BK TECHNOLOGIES CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment
No. __)
Filed
by the Registrant
☑
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For
Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
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BK Technologies Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☑
No fee required
☐
Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction
applies:
(2)
Aggregate number of securities to which transaction
applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
☐
Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
BK
Technologies Corporation
7100 Technology Drive
West Melbourne, Florida 32904
May 17,
2019
Dear
Stockholder:
You are
cordially invited to attend the 2019 annual meeting of stockholders
of BK Technologies Corporation, which
we will hold on
Friday, July 12, 2019, at 9:00 a.m., local time, at the offices of
Capital Wealth Advisors, 9130 Galleria Court, Third Floor, Naples,
Florida 34109.
We are
pleased to take advantage of Securities and Exchange Commission
rules that allow issuers to furnish proxy materials to their
stockholders on the Internet. We believe these rules allow us to
provide our stockholders with the information they need, while
lowering the costs of delivery and reducing the environmental
impact of our annual meeting. On or about May 24, 2019, we expect
to begin mailing a Notice of Internet Availability of Proxy
Materials, or E-proxy notice, to our stockholders of record as of
the close of business on May 14, 2019. The E-proxy notice contains
instructions for your use of this process, including how to access
our proxy statement, proxy card and annual report and how to vote
on the Internet. In addition, the E-proxy notice contains
instructions on how you may receive a paper copy of the proxy
statement, proxy card and annual report or elect to receive your
proxy statement, proxy card and annual report over the
Internet.
If you
are unable to attend the meeting in person, it is very important
that your shares be represented and voted at the annual meeting.
You may vote your shares over the Internet as described in the
E-proxy notice. Alternatively, if you received a paper copy of the
proxy card by mail, please complete, sign, date and promptly return
the proxy card in the self-addressed stamped envelope provided. You
may also vote by telephone as described in your proxy card. Voting
by telephone, over the Internet or by mailing a proxy card will not
limit your right to attend the annual meeting and vote your shares
in person.
We look
forward to seeing you at the meeting.
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Sincerely,
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/s/ D. Kyle Cerminara
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D. Kyle Cerminara
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Chairman of the Board of Directors
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BK TECHNOLOGIES CORPORATION
7100 Technology Drive
West Melbourne, Florida 32904
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JULY 12, 2019
To the
stockholders of BK Technologies Corporation:
The
2019 annual meeting of stockholders of BK Technologies Corporation
will be held on Friday, July 12, 2019, at 9:00 a.m., local time, at
the offices of Capital Wealth Advisors, 9130 Galleria Court, Third
Floor, Naples, Florida 34109, for the following
purposes:
1.
To elect seven
directors named in the proxy statement to serve on our board of
directors until the next annual meeting of stockholders and until
their respective successors are duly elected and
qualified;
2.
To ratify the
appointment of Moore Stephens Lovelace, P.A. as our independent
registered public accounting firm for fiscal year 2019;
and
3.
To transact such
other business properly brought before the meeting and any
adjournment or postponement of the meeting.
Only
stockholders of record at the close of business on May 14, 2019 are
entitled to notice of, and to vote at, the annual meeting and any
adjournment or postponement of the meeting. Each share of common
stock is entitled to one vote. A list of stockholders entitled to
vote at the annual meeting will be available for inspection by our
stockholders, for any purpose germane to the meeting, at the annual
meeting and during ordinary business hours beginning 10 days prior
to the date of the annual meeting, at our principal executive
offices at 7100 Technology Drive, West Melbourne, Florida
32904.
Whether
or not you plan to attend the meeting in person, please vote your
shares over the Internet, as described in the Notice of Internet
Availability of Proxy Materials, or E-proxy notice. Alternatively,
if you received a paper copy of the proxy card by mail, please
complete, sign, date and promptly return the proxy card in the
self-addressed stamped envelope provided. You may also vote your
shares by telephone as described in your proxy card. Voting by
telephone, over the Internet or by mailing a proxy card will not
limit your right to attend the annual meeting and vote your shares
in person.
All
stockholders are cordially invited to attend the annual
meeting.
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By
Order of the Board of Directors,
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/s/ William P. Kelly
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William P. Kelly, Secretary
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West
Melbourne, Florida
May 17,
2019
Important Notice Regarding the Availability of Proxy Materials for
the Annual Stockholder Meeting to be held on July 12, 2019
:
Our proxy statement, proxy card and annual report on Form 10-K for
the year ended December 31, 2018 are available at
https://www.iproxydirect.com
/
BKTI
.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE VOTE YOUR PROXY TODAY. YOU CAN VOTE BY INTERNET, BY
TELEPHONE OR BY MAIL USING THE INSTRUCTIONS INCLUDED ON THE NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS OR PROXY
CARD.
BK TECHNOLOGIES CORPORATION
________________________________________________________
2019 ANNUAL MEETING OF STOCKHOLDERS
JULY 12, 2019
________________________________________________________
PROXY STATEMENT
________________________________________________________
This
proxy statement contains information related to the 2019 annual
meeting of stockholders of BK Technologies Corporation (the
“
Company,
”
“
we,
”
“
our
”
or
“
us
”
) to be held on Friday, July 12,
2019, at 9:00 a.m., local time, at the offices of Capital Wealth
Advisors, 9130 Galleria Court, Third Floor, Naples, Florida 34109,
and at any adjournments or postponements thereof. We are using the
Securities and Exchange Commission rules that allow issuers to
furnish proxy materials to their stockholders on the Internet. On
or about May 24, 2019, we expect to begin mailing a Notice of
Internet Availability of Proxy Materials, which is referred to
herein as the
“
E-proxy
notice,
”
to each holder
of record of our common stock as of the close of business on May
14, 2019, the record date for the meeting. The E-proxy notice and
this proxy statement summarize the information you need to know to
vote by proxy or in person at the annual meeting. You do not need
to attend the annual meeting in person in order to
vote.
Recent Reorganization
. On March 11,
2019, BK Technologies, Inc. (the “Predecessor Company,”
formerly known as RELM Wireless Corporation) announced that its
board of directors had approved the implementation of a holding
company reorganization (the “Reorganization”). On March
28, 2019, the Predecessor Company implemented the Reorganization,
which resulted in us becoming the direct parent company of, and the
successor issuer to, the Predecessor Company. At the effective time
of the Reorganization, each share of common stock of the
Predecessor Company issued and outstanding immediately prior such
time automatically converted into an equivalent corresponding share
of our common stock. Our common stock continues to be listed on the
NYSE American under the ticker symbol “BKTI.” In
addition, our directors and executive officers are the same
individuals who were directors and executive officers,
respectively, of the Predecessor Company immediately prior to the
Reorganization.
For the
purpose of this proxy statement, references to the Company, the
board or any committee thereof, or our management or business at
any period prior to the Reorganization refer to those of the
Predecessor Company and thereafter to those of us, except as
otherwise specified or to the extent the context otherwise
indicates.
________________________________________________________
T
ABLE OF CONTENTS
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ABOUT
THE ANNUAL MEETING
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1
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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4
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PROPOSAL
1: ELECTION OF DIRECTORS
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7
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CORPORATE
GOVERNANCE
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12
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DIRECTOR
COMPENSATION FOR 2018
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18
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REPORT
OF THE AUDIT COMMITTEE
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21
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EXECUTIVE
COMPENSATION
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22
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SUMMARY
COMPENSATION TABLE FOR 2017-2018
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22
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OUTSTANDING
EQUITY AWARDS AT 2018 FISCAL YEAR-END
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27
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RETIREMENT
BENEFITS FOR 2018
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28
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POTENTIAL
PAYMENTS UPON TERMINATION OR IN CONNECTION WITH A CHANGE OF
CONTROL
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28
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TRANSACTIONS
WITH RELATED PERSONS
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31
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RELATIONSHIP
WITH OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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31
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PROPOSAL
2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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32
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FEES
PAID TO OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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32
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EQUITY
COMPENSATION PLAN INFORMATION
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33
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MISCELLANEOUS
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33
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ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the
annual meeting, we are asking stockholders:
●
To elect seven
directors named in this proxy statement to our board of directors
until the next annual meeting of stockholders and until their
respective successors are duly elected and qualified;
●
To ratify the
appointment of Moore Stephens Lovelace, P.A. (
“
Moore Stephens Lovelace
”
) as our independent registered
public accounting firm for the fiscal year ending December 31, 2019
(
“
fiscal 2019
”
);
and
●
To transact such
other business properly brought before the meeting and any
adjournment or postponement of the meeting.
Why did I receive a Notice of Internet Availability of Proxy
Materials?
The
rules of the Securities and Exchange Commission (the
“SEC”) permit us to make our proxy materials available
to beneficial owners of our common stock electronically over the
Internet without having to mail printed copies of the proxy
materials. Accordingly, on or about May 24, 2019, we are sending a
Notice of Internet Availability of Proxy Materials, which is
referred to herein as the
“
E-proxy notice,
”
to our beneficial owners. All
beneficial owners will have the ability to access the proxy
materials, including this proxy statement, the form of proxy card
and our annual report for the fiscal year ended December 31, 2018
(
“
fiscal 2018
”
), on the website referred to in the
E-proxy notice or to request a printed set of the proxy materials.
Instructions on how to access the proxy materials over the Internet
or to request a printed copy may be found in the E-proxy notice. In
addition, beneficial owners may request to receive proxy materials
in printed form by mail or electronically by email on an ongoing
basis.
On or
about May 24, 2019, we will begin mailing paper copies of our proxy
materials to stockholders who have requested them. Those
stockholders who do not receive the E-proxy notice, including
stockholders who have previously requested to receive paper copies
of proxy materials, will receive a copy of this proxy statement,
the proxy card and our annual report for fiscal 2018 by
mail.
Who is entitled to notice of, and to vote, at the annual
meeting?
You are
entitled to notice of the annual meeting and to vote, in person or
by proxy, at the annual meeting if you owned shares of our common
stock as of the close of business (5:00 p.m. EDT) on May 14, 2019,
the record date of the annual meeting. On the record date,
12,701,949 shares of our common stock were issued and outstanding
and held by 739 holders of record, including Cede & Co., which
holds shares on behalf of the beneficial owners of the
Company’s common stock. Holders of record of our common stock
on the record date are entitled to one vote per share at the annual
meeting.
Who can attend the meeting?
All
stockholders as of the record date, or their duly appointed
proxies, may attend. Please note that if you hold shares in
“
street name
”
(that is, through a broker or other
nominee), you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the record date. If you want
to vote shares that you hold in street name in person at the annual
meeting, you must bring a legal proxy in your name from the broker
or other nominee that holds your shares.
What constitutes a quorum?
If a
majority of the shares of our common stock outstanding on the
record date is represented either in person or by proxy at the
annual meeting, a quorum will be present at the annual meeting.
