BG STAFFING, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(E)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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BG STAFFING, INC.
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined): |
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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BG STAFFING, INC.
Notice of
2017
Annual Meeting of Stockholders
Tuesday, May 16, 2017
12:30 P.M. EDT,
BG Staffing, Inc.
5850 Granite Parkway Drive, Suite 730
Plano, Texas 75024
Plano, Texas 75024
The
2017
Annual Meeting of Stockholders of BG Staffing, Inc. will be held on
Tuesday, May 16, 2017
, at 1
2:30 PM EDT
, at the principal executive offices of BG Staffing, Inc.,
5850 Granite Parkway Drive, Suite 730, Plano, Texas 75024
, for the following purposes:
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1.
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To elect Class
III
directors nominated by the Board of Directors;
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2.
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To ratify the Audit Committee’s appointment of Whitley Penn LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017
;
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3.
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To amend BG Staffing, Inc.'s 2013 Long-Term Incentive Plan to add an additional 250,000 shares of common stock available for issuance; and
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4.
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To transact other business that properly comes before the meeting.
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Only stockholders of record at the close of business on
March 17, 2017
, are entitled to receive notice of and to vote at the annual meeting and at any and all adjournments or postponements thereof.
The Notice of Annual Meeting and Proxy Statement for the Annual Meeting is being made available to our stockholders on or about
April 6, 2017
on the Internet or, upon request, in printed form by mail. Instructions on how to access and review the proxy materials on the Internet can be found on the proxy card and on the Notice of Internet Availability of Proxy Materials (the “Notice”). The Notice will also include instructions for stockholders on how to access the proxy card to vote over the Internet.
Your vote is important, and whether or not you plan to attend the Annual Meeting, please vote as promptly as possible. We encourage you to vote via the Internet, as it is the most convenient and cost-effective method of voting. You may also vote by mail (if you received paper copies of the proxy materials). Instructions regarding both methods of voting are included in the Notice, the proxy card and the proxy statement.
Thank you in advance for voting and for your support of BG Staffing, Inc.
By order of the Board of Directors,
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/s/ Dan Hollenbach
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Dan Hollenbach
Chief Financial Officer and Secretary
March 28, 2017
Plano, Texas
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Table of Contents
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QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING AND VOTING PROCEDURES
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PROPOSAL ONE:
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ELECTION OF DIRECTORS
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BOARD INFORMATION
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DIRECTOR COMPENSATION
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CORPORATE GOVERNANCE
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P
ROPOSAL TWO
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RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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E
XECUTIVE OFFICERS
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PROPOSAL THREE:
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AMENDMENT OF THE 2013 LONG-TERM INCENTIVE PLAN TO ADD AN ADDITIONAL 250,000 SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE
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2013 LONG-TERM INCENTIVE PLAN
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RELATED PERSON TRANSACTIONS
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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OTHER BUSINESS
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ANNEX A - 2013 LONG-TERM INCENTIVE PLAN (WITH PROPOSED AMENDMENT)
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BG STAFFING, INC.
5850 Granite Parkway Drive, Suite 730
Plano, Texas 75024
Plano, Texas 75024
(Principal Executive Offices)
PROXY STATEMENT
_____________________________________
This Proxy Statement is furnished in connection with the solicitation of proxies by BG Staffing, Inc. ("BG Staffing"), on behalf of its Board of Directors (the “Board”), for the
2017
Annual Meeting of Stockholders. This proxy statement and related proxy materials are being made available to our stockholders on the Internet or, upon request, mailed to our stockholders on or about
April 6, 2017
.
QUESTIONS AND ANSWERS ABOUT THE
2017
ANNUAL MEETING AND VOTING PROCEDURES
Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
In accordance with rules adopted by the Securities and Exchange Commission (“SEC”), we are making this proxy statement and our Annual Report on Form 10-K for the fiscal year ended
December 25, 2016
(the "Form 10-K") available on the Internet. If you received the Notice by mail and would prefer to receive a printed copy of our proxy materials, please follow the instructions for requesting printed copies included in the Notice. The Notice also contains instructions on how to access and review all of the important information contained in the proxy materials provided on the Internet, including how you may submit your proxy over the Internet.
Who may vote?
Stockholders of record as of the close of business on
March 17, 2017
, the record date for the annual meeting, may vote at the meeting. Each share of common stock entitles the holder to one vote per share. As of
March 17, 2017
there were
8,669,308
shares of our common stock outstanding.
What constitutes a quorum?
The holders of a majority of our outstanding shares of common stock entitled to vote at the annual meeting must be represented at the annual meeting in person or by proxy to have a quorum. Any stockholder present at the annual meeting, either in person or by proxy, but who abstains from voting, will be counted for purposes of determining whether a quorum exists.
How do I vote?
You cannot vote your shares of common stock unless you are present at the meeting or you have previously given your proxy. You can vote by proxy in one of the following two convenient ways:
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by mail – if you received your proxy materials by mail, you can vote by mail by completing, signing, dating and returning the proxy card in the enclosed envelope; or
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on the Internet, by visiting the website shown on the Notice or the proxy card and following the instructions.
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BG STAFFING
– 2017 Proxy Statement –
1
How will the proxies be voted?
All properly executed proxies, unless revoked as described below, will be voted at the meeting in accordance with your directions on the proxy. If a properly executed proxy does not provide instructions, the shares of common stock represented by your proxy will be voted:
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•
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“
FOR
” the election of
C. David Allen, Jr.
and
Doug E. Hailey
as Class
III
directors;
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•
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“
FOR
” the ratification of the Audit Committee’s appointment of Whitley Penn LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017
;
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•
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“
FOR
” the amendment to add an additional 250,000 shares of common stock available for issuance to the 2013 Long-Term Incentive Plan.
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The proxy holders will use their discretion on any other matters that properly come before the meeting. Unless otherwise stated, all shares represented by your completed, returned, and signed proxy will be voted as described above. If you are voting on the Internet, the proxies will be voted in accordance with your voting instructions. If you are voting on the Internet, your voting instructions must be received by 11:59 p.m., Eastern Daylight Time, on
May 15, 2017
.
How may I revoke my proxy?
You may revoke your proxy at any time before or at the annual meeting (in each case, before the vote at the annual meeting) by:
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Delivering a signed, written revocation letter, dated later than the proxy, to Dan Hollenbach, Chief Financial Officer and Secretary, at
5850 Granite Parkway Drive, Suite 730, Plano, Texas 75024
;
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Voting at a later time on the Internet, if you previously voted on the Internet; or
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Attending the meeting and voting in person or by proxy. Attending the meeting alone will not revoke your proxy.
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How many votes must each proposal receive to be adopted?
The election of our Class
III
directors require the affirmative vote of a plurality of the shares of common stock cast at the meeting. You may only vote “FOR” or “WITHHELD” with respect to election of directors, and as a result, there will not be any abstentions on this proposal. Broker non-votes will have no effect on the outcome of this proposal.
A majority of the votes cast is required to ratify Whitley Penn LLP as our independent registered public accounting firm. Broker non-votes and abstentions will have no effect on the outcome of the vote to ratify Whitley Penn LLP.
The affirmative vote of a majority of shares present in person or represented by proxy is required to ratify the 2013 Long-Term Incentive Plan to add an additional 250,000 shares of common stock available for issuance. Broker non-votes will have no effect on the outcome of this proposal, and abstentions will count against the vote to ratify the 2013 Long-Term Incentive Plan.
What are broker non-votes?
Broker non-votes occur when nominees, such as banks and brokers, holding shares on behalf of beneficial owners, or customers, do not receive voting instructions from the customers. Brokers holding shares of record for customers generally are not entitled to vote on certain matters unless they receive voting instructions from their customers. In the event that a broker does not receive voting instructions for these matters, a broker may notify us that it lacks voting authority to vote those shares. These broker non-votes refer to votes that could have been cast on the matter in question by brokers with respect to uninstructed shares if the brokers had received their customers’ instructions. These broker non-votes will be included in determining whether a quorum exists.
BG STAFFING
– 2017 Proxy Statement –
2
Your bank or broker is not permitted to vote your uninstructed shares in the election of directors or on the proposed amendment to the 2013 Long-Term Incentive Plan on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote, no votes will be cast on your behalf in the election of directors. To be sure your shares are voted in the manner you desire, you should instruct your broker how to vote your shares.
Who is soliciting this proxy?
The Board is soliciting this proxy. In addition to the solicitation of proxies by mail, proxies may also be solicited by telephone, electronic mail or personal interview. The Company will bear the cost of any solicitation. We will reimburse banks, brokers, custodians, nominees and fiduciaries for reasonable expenses they incur in sending these proxy materials to you if you are a beneficial holder of our shares.
BG STAFFING
– 2017 Proxy Statement –
3
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PROPOSAL ONE:
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ELECTION OF DIRECTORS
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What is the organizational structure of the Board?
The number of directors currently constituting our entire Board is five. The directors are divided into three classes. In general, directors in each class serve for a term of three years.
How many directors are to be elected?
Two Class
III
directors are to be elected by our stockholders.
Who is the board nominee?
Our Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated
C. David Allen, Jr.
and
Doug E. Hailey
to be re-elected as Class
III
directors by the stockholders.
Mr. Allen
and
Mr. Hailey
have agreed to stand for re-election. However, should either become unable or unwilling to accept nomination or election, the shares of common stock voted for
Mr. Allen
or
Mr. Hailey
by proxy will be voted for the election of a substitute nominee whom the proxy holders believe will carry out our present policies. Our Board has no reason to believe that
Mr. Allen
or
Mr. Hailey
will be unable or unwilling to serve if elected, and, to the knowledge of the Board, both intend to serve the entire term for which election is sought.
We urge you to vote “FOR”
Mr. Allen
and
Mr. Hailey
as Class
III
directors.
C. David Allen, Jr.
Independent Director
Age: 53
Director Since: 2014
Committees Served: Audit Committee, Compensation Committee
Age: 53
Director Since: 2014
Committees Served: Audit Committee, Compensation Committee
Since 2016, Mr. Allen has served as Chief Financial Officer of Smart Start, LLC, a provider of automotive technology products. Prior to Smart Start, from 2015 to 2016, Mr. Allen has served as Chief Financial Officer of Graebel Vanlines Holdings, LLC, a provider of commercial and residential logistics, moving and storage services. Prior to Graebel, from 2009 to 2015, Mr. Allen served as an officer of Snelling Services, LLC, a workforce solutions, contract and temporary staffing services provider. From 2010 to 2015, Mr. Allen served as President and Chief Executive Officer. From 2009 to 2010 he served as Chief Financial Officer. Prior to Snelling, Mr. Allen served for three years as Chief Operating Officer and six years as Chief Financial Officer for Telvista Inc., a business process outsourcer providing customer relationship management solutions. He earned a Master of Business Administration degree from the Tuck School at Dartmouth College in 1993 and received a Bachelor of Business Administration from Stephen F. Austin State University with honors in 1986. We believe that Mr. Allen should serve as a member of the Board due to his extensive experience in the temporary staffing industry as well as his financial expertise.
Douglas E. Hailey
Independent Director
Age: 55
Age: 55
Director Since: 2013
Committees Served: Audit Committee (Chair), Nominating and Corporate Governance Committee
Committees Served: Audit Committee (Chair), Nominating and Corporate Governance Committee
Douglas E. Hailey served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) since its inception and was appointed to our Board in November 2013. Mr. Hailey is the managing director of Taglich Private Equity LLC. Mr. Hailey joined Taglich Brothers, Inc. in 1994 as Head of Investment Banking and is an employee, not a partner, director,
BG STAFFING
– 2017 Proxy Statement –
4
shareholder or executive officer. Taglich Brothers, Inc. is not an affiliate of Taglich Private Equity LLC. He co-led the private equity initiative in 2001 and currently participates in evaluating and executing new investments. Prior to joining Taglich Brothers, Mr. Hailey spent five years with Weatherly Financial Group, assisting in sponsoring leveraged buyouts and five years in structured finance lending at Heller Financial and the Bank of New York. He received a Bachelor of Business Administration from Eastern New Mexico University and a Master of Business Administration in Finance from the University of Texas. We believe that Mr. Hailey should serve as a member of the Board due to the perspective and experience with our ongoing operations and strategy that he has obtained through his prolonged service to the company and due to his ability to assist with the evaluation of potential acquisitions.
Who are the continuing members of the Board?
The terms of the following three members of our Board will continue past the Annual Meeting.
