports and other information with the SEC. Copies of these
documents may be obtained at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by
calling the SEC at (800) SEC-0330. Our SEC filings are also
available on the SEC’s website at
http://www.sec.gov
.
27
www.issuerdirect.com
EXHIBIT A
SECOND AMENDMENT TO
ISSUER DIRECT CORPORATION
2014 EQUITY INCENTIVE PLAN
This
Second Amendment (the “
Second
Amendment
”) to Issuer Direct Corporation 2014 Equity
Incentive Plan, as amended from time to time (the
“
Plan
”), is made
effective as of June 17, 2020 (the “
Amendment Effective Date
”), by
Issuer Direct Corporation, a Delaware corporation
(“
Issuer
Direct”
), as set forth below.
BACKGROUND
WHEREAS, Issuer
Direct established the Plan, originally effective as of March 31,
2014, under which Issuer Direct is authorized to grant equity-based
incentive awards to certain employees and service providers of
Issuer Direct and its subsidiaries;
WHEREAS,
Section 21(a) of the Plan provides that Issuer Direct’s
board of directors (the “
Board
”) may amend the Plan subject
to, in certain circumstances, the approval of the holders of at
least a majority of Issuer Direct’s shares of common
stock;
WHEREAS, on June
10, 2016, the stockholders of Issuer Direct voted to increase the
number of shares of common stock authorized for grant under the
Plan by 200,000 shares;
WHEREAS, the Board
now desires to amend the Plan in the manner contemplated hereby and
has obtained the approval by Issuer Direct’s shareholders at
Issuer Direct’s 2020 Annual Meeting as of the Amendment
Effective Date to increase the number of shares of common stock
authorized for grant by an additional 200,000 shares;
and
WHEREAS,
capitalized terms used but not defined herein shall have the same
meaning as set forth in the Plan.
NOW,
THEREFORE, the Plan shall be amended as of the Amendment Effective
Date as set forth below:
1. The
first paragraph of Section 4 of the Plan is hereby deleted and
replaced in its entirety with the following:
“The
stock subject to options granted under the Plan or grants of
Restricted Shares or Restricted Stock Units shall be shares of
authorized but unissued or reacquired Common Stock. Subject to
adjustment as provided in Section 16 below, the maximum number of
shares of Common Stock of the Corporation (“Shares”)
which may be issued and sold under the Plan is
600,000
Shares.”
.
2.
Except as set forth above, the Plan shall continue to read in its
current state.
IN
WITNESS WHEREOF, Issuer Direct has caused the execution of this
Second Amendment by its duly authorized officer, effective as of
the Amendment Effective Date.
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ISSUER DIRECT CORPORATION
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By:
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Brian
R. Balbirnie
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Chief
Executive Officer
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ISSUER DIRECT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – JUNE 17, 2020 AT 12:00 PM
EDT
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CONTROL ID:
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REQUEST ID:
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The undersigned, a stockholder of Issuer Direct Corporation (the
“Company”), hereby revoking any proxy heretofore given,
does hereby appoint Jeffrey Quick proxy, with power of
substitution, for and in the name of the undersigned to attend the
2020 annual meeting of stockholders of the Company to be held
virtually, on Wednesday, June 17, 2020 beginning at 12:00 PM, local
time, or at any adjournment or postponement thereof, and there to
vote, as designated below.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please mark, sign, date, and return this Proxy Card promptly using
the enclosed envelope.
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FAX:
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Complete the reverse portion of this Proxy Card and Fax to
202.521.3464.
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INTERNET:
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https://www.iproxydirect.com/isdr
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PHONE:
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866.752.VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OFISSUER DIRECT
CORPORATION
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PLEASE COMPLETE, DATE, SIGN AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE:
☒
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
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AGAINST
ALL
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FOR ALL
EXCEPT
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To elect the four (4) directors nominated by our Board of Directors
as set forth in the Proxy Statement:
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☐
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William H. Everett
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Director, Chairman of the Board, Member of Audit Committee &
Strategic Advisory Committee
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☐
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Michael Nowlan
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Director, Chairman of Audit Committee
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Brian R. Balbirnie
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Director, President and Chief Executive Officer
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CONTROL ID:
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J. Patrick Galleher
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Director, Chairman of Compensation Committee and Strategic Advisory
Committee
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REQUEST ID:
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Proposal 2
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FOR
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AGAINST
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ABSTAIN
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Amendment to 2014 Equity Incentive Plan;
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☐
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Proposal 3
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FOR
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AGAINST
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ABSTAIN
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To
ratify the appointment of Cherry Bekaert LLP as our independent
registered public accounting firm for the year ending December 31,
2020.
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MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING:
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MARK HERE FOR ADDRESS CHANGE
☐ New Address (if
applicable):
_________________________
_________________________
IMPORTANT:
Please sign exactly
as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by authorized person.
Dated:
________________________, 2020
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(Print
Name of Stockholder and/or Joint Tenant)
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(Signature
of Stockholder)
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(Second
Signature if held jointly)
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