Shares held by persons attending the annual meeting but not voting,
shares represented in person or by proxy and for which the holder
has abstained from voting, and broker
“
non-votes
”
will be counted as present at the
annual meeting for purposes of determining the presence or absence
of a quorum.
1
What are broker “non-votes”?
A
broker non-vote occurs when a brokerage firm or other nominee
holding shares for a beneficial owner does not vote on a particular
proposal because the brokerage firm or other nominee did not
receive voting instructions from the beneficial owner and does not
have authority to vote on that particular proposal. Brokers and
other nominees are subject to the rules of the New York Stock
Exchange (the
“
NYSE
”
). The NYSE rules direct that
certain matters submitted to a vote of stockholders are considered
“
routine
”
proposals. Brokers or other
nominees generally may vote on such proposals on behalf of
beneficial owners who have not furnished voting instructions,
subject to the rules of the NYSE concerning transmission of proxy
materials to beneficial owners, and subject to any proxy voting
policies and procedures of those brokerage firms or other nominees.
For
“
non-routine
”
proposals, brokers or other
nominees may not vote on such proposals unless they have received
voting instructions from the beneficial owner, and, to the extent
that they have not received voting instructions, brokers or other
nominees report such number of shares as
“
non-votes.
”
Under
NYSE rules, the election of directors (Proposal 1) is considered to
be a
“
non-routine
”
matter. This means that brokers or
other nominees who have not been furnished voting instructions from
their clients will not be authorized to vote in their discretion on
this proposal. The ratification of the appointment of an
independent registered public accounting firm (Proposal 2) is a
“
routine
”
matter. This means that brokers or
other nominees who have not been furnished voting instructions from
their clients will be authorized to vote for this proposal. For
beneficial stockholders, if you do not give your broker or other
nominee specific instructions, your shares will not be voted on
Proposal 1, but may be voted by the brokerage firm or other nominee
on Proposal 2. Broker non-votes will have no effect on the outcome
of the voting on Proposals 1 and 2.
How will abstentions be counted?
Because
the election of directors requires only a plurality vote,
abstentions will have no impact upon the election of directors.
Abstentions will also have no impact on the outcome of Proposal 2
(ratification of the independent registered public accounting
firm).
How do I vote?
Whether
or not you plan to attend the annual meeting, we urge you to vote
your shares over the Internet as described in the E-proxy notice.
Alternatively, if you received a paper copy of the proxy card by
mail, please complete, sign, date and promptly return the proxy
card in the self-addressed stamped envelope provided. You may also
vote your shares by telephone as described in your proxy card.
Authorizing your proxy over the Internet, by mailing a proxy card
or by telephone will not limit your right to attend the annual
meeting and vote your shares in person. Your proxy (one of the
individuals named in your proxy card) will vote your shares per
your instructions. If you fail to provide instructions on a proxy
properly submitted via the Internet, mail or telephone, your proxy
will vote, as recommended by the board of directors, (1) to elect
to our board of directors the seven director nominees named in this
proxy statement and (2) to ratify the appointment of Moore Stephens
Lovelace as our independent registered public accounting firm for
fiscal 2019.
If you
have shares held by a broker or other nominee, you may instruct
your broker or nominee to vote your shares by following the
instructions that the broker or nominee provides to you. Most
brokers and nominees allow you to vote by mail, telephone and on
the Internet. As indicated above, under NYSE rules, the election of
directors (Proposal 1) is a
“
non-routine
”
matter, meaning that brokers or
other nominees who have not been furnished voting instructions from
their clients will not be authorized to vote in their discretion on
this proposal. The ratification of the appointment of Moore
Stephens Lovelace as our independent registered public accounting
firm for fiscal 2019 (Proposal 2) is a matter considered
“routine,” meaning that brokers or nominees who have
not been furnished voting instructions from their clients will be
authorized to vote on that proposal.
Can I
change my vote after I have voted?
Yes.
Voting by telephone, over the Internet or by mailing a proxy card
does not preclude a stockholder from voting in person at the annual
meeting. A stockholder may revoke a proxy, whether submitted via
telephone, the Internet or mailed, at any time prior to its
exercise by filing with our Corporate Secretary a duly executed
revocation of proxy, by properly submitting, either by telephone,
mail or Internet, a proxy to our Corporate Secretary bearing a
later date or by appearing at the annual meeting and voting in
person. Attendance at the annual meeting will not itself constitute
revocation of a proxy.
2
What are the board’s recommendations?
The
board unanimously recommends a vote
“
FOR
”
:
●
election to our
board of each of the seven director nominees named in this proxy
statement; and
●
ratification of the
appointment of Moore Stephens Lovelace as our independent
registered public accounting firm for fiscal 2019.
We do
not expect that any other matters will be brought before the annual
meeting. If, however, other matters are properly presented, the
persons named as proxies will vote the shares represented by
properly executed proxies in accordance with their judgment with
respect to those matters, including any proposal to adjourn or
postpone the annual meeting.
What vote is required to approve the proposals?
Proposal 1: Election of
Directors
. Directors will be elected by a plurality of the
votes cast, either in person or by proxy, at the annual meeting
(meaning that the seven director nominees who receive the highest
number of shares voted
“
for
”
their election are elected). You
may vote
“
for
”
or
“
withhold
”
authority to vote for each of the
director nominees. If you
“
withhold
”
authority to vote with respect to
one or more director nominees, your vote will have no effect on the
election of such nominees. Broker non-votes will also have no
effect on the election of the director nominees.
Proposal 2: Ratification of
Appointment of Moore Stephens Lovelace
. The number of votes
cast
“
for
”
the ratification of the appointment
of Moore Stephens Lovelace as our independent registered public
accounting firm for fiscal 2019, either in person or by proxy, at
the annual meeting must exceed the number of votes cast
“
against
”
ratification. Abstentions and
broker non-votes will have no effect on the outcome of the
vote.
Other Items
. In the
event that other items are properly brought before the annual
meeting, under Nevada law, each matter other than the election of
directors will be approved if the number of votes cast in favor of
the item by the stockholders entitled to vote exceeds the number of
votes cast in opposition to the matter. A properly executed proxy
marked
“
abstain
”
with respect to any such matter
will not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention
will not be counted as a vote cast on the matter and therefore will
not affect the outcome of the matter.
As of
the record date, our directors and executive officers and their
affiliates owned and were entitled to vote approximately 4,981,836
shares of our common stock, which represented approximately 39% of
our common stock outstanding on that date. We currently anticipate
that all of these persons will vote their and their
affiliates
’
shares in
favor of the director nominees and in favor of ratification of the
appointment of Moore Stephens Lovelace.
Who pays for the preparation of the proxy and soliciting
proxies?
We are
making this solicitation of proxies and have paid the entire
expense of preparing, printing and mailing the E-proxy notice and,
to the extent requested by our stockholders, this proxy statement
and any additional materials furnished to stockholders. In addition
to solicitations by mail, our directors, officers and employees may
solicit proxies from stockholders by telephone, e-mail or other
electronic means, or in person. These persons will not receive
additional compensation for soliciting proxies. Arrangements also
will be made with brokerage houses and other custodians, nominees
and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of stock held of record by these persons, and we
will reimburse them for reasonable out-of-pocket
expenses.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
table below sets forth information regarding the beneficial
ownership of our common stock as of the record date, May 14, 2019,
by the following individuals or groups:
●
each person who is
known by us to own beneficially more than 5% of our common
stock;
●
each of our
directors and nominees for director;
●
each of our named
executive officers identified in the
“
Summary Compensation Table For
2017-2018
”
appearing in
this proxy statement (the “Named Executive Officers”);
and
●
all of our
directors and executive officers as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to
securities. Shares of our common stock that are subject to our
stock options that are presently exercisable or exercisable within
60 days of May 14, 2019, as well as shares of common stock issuable
within 60 days of May 14, 2019 upon vesting of restricted stock
units, are deemed to be outstanding and beneficially owned by the
person holding the stock options or restricted stock units, as
applicable, for the purpose of computing the percentage of
ownership of that person, but are not treated as outstanding for
the purpose of computing the percentage of any other
person.
Unless
indicated otherwise below, the address of our directors, director
nominees and executive officers is c/o BK Technologies Corporation,
7100 Technology Drive, West Melbourne, Florida 32904. Except as
indicated below, the persons named in the table have sole voting
and investment power with respect to all shares of common stock
beneficially owned by them. As of May 14, 2019, we had outstanding
12,701,949 shares of our common stock.
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Shares
of Common Stock Beneficially Owned
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Name and Address of Beneficial Owner
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Number of Shares
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Percent of Class
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Beneficial Owners of More Than 5% of Our Common Stock:
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Fundamental
Global Investors, LLC
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4,865,888
(1)
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38.3%
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D. Kyle
Cerminara, Chairman of the Board
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4,886,846
(1)(2)(6)(9)(10)
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38.4%
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Lewis
M. Johnson, Co-Chairman of the Board
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4,881,846
(1)(3)(6)(9)(10)
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38.4%
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Benchmark
Capital Advisors
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1,526,473
(4)
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12.0%
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Donald
F.U. Goebert
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1,264,508
(5)
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10.0%
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Directors,
Director Nominees and Named Executive Officers (not otherwise
included above):
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Timothy
A. Vitou, President
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70,500
(6)(9)
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*
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William
P. Kelly, Executive Vice President and Chief Financial
Officer
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88,827
(6)(7)(9)
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*
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Randy
Willis, Chief Operating Officer
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9,000
(6)(9)
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*
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James
R. Holthaus, Chief Technology Officer
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11,000
(6)(9)
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*
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Michael
R. Dill, Director
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10,958
(9)(10)
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*
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Charles
T. Lanktree, Director
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18,874
(8)(9)(10)
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*
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E. Gray
Payne, Director
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25,958
(6)(9)(10)
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*
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John W.
Struble, Director
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10,958
(9)(10)
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*
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Ryan
R.K. Turner, Director
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11,310
(9)(10)
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*
|
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All
current directors and executive officers as a group (11
persons)
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5,160,189
(9)
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40.1%
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______________
*Less
than 1%
4
(1)
The amount shown
and the following information is derived from a Schedule 13D/A
filed by Fundamental Global Investors, LLC (“Fundamental
Global”) and its affiliates on September 14, 2018.