Term to Expire at the 2018 Annual Meeting:
L. Allen Baker, Jr.
President and Chief Executive Officer
Age: 67
Age: 67
Director Since: 2013
L. Allen Baker, Jr. joined the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) in 2008 while serving as the Executive Vice President/Chief Financial Officer of Impact Confections, Inc., a confections manufacturing company in Colorado, a position Mr. Baker held from 2002 through 2009 and was appointed to our Board in November 2013. He began serving as President and Chief Executive Officer of BG Staffing in 2009. From 1985 to 2002, Mr. Baker served as Executive Vice President and Chief Financial Officer of Piping Design Services, Inc. d/b/a PDS Technical Services, a national, privately held staffing company headquartered in the Dallas/Fort Worth area, with operations in 43 states. Prior to this position, he worked at Core Laboratories, Inc. as the Corporate Controller from 1980 to 1985 and as Data Processing Manager from 1976 to 1980. Mr. Baker held several computer programmer positions prior to joining Core Laboratories, Inc. He has a Bachelor of Science in Mathematics with a minor in Computer Information Systems from West Texas State University and a Master of Business Administration from the University of Dallas. We believe that Mr. Baker should serve as a member of the Board due to his extensive experience in the temporary staffing industry.
Term to Expire at the 2019 Annual Meeting:
Richard L. Baum, Jr.
Independent Director
Age: 56
Director Since: 2013
Committees Served: Audit Committee, Compensation Committee (Chair), Nominating and Corporate Governance Committee (Chair)
Age: 56
Director Since: 2013
Committees Served: Audit Committee, Compensation Committee (Chair), Nominating and Corporate Governance Committee (Chair)
Richard L. Baum, Jr. served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) since its inception and was appointed to serve on our Board in November 2013. Since March 2013, Mr. Baum has been Chairman of the Board of Unique Fabricating, Inc. (NYSE MKT: UFAB), which is an automotive die-cut fabricator of non-metallic materials. Mr. Baum joined Taglich Private Equity LLC in 2005 and currently is an active director with a number of private companies where Taglich Private Equity LLC has an investment. Prior to joining Taglich Private Equity LLC, Mr. Baum led a group that purchased a private equity portfolio from Transamerica Business Credit. From 1998 to 2003, Mr. Baum was a Managing Director in the small business merger and acquisition practices of Wachovia Securities and its predecessor, First Union Securities. From 1988 through 1998, Mr. Baum was a Principal with the Mid-Atlantic Companies, Ltd., a financial services firm acquired by First Union in 1998. Mr. Baum received a Bachelor of Science from Drexel University and a Master of Business Administration from the Wharton School of the University of Pennsylvania. We believe that Mr. Baum should serve as a member of the Board due to the perspective and experience with our ongoing operations and strategy that he has obtained through his prolonged service to the company and due to his ability to assist with the evaluation of potential acquisitions.
BG STAFFING
– 2017 Proxy Statement –
5
Paul A. Seid
Independent Director
Age: 69
Director Since: 2014
Committees Served: Compensation Committee, Nominating and Corporate Governance Committee
Age: 69
Director Since: 2014
Committees Served: Compensation Committee, Nominating and Corporate Governance Committee
Since 2010, Mr. Seid has served on the board of directors of BioVentrix, a medical device company. Starting in 2013, he has served as Chief Executive Officer of RST Automation, a hospital instrumentation automation developer which was established 2004. For the past sixteen years he has been President of Strategic Data Marketing, a research and data collection company. He has also founded, bought and/or sold over twenty companies in Asia, Europe, North, and South America. Mr. Seid graduated from Queen’s College, a division of the City University of New York, in 1968 with a Bachelor’s degree in Political Science. Mr. Seid has held numerous other board of directors and consulting positions. We believe that Mr. Seid should serve as a member of the Board due to his extensive experience growing diverse businesses.
BG STAFFING
– 2017 Proxy Statement –
6
BOARD INFORMATION
Independent Directors
Our Board has determined that the following directors are “independent” as defined under the rules of the NYSE MKT: Richard L. Baum, Jr., Paul A. Seid, C. David Allen, Jr., and Douglas E. Hailey. Our Board considers, among other things, relevant transactions, relationships or arrangements, if any, required to be disclosed by the Company under Item 404 of Regulation S-K in reaching the forgoing conclusion.
Board Meetings
During
2016
, our Board met four times, including regularly scheduled and special meetings, and acted one time by unanimous written consent. Each director attended all meetings of the Board during his or her service as a director. All of our directors attended all of the meetings of the Board (during the period during which such director served) and the total number of meetings of the Board committees on which they serve (during the period during which such director served).
Board Leadership and Role in Risk Oversight
Meetings of our Board are presided over by L. Allen Baker, Jr. Our Board does not have a chairperson. Our Board believes that L. Allen Baker, Jr. is currently best situated to preside over meetings of our Board because of his familiarity with our business and ability to effectively identify strategic priorities and lead the discussion and execution of strategy.
Our Board oversees the risk management activities designed and implemented by our management and executes its oversight responsibility for risk management both directly and through its committees. The full Board also considers specific risk topics, including risks associated with our strategic plan, business operations and capital structure. In addition, our Board receives detailed regular reports from members of our senior management and other personnel that include assessments and potential mitigation of the risks and exposures involved with their respective areas of responsibility.
Our Board delegates to the Audit Committee oversight of our risk management process. Our other Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full board of directors as appropriate, including when a matter rises to the level of a material or enterprise level risk.
Committees of the Board of Directors
The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of the committees reports to our Board as they deem appropriate and as our Board may request. The composition, duties and responsibilities of these committees are set forth below.
Audit Committee
The Audit Committee is responsible for, among other matters: (1) appointing, retaining and evaluating our independent registered public accounting firm and approving all services to be performed by them; (2) overseeing our independent registered public accounting firm’s qualifications, independence and performance; (3) overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; (4) reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; (5) establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; (6) reviewing and approving related person transactions; and (7) overseeing the risk management process.
Our Audit Committee consists of C. David Allen, Jr., Richard L. Baum, Jr. and Douglas E. Hailey. We believe that each
qualifies as independent directors according to the rules and regulations of the SEC and NYSE MKT with respect to audit committee membership. We also believe that Mr. Hailey
qualifies as our “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of
BG STAFFING
– 2017 Proxy Statement –
7
Regulation S-K. Our Board has adopted a written charter for the Audit Committee, which is available on our corporate website under the investor relations tab at www.bgstaffing.com. The information on our website is not part of this Proxy Statement.
The Audit Committee held three meetings in
2016
.
Compensation Committee
The Compensation Committee is responsible for, among other matters: (1) reviewing key employee compensation goals, policies, plans and programs; (2) reviewing and approving the compensation of our directors, president and chief executive officer and other executive officers; (3) reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and (4) administering our stock plans and other incentive compensation plans, including our 2013 Long-Term Incentive Plan (the "2013 Plan"). The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the committee may deem appropriate in its sole discretion. The Compensation Committee may invite such members of management to its meetings as it deems appropriate. However, the Compensation Committee meets regularly without such members present, and in all cases no officer may be present at meetings at which such officer’s compensation or performance is discussed or determined. The Committee has the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant as necessary to assist with the execution of its duties and responsibilities. Neither the Compensation Committee nor management engaged a compensation consultant with respect to the fiscal year ended
2016
.
Our Compensation Committee consists of C. David Allen, Jr., Richard L. Baum, Jr. and Paul A. Seid. Our Board has adopted a written charter for the Compensation Committee, which is available on our corporate website under the investor relations tab at www.bgstaffing.com. The information on our website is not part of this Proxy Statement.
The Compensation Committee held two meetings and acted by unanimous written consent one time in
2016
.
Nominating and Corporate Governance Committee
We have a Nominating and Corporate Governance Committee, which identifies, evaluates and recommends qualified nominees to serve on our Board, develops and oversees our internal corporate governance processes and maintains a management succession plan. Our Nominating and Corporate Governance Committee charter defines the committee’s primary duties. The Nominating and Corporate Governance Committee will evaluate nominees for director, including nominees recommended by stockholders, using all relevant criteria, including diversity of experience and background. The Nominating and Corporate Governance Committee will consider any director candidates recommended by the Company’s stockholders provided that the notice and information requirements specified by Section 2.06(b)–(c) of the Bylaws (relating to direct stockholder nominations) are complied with.
Our Nominating and Corporate Governance Committee consists of Richard L. Baum, Jr., Douglas E. Hailey, and Paul A. Seid. A copy of the Nominating and Corporate Governance Committee’s charter is posted on our website at www.bgstaffing.com. The information on our website is not part of this Proxy Statement.
The Nominating and Corporate Governance Committee held one meeting in
2016
.
Other Committees
Our Board may establish other committees as it deems necessary or appropriate from time to time.
Family Relationships
There are no family relationships among any of our executive officers or any of our directors.
BG STAFFING
– 2017 Proxy Statement –
8
DIRECTOR COMPENSATION
Set forth below is a summary of the components of compensation payable to our non-management directors.
Cash Compensation
We reimburse each member of our Board for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of our Board and any committees thereof, including, without limitation, reasonable travel, lodging and meal expenses. Each director who is not also an employee or officer of the Company is also entitled to (i) annual retainer of $15,000 for their service on our Board, (ii) an annual retainer of $5,000 for each committee on which the director serves, and (iii) an annual retainer of $25,000 for audit and $10,000 for all other committee chairs on which the director serves.
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Name
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Board Member
($)
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Audit Committee ($)
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Compensation Committee
($) |
Nominating & Governance Committee ($)
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Chairman of the Board
($)
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Total
($) |
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C. David Allen, Jr.
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$
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15,000
|
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$
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5,000
|
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$
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5,000
|
|
$
|
—
|
|
$
|
—
|
|
$
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25,000
|
|
|
Richard L. Baum, Jr.
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$
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15,000
|
|
$
|
5,000
|
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$
|
15,000
|
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$
|
15,000
|
|
$
|
—
|
|
$
|
50,000
|
|
|
Douglas E. Hailey
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$
|
15,000
|
|
$
|
30,000
|
|
$
|
—
|
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$
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5,000
|
|
$
|
—
|
|
$
|
50,000
|
|
|
Paul A. Seid
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$
|
15,000
|
|
$
|
—
|
|
$
|
5,000
|
|
$
|
5,000
|
|
$
|
—
|
|
$
|
25,000
|
|
Equity Compensation
On June 9, 2015, the Compensation Committee granted nonqualified stock options to the following directors of the Company: Douglas E. Hailey (3,750 options with a $11.00 exercise price per share), Paul A. Seid (3,750 options with a $11.00 exercise price per share), C. David Allen, Jr. (3,750 options with a $11.00 exercise price per share) and Richard L. Baum, Jr. (3,750 options with a $11.00 exercise price per share). The nonqualified stock options will expire on June 9, 2025, one-fifth of the non-qualified stock options vested on June 9, 2015 and the remainder of the nonqualified stock options will vest in four equal annual increments beginning on June 9, 2016. Each option is subject to the condition that the optionee will have remained as a director through such vesting dates, and each option is subject to the terms and conditions set forth in the 2013 Plan and in the Nonqualified Stock Option Agreement between the Company and each optionee.
Director Compensation for the Fiscal Year Ended
2016
The table below sets forth the compensation payable to our non-management directors for service during the fiscal year ended
2016
.
|
Name
|
Fees earned or paid in cash
($) |
Stock awards
($) |
Option awards
($) (*) |
Non-equity incentive plan
compensation ($) |
Nonqualified deferred
compensation earnings ($) |
All other compensation
($) |
Total
($) |
||||||||||||||
|
C. David Allen, Jr.
|
$
|
25,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,000
|
|
|
Richard L. Baum, Jr.
|
$
|
50,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
50,000
|
|
|
Douglas E. Hailey
|
$
|
50,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
50,000
|
|
|
Paul A. Seid
|
$
|
25,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,000
|
|
|
*
|
The amounts reflect the dollar amounts recognized for financial statement reporting purposes in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in Note 13 Share-based Compensation to the audited consolidated financial statements included in the Form 10-K.
|
BG STAFFING
– 2017 Proxy Statement –
9
CORPORATE GOVERNANCE
General
Our Board has established corporate governance practices designed to serve the best interests of the Company and our stockholders. In this regard, our Board has, among other things, adopted:
|
•
|
a code of business conduct and ethics applicable to all of our Board members, as well as all of our employees, including our President and Chief Executive Officer and Chief Financial Officer and Secretary;
|
|
•
|
procedures regarding stockholder communications with our Board and its committees;
|
|
•
|
a policy for the submission of complaints or concerns relating to accounting, internal accounting controls or auditing matters;
|
|
•
|
provisions in our Bylaws regarding director candidate nominations and other proposals by stockholders; and
|
|
•
|
written charters for its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
|
Our Board intends to monitor developing standards in the corporate governance area and, if appropriate, modify our policies and procedures with respect to such standards. In addition, our Board will continue to review and modify our policies and procedures as appropriate to comply with any new requirements of the Securities and Exchange Commission or NYSE MKT.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, including our chief executive officer and our chief financial officer (who is our principal accounting officer). Our Code of Ethics is available on our website at www.bgstaffing.com. If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we intend to satisfy the requirements under Item 5.05 of Item 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Ethics that apply to our principal executive, financial and accounting officers by posting the required information on our website at the above address. Our website is not part of this Proxy Statement.