Fundamental Global is deemed to beneficially own the shares
disclosed as directly owned by certain of its affiliates. According
to the Schedule 13D/A, CWA Asset Management Group, LLC
(“CWA”) reports ownership of 1,840,514 shares, or 14.5%
of outstanding shares, which are held in its customer accounts and
are included in the number of shares listed in the table above
(including 817,131 shares held by CWA for accounts owned by Joseph
Moglia, an affiliate of Fundamental Global). CWA has the
dispositive power over the shares held in its customer accounts
while CWA’s customers retain the voting power over their
shares. CWA’s business address is 9130 Galleria Court, Third
Floor, Naples, Florida 34109. In addition, D. Kyle Cerminara and
Lewis M. Johnson, our Chairman and Co-Chairman, respectively, and
affiliates of Fundamental Global, hold an additional 36,916 shares
of common stock, which increases the total number of shares
beneficially owned by Fundamental Global to 4,902,804, or 38.5% of
outstanding shares. Fundamental Global has shared voting power with
respect to 3,025,374 of the shares listed in the table above and
dispositive power with respect to all 4,865,888 shares. Fundamental
Global’s business address is 4201 Congress Street, Suite 140,
Charlotte, North Carolina 28209.
(2)
Mr. Cerminara is
the Chief Executive Officer, Co-Founder and Partner of Fundamental
Global and Co-Chief Investment Officer of CWA. Due to his positions
with Fundamental Global, Mr. Cerminara is deemed to beneficially
own the 4,865,888 shares disclosed as directly owned by certain
affiliates of Fundamental Global. Mr. Cerminara expressly disclaims
beneficial ownership of these shares. The business addresses for
Mr. Cerminara are c/o Fundamental Global Investors, LLC, 4201
Congress Street, Suite 140, Charlotte, North Carolina 28209; c/o
Ballantyne Strong, Inc., 11422 Miracle Hills Drive, Suite 300,
Omaha, Nebraska 68154; and 131 Plantation Ridge Drive, Suite 100,
Mooresville, North Carolina 28117.
(3)
Mr. Johnson is the
President, Co-Founder and Partner of Fundamental Global and serves
as Co-Chief Investment Officer of CWA. Accordingly, Mr. Johnson is
deemed to beneficially own the 4,865,888 shares disclosed as
directly held by affiliates of Fundamental Global. Mr. Johnson
expressly disclaims beneficial ownership of these shares. The
business addresses for Mr. Johnson are c/o Fundamental Global
Investors, LLC, 4201 Congress Street, Suite 140, Charlotte, North
Carolina 28209; and c/o CWA Asset Management Group, LLC, 9130
Galleria Court, Third Floor, Naples, Florida 34109.
(4)
The amount shown
and the following information is derived from a Schedule 13G/A
filed by Benchmark Capital Advisors (“Benchmark”) on
April 27, 2018. According to the Schedule 13G/A, Benchmark
beneficially owns 1,526,473 shares, and has sole voting and
dispositive power with respect to 933,924 of these shares and
shared voting and dispositive power with respect to 592,549 of
these shares. Benchmark’s business address is 14 Wall Street,
Suite 2087, New York, New York 10005.
(5)
The amount shown is
based on Mr. Goebert’s Form 4 filed on December 30, 2016,
plus 6,225 shares acquired upon option exercises since the filing
of the Form 4, and reflects the repurchase by the Company on
December 12, 2018 of 200,000 shares of common stock held by Mr.
Goebert. Mr. Goebert’s primary address is 3382 Harbor Road
S., Tequesta, Florida 33469.
(6)
Share ownership of
the following persons includes options to purchase our common
shares presently exercisable or exercisable within 60 days of May
14, 2019, as follows: for Mr. Cerminara – 10,000 shares; for
Mr. Johnson – 5,000 shares; for Mr. Vitou – 38,000
shares; for Mr. Kelly – 62,000 shares; for Mr. Willis –
9,000 shares; for Mr. Holthaus – 11,000 shares; and for
General Payne – 5,000 shares.
(7)
Includes 26,827
shares held jointly by Mr. Kelly with his wife.
(8)
Includes 7,702
shares directly owned by the Donna B. Lanktree Family Trust, the
trustee of which is Donna B. Lanktree, the spouse of Mr.
Lanktree.
5
(9)
Includes 4,865,888
shares reported as beneficially owned by Fundamental Global, of
which Messrs. Cerminara and Johnson are deemed to have beneficial
ownership by virtue of their respective positions with Fundamental
Global. Includes 26,827 shares held jointly by Mr. Kelly with his
wife. Includes 7,702 shares directly owned by the Donna B. Lanktree
Family Trust, the trustee of which is Donna B. Lanktree, the spouse
of Mr. Lanktree. Includes options to purchase common shares
presently exercisable or exercisable within 60 days of May 14,
2019, as follows: for Mr. Cerminara – 10,000 shares; for Mr.
Johnson – 5,000 shares; for Mr. Vitou – 38,000 shares;
for Mr. Kelly – 62,000 shares; for Mr. Willis – 9,000
shares; for Mr. Holthaus – 11,000 shares; and for General
Payne – 5,000 shares. Includes 5,479 restricted stock units
held by each of Messrs. Cerminara, Johnson, Dill, Lanktree, Payne,
Struble and Turner, which were granted on June 4, 2018 and vest in
full 12 months after the grant date, which date is within 60 days
of May 14, 2019, subject to the recipient’s continued service
as a director of the Company through such date.
The
following options are not reflected in the table, as they are not
presently exercisable or exercisable within 60 days of May 14,
2019: options to purchase 77,000 common shares held by Mr. Vitou;
options to purchase 63,000 common shares held by Mr. Kelly; options
to purchase 56,000 shares held by Mr. Willis; and options to
purchase 59,000 common shares held by Mr. Holthaus.
The
table also does not include 5,063 restricted stock units held by
each of Messrs. Cerminara, Johnson, Dill, Lanktree, Payne, Struble
and Turner, which were granted on September 6, 2018 and vest in
five equal annual installments, beginning on the first anniversary
of the grant date, subject to the director’s continued
service as a director of the Company through such date, none of
which have vested as of May 14, 2019 or will vest within 60 days of
such date. All restricted stock units were granted under the
Company’s 2017 Incentive Compensation Plan (the “2017
Plan”). Each restricted stock unit represents a contingent
right to receive one share of common stock of the
Company.
(10)
The named person is
a nominee for director at the annual meeting.
6
PROPOSAL 1: ELECTION OF DIRECTORS
General
At the
annual meeting, seven nominees will be elected as directors. Our
board of directors currently consists of seven members, all of whom
are standing for re-election at the annual meeting. At the 2018
annual meeting, our stockholders elected D. Kyle Cerminara, Lewis
M. Johnson, Michael R. Dill, Charles T. Lanktree, General E. Gray
Payne, John W. Struble and Ryan R.K. Turner as directors. Our board
of directors, based on the recommendation of the nominating and
governance committee, has nominated each of these individuals to
stand for re-election at the annual meeting. We expect each nominee
for director to be able to serve if elected. If any nominee is not
able to serve, proxies will be voted in favor of the remainder of
those nominated and may be voted for substitute nominees, unless
our board of directors chooses to reduce the number of directors
serving on the board.
The directors elected at the annual meeting will serve until the
next annual meeting of stockholders and until their respective
successors are duly elected and qualified.
We are
of the view that the continuing service of qualified incumbent
directors promotes stability and continuity in the function of the
board of directors, contributing to the board
’
s ability to work as a collective
body, while giving us the benefit of the familiarity and insight
into our affairs that our directors have accumulated during their
tenure. With the addition of five new directors in 2017, the
board
’
s composition has
been refreshed to bring the most relevant skill sets and
experiences to the board at this time. When analyzing whether
directors and nominees have the desired experience, qualifications,
attributes and skills, individually and taken as a whole, the
nominating and governance committee and the board of directors
focus on the information as summarized in each of the
directors
’
individual
biographies set forth below. In particular, the board selected Mr.
Cerminara to serve as a director because of his extensive
experience in the financial industry, including investing, capital
allocation, finance and financial analysis of public companies, and
operational experience as the Chief Executive Officer of a
publicly-traded company. He also brings the perspective of one of
our most significant stockholders. Mr. Johnson brings to the board
the perspective of one of the Company
’
s most significant stockholders. He
has extensive experience in the financial industry, including
investing, capital allocation, finance and financial analysis of
public companies. Mr. Dill brings over 20 years of extensive
leadership and operational experience to the board, including
experience in developing and implementing strategic plans. Mr.
Lanktree brings extensive operational and leadership experience,
wireless communications industry experience and public company
experience to the board, including experience as a Chief Executive
Officer. General Payne brings extensive strategic, operational and
leadership experience and valuable insight into the military
sector, having over 40 years of military operational and strategic
expertise. Mr. Struble provides extensive experience in the
accounting/finance field to the board and qualifies as an
“
audit committee
financial expert
”
under
the SEC
’
s rules. Mr.
Turner brings extensive experience in investment analysis and
capital allocation for a publicly-traded company, as well as
business development experience.
Vote Required
The
affirmative vote of a plurality of the votes cast, either in person
or by proxy, at the annual meeting is required for the election of
these nominees as directors.
Recommendation of the Board
Our
board of directors unanimously recommends that stockholders vote
“
FOR
”
the election of the seven nominees
named in this proxy statement as directors.
7
Nominees for Election as Directors
The
following table sets forth the nominees to be elected at the annual
meeting, the year each nominee was first elected as a director and
each nominee
’
s age as of
May 14, 2019:
|
Name and Year First Elected
|
|
Age
|
|
Position
|
|
D. Kyle
Cerminara (2015)
|
|
41
|
|
Chairman
of the Board
|
|
Lewis
M. Johnson (2016)
|
|
49
|
|
Co-Chairman
of the Board
|
|
Michael
R. Dill (2017)
|
|
54
|
|
Director
|
|
Charles
T. Lanktree (2017)
|
|
70
|
|
Director
|
|
E. Gray
Payne (2017)
|
|
71
|
|
Director
|
|
John W.
Struble (2017)
|
|
42
|
|
Director
|
|
Ryan
R.K. Turner (2017)
|
|
40
|
|
Director
|
The
business experience of each nominee for director is set forth below
as of May 14, 2019.
D. Kyle
Cerminara
was appointed to the
board of directors in July 2015 and as Chairman in March 2017. Mr.
Cerminara is the Chief Executive Officer and Chairman of the Board
for Ballantyne Strong, Inc., a holding company with diverse
business activities focused on serving the cinema, retail,
financial and government markets. Mr. Cerminara assumed
responsibilities as Chairman of the Board of Ballantyne Strong in
May 2015 and as Chief Executive Officer in November 2015. Since
April 2012, Mr. Cerminara has also served as the Chief Executive
Officer, Co-Founder and Partner of Fundamental Global Investors,
LLC, an SEC registered investment advisor that manages equity and
fixed income hedge funds and is the largest stockholder of the
Company. In addition, Mr. Cerminara is Co-Chief Investment Officer
of CWA Asset Management Group, LLC (d/b/a Capital Wealth Advisors),
a wealth advisor and multi-family office affiliated with
Fundamental Global Investors, LLC, which position he has held since
December 2012. Mr. Cerminara also serves as President and Trustee
of StrongVest ETF Trust and Chief Executive Officer of StrongVest
Global Advisors, LLC. StrongVest Global Advisors, LLC, a
wholly-owned subsidiary of Ballantyne Strong, is an investment
advisor, and CWA Asset Management Group, LLC is a sub-advisor, to
CWA Income ETF, an exchange-traded fund and series of StrongVest
ETF Trust. Mr. Cerminara is a member of the Board of Directors of a
number of publicly-held companies focused in the insurance,
building infrastructure, technology and communications sectors,
including Ballantyne Strong, Inc. (NYSE American: BTN) since
February 2015, 1347 Property Insurance Holdings, Inc. (Nasdaq:
PIH), a holding company, which, through its subsidiaries, is
engaged in providing property and casualty insurance, since
December 2016, Itasca Capital, Ltd. (TSXV: ICL) (formerly Kobex
Capital Corp.), a publicly-traded investment firm, since June 2016,
and Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides
building infrastructure services, since March 2019. He was
appointed Chairman of 1347 Property Insurance Holdings, Inc. in May
2018 and Chairman of Itasca Capital, Ltd. in June 2018. He also
served on the board of directors of Iteris, Inc. (Nasdaq: ITI), a
publicly-traded, applied informatics company, from August 2016 to
November 2017, and Magnetek, Inc., a publicly-traded manufacturer,
in 2015. He also serves on the board of directors of Blueharbor
Bank. Prior to these roles, Mr. Cerminara was a Portfolio Manager
at Sigma Capital Management, an independent financial adviser, from
2011 to 2012, a Director and Sector Head of the Financials Industry
at Highside Capital Management from 2009 to 2011, and a Portfolio
Manager and Director at CR Intrinsic Investors from 2007 to 2009.
Before joining CR Intrinsic Investors, Mr. Cerminara was a Vice
President, Associate Portfolio Manager and Analyst at T. Rowe Price
from 2001 to 2007 and an Analyst at Legg Mason from 2000 to
2001.
Mr.
Cerminara received an MBA from the Darden School of Business at the
University of Virginia and a B.S. in Finance and Accounting from
the Smith School of Business at the University of Maryland, where
he was a member of Omicron Delta Kappa, an NCAA Academic All
American and Co-Captain of the men’s varsity tennis team. He
also completed a China Executive Residency at the Cheung Kong
Graduate School of Business in Beijing, China. Mr. Cerminara holds
the Chartered Financial Analyst (CFA) designation.
8
Lewis M.
Johnson
was elected to the
board of directors in May 2016 and appointed as Co-Chairman in June
2018. Since April 2012, Mr. Johnson has served as the President,
Co-Founder and Partner of Fundamental Global Investors, LLC, an SEC
registered investment advisor that manages equity and fixed income
hedge funds and is the largest stockholder of the Company. In
addition, since April 2012, Mr. Johnson has served as Co-Chief
Investment Officer of CWA Asset Management Group, LLC (d/b/a
Capital Wealth Advisors), a wealth advisor and multi-family office
affiliated with Fundamental Global Investors, LLC. Prior to
co-founding Fundamental Global Investors, LLC and partnering with
Capital Wealth Advisors, Mr. Johnson was a private investor from
2010 to 2012. From 2008 to 2010, Mr. Johnson served as Portfolio
Manager and Managing Director at Louis Dreyfus Highbridge Energy.
Previously, Mr. Johnson was a Senior Vice President, Portfolio
Manager and Analyst at Pequot Capital from 2006 to 2007. Prior to
joining Pequot Capital, Mr. Johnson was a Vice President and
Analyst at T. Rowe Price from 2000 to 2006. Mr. Johnson worked as
an Analyst at Capital Research and Management in 1999 and as a Vice
President at AYSA from 1992 to 1998. Mr. Johnson received an MBA
from the Wharton School of Business at the University of
Pennsylvania in addition to a M.A. in Political Science and a B.A.
in International Studies from Emory University, where he graduated
Magna Cum Laude and was a member of Phi Beta Kappa. Mr. Johnson is
a member of the Board of Directors of a number of publicly-held
companies, including Ballantyne Strong, Inc. (NYSE American: BTN),
a holding company with diverse business activities focused on
serving the cinema, retail, financial and government markets, since
May 2016; 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), a
holding company, which, through its subsidiaries, is engaged in
providing property and casualty insurance, since April 2017; and
Itasca Capital, Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a
publicly-traded investment firm, since June 2018. Mr. Johnson was
also appointed Co-Chairman of 1347 Property Insurance Holdings,
Inc. in May 2018 and Co-Chairman of Ballantyne Strong, Inc. in
April 2019.
Michael R.
Dill
was appointed to the board
of directors in March 2017. Mr. Dill has served as President,
Americas West, and previously as Vice President and General
Manager, of GKN Aerospace Engine Systems North America, a designer
and manufacturer of aerospace engine components, since April 2017.
Mr. Dill previously served as President of the Aerospace, Power
Generation and General Industrial divisions at AFGlobal
Corporation, a privately-held, integrated technology and
manufacturing company, from August 2014 to April 2017. Prior to
joining AFGlobal, Mr. Dill held various positions in the Aerospace
and Defense division of CIRCOR International, a publicly-traded
global manufacturer of highly engineered environment products
(NYSE: CIR), including serving as Group Vice President from 2009 to
2014, Vice President of Business Development and Strategy from 2010
to 2011 and Director of Continuous Improvement from 2009 to 2011.
From 2007 to 2009, he served as a Business Unit Director and
Facility Leader within the aerospace group of Parker Hannifin
Corporation (NYSE: PH), a publicly-traded diversified manufacturer
of motion and control technologies and systems. Before joining
Parker Hannifin Corporation, he held various positions with Shaw
Aero Devices, Inc., a producer of aerospace components and
equipment, from 1996 to 2007, and Milliken and Company, a
manufacturing company, from 1988 to 1996. Mr. Dill received a B.S.
in Management from the Georgia Institute of
Technology.
Charles T.
Lanktree
was appointed to the
board of directors in March 2017. Mr. Lanktree has served as Chief
Executive Officer of Eggland’s Best, LLC, a joint venture
between Eggland’s Best, Inc. and Land O’Lakes, Inc.
distributing nationally branded eggs, since 2012 and also served as
its President from 2012 to 2018. Since 1997, Mr. Lanktree has
served as President and Chief Executive Officer of Eggland’s
Best, Inc., a franchise-driven consumer egg business, where he
previously served as the President and Chief Operating Officer from
1995 to 1996 and Executive Vice President and Chief Operating
Officer from 1990 to 1994. Mr. Lanktree currently serves on the
Board of Directors of Eggland’s Best, Inc. and several of its
affiliates and on the Board of Directors of Ballantyne Strong, Inc.
(NYSE American: BTN), a holding company with diverse business
activities focused on serving the cinema, retail, financial and
government markets. From 2010 to 2013, he served on the Board of
Directors of Eurofresh Foods, Inc., a privately-held company, and
from 2004 to 2013, he was on the Board of Directors of
Nature’s Harmony Foods, Inc. Prior to joining Eggland’s
Best, Inc., Mr. Lanktree served as the President and Chief
Executive Officer of American Mobile Communications, Inc. from 1987
to 1990 and as the President and Chief Operating Officer of
Precision Target Marketing, Inc. from 1985 to 1987. From 1976 to
1985, he held various executive-level marketing positions with The
Grand Union Company and BeechNut Foods Corporation. Mr. Lanktree
received an MBA from the University of Notre Dame and a B.S. in
Food Marketing from St. Joseph’s College. He also served in
the U.S. Army and U.S. Army Reserves from 1971 to
1977.
9
E. Gray
Payne
was appointed to the
board of directors in January 2017. General Payne served as Senior
Vice President of The Columbia Group (“TCG”), from
September 2010 to September 2017, where he was responsible for
managing the Marine Corps Programs Division (since September 2010)
and the Navy Programs Division (since October 2013), with combined
annual revenue of approximately $30 million. TCG is a federal
consulting firm working with the Department of Defense, Department
of Homeland Security, NOAA and private clients. TCG consults in the
areas of logistics, acquisitions, program management, information
technology, training, marine architecture and engineering, and
command and control systems. Since December 2011, General Payne has
also provided consulting services to and served on the Advisory
Council of Marstel-Day, LLC, located in Fredericksburg, Virginia,
which consults in the areas of conservation, environmental
compliance, and encroachment. Prior to September 2010, General
Payne was on active duty with the Marine Corps for 10 years,
retiring as a Major General. Prior to March 2001, he worked with a
number of companies in various capacities, including as a
management consultant, Chief Financial Officer, Chief Operating
Officer, and Chief Executive Officer. General Payne currently
serves on the Board of Directors of 1347 Property Insurance
Holdings, Inc. (Nasdaq: PIH), a holding company, which, through its
subsidiaries, is engaged in providing property and casualty
insurance (since May 2018), and currently serves on the following
non-profit boards: The Marine Corps Association & Foundation
(since 2004), where he serves as Chairman of the Board of The
Marine Corps Association, VetCV (since December 2017), and National
Wildlife Refuge Association (since June 2018). He received a B.S.
in Economics from North Carolina State University and a M.S. in
Strategic Studies from U.S. Army War College.
John W.
Struble
was appointed to the
board of directors in March 2017. Mr. Struble has served as Chief
Financial Officer of IntraPac International, a specialty packaging
manufacturing company owned by private equity investment firm Onex
Corporation (TSE: ONEX), since December 2013, where he is
responsible for the finance, information technology and human
resources functions. From May 2012 to December 2013, he served as
Corporate Controller and Treasurer of IntraPac. From May 2010 to
May 2012, he served as Corporate Controller (Operations) of Euramax
International, Inc., where he was responsible for the accounting
and finance functions for the North American operations. Euramax is
a public company that produces aluminum, steel, vinyl and
fiberglass products for OEM, distributors, contractors, and home
centers in North America and Europe. Prior to that, he was
Controller of Rock-Tenn Company, from December 2008 to
February 2010. Mr. Struble is a Certified Public Accountant. He
received an MBA from the University of Georgia and a B.S. in
Business Administration from the State University of New York at
Buffalo.
Ryan R.K.
Turner
was appointed to the
board of directors in March 2017. Mr. Turner has served as Vice
President of Strategic Investments for Ballantyne Strong, Inc.
(NYSE American: BTN), a holding company with diverse business
activities focused on serving the cinema, retail, financial and
government markets, since 2016. Mr. Turner also serves as President
of StrongVest Global Advisors, LLC, a wholly-owned subsidiary of
Ballantyne Strong, since 2016. He previously served as Director of
Business Development for Ballantyne Strong, Inc. from 2015 to 2016.