Stockholder Communications with the Board
Stockholders may contact the Board or any committee of the Board by any one of the following methods:
|
|
|
|
|
By telephone:
972-692-2400 |
By mail:
BG Staffing, Inc. Attn: Corporate Secretary
5850 Granite Parkway, Suite 730,
Plano, Texas 75024
|
By e-mail:
InvestorRelations@BGStaffing.com |
|
BG STAFFING
– 2017 Proxy Statement –
10
Director Attendance at Annual Meeting of Stockholders
Our Board has not adopted a formal policy stating that each member of the Board should attend our annual meeting of stockholders. However, we anticipate that each director will attend this in person or by telephonically. At the
2016
Annual Meeting of Stockholders, all directors were present.
BG STAFFING
– 2017 Proxy Statement –
11
|
PROPOSAL TWO:
|
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
The Audit Committee appointed Whitley Penn LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017
and Whitley Penn LLP has served in this capacity since 2013. Our Board has further directed that we submit the selection of our independent registered public accounting firm for ratification by our stockholders at the
2017
annual meeting.
Representatives of Whitley Penn LLP will attend the annual meeting and available to respond to appropriate questions and, although the firm has indicated that no statement will be made, an opportunity for a statement will be provided.
The Audit Committee reviews and pre-approves both audit and all permissible non-audit services provided by our independent registered public accounting firm, and accordingly, all services and fees in the fiscal years ended
2016
,
2015
, and
2014
provided by Whitley Penn LLP were pre-approved by the Audit Committee. The Audit Committee has considered whether the provision of services, other than services rendered in connection with the audit of our annual financial statements, is compatible with maintaining Whitley Penn LLP’s independence. The Audit Committee has determined that the rendering of non-audit services by Whitley Penn LLP during the fiscal years ended
December 25, 2016
,
December 27, 2015
, and
December 28, 2014
was compatible with maintaining the firm’s independence.
Stockholder ratification of the selection of Whitley Penn LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, our Board is submitting the selection of Whitley Penn LLP to the stockholders for ratification as a matter of good corporate practice. The Audit Committee believes it to be in the best interests of our stockholders to retain, and has retained, Whitley Penn LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017
. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to continue the retention of Whitley Penn LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in our best interests and those of our stockholders. The Audit Committee annually reviews the performance of our independent registered public accounting firm and the fees charged for their services. Based upon the Audit Committee’s analysis of this information, the Audit Committee will determine which registered independent public accounting firm to engage to perform our annual audit each year.
Our Board of Directors recommends that you vote “
FOR
” the proposal to ratify the selection of Whitley Penn LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017
.
BG STAFFING
– 2017 Proxy Statement –
12
Principal Accountant Fees and Services
Aggregate fees billed or incurred related to the following years for professional services rendered by Whitley Penn LLP for the fiscal years ended
December 25, 2016
,
December 27, 2015
, and
December 28, 2014
are set forth below.
|
2016
|
2015
|
2014
|
||||||||||
|
Audit Fees
(1)
|
$
|
168,243
|
|
$
|
192,543
|
|
$
|
177,236
|
|
|||
|
Audit-Related Fees
(2)
|
75,214
|
|
167,154
|
|
27,117
|
|
||||||
|
Tax Fees
|
—
|
|
—
|
|
—
|
|
||||||
|
All Other Fees
|
—
|
|
—
|
|
—
|
|
||||||
|
Total
|
$
|
243,457
|
|
$
|
359,697
|
|
$
|
204,353
|
|
|||
|
(1)
|
Audit fees consist principally of fees for the audit of our consolidated financial statements, review of our interim consolidated financial statements and services related to our acquisitions.
|
|
(2)
|
These fees consist principally of fees related to the preparation of SEC registration statements, acquisitions, and U.S. Department of Labor filings.
|
BG STAFFING
– 2017 Proxy Statement –
13
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board, the Audit Committee assists the Board in fulfilling its oversight responsibilities by, among other things, reviewing the financial reports and other financial information provided by the Company to any governmental body or the public.
In discharging its oversight responsibilities, the Audit Committee obtained from the independent registered public accounting firm a formal written statement describing all relationships between the firm and the Company that might bear on the auditors’ independence consistent with the applicable requirements of the Public Company Accounting Standards Board, discussed with the independent auditors any relationships that may impact their objectivity and independence, and satisfied itself as to the auditors’ independence. The Audit Committee also discussed with management and the independent auditors the integrity of the Company’s financial reporting processes, including the Company’s internal accounting systems and controls, and reviewed with management and the independent auditors the Company’s significant accounting principles and financial reporting issues, including judgments made in connection with the preparation of the Company’s financial statements. The Audit Committee also reviewed with the independent auditors their audit plans, audit scope and identification of audit risks.
The Audit Committee discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 16,
Communications with Audit Committees
, as adopted by the Public Company Accounting Oversight Board, and, with and without management present, discussed and reviewed the results of the independent auditors’ examination of the consolidated financial statements of the Company.
The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended
December 25, 2016
with management and the independent auditors. Management is responsible for the Company’s financial reporting process, including its system of internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended), and for the preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles. The independent auditor is responsible for auditing those financial statements, and expressing an opinion on the effectiveness of internal control over financial reporting. The Audit Committee’s responsibility is to monitor and review these processes. The members of the Audit Committee are “independent” as defined by SEC and NYSE MKT rules, and our Board has determined that Douglas E. Hailey is an “audit committee financial expert” as defined by SEC rules.
The Audit Committee discussed with the Company’s independent auditors the overall scope and plans for their respective audits. The Audit Committee periodically meets with the Company’s independent auditors, with and without management present, and in private sessions with members of senior management to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee also periodically meets in executive session.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board subsequently approved the recommendation) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 25, 2016
, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Douglas E. Hailey,
Chair
C. David Allen
Richard L. Baum, Jr.
C. David Allen
Richard L. Baum, Jr.
BG STAFFING
– 2017 Proxy Statement –
14
EXECUTIVE OFFICERS
Our Board appoints our executive officers and updates the executive officer positions as needed throughout the fiscal year. Each executive officer serves at the behest of our Board and until their successors are appointed, or until the earlier of their death, resignation or removal.
The following table sets forth certain information with respect to our executive officers as of the date of this Proxy Statement:
|
Name
|
Age
|
Position
|
|
L. Allen Baker, Jr.
|
67
|
President and Chief Executive Officer
|
|
Beth Garvey
|
51
|
Chief Operating Officer
|
|
Dan Hollenbach
|
61
|
Chief Financial Officer and Secretary
|
L. Allen Baker, Jr.
joined the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) in 2008 while serving as the Executive Vice President/Chief Financial Officer ("CFO") of Impact Confections, Inc., a confections manufacturing company in Colorado, a position Mr. Baker held from 2002 through 2009 and was appointed to our Board in November 2013. He began serving as President and Chief Executive Officer of the Company in 2009. From 1985 to 2002, Mr. Baker served as Executive Vice President and Chief Financial Officer of Piping Design Services, Inc. d/b/a PDS Technical Services, a national, privately held staffing company headquartered in the Dallas/Fort Worth area, with operations in 43 states. Prior to this position, he worked at Core Laboratories, Inc. as the Corporate Controller from 1980 to 1985 and as Data Processing Manager from 1976 to 1980. Mr. Baker held several computer programmer positions prior to joining Core Laboratories, Inc. He has a Bachelor of Science in Mathematics with a minor in Computer Information Systems from West Texas State University and a Master of Business Administration from the University of Dallas.
Beth Garvey
began serving as Chief Operating Officer of the Company in August 2016 and joined the Company through the Company's acquisition of substantially all of the assets of InStaff Holding Corporation and InStaff Personnel, LLC ("InStaff") in 2013. Ms. Garvey started at InStaff in 1998 as Director of Human Resources, subsequently serving as Director of Operations, VP of Operations, Senior VP of Operations, COO and ultimately CEO prior to our acquisition. Beth currently serves on the Advisory Board for and the Dallas Regional Chamber and the Board of Directors for the Texas Association of Business. She is also currently serving on the Executive Committee for the Dallas Executive Women’s Roundtable.
Dan Hollenbach
joined as CFO and Secretary on August 24, 2015. Prior to joining the Company, Mr. Hollenbach was the CFO of Cybergy Holdings, Inc. (OTC: CYBG), an advisory service and products company for the federal and state governments, and commercial clients, from May 2014 to August 2015. Prior to this position, he led the consulting practice for Robert Half Management Resources in Colorado from June 2010 to May 2014. From August 2004 to July 2009, Dan was the CFO for Global Employment Holdings (OTC: GEYH), a national staffing, consulting and professional employer organization company. Mr. Hollenbach began his career in the Audit and Assurance Services practice of EY before entering the corporate world. He has over three decades of experience in corporate accounting and finance, including expertise in initial public offerings, SEC reporting, mergers and acquisitions, Sarbanes-Oxley, treasury management, process improvement, and all phases of audit, tax, and reporting. Additionally, he has served on audit committees and led negotiations of multiple senior debt restructurings. He is a CPA in State of Texas, holds a Chartered Global Management Accountant certification, and received his B.B.A. in accounting from Texas Tech University.
Named Executive Officers
Our named executive officers for the fiscal year ended
2016
and the positions they held with the company as of
December 25, 2016
are:
|
•
|
L. Allen Baker, Jr., our President and Chief Executive Officer;
|
|
•
|
Beth Garvey, our Chief Operating Officer; and
|
|
•
|
Dan Hollenbach, our Chief Financial Officer and Secretary.
|
BG STAFFING
– 2017 Proxy Statement –
15
Throughout this section, the term “named executive officer” is intended to refer to the individuals identified above. During the fiscal year ended
2016
, we had only three executive officers, each of whom is set forth above.
Summary Compensation Table
The following table presents compensation information for our named executive officers with respect to the fiscal years ended
2016
,
2015
, and
2014
.
|
Name and
Principal Position |
Year
|
Salary ($)
|
Bonus
($)
|
Stock
Awards ($) (*) |
Option
Awards ($) (*) |
Non-equity
incentive plan compensation ($) |
Non-qualified
deferred compensation earnings ($) |
All Other
Compensation ($) |
Total
($)
|
||||||||||
|
L. Allen Baker, Jr.
(1)
President and Chief Executive Officer
|
2016
|
$375,000
|
$—
|
$—
|
$—
|
$—
|
$—
|
$23,217
|
(2)
|
$398,217
|
|||||||||
|
2015
|
$325,000
|
$278,750
|
(3)
|
$—
|
$54,814
|
$—
|
$—
|
$19,733
|
(4)
|
$678,297
|
|||||||||
|
2014
|
$325,000
|
$32,500
|
(5)
|
$509
|
$929,683
|
$—
|
$—
|
$20,925
|
(6)
|
$1,308,617
|
|||||||||
|
Beth Garvey
(8)
Chief Operating Officer
|
2016
|
$111,056
|
(7)
|
$—
|
$—
|
$202,623
|
$—
|
$—
|
$4,053
|
(7)
|
$317,732
|
||||||||
|
2015
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
|||||||||||
|
2014
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
|||||||||||
|
Dan Hollenbach
Chief Financial Officer and Secretary
|
2016
|
$210,000
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$210,000
|
||||||||||
|
2015
|
$76,729
|
$17,500
|
$—
|
$119,921
|
$—
|
$—
|
$19,863
|
(9)
|
$234,013
|
||||||||||
|
2014
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
$—
|
|||||||||||
|
(*)
|
The amounts reflect the dollar amounts recognized for financial statement reporting purposes in accordance with FASB ASC Topic 718. The assumptions used in the calculation of these amounts are included in Note 13 Share-based Compensation to the audited consolidated financial statements included in the Original Form 10-K.
|
|
(1)
|
Mr. Baker also serves on our board of directors, but does not receive additional compensation to do so.
|
|
(2)
|
Includes $12,000 representing matching 401(k) contributions made by us and $11,217 in medical benefits.
|
|
(3)
|
Includes $178,750 of 2015 bonus was earned in 2015 and $100,000 discretionary bonus paid in 2015.
|
|
(4)
|
Includes $11,750 representing matching 401(k) contributions made by us and $7,983 in medical benefits.
|
|
(5)
|
2014 bonus was earned in 2014 and paid in 2015.
|
|
(6)
|
Includes $11,750 representing matching 401(k) contributions made by us and $9,175 in medical benefits.
|
|
(7)
|
Includes compensation since the executed employment agreement effective August 1, 2016.
|
|
(8)
|
Beth Garvey was not named executive officer in 2015 or 2014 and therefore no amounts have been included for those respective years in the table above.
|
|
(9)
|
Includes $4,053 representing matching 401(k) contributions made by us
|
Agreements with Executive Officers
President and Chief Executive Officer
On February 1, 2016, we executed an employment agreement effective December 28, 2015 with L. Allen Baker, Jr., pursuant to which Mr. Baker serves as our President and Chief Executive Officer. The contract is effective through December 31, 2018 and automatically renews for successive one-year periods until terminated in accordance with its terms. Mr. Baker’s annual compensation is evaluated annually, but may not be less than $375,000 per year. Mr. Baker received an annual base salary of $375,000 for the fiscal year-ended
December 25, 2016
.