From 2012 to 2015, Mr. Turner served as Director of Research and
Research Analyst for Fundamental Global Investors, LLC, an SEC
registered investment advisor that manages equity and fixed income
hedge funds and, together with Ballantyne Strong, is the largest
stockholder of the Company. Prior to joining Fundamental Global
Investors, LLC, Mr. Turner worked as an Associate Analyst at T.
Rowe Price from 2006 to 2012, and as an Associate in the Product
Services & Development Department at AST Trust Company from
2002 to 2006. Mr. Turner received an MBA from the Robert H. Smith
School of Business at the University of Maryland and a B.S. in
Business Administration from the University of Arizona. Mr. Turner
holds the Chartered Financial Analyst (CFA)
designation.
10
Executive Officers
The
following table presents information with respect to our executive
officers as of May 14, 2019.
|
Name
|
|
Age
|
|
Position
|
|
Timothy
A. Vitou
|
|
62
|
|
President
|
|
William
P. Kelly
|
|
62
|
|
Executive
Vice President, Chief Financial Officer and Secretary
|
|
Henry
R. (Randy) Willis
|
|
60
|
|
Chief
Operating Officer
|
|
James
R. Holthaus
|
|
56
|
|
Chief
Technology Officer
|
Timothy A.
Vitou
has been our President
since January 17, 2017. He previously served as the Company’s
Senior Vice President of Sales and Marketing since May 2008. Prior
to that, he served as Vice President of Sales for Mobility
Electronics, Inc., from August 2006 to May 2007, Senior Director of
Global Go-To-Market, for Motorola Solutions, Inc., from April 2002
to April 2006, and General Manager, Americas Region, for Motorola
Solutions, from April 2000 to April 2002.
William P.
Kelly
has been our Executive
Vice President and Chief Financial Officer since July 1997, and
Secretary since June 2000. From October 1995 to June 1997, he was
Vice President and Chief Financial Officer of our subsidiary, RELM
Communications, Inc. From January 1993 to October 1995, he was the
Financial Director of Harris Corp. Semiconductor
Sector.
Henry R.
(Randy) Willis
has been our
Chief Operating Officer since March 14, 2018. He previously served
as the Company’s Vice President of Operations since August
2017, overseeing all aspects of manufacturing and quality. Prior to
joining the Company, he held leadership positions in manufacturing,
operations, quality, supply chain, industrial engineering and
program management, including founding and serving as President of
Target Velocity Consulting, Inc., a “Lean/Six Sigma”
firm specializing in operational improvements, from December 2009
to August 2017 and Vice President, Continuous Improvement, for
CIRCOR International, Inc. (NYSE: CIR), from August 2007 to
December 2009. He also served in leadership positions for
Parker-Hannifin Corporation (NYSE: PH) from January 2005 to August
2007 and Honeywell International Inc. (NYSE: HON) from June 1998 to
January 2005. Mr. Willis holds certifications as a Lean Master and
Six Sigma Black Belt and B.S. and M.S. degrees in Industrial
Technology from East Carolina University.
James R.
Holthaus
was appointed as our
Chief Technology Officer effective August 4, 2017. He joined the
Company in 2007 and most recently served as the Vice President
– Project 25 Solutions, responsible for product definition
and market analysis, with a focus on development of our P-25 mobile
and portable radio products. Since 1993, Mr. Holthaus has been
active in the development of land mobile radio products and the
P-25 Digital Radio Standards. He holds an M.S. Degree in Electrical
Engineering from Southern Methodist University.
11
CORPORATE GOVERNANCE
The
board of directors is committed to good business practices,
transparency in financial reporting and the highest level of
corporate governance. The board of directors, which is elected by
the stockholders, is our ultimate decision-making body, except with
respect to those matters reserved to our stockholders. The board
selects the senior management team, which is charged with the
conduct of our business. Having selected the senior management
team, the board of directors acts as an advisor and counselor to
senior management and ultimately monitors its
performance.
Board of Directors Independence
In
accordance with the NYSE American corporate governance listing
standards, it is our policy that the board of directors consist of
a majority of independent directors. Our board of directors reviews
the relationships that each director has with us and other parties.
Only those directors who do not have any of the categorical
relationships that preclude them from being independent within the
independence requirements of the NYSE American corporate governance
listing standards and who the board of directors affirmatively
determines have no relationships that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director are considered to be independent
directors. The board of directors reviews a number of factors to
evaluate the independence of each of its members. These factors
include its members’ current and historic relationships with
us and our subsidiaries; their relationships with management and
other directors; the relationships their current and former
employers have with us and our subsidiaries; and the relationships
between us and other companies of which our board members are
directors or executive officers. After evaluating these factors,
the board of directors determined that, during fiscal 2018, all
seven members were “independent” directors within the
independence requirements of the NYSE American corporate governance
listing standards and all applicable rules and regulations of the
SEC, and all board committee members were independent for the
purposes of the committees on which they served.
The
board of directors reviewed the various factors described above in
April 2019, including an evaluation of the holdings of Fundamental
Global Investors, LLC, one of our most significant stockholders,
and Messrs. Cerminara and Johnson’s positions as its Chief
Executive Officer,
Co-Founder and
Partner, and President, Co-Founder and Partner, respectively, and
our investment in 1347 Property Insurance Holdings, Inc., through
our investment in FGI 1347 Holdings, LP, a consolidated variable
interest entity of which we are the sole limited partner. Pursuant
to such evaluation, the board of directors determined that Messrs.
Dill, Lanktree, Payne, Struble and Turner were
“independent” directors within the independence
requirements of the NYSE American corporate governance listing
standards and all applicable rules and regulations of the
SEC
. In addition, certain board
committees were reconstituted, and all current
board
committee members are independent for the purpose of the committees
on which they serve.
There
are no family relationships between any of our directors, director
nominees or executive officers.
Independent members
of our board of directors meet in executive session without
management present, and are scheduled to do so at least once per
year.
Stockholder Communications
Our
board of directors believes that it is important for our
stockholders and other interested parties to have a process to send
communications to the board. Accordingly, stockholders and other
interested parties desiring to send a communication to the board of
directors or to a specific director may do so by delivering a
letter to our Corporate Secretary at 7100 Technology Drive, West
Melbourne, Florida 32904. The mailing envelope must contain a clear
notation indicating that the enclosed letter is a
“stockholder-board communication” or
“stockholder-director communication” (or
“interested party-board communication” or
“interested party-director communication,” as
appropriate). All such letters must identify the author as the
stockholder or interested party and clearly state whether the
intended recipients of the letter are all members of our board of
directors or certain specified individual directors. The secretary
will open such communications and make copies, and then circulate
them to the appropriate director or directors and such other
individuals in accordance with our corporate governance
policies.
Policy Concerning Director Attendance at Annual Stockholders’
Meetings
While
we encourage all members of our board of directors to attend our
annual stockholders’ meetings, there is no formal policy as
to their attendance at annual stockholders’ meetings. Messrs.
Johnson, Dill, Lanktree and Payne attended the 2018 annual
stockholders’ meeting.
12
Codes of Ethics
Our
board of directors has adopted the Code of Business Conduct and
Ethics (the “Code of Conduct”) that applies to all of
our directors, officers and employees, including our principal
executive officer, principal financial officer and principal
accounting officer, and the Code of Ethics for the CEO and Senior
Financial Officers (the “Code of Ethics”) containing
additional specific policies. The Code of Conduct and the Code of
Ethics are posted on our Internet website at
www.bktechnologies.com/investor-relations and are available free of
charge, upon request to Corporate Secretary, 7100 Technology Drive,
West Melbourne, Florida 32904; telephone number: (321)
984-1414.
Any
amendment to, or waiver from, a provision of the codes of ethics
applicable to our directors and executive officers will be
disclosed in a current report on Form 8-K within four business days
following the date of the amendment or waiver, unless the rules of
the NYSE American then permit website posting of such amendments
and waivers, in which case we would post such disclosures on our
Internet website.
Hedging and Pledging Policy
Our
insider trading policy prohibits our officers, other employees and
directors from hedging or pledging our shares.
Meetings and Committees of the Board of Directors
The
board of directors held six meetings during 2018, and each of the
directors attended at least seventy-five percent (75%) of the total
number of meetings of the board of directors held during the period
for which he was a director and the total number of meetings held
by all committees of the board of directors on which he served
during the periods that he was a member of that
committee.
The
board of directors has a standing audit committee, compensation
committee and nominating and governance committee. During fiscal
2018, the members of the committees of the board of directors were
as follows:
|
Director
|
|
Audit Committee
|
|
Compensation Committee
|
|
Nominating and Governance Committee
|
|
D. Kyle
Cerminara
(1)
|
|
|
|
X
|
|
X
|
|
Lewis
M. Johnson
(2)
|
|
|
|
|
|
Chair
(3)
|
|
Michael
R. Dill
|
|
X
|
|
X
|
|
|
|
Charles
T. Lanktree
|
|
|
|
X
|
|
|
|
E. Gray
Payne
|
|
X
|
|
Chair
(3)
|
|
X
|
|
John W.
Struble
|
|
Chair
|
|
|
|
|
|
Ryan
R.K. Turner
|
|
|
|
X
|
|
|
_______________
(1)
Chairman of the
Board.
(2)
Appointed
Co-Chairman on June 4, 2018.
(3)
Appointed committee
chairperson June 4, 2018, replacing Mr. Cerminara in such
role.
Effective April 29,
2019, the board reconstituted its board committees. As of May 14,
2019, the members of the committees were as follows:
|
Director
|
|
Audit Committee
|
|
Compensation Committee
|
|
Nominating and Governance Committee
|
|
D. Kyle
Cerminara
(1)
|
|
|
|
|
|
|
|
Lewis
M. Johnson
(2)
|
|
|
|
|
|
|
|
Michael
R. Dill
|
|
X
|
|
Chair
|
|
X
|
|
Charles
T. Lanktree
|
|
|
|
|
|
X
|
|
E. Gray
Payne
|
|
X
|
|
|
|
Chair
|
|
John W.
Struble
|
|
Chair
|
|
X
|
|
X
|
|
Ryan
R.K. Turner
|
|
|
|
X
|
|
X
|
(1)
Chairman of the
Board.
(2)
Co-Chairman of the
Board.
13
Audit
Committee
.
The audit committee has a written charter, which is available at
our website at www.bktechnologies.com/investor-relations. The audit
committee charter requires that the audit committee consist of two
or more members of the board of directors, each of whom are
independent, as defined by the corporate governance listing
standards of the NYSE American.
The
board of directors has determined that each member of the audit
committee is independent, as defined by Rule 10A-3 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the corporate governance listing standards of the
NYSE American. The board of directors also has determined that Mr.
Struble is an “audit committee financial expert,” as
defined in Item 407(d)(5) of Regulation S-K.
The
audit committee has oversight responsibility for the quality and
integrity of our consolidated financial statements and is directly
responsible for the appointment, compensation, retention and
oversight of our independent registered public accounting firm. The
committee meets privately with members of our independent
registered public accounting firm, which has unrestricted access
and reports directly to the committee, and annually reviews their
performance and independence from management in deciding whether to
continue to retain the accounting firm or engage a different
accounting firm. The audit committee also evaluates the lead
partner designated by the independent auditor. As required by the
SEC’s rules, the committee is directly involved in the review
and selection of the audit partners serving on the auditor’s
engagement team during mandated five-year partner rotations. The
audit committee also oversees audit fee negotiations associated
with our retention of the independent auditor and has the sole
authority to approve such fees. The audit committee met eight times
during 2018. The primary functions of the audit committee are to
oversee: (i) the audit of our consolidated financial statements
provided to the SEC and our stockholders; (ii) our internal
financial and accounting processes; and (iii) the independent audit
process. Additionally, the audit committee has responsibilities and
authority necessary to comply with Rules 10A-3(b)(2), (3), (4), and
(5) of the Exchange Act, concerning the responsibilities relating
to: (a) registered public accounting firms, (b) complaints relating
to accounting, internal accounting controls or auditing matters,
(c) authority to engage advisors, and (d) funding. These and other
aspects of the audit committee’s authority are more
particularly described in the audit committee charter.
The
audit committee has adopted a formal policy concerning approval of
audit and non-audit services to be provided to us by our
independent registered public accounting firm, Moore Stephens
Lovelace. The policy requires that all services to be provided by
Moore Stephens Lovelace, including audit services and permitted
audit-related and non-audit services, must be pre-approved by the
audit committee. The audit committee approved all audit services
provided by Moore Stephens Lovelace to us during 2018. Moore
Stephens Lovelace did not provide any audit-related or non-audit
services to us during 2018.
Compensation
Committee
.
All members of the
compensation committee are, and were during fiscal 2018,
independent under the corporate governance listing standards of the
NYSE American and applicable SEC rules and regulations. The
compensation committee has a written charter, which is available at
our website at www.bktechnologies.com/investor-relations. The
functions performed by the compensation committee include reviewing
and approving all compensation arrangements for our executive
officers and administering our equity incentive plans and programs.
The compensation committee makes all final compensation decisions
for the Named Executive Officers, including equity grants. The
compensation committee reviews the performance of the Named
Executive Officers, including the principal executive officer. Our
principal executive officer annually reviews the performance of
each of the Named Executive Officers and other officers, and makes
recommendations regarding the Named Executive Officers and other
officers and managers to the compensation committee for its
consideration and approval. The compensation committee can exercise
its discretion in modifying any of our principal executive
officer’s recommendations. In performing its functions, the
compensation committee may retain and terminate outside counsel,
compensation and benefits consultants or other experts. During
2018, the compensation committee met seven times.
Nominating
and Governance Committee
.
All members of the
nominating and governance committee are, and were during fiscal
2018, independent under the corporate governance listing standards
of the NYSE American. The nominating and governance committee has a
written charter, which is available at our website at
www.bktechnologies.com/investor-relations. During 2018, the
nominating and governance committee met three times.
The
functions of the nominating and governance committee include
determining and recommending to the board of directors the slate of
director nominees for election to the board of directors at each
annual stockholders’ meeting and identifying and recommending
director candidates to fill vacancies occurring between annual
stockholders’ meetings. In addition, the nominating and
governance committee reviews, evaluates and recommends changes to
our corporate governance policies, including our Code of Conduct
and Code of Ethics, and monitors our compliance with these
corporate policies.
14
Board Leadership and Board’s Role in Risk
Oversight
We have
a separate Chairman and Co-Chairman of the Board and Principal
Executive Officer. Our board of directors believes this board
leadership structure is best for the Company and our stockholders
at this time. Our Chairman of the Board is D. Kyle Cerminara and
the Co-Chairman of the Board is Lewis M. Johnson, and our current
Principal Executive Officer is our President, Timothy A.
Vitou.
The
board believes it is in the Company’s best interest to have a
separate Chairman and Co-Chairman of the Board and Principal
Executive Officer so that the Principal Executive Officer can
devote his time and energy on the day-to-day management of the
business, while our Chairman and Co-Chairman, currently Messrs.
Cerminara and Johnson, respectively, can each focus on providing
advice and oversight of management. Because our Chairman and
Co-Chairman are appointed annually by our non-management directors,
such directors are able to evaluate the leadership and performance
of our Chairman and Co-Chairman each year. The board of directors
has not named a lead independent director, as it receives strong
leadership from all of its members. Our board committees consist of
only independent members, and our independent directors meet at
least annually in executive session without the presence of
non-independent directors and management. In addition, our
directors take active and substantial roles in the activities of
our board of directors at the full board meetings. Our board
believes that this open structure, as compared to a system in which
there is a designated lead independent director, facilitates a
greater sense of responsibility among our directors and facilitates
active and effective oversight by the independent directors of the
Company’s operations and strategic initiatives, including any
risks.
Our
board of directors, through its three standing committees, has an
advisory role in the Company’s risk management process. In
particular, the board is responsible for monitoring and assessing
strategic and operational risk exposure. Our management team
maintains primary responsibility for the Company’s risk
management, and the board and its committees rely on the
representations of management, the external audit of our financial
and operating results, our systems of internal controls and our
historically conservative practices when assessing the
Company’s risks. The audit committee considers and discusses
financial risk exposures and the steps management has taken to
monitor and control these exposures, and also provides oversight of
the performance of the internal audit function. The nominating and
governance committee monitors the effectiveness of our corporate
governance policies and the selection of prospective board members
and their qualifications. The compensation committee, in
conjunction with the audit committee, assesses and monitors whether
any of the Company’s compensation policies and programs have
the potential to encourage excessive risk-taking. Each committee
must report findings regarding material risk exposures to the board
as quickly as possible. The board believes that its role in risk
oversight does not affect the board’s leadership
structure.
Like
all businesses, we also face threats to the Company’s
cybersecurity, as the Company is reliant upon information systems
and the Internet to conduct its business activities. In light of
the pervasive and increasing threat from cyberattacks, the board
and the audit committee, with input from management, assess the
Company’s cybersecurity threats and the measures implemented
by the Company to mitigate and prevent cyberattacks. The audit
committee consults with management regarding ongoing cybersecurity
initiatives, and requests management to report to the audit
committee or the full board regularly on their assessment of the
Company’s cybersecurity program and risks.
15
Director Nomination Process
In
accordance with the nominating and governance committee’s
written charter, the nominating and governance committee has
established policies and procedures for the nomination of director
candidates to the board of directors. The committee determines the
required selection criteria and qualifications of director
candidates based upon our needs at the time director candidates are
considered. Minimum qualifications for director candidates are set
forth in the committee’s “Policy Regarding Minimum
Qualifications of Director Candidates” and include threshold
criteria, such as integrity, absence of conflicts of interest that
would materially impair a director’s ability to exercise
independent judgment or otherwise discharge the fiduciary duties
owed as a director to the Company and our stockholders, ability to
represent fairly and equally all stockholders, demonstrated
achievement in one or more fields of business, professional,
governmental, communal, scientific or educational endeavors, sound
judgment, as a result of management or policy-making experience,
that demonstrates an ability to function effectively in an
oversight role, general appreciation regarding major issues facing
public companies of a size and operational scope similar to the
Company, and adequate time to serve. As noted in the policy, the
committee, as one of its considerations, considers the extent to
which the membership of the candidate on the board will promote
diversity among the directors, and seeks to promote through the
nominations process an appropriate diversity on the board of
professional background, experience, expertise, perspective, age,
gender, ethnicity and country of citizenship. The committee also
considers the overall composition of the board and its committees,
compliance with the NYSE American listing standards, and the
contributions that a candidate can be expected to make to the
collective functioning of the board based upon the totality of the
candidate’s credentials, experience and expertise, the
composition of the board at the time, and other relevant
circumstances.
We are
of the view that the continuing service of qualified incumbent
directors promotes stability and continuity in the function of the
board of directors, contributing to the board’s ability to
work as a collective body, while giving us the benefit of the
familiarity and insight into our affairs that our directors have
accumulated during their tenure.
The
nominating and governance committee has adopted procedures
consistent with the practice of re-nominating incumbent directors
who continue to satisfy the committee’s criteria for
membership on the board, who the committee believes continue to
make important contributions to the board and who consent to
continue their service on the board. These procedures are set forth
in the committee’s “Procedures for Identifying and
Evaluating Director Candidates” policy. When evaluating the
qualifications and performance of the incumbent directors that
desire to continue their service on our board, the committee will
(i) consider whether the director continues to satisfy the minimum
qualifications for director candidates adopted by the committee,
(ii) review the assessments of the performance of the director
during the preceding term made by the committee, and (iii)
determine whether there exist any special, countervailing
considerations against re-nomination of the director. When there is
no qualified and available incumbent, the committee will also
solicit recommendations for nominees from persons that the
committee believes are likely to be familiar with qualified
candidates. These persons may include members of our board of
directors and management of the Company. The committee may also
determine to engage a professional search firm to assist in
identifying candidates. As to each recommended candidate that the
committee believes merits consideration, the committee will
consider, among other things, whether the candidate possesses any
of the specific qualities or skills that under the
committee’s policies must be possessed by one or more members
of the board, the contribution that the candidate can be expected
to make to the overall functioning of the board and the extent to
which the membership of the candidate on the board will promote
diversity among the directors.
The
nominating and governance committee has adopted a policy with
regard to the consideration of director candidates submitted by
stockholders. This policy is set forth in the committee’s
“Policy Regarding Director Candidate Recommendations
Submitted by Stockholders.” The committee will only consider
director candidates submitted by stockholders who satisfy the
minimum qualifications prescribed by the committee, including that
a director must represent the interests of all stockholders and not
serve for the purpose of favoring or advancing the interests of any
particular stockholder group or other constituency.