BG STAFFING
– 2017 Proxy Statement –
16
Mr. Baker is eligible to receive an annual cash bonus based on our adjusted EBITDA (as defined in the employment agreement). At the beginning of each calendar year, our board of directors approves an operating adjusted EBITDA budget. If we achieve:
|
•
|
at least 85% of the approved adjusted EBITDA budget for the fiscal year, then Mr. Baker receives a cash bonus in an amount equal to 10% his annual base salary for the applicable employment period in which the calendar year ends (or such greater amount as decided by our board of directors);
|
|
•
|
at least 95% of the approved adjusted EBITDA budget for the fiscal year, then Mr. Baker receives a cash bonus in an amount equal to 25% of his annual base salary for the applicable employment period in which the calendar year ends (or such other greater amount as decided by our board of directors);
|
|
•
|
at least 100% of the approved adjusted EBITDA budget for the fiscal year, then Mr. Baker receives a cash bonus in an amount equal to 40% of his annual base salary for the applicable employment period in which the calendar year ends (or such other greater amount as decided by our board of directors ); and
|
|
•
|
at least 110% of the approved adjusted EBITDA budget for the fiscal year, then Mr. Baker receives a cash bonus in an amount equal to 55% of his annual base salary for the applicable employment period in which the calendar year ends (or such other greater amount as decided by our board of directors).
|
In the event that Mr. Baker’s employment is terminated by us without cause or by Mr. Baker for good reason, Mr. Baker will receive as severance installments equal to twelve months of base salary plus COBRA premiums for eighteen months. In the event that Mr. Baker’s employment is terminated without cause or for good reason within one year of a change in control (as defined in the employment agreement), Mr. Baker will receive as severance installments his base salary plus COBRA premiums for Mr. Baker and his dependents for eighteen months. Mr. Baker will also generally be entitled to receive any bonus payable but unpaid, payment for unused vacation days, and unpaid reimbursements. The severance is contingent upon Mr. Baker’s execution of a separation agreement including a general release. In the event that Mr. Baker’s employment is terminated by us for cause, or by Mr. Baker other than for good reason, we will pay to Mr. Baker any monthly salary, bonus payable but unpaid, unused vacation, and expense reimbursements, earned or due to Mr. Baker but unpaid.
We and Mr. Baker have also entered into a confidentiality, non-solicitation, non-interference and non-competition agreement. Pursuant to the agreement, Mr. Baker generally agrees not to disclose our confidential information (as defined in the agreement) and, for a period of eighteen months following his termination, not to solicit our customers, interfere with our customer and supplier relationships, or solicit our employees. Mr. Baker also agrees not to compete with us for a period of twelve months or for the period during which he is entitled to severance payments (if longer).
Mr. Baker was granted stock options in 2015 and 2014 as further described under “Outstanding Equity Awards” below.
Chief Operating Officer
On August 5, 2016, we executed an employment agreement effective August 1, 2016 with Beth Garvey pursuant to which Ms. Garvey serves as our Chief Operating Officer. The contract is effective through July 31, 2017 and automatically renews for successive one-year periods until terminated in accordance with its terms. Ms. Garvey's annual compensation is evaluated annually, but may not be less than $275,000 per year. Ms. Garvey received an annual base salary of $275,000 pro rated for the fiscal year ended
December 25, 2016
.
Ms. Garvey is eligible to receive an annual cash bonus based on achieving certain adjusted EBITDA levels (as defined by the Compensation committee) and certain fiscal year objectives as determined by us and provided that Ms. Garvey is in our employment on the date such bonus amount is paid.
In the event that Ms. Garvey’s employment is terminated by us without cause or by Ms. Garvey for good reason, Ms. Garvey will receive as severance installments equal to six months of base salary. In the event that Ms. Garvey’s employment is terminated without cause or for good reason within one year of a change in control, Ms. Garvey will receive as severance installments her base salary plus COBRA premiums for Ms. Garvey and her dependents for twelve months. Ms. Garvey will also generally be entitled to receive any bonus payable but unpaid, payment for unused vacation days, and unpaid reimbursements. The severance is contingent upon Ms. Garvey’s execution of a separation agreement including a general release. In the event that Ms. Garvey’s employment is terminated by us for cause,
BG STAFFING
– 2017 Proxy Statement –
17
or by Ms. Garvey other than for good reason, we will pay to Ms. Garvey any monthly salary, bonus payable but unpaid, unused vacation, and expense reimbursements, earned or due to Ms. Garvey but unpaid.
We and Ms. Garvey have also entered into a confidentiality, non-solicitation, non-interference and non-competition agreement. Pursuant to the agreement, Ms. Garvey generally agrees not to disclose our confidential information (as defined in the agreement) and, for a period of eighteen months following her termination, not to solicit our customers, interfere with our customer and supplier relationships, or solicit our employees. Ms. Garvey also agrees not to compete with us for a period of twelve months after termination.
Ms. Garvey was granted stock options in the fiscal year ended 2016 pursuant to her election as COO and in fiscal 2015 and 2014 in her previous role as further described under “Outstanding Equity Awards” below.
Chief Financial Officer
On October 27, 2015, we executed an employment agreement effective August 24, 2015 with Dan Hollenbach pursuant to which Mr. Hollenbach serves as our Chief Financial Officer and Secretary. The contract remains in effect under successive one-year extensions until terminated pursuant to its terms. Mr. Hollenbach's annual compensation is evaluated annually, but may not be less than $210,000 per year. Effective December 26, 2016, the Compensation committee approved an increase in Mr. Hollenbach's annual base salary to $230,000.
Mr. Hollenbach is eligible to receive an annual cash bonus based on achieving certain adjusted EBITDA levels (as defined by the Compensation committee) and certain fiscal year objectives as determined by us and Mr. Hollenbach is in our employment on the date such bonus amount is paid. For purposes of the fiscal year ended 2015 only, Mr. Hollenbach was eligible to receive a discretionary bonus in the gross lump sum amount $17,500. Mr. Hollenbach was reimbursed for moving and relocation costs and temporary living expenses of approximately $32,000.
In the event that Mr. Hollenbach’s employment is terminated by us without cause or by Mr. Hollenbach for good reason, Mr. Hollenbach will receive as severance installments equal to six months of base salary. In the event that Mr. Hollenbach’s employment is terminated without cause or for good reason within one year of a change in control, Mr. Hollenbach will receive as severance installments his base salary plus COBRA premiums for Mr. Hollenbach and his dependents for twelve months. Mr. Hollenbach will also generally be entitled to receive any bonus payable but unpaid, payment for unused vacation days, and unpaid reimbursements. The severance is contingent upon Mr. Hollenbach’s execution of a separation agreement including a general release. In the event that Mr. Hollenbach’s employment is terminated by us for cause, or by Mr. Hollenbach other than for good reason, we will pay to Mr. Hollenbach any monthly salary, bonus payable but unpaid, unused vacation, and expense reimbursements, earned or due to Mr. Hollenbach but unpaid.
We and Mr. Hollenbach have also entered into a confidentiality, non-solicitation, non-interference and non-competition agreement. Pursuant to the agreement, Mr. Hollenbach generally agrees not to disclose our confidential information (as defined in the agreement) and, for a period of eighteen months following his termination, not to solicit our customers, interfere with our customer and supplier relationships, or solicit our employees. Mr. Hollenbach also agrees not to compete with us for a period of twelve months after termination.
Mr. Hollenbach was granted stock options in 2015 as further described under “Outstanding Equity Awards” below.
Outstanding Equity Awards
The following table presents outstanding equity awards as of
December 25, 2016
.
BG STAFFING
– 2017 Proxy Statement –
18
|
Name
|
Option Awards
|
||||||||||
|
Grant date
|
Number of securities underlying unexercised options (#) exercisable
|
Number of securities underlying unexercised options (#) unexercisable
|
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)
|
Option exercise price ($)
|
Option expiration date
|
||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
||||||
|
L. Allen Baker, Jr.
|
06/09/2015
|
12,000
|
18,000
|
|
(1)
|
—
|
|
$
|
11.00
|
|
06/09/2025
|
|
02/06/2014
|
170,271
|
—
|
|
(2)
|
—
|
|
$
|
6.25
|
|
02/06/2024
|
|
|
02/06/2014
|
17,402
|
—
|
|
(2)
|
—
|
|
$
|
12.50
|
|
02/06/2024
|
|
|
02/06/2014
|
56,000
|
14,000
|
|
(3)
|
—
|
|
$
|
6.25
|
|
02/06/2024
|
|
|
02/06/2014
|
16,000
|
16,000
|
|
(4)
|
—
|
|
$
|
6.25
|
|
02/06/2024
|
|
|
Beth Garvey
|
08/16/2016
|
1,417
|
11,768
|
|
(5)
|
—
|
|
$
|
17.46
|
|
08/16/2026
|
|
08/16/2016
|
8,583
|
28,232
|
|
(6)
|
—
|
|
$
|
17.46
|
|
08/16/2026
|
|
|
06/09/2015
|
8,000
|
12,000
|
|
(7)
|
—
|
|
$
|
11.00
|
|
06/09/2025
|
|
|
02/06/2014
|
20,000
|
5,000
|
|
(8)
|
—
|
|
$
|
6.25
|
|
02/06/2024
|
|
|
Dan Hollenbach
|
10/27/2015
|
18,066
|
27,099
|
|
(9)
|
—
|
|
$
|
11.07
|
|
10/27/2025
|
|
10/27/2015
|
7,934
|
11,901
|
|
(10)
|
—
|
|
$
|
11.07
|
|
10/27/2025
|
|
|
(1)
|
Nonqualified stock options vested one-fifth on June 9, 2015 and the remainder of the options vest in four equal annual increments beginning on June 9, 2016.
|
|
(2)
|
Nonqualified stock options vested in full on the date of grant
|
|
(3)
|
Nonqualified stock options vested one-fifth on February 6, 2014 and the remainder of the options vest in four equal annual increments beginning on February 6, 2015.
|
|
(4)
|
Incentive stock options vested one-fifth on February 6, 2014 and the remainder of the options vest in four equal annual increments beginning on February 6, 2015.
|
|
(5)
|
Incentive stock options vested one-fifth on August 16, 2016 and the remainder of the options vest in four equal annual increments beginning on August 16, 2017.
|
|
(6)
|
Nonqualified stock options vested one-fifth on August 16, 2016 and the remainder of the options vest in four equal annual increments beginning on August 16, 2017.
|
|
(7)
|
Incentive stock options vested one-fifth on June 9, 2015 and the remainder of the options vest in four equal annual increments beginning on June 9, 2016.
|
|
(8)
|
Incentive stock options vested one-fifth on February 6, 2014 and the remainder of the options vest in four equal annual increments beginning on February 6, 2015.
|
|
(9)
|
Incentive stock options vested one-fifth on October 27, 2015 and the remainder of the options vest in four equal annual increments beginning on October 27, 2016.
|
|
(10)
|
Nonqualified stock options vested one-fifth on October 27, 2015 and the remainder of the options vest in four equal annual increments beginning on October 27, 2016.
|
Each option is subject to the condition that the optionee will have remained employed by the Company, or any one or more of its subsidiaries, through such vesting dates, and each option is further subject to the terms and conditions set forth in the 2013 Plan and in the applicable Stock Option Agreement.
Vesting Equity Awards
No stock awards were granted to our named executive officers during the fiscal year ended
2016
.
BG STAFFING
– 2017 Proxy Statement –
19
|
PROPOSAL THREE:
|
AMENDMENT OF THE 2013 LONG-TERM INCENTIVE PLAN TO ADD AN ADDITIONAL 250,000 SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE
|
The Board of Directors has approved the amendment of the 2013 Plan to add an additional 250,000 shares of common stock available for issuance. Our Board has further directed that we submit the amendment to our 2013 Plan for ratification by our stockholders at the
2017
annual meeting.
Our Board approved the amendment to the 2013 Plan, subject to stockholder approval, so that a sufficient number of shares of Company common stock will be available for appropriate compensation to employees and directors. Equity awards are an important part of our compensation program and align the interests of our employees and directors with the long-term interests of our stockholders through equity awards.
A total of 900,000 shares of common stock were originally reserved for issuance under the 2013 Plan, which represented approximately 16% of the then outstanding shares of common stock.
As of
March 17, 2017
, 140,088 shares have been issued to employees, officers and our non-employee directors upon the exercise of vested options. Additionally, we have 663,411 unexercised options outstanding, leaving 96,501 options available for issuance.
The proposed amendment makes an additional 250,000 shares of common stock available for issuance under the 2013 Plan, bringing the total to 1,150,000 or approximately 13.3% of outstanding shares of our common stock.
The shares of common stock to be delivered under the plan will be made available, at the discretion of our board of directors or the committee established by the board to administer the plan, either from authorized but unissued shares of common stock or from previously issued shares of common stock reacquired by the company, including shares of common stock purchased on the open market.
Our Board of Directors recommends that you vote “
FOR
” the proposal to amend the 2013 Plan to add an additional 250,000 shares of common stock available for issuance.
BG STAFFING
– 2017 Proxy Statement –
20
Equity Compensation Plans
The following equity compensation plan information is provided as of
December 25, 2016
:
|
Plan Category
|
Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (a)
|
Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column (a))
|
|||||
|
Equity Compensation Plans Approved by Security Holders (2013 Plan)
|
678,411
|
|
$8.95
|
82,324
|
|
|||
|
Total
|
678,411
|
|
$8.95
|
82,324
|
|
|||
The following is a summary of provisions of the 2013 Plan and is qualified in its entirety by reference to the complete text of the 2013 Plan appended to this proxy statement.
2013 Plan
Grant History
Since adoption of the 2013 Plan, we have granted the following awards to the individuals and groups listed below:
|
Name and Principal Position
|
Option Awards
|
Stock-Based Awards
|
|||||||||
|
Weighted Average Exercise
Price
|
Total Shares Subject to Option Grants
|
Total
Stock Based Awards
|
Weighted Average
Purchase
Price
|
||||||||
|
L. Allen Baker, Jr.
|
$
|
6.93
|
|
367,673
|
|
50
|
|
$
|
10.19
|
|
|
|
President and Chief Executive Officer
|
|||||||||||
|
Beth Garvey
|
$
|
13.15
|
|
95,000
|
|
50
|
|
$
|
10.19
|
|
|
|
Chief Operating Officer
|
|||||||||||
|
Dan Hollenbach
|
$
|
11.07
|
|
65,000
|
|
—
|
|
$
|
—
|
|
|
|
Chief Financial Officer and Secretary
|
|||||||||||
|
All current executive officers, as a group
|
$
|
8.56
|
|
527,673
|
|
100
|
|
$
|
10.19
|
|
|
|
All current directors who are not executive officers, as a group
|
$
|
7.80
|
|
62,395
|
|
—
|
|
$
|
—
|
|
|
|
C. David Allen, Jr., director nominee
|
$
|
8.40
|
|
11,250
|
|
—
|
|
$
|
—
|
|
|
|
Doug E. Hailey, director nominee
|
$
|
7.31
|
|
22,748
|
|
—
|
|
$
|
—
|
|
|
|
All employees who are not current executive officers, as a group
|
$
|
8.87
|
|
292,295
|
|
8,700
|
|
$
|
10.19
|
|
|
Our Board adopted our 2013 Plan effective December 20, 2013, and it was approved by our shareholders on February 6, 2014. Our 2013 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any subsidiary's employees, and for the grant of nonstatutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees and directors and our subsidiary's employees.
A total of 900,000 shares of common stock were originally reserved for issuance under the 2013 Plan, which represented approximately 16% of the then outstanding shares of common stock.
BG STAFFING
– 2017 Proxy Statement –
21
As of
March 17, 2017
, 140,088 shares have been issued to employees, officers and our non-employee directors upon the exercise of vested options. Additionally, we have 663,411 unexercised options outstanding, leaving 96,501 options available for issuance.
The proposed amendment makes an additional 250,000 shares of common stock available for issuance under the 2013 Plan, bringing the total to 1,150,000 or approximately 13.3% of outstanding shares of our common stock.
Summarized below are certain sections of the 2013 Plan. Attached as Annex A is the Proposed 2013 Plan
Plan Administration.
Our Compensation Committee administers our 2013 Plan. In the case of awards intended to qualify as ‘‘performance-based compensation’’ within the meaning of Section 162(m), the committee consists of two or more ‘‘outside directors’’ within the meaning of Section 162(m). Subject to the provisions of our 2013 Plan, the administrator has the power to administer our 2013 Plan, including but not limited to, the power to interpret the terms of our 2013 Plan and awards granted under it, to create, amend and revoke rules relating to our 2013 Plan, and to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards, and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce or increase their exercise prices, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards of the same type that may have a higher or lower exercise price or different terms, awards of a different type and/or cash.
Stock Options.
Stock options may be granted under our 2013 Plan. The exercise price of options granted under our 2013 Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. For nonstatutory stock options, the exercise price must equal at least 100% of the fair market value. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option generally will remain exercisable for three months following the termination of service. An option may not be exercised later than the expiration of its term. However, if the exercise of an option is prevented by applicable law the exercise period may be extended under certain circumstances. Subject to the provisions of our 2013 Plan, the administrator determines the other terms of options.
Stock Appreciation Rights.
Stock appreciation rights may be granted under our 2013 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding ten years. After the termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her stock appreciation rights agreement. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2013 Plan, the administrator determines the other terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.
Restricted Stock.
Restricted stock may be granted under our 2013 Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and, subject to the provisions of our 2013 Plan, will determine the terms and conditions of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us); provided, however, that the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.
BG STAFFING
– 2017 Proxy Statement –
22
RSUs.
RSUs may be granted under our 2013 Plan.
RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2013 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Performance Units and Performance Shares.
Performance units and performance shares may be granted under our 2013 Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established by the administrator on or prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.
Outside Directors.
Our 2013 Plan provides that all outside directors will be eligible to receive all types of awards (except for incentive stock options) under our 2013 Plan.
Non-Transferability of Awards.
Unless the administrator provides otherwise, our 2013 Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.
Certain Adjustments.
In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under our 2013 Plan, the administrator will adjust the number and class of shares that may be delivered under our 2013 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in our 2013 Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all awards will terminate immediately prior to the consummation of such proposed transaction.
Merger or Change in Control.
Our 2013 Plan provides that in the event of a merger or change in control, as defined under our 2013 Plan, each outstanding award will be treated as our board of directors determines.
Amendment; Termination.
The administrator has the authority to amend, suspend or terminate our 2013 Plan provided such action does not impair the existing rights of any participant. Our 2013 Plan automatically will terminate in 2023, unless we terminate it sooner.
Plan Benefits
As of
March 17, 2017
, approximately 291 persons were eligible to receive awards under the 2013 Plan, including our executive officers and non-employee directors. The granting of awards under the 2013 Plan is discretionary, and we cannot now determine the number or type of awards to be granted in the future to any particular person or group.
On
March 17, 2017
, the last reported sale price of our common stock on the NYSE MKT was $14.46.
Summary of Federal Income Tax Consequences
The following is a summary of the federal income tax consequences of transactions under the 2013 Plan. The summary is general in nature and is not intended to cover all the income tax consequences that may apply to a particular employee, director or to the Company. The provisions of the Code and regulations thereunder relating to these matters are complicated, may change, and their impact in any one case may depend upon the particular circumstances. Further, this summary does not discuss the income tax consequences of a participant's death, net investment income, or the provisions of any income tax laws of any municipality, state or foreign country in which a participant may reside.
The description is based on current federal tax laws, rules and regulations, which are subject to change, and does not purport to be a complete description of the federal income tax aspects of the 2013 Plan.
BG STAFFING
– 2017 Proxy Statement –
23
Non-Qualified Stock Options.
The grant of a non-qualified stock option will not result in taxable income to the participant. The participant will realize ordinary income at the time of exercise in an amount equal to the excess, if any, of the then fair market value of the stock acquired over the exercise price for those shares, and we will be entitled to a corresponding tax deduction. To the extent the participant is an employee, the amount realized as ordinary income is considered compensation and is subject to income tax withholding and FICA taxes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains or losses, with the basis in such stock equal to the fair market value of the shares at the time of exercise and the holding period beginning on the date of exercise.
Incentive Stock Options.
The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant if the participant was, without a break in service, employed by us or an affiliate from the date of the grant of the option until the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled). The excess, if any, of the fair market value of the stock at the time of the exercise over the exercise price is an adjustment that is included in the calculation of the participant's alternative minimum taxable income for the tax year in which the incentive stock option is exercised.
If the participant does not sell or otherwise dispose of the stock within two years from the date of the grant of the incentive stock option and within one year of exercise of the incentive stock option, then, upon disposition of such stock, any amount realized in excess of the exercise price will be taxed to the participant as capital gain, and we will not be entitled to a corresponding deduction. A capital loss will be recognized to the extent that the amount realized is less than the exercise price. If the foregoing holding period requirements are not met resulting in a disqualified disposition, the participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess, if any, of the fair market value of the stock on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and we will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, the additional amount will be capital gain. If the amount realized is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares. None of the gain from a disqualifying disposition is subject to income tax withholding nor considered wages for FICA and FUTA tax purposes. A cashless exercise of stock options is considered a disqualified disposition for that portion of the shares deemed sold to cover the cost of the shares exercised and retained.
Stock Appreciation Rights.
The grant of a stock appreciation right will not result in taxable income to the participant. The participant will realize ordinary income at the time of exercise in an amount equal to the amount of cash or the fair market value of the shares paid upon exercise, and we will be entitled to a corresponding deduction. Any subsequent gains or losses realized by the participant upon disposition of any shares received will be treated as capital gains or losses, with the basis in such stock equal to the fair market value of the shares at the time of exercise and the holding period will begin on the date stock was received.
Restricted Stock and Performance Shares.
A grant of restricted stock or performance shares will not result in taxable income to the participant at the time of grant, and we will not be entitled to a corresponding deduction, assuming that the shares are subject to transferability restrictions and that certain restrictions on the shares constitute a "substantial risk of forfeiture" for federal income tax purposes. Upon vesting, the holder will realize ordinary income in an amount equal to the then fair market value of the vested shares, and we will be entitled to a corresponding deduction. Gains or losses realized by the participant upon subsequent disposition of such shares will be treated as capital gains or losses, with the basis in such shares equal to the fair market value of the shares at the time of vesting. Dividends paid or accrued on restricted stock during the restricted period also will be compensation income to the participant, and we will be entitled to a corresponding deduction, when the dividends are paid to the holder of the restricted stock.
A participant may elect, pursuant to Section 83(b) of the Code, to have income recognized at the date a restricted stock award or performance share award, as the case may be, is granted. This election must be made within 30 days of grant. The amount of ordinary income required to be recognized is equal to the value of stock on date of grant less any amount required to be paid. This amount is subject to income tax withholding and subject to FICA and FUTA tax. We will be entitled to a corresponding deduction. The applicable capital gain holding period commences as of that date with a tax basis for reporting subsequent gains and losses equal to the value of the stock at the date of grant. However, to the extent a Section 83(b) election is made and the stock never vests and is forfeited, participant does not receive a deduction for the previous income recognized. Such loss is limited to any amounts previously paid.
BG STAFFING
– 2017 Proxy Statement –
24
Restricted Stock Units and Performance Units.
A grant of restricted stock units or performance units will not result in taxable income to the participant at the time of grant, and we will not be entitled to a corresponding deduction. Upon vesting and issuance of the underlying shares, the holder will realize ordinary income in an amount equal to the then fair market value of the issued shares, and we will be entitled to a corresponding deduction. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains or losses, with the basis in such shares equal to the fair market value of the shares at the time of vesting and issuance. Dividend equivalents paid or accrued on restricted stock units during the restricted period also will be compensation income to the participant, and we will be entitled to a corresponding deduction, when the dividend equivalents are paid to the holder of the restricted stock units. No election pursuant to Section 83(b) of the Code may be made with respect to restricted stock units and performance units.
Phantom Shares.
The grant of phantom shares will not result in taxable income to the participant. Phantom shares are settled in cash, and the participant will realize ordinary income at the time of settlement in an amount equal to the cash value of the closing sales price of Company stock on the vesting date, multiplied by the number of shares vesting, and we will be entitled to a corresponding deduction.
Performance Awards and Other Stock-Based Awards.
A grant of a performance award or other stock-based award will not result in taxable income to the participant at the time of grant, and we will not be entitled to a corresponding deduction. Upon payment of cash or the vesting or issuance of the underlying shares, the participant will realize ordinary income in an amount equal to the cash received or the then fair market value of the issued shares, and we will be entitled to a corresponding deduction. Gains or losses realized by the participant upon subsequent disposition of such shares will be treated as capital gains or losses, with the basis in such shares equal to the fair market value of the shares at the time of vesting and issuance.