16
In
accordance with this policy, the nominating and governance
committee will consider director candidates recommended by
stockholders only where the committee has determined to not
re-nominate an incumbent director. In addition, the committee will
not consider any recommendation by a stockholder or an affiliated
group of stockholders unless such stockholder or group of
stockholders has owned at least five percent (5%) of our common
stock for at least one year as of the date the recommendation is
made. Any eligible stockholder (or affiliated group of
stockholders) who desires to recommend a director candidate for
consideration by the nominating and governance committee generally
must ensure that it is received by the Company no later than 120
days prior to the first anniversary of the date of the proxy
statement for the prior annual meeting of stockholders. In the
event that the date of the annual meeting of stockholders for the
current year is more than 30 days following the first anniversary
date of the annual meeting of stockholders for the prior year, the
submission of a recommendation will be considered timely if it is
submitted a reasonable time in advance of the mailing of the
Company’s proxy statement for the annual meeting of
stockholders for the current year. Because the date of the 2019
annual meeting of stockholders is more than 30 days following the
first anniversary date of the 2018 annual meeting of stockholders,
recommendations for director candidates for consideration by the
nominating and governance committee were required to be submitted a
reasonable time in advance of this mailing of this proxy statement
(that is, no later than April 28, 2019). No such nominations were
received. Any eligible stockholder (or affiliated group of
stockholders) who desires to recommend a director candidate for
consideration by the nominating and governance committee for the
2020 annual meeting of stockholders is required to do so prior to
January 25, 2020.
Any
such eligible stockholder (or affiliated group of stockholders) is
required to submit complete information about itself and the
recommended director candidate as specified in the
committee’s “Procedures for Stockholders Submitting
Director Candidate Recommendations” policy and as set forth
in the advance notice provisions in our amended and restated
bylaws. Such information must include, among other things, (i) the
number of our common shares beneficially owned by the recommending
stockholder and the length of time such shares have been held, (ii)
the name, age and experience of the director candidate, (iii)
whether the director candidate owns any of our securities, (iv)
whether the director candidate has a direct or indirect material
interest in any transaction in which we are a participant, (v) a
description of all relationships between the director candidate and
the recommending stockholder, and (vi) a statement setting forth
the director candidate’s qualifications. Submissions should
be addressed to the nominating and governance committee care of our
Corporate Secretary at our principal headquarters, 7100 Technology
Drive, West Melbourne, Florida 32904. Submissions must be made by
mail, courier or personal delivery. E-mail submissions will not be
considered.
Copies
of the policies of the nominating and corporate governance
committee are available on our website at
www.bktechnologies.com/investor-relations.
The nominating and governance committee evaluated Messrs. D. Kyle
Cerminara, Lewis M. Johnson, Michael R. Dill, Charles T. Lanktree,
E. Gray Payne, John W. Struble and Ryan R.K. Turner, all of whom
are incumbent directors, and recommended their nomination to the
board of directors. The board, in turn, nominated these seven
persons for election as directors at the annual
meeting.
17
DIRECTOR COMPENSATION FOR 2018
Director Compensation Program
On
September 6, 2018, the board, upon the recommendation of the
compensation committee, adopted a new director compensation program
for all non-employee directors, effective as of September 1, 2018.
The program was adopted to remain competitive in attracting and
retaining qualified board members and to better align director
compensation to other public companies of comparable size to the
Company.
Under
the new program, each non-employee director receives an annual
retainer fee of $50,000, payable in quarterly cash installments.
Each non-employee director also receives an annual grant of
restricted stock units with a value of $40,000 pursuant to the 2017
Plan. Each restricted stock unit represents a contingent right to
receive one share of our common stock. The restricted stock units
vest in five equal annual installments, beginning with the first
anniversary of the grant date, subject to the recipient’s
continued service as a director of the Company through such date,
provided that, if the director makes himself available and consents
to be nominated by the Company for continued service as a director
of the Company, but is not nominated for the board of directors for
election by stockholders, other than for good reason, as determined
by the board in its discretion, then the restricted stock units
will vest in full as of the director’s last date of service
as a director of the Company.
Following
the adoption of the new director compensation program, which
provides for an annual grant of restricted stock units with a value
of $40,000, on September 6, 2018, the compensation committee
granted 5,063 restricted stock units with a value of $20,000 to
each of the non-employee directors. The restricted stock units were
granted to the non-employee directors in light of the grant of
5,479 restricted stock units with a value of $20,000 granted to
each non-employee director on June 4, 2018 after the 2018 annual
stockholders’ meeting.
In
addition, the new director compensation program provides for an
additional annual cash retainer of $3,000, payable in quarterly
cash installments, for each board committee served on, or an
additional annual cash retainer of $10,000, payable in quarterly
cash installments, per committee for service as committee chairman.
The Chairman and Co-Chairman of the Board also each receive an
additional annual cash retainer of $75,000, payable in quarterly
cash installments. All non-employee directors are entitled to
reimbursement of reasonable out-of-pocket expenses incurred by them
in connection with their attendance at meetings of the board and
any committee thereof on which they serve. If a non-employee
director does not serve on the board or a board committee, or as
Chairman or Co-Chairman of the Board, or as a board committee
chairman, for the full year, the board and any applicable board
committee, Board Chairman and Board Co-Chairman, as applicable, and
any board committee chairman retainers are prorated for the portion
of the year served. If a non-employee director joins the board
after the grant of restricted stock units for that year, the
non-employee director’s grant of restricted stock units will
be prorated for the portion of the year to be served.
Our
2017 Plan provides that the aggregate grant date fair value of all
awards granted to any single non-employee director during any
single calendar year (determined as of the applicable grant date(s)
under applicable financial accounting rules), taken together with
any cash fees paid to the non-employee director during the same
calendar year, may not exceed $200,000.
Prior
to September 1, 2018, we paid to our non-employee directors an
annual retainer fee of $50,000, of which $30,000 was payable in
quarterly cash payments of $7,500, and $20,000 was payable in the
form of an annual grant of restricted stock units pursuant to the
2017 Plan. The restricted stock units were granted at the board
meeting coinciding with our annual stockholders’ meeting and
each restricted stock unit represented a contingent right to
receive one share of our common stock. The restricted stock units
vest in full 12 months after the grant date, subject to the
recipient’s continued service as a director of the Company
through such date. The previous program also provided for an
additional $3,000 payable in cash each year for each board
committee served on, or an additional $10,000 payable in cash each
year per committee for service as committee chairman. The Chairman
of the Board also received an additional $10,000 annual retainer
fee payable in cash. All non-employee directors were entitled to
reimbursement of reasonable expenses incurred by them in connection
with their attendance at meetings of the board and any committee
thereof on which they served or otherwise in furtherance of our
business. If a non-employee director did not serve on the board or
a board committee or as Chairman of the Board or a board committee
chairman for the full year, the board and any applicable board
committee or chairman retainers were prorated for the portion of
the year served.
18
The
following table shows the compensation paid to our non-employee
directors for fiscal 2018:
|
Name
|
|
Fees Earned or Paid in Cash ($)
|
|
Stock Awards ($)
(2)
|
|
Option Awards ($)
|
|
Total ($)
|
|
D. Kyle
Cerminara
(3)
|
|
90,750
|
|
40,000
|
|
—
|
|
130,750
|
|
Lewis
M. Johnson
(1)(3)(4)
|
|
87,000
|
|
40,000
|
|
—
|
|
127,000
|
|
Michael
R. Dill
(3)
|
|
46,000
|
|
40,000
|
|
—
|
|
86,000
|
|
Charles
T. Lanktree
(3)(4)
|
|
43,000
|
|
40,000
|
|
—
|
|
83,000
|
|
E. Gray
Payne
(3)
|
|
54,250
|
|
40,000
|
|
—
|
|
94,250
|
|
John W.
Struble
(3)
|
|
50,000
|
|
40,000
|
|
—
|
|
90,000
|
|
Ryan
R.K. Turner
(3)
|
|
43,000
|
|
40,000
|
|
—
|
|
83,000
|
_________________
(1)
Mr. Johnson was
appointed Co-Chairman of the Board on June 4, 2018.
(2)
Stock awards
represent the aggregate grant date fair value of 5,479 restricted
stock units, or RSUs, granted on June 4, 2018 after the 2018 annual
stockholders’ meeting to each non-employee director who was
elected as a director at the meeting and the aggregate grant date
fair value of 5,063 RSUs granted on September 6, 2018 to each of
the non-employee directors. We granted the additional RSUs on
September 6, 2018 following the adoption of our new director
compensation program, effective as of September 1, 2018, which
provides for an annual grant of RSUs with a total value of $40,000
(RSUs with a value of $20,000 were granted to the non-employee
directors on September 6, 2018, in light of grants of RSUs with a
value of $20,000 made to the non-employee directors on June 4,
2018).
The
RSUs were granted pursuant to the 2017 Plan and represent a portion
of the compensation payable to our non-employee directors, as
described above under “Director Compensation Program.”
Each RSU represents a contingent right to receive one share of our
common stock. The 5,479 RSUs granted on June 4, 2018 vest in full
12 months after the grant date and the 5,063 RSUs granted on
September 6, 2018 vest in full in five equal annual installments,
beginning on the first anniversary of the grant date, in each case
subject to the director’s continued service as a director of
the Company through such date, provided that, solely with respect
to the RSUs granted on September 6, 2018, if the director makes
himself available and consents to be nominated by the Company for
continued service as a director of the Company, but is not
nominated for the board for election by stockholders, other than
for good reason, as determined by the board in its discretion, then
the RSUs shall vest in full as of the director’s last date of
service as a director of the Company. In addition, the 2017 Plan
and the RSU award agreements grant the compensation committee the
discretion to accelerate vesting of the RSUs upon the occurrence of
a “change in control” (as defined under the plan) or in
connection with the termination of the director’s service for
any reason prior to the vesting date. The amounts shown represent
the aggregate grant date fair value computed in accordance with
FASB Accounting Standards Codification (ASC) Topic 718
“Compensation-Stock Compensation” (“FASB ASC
Topic 718”). For a discussion of valuation assumptions, see
Note 10 (Share-Based Employee Compensation) of our consolidated
financial statements included in our Annual Report on Form 10-K for
fiscal 2018.
(3)
The aggregate
number of option and stock awards outstanding (including exercised
and unexercised stock options and unvested RSUs) as of December 31,
2018 for each non-employee director was as follows:
|
Name
|
|
Option Awards (#)
|
|
Stock Awards (#)
|
|
D. Kyle Cerminara
|
|
10,000 (all exercisable)
|
|
10,542 RSUs
|
|
Lewis
M. Johnson
|
|
5,000 (all exercisable)
|
|
10,542 RSUs
|
|
Michael
R. Dill
|
|
—
|
|
10,542 RSUs
|
|
Charles
T. Lanktree
|
|
—
|
|
10,542 RSUs
|
|
E. Gray
Payne
|
|
5,000 (all exercisable)
|
|
10,542 RSUs
|
|
John W.