Section 162(m).
With respect to certain executive officers, including our Chief Executive Officer, the amount of compensation payments that may be deducted by us in any given taxable year may be limited to $1 million, regardless of whether we would otherwise be entitled to a deduction for such payments. This limit does not apply to performance-based compensation that satisfies certain conditions. The 2013 Plan is intended to comply with the rules for performance-based compensation, such that stock options, SARs, performance awards, performance shares and performance units as well as other performance-based cash plans, such as our short-term incentive and retention plans, can be awarded in a manner that is intended to satisfy the applicable conditions and be deductible on the same basis as applies to all employees generally. Other types of non-performance based awards may not qualify for this performance-based exception to the deduction limit.
Section 409A.
Section 409A of the Code may cause certain deferred compensation amounts to be deemed currently taxable at normal rates and subject to an additional tax rate of at least 20%. It is intended that any amounts awarded pursuant to the 2013 Plan that are treated as deferred compensation for purposes of such Section shall be administered in a manner intended to comply with such requirements, to the extent applicable to such compensation.
Tax Withholding.
As a condition to the delivery of any shares to the recipient of an award, we may require the recipient to make arrangements for meeting certain tax withholding requirements in connection with the award.
The preceding is based on current federal tax laws and regulations, which are subject to change, and does not purport to be a complete description of the federal income tax aspects of the 2013 Plan. A participant may also be subject to state and local taxes.
BG STAFFING
– 2017 Proxy Statement –
25
RELATED PERSON TRANSACTIONS
Policy on Review and Approval of Transactions with Related Persons
Our Board is currently primarily responsible for developing and implementing processes and controls to obtain information from our directors, executive officers and significant stockholders regarding related-person transactions and then determining, based on the facts and circumstances, whether we or a related person has a direct or indirect material interest in these transactions. Our Audit Committee is responsible for the review, approval and ratification of “related-person transactions” between us and any related person. Under SEC rules, a related person is a director, executive officer, nominee for director or beneficial holder of more than of 5% of any class of our voting securities or an immediate family member of any of the foregoing. In the course of its review and approval or ratification of a related-person transaction, the Audit Committee will consider:
|
•
|
the nature of the related person’s interest in the transaction;
|
|
•
|
the material terms of the transaction, including the amount involved and type of transaction;
|
|
•
|
the importance of the transaction to the related person and to the Company;
|
|
•
|
whether the transaction would impair the judgment of a director or executive officer to act in our best interest and the best interest of our stockholders; and
|
|
•
|
any other matters the Audit Committee deems appropriate.
|
Any member of the Audit Committee who is a related person with respect to a transaction under review will not be able to participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction.
2016 Registered Offering
In June 2016, the Company issued and sold 1,191,246 shares of common stock, $0.01 par value per share, to various investors in a registered offering for an aggregate purchase price of $16,677,444 in cash. The purchase price was $14.00 per share. The newly issued shares constituted approximately 16.1% of the total of issued and outstanding shares of common stock immediately before the initial execution of the Underwriting Agreement. In connection with the closing, we paid Taglich Brothers, Inc., as co-placement agent, commissions of approximately $625,000. Michael N. Taglich and Robert F. Taglich are co-founders of Taglich Brothers, Inc. and the beneficial owners of more than 5% of our common stock. The Underwriting Agreement also provided for the Company to issue warrants to Taglich Brothers, Inc. to purchase from the Company up to a total of 16,125 shares of Common Stock at an exercise price of $16.80 per share, which is exercisable in whole or in part commencing one year after the closing of the offering and expires on the fifth anniversary of the closing. Doug Hailey is not an owner, director, or executive officer of Taglich Brothers, Inc. Taglich Brothers, Inc. is not an affiliate of Taglich Private Equity LLC.
2015 Registered Offering
On May 6, 2015, the Company issued and sold 636,500 shares of common stock, $0.01 par value per share, to various investors in a registered offering for an aggregate purchase price of $7,001,500 in cash. The purchase price was $11.00 per share, which constituted approximately 9.6% of the total of issued and outstanding shares of common stock immediately before the initial execution of the Securities Purchase Agreement. In connection with the closing, we paid Taglich Brothers, Inc., as placement agent, commissions of approximately $420,000. Michael N. Taglich and Robert F. Taglich are co-founders of Taglich Brothers, Inc. and the beneficial owners of more than 5% of our common stock.
BG STAFFING
– 2017 Proxy Statement –
26
2014 Private Placement
In December 2014, we sold an aggregate of 963,750 shares of our common stock to various accredited investors in a private placement at a price of $9.75 per share. In connection with the private placement, we paid Taglich Brothers, Inc., as placement agent, commissions of approximately $752,000. We also issued to designees of Taglich Brothers warrants to purchase 96,375 shares of our common stock. The warrants are exercisable at any time commencing on the sixth month anniversary of the issuance date in whole or in part, at an initial exercise price per share of $9.75, and may be exercised in a cashless exercise. The exercise price and number of shares of common stock issuable under the warrants are subject to adjustments for stock dividends, splits, combinations and similar events. The warrants expire on the fifth anniversary of the date of issuance. The holders of the warrants are also entitled to certain registration rights. Michael N. Taglich and Robert F. Taglich are co-founders of Taglich Brothers, Inc. and the beneficial owners of more than 5% of our common stock.
BG STAFFING
– 2017 Proxy Statement –
27
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by our directors, executive officers, and beneficial owners of more than 10% of our shares of common stock pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and other information available to us, we believe that all such ownership reports required to be filed by those reporting persons during and with respect to the fiscal year ended
2016
were timely made.
BG STAFFING
– 2017 Proxy Statement –
28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of
March 6, 2017
by:
|
•
|
each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
|
|
•
|
each of our named executive officers and directors; and
|
|
•
|
all our executive officers and directors as a group.
|
Each stockholder’s percentage ownership is based on
8,669,308
shares of common stock outstanding as of
March 6, 2017
.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned, subject to applicable community property laws.
The number and percentage of shares beneficially owned by a person includes shares that may be acquired by such person within 60 days of
March 6, 2017
through the exercise of vested options or warrants, while these shares are not counted as outstanding for computing the percentage ownership of any other person.
Except as otherwise set forth below, the address of the persons below is c/o BG Staffing, Inc.,
5850 Granite Parkway Drive, Suite 730, Plano, Texas 75024
.
|
Name of Beneficial Owner
|
Shares of
Common Beneficially Stock Owned |
Percent of
Common Stock Beneficially Owned |
||||
|
Dan Hollenbach
|
26,000
|
(1)
|
*
|
|
||
|
Beth Garvey
|
38,536
|
(2)
|
*
|
|
||
|
L. Allen Baker, Jr.
|
486,336
|
(3)
|
5.4
|
%
|
||
|
Douglas E. Hailey
|
120,394
|
(4)
|
1.4
|
%
|
||
|
Richard L. Baum, Jr.
|
83,521
|
(5)
|
*
|
|
||
|
C. David Allen, Jr.
|
7,125
|
(6)
|
*
|
|
||
|
Paul A. Seid
|
77,022
|
(7)
|
*
|
|
||
|
All executive officers and directors as a group (7 total)
|
838,934
|
9.3
|
%
|
|||
|
Michael N. Taglich
(10)
|
576,627
|
(8)
|
6.6
|
%
|
||
|
Robert F. Taglich
(10)
|
522,378
|
(9)
|
6.0
|
%
|
||
|
*
|
Less than 1%.
|
|
(1)
|
Includes 26,000 shares of common stock issuable upon exercise of stock options.
|
|
(2)
|
Includes 38,000 shares of common stock issuable upon exercise of stock options.
|
|
(3)
|
Includes 271,673 shares of common stock issuable upon exercise of stock options and 214,663 shares of common stock held by a trust.
|
|
(4)
|
Includes 18,623 shares of common stock issuable upon exercise of stock options.
|
BG STAFFING
– 2017 Proxy Statement –
29
|
(5)
|
Includes 7,125 shares of common stock issuable upon exercise of stock options, 71,008 shares of common stock held by a private investment company controlled by Mr. Baum, and 5,388 shares of common stock held by a family trust.
|
|
(6)
|
Includes 7,125 shares of common stock issuable upon exercise of stock options.
|
|
(7)
|
Includes 7,125 shares of common stock issuable upon exercise of stock options.
|
|
(8)
|
Includes 41,870 shares of common stock held by a private investment company controlled by Mr. Taglich, 12,000 shares of common stock held by a partnership 50% controlled by Mr. Taglich, 19,626 shares of common stock registered in the name of an individual third party but over which Mr. Taglich has voting and investment control, 34,777 shares of common stock issuable upon exercise of warrants to purchase shares of common stock, and 12,204 shares of common stock held by Mr. Taglich as custodian for third parties.
|
|
(9)
|
Includes 220 shares of common stock registered in the name of an individual third party but over which Mr. Taglich has voting and investment control, 12,000 shares of common stock held by a partnership 50% controlled by Mr. Taglich, 31,257 shares of common stock issuable upon exercise of warrants to purchase shares of common stock, and 5,715 shares of common stock held by Mr. Taglich as custodian for third parties.
|
|
(10)
|
The address of Michael N. Taglich and Robert F. Taglich is c/o Taglich Brothers, Inc., 790 New York Avenue, Suite 209, Huntington, New York 11743.
|
BG STAFFING
– 2017 Proxy Statement –
30
SUBMISSION OF STOCKHOLDER PROPOSALS
From time to time, stockholders may seek to nominate directors or present proposals for inclusion in the proxy statement and form of proxy for consideration at an annual stockholders meeting. To be included in the proxy statement or considered at an annual or any special meeting, you must timely submit nominations of directors or proposals, in addition to meeting other legal requirements. We must receive proposals for possible inclusion in the proxy statement and form of proxy related to the
2018
Annual Meeting of Stockholders no later than
December 7, 2017
. Under our Bylaws, proposals for possible consideration at the
2018
Annual Meeting of Stockholders must be received by us no earlier than
January 16, 2018
, and no later than
February 15, 2018
. The
2018
Annual Meeting of Stockholders is expected to take place on
May 17, 2018
. Direct any proposals, as well as related questions, to Corporate Secretary, BG Staffing, Inc.,
5850 Granite Parkway Drive, Suite 730, Plano, Texas 75024
.
BG STAFFING
– 2017 Proxy Statement –
31
OTHER BUSINESS
The Board does not intend to bring any business before the Annual Meeting other than the matters referred to in this Proxy Statement and at this time has not been informed of any matters that may be presented to the Annual Meeting by others. If, however, any other matters properly come before the Annual Meeting, it is intended that the persons named in the accompanying proxy will vote pursuant to the proxy in accordance with their best judgment on such matters.
*****PLEASE VOTE—YOUR VOTE IS IMPORTANT*****
BG STAFFING
– 2017 Proxy Statement –
32
ANNEX A
BG Staffing, Inc.
2013 Long-Term Incentive Plan (including Proposed amendment)
Article 1
General Plan Information
|
1.1
|
Background. The BG Staffing, Inc. 2013 Long-Term Incentive Plan (the “Plan”) permits the Company to grant Employees and Directors certain cash and equity-based incentive compensation opportunities, including Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Options, including ISOs, NQSOs, and Other Awards such as Stock Appreciation Rights and Cash Incentive Awards.
|
|
1.2
|
Objectives. The objectives of the Plan are to optimize the profitability and growth of the Company through long-term incentives that are consistent with the Company’s goals and that link the interests of Participants to those of the Company’s shareholders; to provide Participants with incentives for excellence in individual performance; to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Company’s success; and to allow Participants to share in the success of the Company.
|
|
1.3
|
Duration of the Plan. The Plan will be effective on the date it is approved by the Company’s shareholders. The Plan will remain in effect until terminated pursuant to Article 16, subject to the right of the Committee to amend or terminate the Plan at any time or until there are no more Shares available for issuance under the Plan and all cash Awards have been paid or forfeited.
|
Article 2
Definitions
The following terms will have the meanings set forth below, except as otherwise clearly required by the context.
2.1 “Award” means a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Other Awards.
2.2 “Award Agreement” means an agreement entered into by the Company and a Participant, or another instrument prepared by the Company in lieu of such an agreement, setting forth the terms and conditions applicable to an Award under the Plan. An Award Agreement may be in hard copy or electronic form as determined by the Committee.
2.3 “Board” means the Board of Directors of the Company.
2.4 “Cash Incentive Award” means a performance-based cash incentive Award granted pursuant to Section 9.5.
2.5 “Change of Control” means one of the following events that occurs after the Effective Date:
(a) any “Person” (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 30% of the combined voting power of the Company’s then outstanding securities;
(b) at any time during the 24-month period after a tender offer, merger, consolidation, sale of assets, or contested election, or any combination of such transactions, at least a majority of the Board of Directors ceases to consist of “continuing directors” (meaning directors of the Company who either were directors prior to a transaction or who subsequently became directors and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors prior to the transaction);
(c) the Company’s shareholders approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 60% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after the merger or consolidation; or
(d) the Company’s shareholders approve a plan of complete liquidation of the Company or an agreement of sale or disposition of all or substantially all of the Company’s assets.
ANNEX A
2.6 “Code” means the Internal Revenue Code of 1986, as amended.
2.7 “Committee” means the Compensation Committee of the Board or any other committee appointed by the Board to administer the Plan and Awards.
2.8 “Company” means BG Staffing, Inc., a Delaware corporation, and any successor thereto.
2.9 “Director” means a non-Employee member of the Board of Directors of the Company.
2.10 “Disability” means that the Participant is disabled and receiving benefits under the terms of any long-term disability plan maintained by either the Company or a Subsidiary except for purposes of determining the term of an ISO, in which case the term “Disability” has the meaning ascribed to it under Code section 22(e)(3).
2.11 “Effective Date” means the date the Plan becomes effective in accordance with Section 1.3.
2.12 “Employee” means any employee of the Company or a Subsidiary.
2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.14 “Fair Market Value” means, as of any date, the value of the Shares determined as follows:
(a) if the Shares are listed on an established stock exchange or a national market system, fair market value will be the closing sales price of the Shares (or the closing bid, if no sales were reported) as quoted on the system or exchange (or the exchange or system with the greatest volume of trading in the Shares) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date a closing sales price or closing bid was reported), as reported in The Wall Street Journal or other source that the Committee or Board deems reliable; or
(b) if the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the fair market value of the Shares will be the mean between the high bid and high asked prices for the Shares on the date of determination (or, if no prices were reported on that date, on the last date prices were reported), as reported in The Wall Street Journal or other source that the Committee or the Board deems reliable; or
(c) in the absence of an established market for the Shares of the type described in (a) and (b), above, fair market value will be determined by the Committee or the Board in good faith.
2.15 “ISO” means an Option that is designated by the Committee as an “incentive stock option” within the meaning of Code section 422.
2.16 “NQSO” means an Option that is not designated by the Committee as an ISO.
2.17 “Option” means an ISO or NQSO granted under the Plan.
2.18 “Other Award” means an Award granted to a Participant pursuant to Article 9.
2.19 “Participant” means an Employee or Director who has been selected to receive an Award or who holds an outstanding Award.
2.20 “Performance-Based Exception” means the performance-based exception from the tax deductibility limitation imposed by Code section 162(m), as set forth in Code section 162(m)(4)(C).
2.21 “Performance Share” means an Award granted pursuant to Article 8, which, on the date of grant, will have a value equal to the Fair Market Value of a Share on that date.
2.22 “Performance Unit” means an Award granted pursuant to Article 8, which will have an initial value established by the Committee on the date of grant.
2.23 “Restricted Stock” means an Award granted pursuant to Section 7.1.
2.24 “Restricted Stock Unit” means an Award granted pursuant to Section 7.5.
2.25 “Restricted Period” means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or the occurrence of other events determined by the Committee in its discretion) and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7.
2.26 “Share” means a share of the Company’s Common Stock, $.01 par value per share.
2.27 “Share Pool” means the number of Shares available under Section 4.1, as adjusted pursuant to Section 4.3.
ANNEX A
2.28 “Stock Appreciation Right” or “SAR” means an Award, granted either alone or in connection with a related Option, pursuant to the terms of Article 9.
2.29 “Subsidiary” means (a) a corporation, partnership, joint venture, or other entity in which the Company has a direct or indirect ownership interest of at least 50%, and (b) any corporation, partnership, joint venture, or other entity in which the Company holds a direct or indirect ownership interest of less than 50% but which, in the discretion of the Committee, is treated as a Subsidiary for purposes of the Plan; provided that the Shares subject to any Award must constitute “service recipient stock” for purposes of Code section 409A or otherwise not subject the Award to Code section 409A.
2.30 “Ten Percent Shareholder” means a Participant who owns stock of the Company possessing more than ten percent of the total combined voting of all classes of stock of the Company or its parent or subsidiary corporation (within the meaning of Code section 422(b)).
Article 3
Administration
3.1 General. Except as otherwise determined by the Board in its discretion, the Plan will be administered by the Committee. The Committee will consist exclusively of two or more non-employee directors within the meaning of the rules promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act who also qualify as outside directors within the meaning of Code section 162(m) and the related regulations under the Code. The members of the Committee will be appointed from time to time by, and will serve at the discretion of, the Board.
3.2 Authority of the Committee. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions of this Plan, the Committee will have full power in its discretion to select Employees who will participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any Award Agreement or other agreement or instrument entered into or issued under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; amend the terms and conditions of any outstanding Award; determine whether and on what terms and conditions outstanding Awards will be adjusted for dividend equivalents (i.e., a credit, made at the discretion of the Committee, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented or covered by an outstanding Award held by the Participant); and establish a program pursuant to which designated Participants may receive an Award under the Plan in lieu of compensation otherwise payable in cash. Further, the Committee will make all other determinations that may be necessary or advisable for the administration of the Plan.
3.3 Delegation of Authority. Subject to the requirements of applicable law, the Committee may delegate to any person or group or subcommittee of persons (who may, but need not be members of the Committee) any Plan-related functions within the scope of its responsibility, power, and authority as it deems appropriate. The Committee may not delegate its authority with respect to (a) non-ministerial actions with respect to individuals who are subject to the reporting requirements of Section 16(a) of the Exchange Act; (b) non-ministerial actions with respect to Awards that are intended to qualify for the Performance-Based Exception; and (c) certifying the satisfaction of performance goals and other material terms attributable to Awards intended to qualify for the Performance-Based Exception.
3.4 Decisions Binding. All determinations and decisions made by the Committee, and all related orders and resolutions of the Committee will be final, conclusive, and binding on all persons.
3.5 Performance-Based Awards. For purposes of the Plan, it will be presumed, unless the Committee indicates to the contrary, that all Awards to Employees are intended to qualify for the Performance-Based Exception. If the Committee does not intend an Award to an Employee to qualify for the Performance-Based Exception, the Committee will reflect its intent in its records in a manner the Committee determines to be appropriate.
3.6 Prohibitions on Repricing and Buyback. The Board and the Committee may not reprice Options or SARs granted under the Plan, either by amending an existing award agreement or by substituting a new Award at a lower price. The Board and the Committee are also prohibited from providing stock, cash, or other consideration to a Participant in exchange for the cancellation of any Option or SAR with an exercise price higher than the Fair Market Value of the Shares covered by the Option or SAR.
ANNEX A
Article 4
Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Issuable under the Plan. Shares that may be issued pursuant to Awards may be either authorized and unissued Shares, or authorized and issued Shares held in the Company’s treasury, or any combination of the foregoing. Subject to adjustment as provided in Section 4.3, there will be reserved for issuance under Awards 1,150,000 shares of Common Stock. For the purposes hereof, the following Shares covered by previously-granted Awards will be deemed not to have been issued under the Plan and will remain in the Share Pool: (a) Shares covered by the unexercised portion of an Option or SAR that terminates, expires, is canceled or is settled in cash, (b) Shares forfeited or repurchased under the Plan, (c) Shares covered by Awards that are forfeited, canceled, terminated or settled in cash, (d) Shares withheld in order to pay the exercise or purchase price under an Award or to satisfy the tax withholding obligations associated with the exercise, vesting or settlement of an Award, and (e) Shares subject to SARs or a similar Award but not actually delivered in connection with the exercise or settlement of the Award.
4.2 Individual Award Limitations. The maximum aggregate number of Shares that may be granted to any one Participant in any one year under the Plan with respect to Options will be 1,150,000.
4.3 Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code section 368) or any partial or complete liquidation of the Company, such adjustment will be made in the number and class of Shares available for grant under Section 4.1, in the number and class of and/or price of Shares subject to outstanding Awards, and in the per-Participant Award limits set forth in Section 4.2, as may be determined to be appropriate and equitable by the Committee, in its discretion, to prevent dilution or enlargement of the benefits available under the Plan and of the rights of Participants; provided, that, the number of Shares subject to any Award will always be a whole number. In a stock-for-stock acquisition of the Company, the Committee may, in its discretion, substitute securities of another issuer for any Shares subject to outstanding Awards.
Article 5
Eligibility and Participation
5.1 Eligibility. All Employees and Directors are eligible to participate in the Plan. Only employees of the Company or a Subsidiary may be granted ISOs.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select Employees and Directors to whom Awards will be granted and will determine the nature and size of each Award.
Article 6
Stock Options
6.1 Grant of Options. Subject to the terms of the Plan, Options may be granted to Participants at any time and from time to time in the number and on the terms determined by the Committee.
6.2 Option Exercise Price. The Option exercise price under each Option may not be less than 100% of the Fair Market Value of the respective Share on the date the Option is granted. Notwithstanding the foregoing, in the case of an ISO granted to a Ten Percent Shareholder, the Option exercise price under each ISO may not be less than 110% of the Fair Market Value of the respective Share on the date the Option is granted.
6.3 Term of Options. Each Option granted to a Participant will expire at the time the Committee determines at the time of grant; provided that no Option will be exercisable after the tenth anniversary of its date of grant. Notwithstanding the foregoing, in the case of an ISO granted to a Ten Percent Shareholder, the Option will not be exercisable after the fifth anniversary of its date of grant.
6.4 Exercise of Options. Options granted under the Plan will be exercisable at the times and be subject to the restrictions and conditions that the Committee approves, which need not be the same for each grant or for each Participant. Options may be
ANNEX A
exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
6.5 Payment. The purchase price for the Shares that an Option is exercised for must be paid to the Company in full at the time of exercise as follows:
(a) in cash or its equivalent;
(b) at the discretion of the Committee, in Shares having a Fair Market Value equal to the aggregate Option exercise price for the Shares being purchased and satisfying any other requirements imposed by the Committee; provided, that the Shares have been held by the Participant for no less than six months;
(c) at the discretion of the Committee, partly in cash (or its equivalent) and partly in Shares;
(d) through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate Option exercise price for the Shares being purchased; or
(e) through other means as prescribed in the Award Agreement or by the Committee or the Board. Subject to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment of the Option exercise price, the Company may deliver to the Participant, in the Participant’s name (or, at the direction of the Participant, jointly in the names of the participant and the Participant’s spouse), one or more Share certificates for the Shares purchased under the Option.
6.6 Limitations on ISOs. Notwithstanding anything in the Plan to the contrary, to the extent required by the Code or applicable regulations, the following additional provisions will apply to the grant of Options that are intended to qualify as ISOs:
(a) Fair Market Value Limitation. The aggregate Fair Market Value (determined as of the date the ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company (or any parent or subsidiary corporation within the meaning of Code section 424) may not exceed $100,000 or any other amount subsequently specified by the Code or applicable regulations; provided, that, to the extent that the limitation is exceeded, any Options on Shares with a Fair Market Value in excess of the amount will be deemed to be NQSOs.
(b) Code Section 422. ISOs will be subject to any other provisions that the Committee deems advisable, but will in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify as incentive stock options under Code section 422. Moreover, no ISOs may be granted more than ten years from the earlier of the date on which the Plan was adopted by the Board or the date the Plan received shareholder approval.
Article 7
Restricted Stock and Restricted Stock Units
7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in amounts that the Committee determines.
7.2 Restrictions.
(a) The Committee may impose any conditions or restrictions on any Shares of Restricted Stock that the Committee determines, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, transfer restrictions, restrictions based upon the achievement of specific performance goals, time-based restrictions, and restrictions under applicable federal or state securities laws.
(b) The Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until the time that all conditions and restrictions applicable to the Shares have been satisfied.
(c) Except as otherwise provided in this Article, Shares of Restricted Stock that have not yet been forfeited or canceled will become freely transferable (subject to any restrictions under applicable securities laws) by the Participant after the last day of the applicable Restriction Period.
7.3 Voting Rights. Participants holding Shares of Restricted Stock may be granted full voting rights with respect to those Shares during the Restriction Period.
7.4 Dividends and other Distributions. At the discretion of the Committee, during the Restriction Period, Shares of Restricted Stock may be credited with regular cash dividends paid with respect to the Shares. The Committee may apply any restrictions
ANNEX A
to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Stock is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to the Restricted Stock, so that the dividends and the Restricted Stock will be eligible for the Performance-Based Exception.
7.5 Restricted Stock Units. In lieu of or in addition to any Awards of Restricted Stock, the Committee may grant Restricted Stock Units to any Participant, subject to the terms and conditions of this Article being applied to those Awards as if those Awards were for Restricted Stock and subject to any other terms and conditions that the Committee determines (including, but not limited to, requiring or permitting deferral of the payment of Awards after the time that Participants become vested in them, notwithstanding any provision to the contrary in Section 7.2). Each Restricted Stock Unit will have the value of one respective Share. Restricted Stock Units will be payable at the time the Committee determines in its discretion, and payments may be made in a lump sum or in installments, in cash, Shares, or a combination thereof, as determined by the Committee in its discretion.
Article 8
Performance Units and Performance Shares
8.1 Grant of Performance Units/Shares. Subject to the terms of the Plan, Performance Units, and/or Performance Shares may be granted to Participants at any time and from time to time in amounts and subject to the terms determined by the Committee.
8.2 Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of the respective Share on the date of grant. The Committee will set performance goals in its discretion that, depending on the extent to which they are met, will determine the number and value of Performance Units/Shares that will be paid out to the Participant.
8.3 Earning Performance Units/Shares. Subject to the terms of the Plan, after the applicable performance period has ended, the holder of Performance Units/Shares will be entitled to receive payout with respect to the number and value of Performance Units/Shares earned by the Participant over the performance period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.
8.4 Form and Timing of Payment of Performance Units/Shares.
(a) Distributions. Unless the Committee determines otherwise in its discretion, payment of earned Performance Units/Shares will be made in a single lump sum following the close of the applicable performance period. Subject to the terms of the Plan, the Committee, in its discretion, may direct that earned Performance Units/Shares be paid in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares on the last trading day immediately before the close of the applicable performance period. Those Shares may be granted subject to any restrictions deemed appropriate by the Committee.
(b) Dividends. At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares that have been earned in connection with grants of Performance Units or Performance Shares, but not yet distributed to Participants. Dividends may be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares covered by Restricted Stock Awards. In addition, Participants may, at the discretion of the Committee, be entitled to exercise voting rights with respect to such Shares.
Article 9
Other Awards
9.1 General. Subject to the terms of the Plan, the Committee may grant any type of Awards other than those that are specifically set forth in Article 6 through Article 8, including, but not limited to, SARs, Cash Incentive Awards, and the payment of Shares in lieu of cash under any Company incentive bonus plan or program. Subject to the terms of the Plan, the Committee, in its sole discretion, will determine the terms and conditions of any Other Awards.
9.2 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as determined by the Committee; provided that the SAR exercise price may not be less than 100% of the Fair Market Value of a respective Share on the date the SAR is granted. The Committee will have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to SARs.
ANNEX A
9.3 Term of SARs. The term of an SAR will be determined by the Committee, in its discretion; provided that the term may not exceed ten years.
9.4 Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
(a) the excess of the Fair Market Value of a respective Share on the date of exercise over the grant price, by
(b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment upon exercise of an SAR may be in cash, in Shares of equivalent Fair Market Value, or in some combination thereof.
9.5 Cash Incentive Awards. Incentive Awards, including annual incentive Awards and long-term incentive Awards, denominated as cash amounts, may be granted under the Plan, subject to achievement of specified performance goals established by the Committee. At the expiration of the applicable performance period, the Committee will determine whether and the extent to which the performance goals are achieved and the extent to which each Cash Incentive Award has been earned. The amount (if any) payable to a Participant in respect of a Cash Incentive Award will be paid in cash as soon as practicable after the amount is determined, subject to any deferral conditions as may be permitted or prescribed consistent with the requirements of Code section 409A.
Article 10
Award Agreements
10.1 In General. Each Award must be evidenced by an Award Agreement that includes the provisions determined by the Committee and that specifies:
(a) in the case of an Option or SAR, the number of respective Shares to which the Option or SAR pertains, the Option exercise price or SAR grant price, the term of the Option or SAR, the schedule on which the Option or SAR becomes exercisable, and, in the case of an Option, whether it is intended to be an ISO or an NQSO;
(b) in the case of Restricted Stock or Restricted Stock Units, the number of respective Shares of Restricted Stock or Restricted Stock Units granted, the applicable restrictions, and the Restriction Period(s);
(c) in the case of Performance Units or Performance Shares, the number of Performance Units or Performance Shares granted, the initial value of a Performance Unit (if applicable), and the performance goals; and
(d) in the case of a Cash Incentive Award, the amount that may be earned and the performance goals.
10.2 Severance from Service. Each Award Agreement will set forth the extent to which the Participant will have rights under the Award following the Participant’s severance from service with the Company and its Subsidiaries. The Award Agreement may make distinctions based on the reason for the Participant’s severance from service.
10.3 Restrictions on Transferability. Subject to the provisions of the Plan, each Award Agreement will set forth any restrictions on the transferability of the Award and on the transferability of Shares acquired pursuant to the Award as the Committee deems advisable, including, without limitation, restrictions under applicable securities laws, under the requirements of any stock exchange or market upon which Shares are then listed and/or then traded, and under any blue sky or state securities laws applicable to the Shares. In the case of an ISO (and in the case of any other Award, except as otherwise provided in the Award Agreement), a Participant’s Award may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and will be exercisable during the Participant’s lifetime only by the Participant.
10.4 Uniformity Not Required. The provisions of the Award Agreements need not be uniform among all Awards, among all Awards of the same type, among all Awards granted to the same Participant, or among all Awards granted at the same time.
Article 11
Performance Measures
11.1 Performance Criteria. Unless and until the Company’s shareholders approve a change in the general performance measures set forth in this Article, the attainment of which may determine the degree of payout or vesting with respect to Awards that are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants may be measured or applied to an individual, a business unit or division, the Company and any one or more of its
ANNEX A
subsidiaries, or any other operating units the Compensation Committee designates, may be expressed in absolute or relative terms, and will be chosen from among, and may include any combination of, the following:
(a) income measures (including, but not limited to, gross profit, operating income, earnings before or after taxes, profits before or after taxes, net income or earnings per share);
(b) return measures (including, but not limited to, return on assets, investment, equity, or sales or pre-tax margin);
(c) cash flow thresholds;
(d) cash flow return on investments, which equals net cash flows divided by owners’ equity;
(e) gross revenues;
(f) market share results;
(g) market value added;
(h) debt measures (including, without limitation, debt multiples);
(i) economic value added; or
(j) share price (including, but not limited to, growth measures and total shareholder return).
11.2 Adjustments. The Committee will have the discretion to adjust the determinations of the degree of attainment of the pre-established performance goals; provided that Awards that are designed to qualify for the Performance-Based Exception may not be adjusted upward (although the Committee will retain the discretion to adjust those Awards downward).
11.3 Certification. In the case of any Award that is granted subject to the condition that a specified performance measure be achieved, no payment under the Award will be made prior to the time that the Committee certifies in writing that the performance measure has been achieved. For this purpose, approved minutes of the Committee meeting at which the certification is made will be treated as a written certification. No such certification is required, however, in the case of an Award that is based solely on an increase in the value of a Share from the date the Award was made.
Article 12
Beneficiary Designation
Each Participant may, from time to time, name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of the Participant’s death before the Participant receives any or all of the benefit. Each designation will revoke all prior designations by the same Participant with respect to the benefit, will be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, any benefits remaining unpaid under the Plan at the Participant’s will be paid to the Participant’s estate unless otherwise provided in the Award Agreement.
Article 13
Deferrals
The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due pursuant to the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, the satisfaction of any requirements or goals with respect to Performance Units/Shares, or in connection with any Other Awards, all in accordance with procedures and upon terms and conditions that the Committee, acting in its discretion, prescribes, subject to, and in accordance with, Code section 409A.
Article 14
No Right to Employment or Participation
14.1 Employment. The Plan will not interfere with or limit in any way the right of the Company or of any Subsidiary to terminate any Employee’s employment at any time, and the Plan does not confer upon any Employee the right to continue in the employ of the Company or of any Subsidiary.
14.2 Participation. No Employee or Director will have the right to be selected to receive an Award or, having been so selected, to be selected to receive a future Award.
ANNEX A
Article 15
Change of Control
In the event of a Change of Control, the Board may in its sole discretion direct that (a) all option holders be permitted to exercise their outstanding Options and SARs in whole or in part (whether or not otherwise exercisable) immediately prior to the Change of Control; or (b) if, as part of a Change of Control transaction, the shareholders of the Company receive capital stock of another corporation (“Exchange Stock”) in exchange for their Shares (whether or not such Exchange Stock is the sole consideration), the Board may direct that all options and SARs for Shares that are outstanding at the time of the Change of Control transaction will be converted into options or SARs (as the case may be) for shares of Exchange Stock, such that the vesting and other terms and conditions of the converted options and SARs will be substantially the same as the vesting and corresponding other terms and conditions of the original options and SARs. The Board, acting in its discretion, may accelerate vesting of other non-vested awards, and cause cash settlements or other adjustments to be made to any outstanding awards (including, without limitation, options and SARs) as it deems appropriate in the context of a Change of Control transaction, taking into account with respect to other awards the manner in which outstanding options and SARs are being treated. To the extent determined by the Committee, any outstanding options and SARs that are not exercised before a Change of Control described in Section 2.5(c) or 2.5(d) will automatically terminate upon the Change of Control.
Article 16
Amendment and Termination
16.1 Amendment and Termination. Subject to the terms of the Plan, the Committee may, at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part; provided that, unless the Committee specifically provides otherwise, any revision or amendment that would cause the Plan to fail to comply with any requirement of applicable law, regulation, or rule if the amendment were not approved by the shareholders of the Company will not be effective unless and until shareholder approval is obtained.
16.2 Term of the Plan. Unless sooner terminated, the Plan will terminate on the tenth anniversary of the date of its adoption by the Company’s shareholders.
16.3 Outstanding Awards. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, or modification of the Plan may cause, without the consent of the Participant, any previously granted Awards to be forfeited or altered in a way that adversely affects the Participant. After the termination of the Plan, any previously granted Award will remain in effect and will continue to be governed by the terms of the Plan, the Award, and any applicable Award Agreement.
Article 17
Tax Withholding
17.1 Tax Withholding. The Company and its Subsidiaries will have the power and the right to deduct or withhold, or to require a Participant to remit to the Company or to a Subsidiary, an amount that the Company or a Subsidiary determines to be required to comply with federal, state, local, or foreign tax withholding requirements.
17.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory withholding tax that could be imposed on the transaction. All such elections will be irrevocable, made in writing, signed by the Participant, and will be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate.
Article 18
Successors
All obligations of the Company under the Plan with respect to Awards granted hereunder will be binding on any successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.
ANNEX A
Article 19
Legal Construction
19.1 Severability. If any provision of the Plan is held illegal or invalid for any reason, that illegality or invalidity will not affect the remaining provisions of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.
19.2 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan will be subject to all applicable laws, rules, and regulations, and to any approvals by any governmental agencies or national securities exchanges as may be required.
19.3 Section 409A Compliance. Except as otherwise specifically provided by the Committee at the time an Award is made, any Award providing for a deferral of compensation must satisfy the requirements of Code section 409A. Toward that end, if any payment or benefit received or to be received by a Participant pursuant to an Award would cause the Participant to incur a penalty tax or interest under Code section 409A or any regulations or Treasury Department guidance promulgated thereunder, the Committee may reform the provision(s) of the Award in order to avoid, to the maximum extent practicable, the incurrence of any such penalty tax or interest.
19.4 Governing Law. The Plan and all Award Agreements will be construed in accordance with and governed by the laws of the State of Delaware (without regard to the legislative or judicial conflict of laws rules of any state), except to the extent superseded by federal law.
BG
STAFFING, INC.
Proxy For Annual Meeting of Shareholders on
May 16, 2017
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints L. Allen Baker, Jr. and Dan Hollenbach, and each of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of Shareholders of BG Staffing, Inc., to be held
May 16, 2017
at the principal executive offices of BG Staffing, Inc., located at
5850 Granite Parkway Drive, Suite 730, Plano, Texas 75024
, and at any adjournments or postponements thereof, as follows
(if no direction is given as to the manner in which this proxy should be voted, it will be voted in accordance with the Board of Directors' recommendations)
:
(continued and to be signed on the reverse side.)
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING AND VOTING PROCEDURESPROPOSAL ONE: ELECTION OF DIRECTORSBOARD INFORMATIONDIRECTOR COMPENSATIONCORPORATE GOVERNANCEPROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMAUDIT COMMITTEE REPORTEXECUTIVE OFFICERSPROPOSAL THREE: AMENDMENT OF THE 2013 LONG-TERM INCENTIVE PLAN TO ADD AN ADDITIONAL 250,000 SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE2013 LONG-TERM INCENTIVE PLANRELATED PERSON TRANSACTIONSSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSUBMISSION OF STOCKHOLDER PROPOSALSOTHER BUSINESSANNEX A - 2013 LONG-TERM INCENTIVE PLAN (WITH PROPOSED AMENDMENT)