Struble
|
|
—
|
|
10,542 RSUs
|
|
Ryan
R.K. Turner
|
|
—
|
|
10,542 RSUs
|
19
Of the
10,542 RSUs outstanding for each director listed above as of
December 31, 2018, 5,479 RSUs (granted on June 4, 2018) vest in
full on June 4, 2019 and 5,063 RSUs (granted on September 6, 2018)
vest in full in five equal annual installments, beginning on
September 6, 2019, the first anniversary of the grant date, in each
case subject to the director’s continued service as a
director of the Company through such date, provided that, solely
with respect to the RSUs granted on September 6, 2018, if the
director makes himself available and consents to be nominated by
the Company for continued service as a director of the Company, but
is not nominated for the board of directors for election by
stockholders, other than for good reason, as determined by the
board in its discretion, then the restricted stock units will vest
in full as of the director’s last date of service as a
director of the Company. See footnote 2 above for more
information.
(4)
Amount includes
fees ($33,750 for Mr. Johnson and $13,250 for Mr. Lanktree) earned
for board and committee service in the fourth quarter of fiscal
2018 that were paid in January 2019.
20
REPORT OF THE AUDIT COMMITTEE
The following report of the
audit committee does not constitute soliciting material and should
not be deemed filed with the Securities and Exchange Commission nor
shall this report be incorporated by reference into any of our
filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
The
audit committee oversees our financial reporting process on behalf
of the board of directors. Management has the primary
responsibility for the consolidated financial statements and the
reporting process, including the systems of internal controls. In
fulfilling its oversight responsibilities, the audit committee has
reviewed and discussed the audited consolidated financial
statements included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2018 with management, including a
discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments,
and the clarity of disclosures in the consolidated financial
statements.
The
audit committee also has reviewed and discussed with our
independent registered public accounting firm, Moore Stephens
Lovelace, P.A., which is responsible for expressing an opinion on
the conformity of those consolidated financial statements with
accounting principles generally accepted in the United States, its
judgments as to the quality, not just the acceptability, of our
accounting principles and such other matters as are required to be
discussed with the committee by applicable requirements of the
Public Company Accounting Oversight Board and the Securities and
Exchange Commission. In addition, the audit committee has received
the written disclosures and the letter from Moore Stephens
Lovelace, P.A. required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
accountant’s communications with the audit committee
concerning independence, and has discussed with Moore Stephens
Lovelace, P.A. its independence.
Based
on the considerations and discussions referred to above, the audit
committee recommended to our board of directors (and the board
approved) that the audited consolidated financial statements for
2018 be included in our Annual Report on Form 10-K for the year
ended December 31, 2018, as filed with the Securities and Exchange
Commission.
This
report is provided by the following independent directors, who
comprise the audit committee:
|
|
John W.
Struble (chairperson)
|
|
|
Michael
R. Dill
|
|
|
General
E. Gray Payne
|
21
EXECUTIVE COMPENSATION
On
March 28, 2019, the Reorganization was completed. As a result of
the Reorganization, BK Technologies, Inc. became our wholly-owned
subsidiary, and BK Technologies Corporation became the publicly
held company. BK Technologies, Inc. continues to conduct the same
operations as it did prior to the completion of the Reorganization.
In connection with the Reorganization, the Named Executive Officers
retained their officer positions with BK Technologies, Inc., while
also being appointed officers of us.
The
following table provides certain summary information concerning the
compensation of our Named Executive Officers for the last two
completed fiscal years ended December 31, 2018:
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus ($)
(4)
|
|
Stock Awards ($)
|
|
Option Awards ($)
(6)
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
All Other Compensation ($)
|
|
Total ($)
|
|
Timothy A. Vitou
(1)
|
|
2018
|
|
250,000
|
|
125,000
|
|
—
|
|
49,110
|
|
—
|
|
24,816
(7)
|
|
448,926
|
|
President
|
|
2017
|
|
247,461
|
|
50,000
|
|
—
|
|
54,295
|
|
—
|
|
14,878
(7)
|
|
366,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William P. Kelly
|
|
2018
|
|
200,000
|
|
100,000
|
|
—
|
|
32,740
|
|
—
|
|
34,266
(8)
|
|
367,006
|
|
Executive
Vice President, Chief Financial Officer and Secretary
|
|
2017
|
|
201,283
(12)
|
|
25,000
|
|
—
|
|
54,295
|
|
—
|
|
14,705
(8)
|
|
295,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy Willis
(2)
|
|
2018
|
|
200,000
|
|
100,000
|
|
—
|
|
32,740
|
|
—
|
|
5,501
(9)(10)
|
|
338,241
|
|
Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Holthaus
(3)
|
|
2018
|
|
202,301
|
|
100,000
|
|
—
|
|
32,740
|
|
—
|
|
13,252
(11)
|
|
348,293
|
|
Chief
Technology Officer
|
|
2017
|
|
144,326
|
|
132,556
(5)
|
|
—
|
|
56,790
|
|
—
|
|
11,638
(11)
|
|
345,310
|
_____________
(1)
Mr. Vitou was
appointed as President of the Company effective January 17, 2017.
Mr. Vitou’s compensation for 2017 includes compensation
received from January 1, 2017 through January 17, 2017 in his role
as Senior Vice President of Sales and Marketing of the
Company.
(2)
Mr. Willis was
appointed as Chief Operating Officer of the Company on March 14,
2018, having previously served as Vice President of Operations
since August 2017. Mr. Willis was not a Named Executive Officer for
the fiscal year ending December 31, 2017 (“fiscal
2017”). Mr. Willis’ compensation for 2018 includes
compensation received from January 1, 2018 through March 14, 2018
in his role as Vice President of Operations.
(3)
Mr. Holthaus was
appointed as Chief Technology Officer of the Company effective
August 4, 2017. Mr. Holthaus’ compensation for 2017 includes
compensation received from January 1, 2017 through August 4, 2017
in his role as Vice President – Project 25 Solutions for the
Company.
(4)
On January 23,
2019, the compensation committee approved payment of cash bonuses
of $125,000 to Mr. Vitou, $100,000 to Mr. Kelly, $100,000 to Mr.
Willis and $100,000 to Mr. Holthaus based upon their 2018
performance. On March 14, 2018, the compensation committee approved
payment of cash bonuses of $50,000 to Mr. Vitou, $25,000 to Mr.
Kelly, $25,000 to Mr. Willis and $12,500 to Mr. Holthaus based upon
their 2017 performance. The bonus paid to Mr. Willis is not shown
in the table above as he was not a Named Executive Officer for
fiscal 2017.
(5)
Includes the
$12,500 cash bonus received by Mr. Holthaus on March 14, 2018 (as
described in footnote 4) and the cash bonus received pursuant to a
sales bonus plan related to Mr. Holthaus’ previous position
as Vice President – Project 25 Solutions for the Company. On
August 30, 2017, the compensation committee approved Mr.
Holthaus’ continued participation in the plan through the end
of fiscal 2017.
(6)
The amounts in this
column represent the aggregate grant date fair value of stock
options granted to the Named Executive Officer computed in
accordance with FASB ASC Topic 718. The value ultimately realized
by the Named Executive Officer upon the actual exercise of the
stock options may or may not be equal to the FASB ASC Topic 718
computed value. For a discussion of valuation assumptions, see Note
10 (Share-Based Employee Compensation) of our consolidated
financial statements included in our Annual Report on Form 10-K for
fiscal 2018.
22
On March 14, 2018, the committee granted
non-qualified stock options to Messrs. Vitou, Kelly, Willis and
Holthaus to purchase 30,000, 20,000, 20,000 and 20,000 shares,
respectively, of the Company’s common stock, at an exercise
price of $3.75 per share. On August 30, 2017, the committee granted
non-qualified stock options to Messrs. Vitou, Kelly, Willis and
Holthaus to purchase 10,000, 10,000, 25,000 and 25,000 shares,
respectively, of the Company’s common stock, at an exercise
price of $4.20 per share. In addition, on March 17, 2017, the
committee granted non-qualified stock options to Messrs. Vitou,
Kelly and Holthaus to purchase 25,000, 25,000 and 5,000 shares,
respectively, of the Company’s common stock, at an exercise
price of $5.10 per share.
The stock options granted to Mr.
Willis in 2017 are not shown in the table above as he was not a
Named Executive Officer for fiscal 2017. Additional information
about the stock option awards can be found below under
“—
Stock Option
Awards.
”
(7)
The amounts in this
column for Mr. Vitou represent the Company’s matching
contributions for fiscal 2018 and fiscal 2017 of $6,308 and $6,276,
respectively, to Mr. Vitou’s account under the
Company’s 401(k) plan; the Company’s payments for
fiscal 2018 and fiscal 2017 of $8,893 and $8,602, respectively, for
long-term disability, life and health insurance premiums for the
benefit of Mr. Vitou; and the Company’s payment for fiscal
2018 of $9,615 for accrued unused vacation time.
(8)
The amounts in this
column for Mr. Kelly represent the Company’s matching
contributions for fiscal 2018 and fiscal 2017 of $6,142 and $6,142,
respectively, to Mr. Kelly’s account under the
Company’s 401(k) plan; the Company’s payments for
fiscal 2018 and fiscal 2017 of $8,894 and $8,563, respectively, for
long-term disability, life and health insurance premiums for the
benefit of Mr. Kelly; and the Company’s payment for fiscal
2018 of $19,230 for accrued unused vacation time.
(9)
The amount in this
column for Mr. Willis includes the Company’s payment for
fiscal 2018 of $5,501 for long-term disability, life and health
insurance premiums for the benefit of Mr. Willis.
(10)
Does not include a
one-time cash payment of $30,000 paid by the Company to Mr. Willis
after fiscal 2018 to offset potential losses incurred by Mr. Willis
in connection with the sale of his house located in Charlotte,
North Carolina. Mr. Willis relocated from Charlotte, North
Carolina, to Brevard County, Florida, in order to be closer to the
Company’s principal executive offices. The payment was made
pursuant to a retention agreement entered into between the Company
and Mr. Willis. See “—Appointment of Chief Operating
Officer—Retention Agreement” below for more information
about this agreement. In 2017, the Company also paid moving
expenses of $10,972 in connection of Mr. Willis’ relocation,
which amount is not shown in the table above, as Mr. Willis was not
a Named Executive Officer for fiscal 2017.
(11)
The amounts in this
column for Mr. Holthaus represent the Company’s matching
contributions for fiscal 2018 and fiscal 2017 of $4,460 and $3,336,
respectively, to Mr. Holthaus’ account under the
Company’s 401(k) plan and the Company’s payments for
fiscal 2018 and 2017 of $8,792 and $8,302, respectively, for
long-term disability, life and health insurance premiums for the
benefit of Mr. Holthaus.
(12)
Includes a payment
of $7,692 for accrued unused vacation time in fiscal
2017.
Except
as disclosed above, Messrs. Vitou, Kelly, Willis and Holthaus did
not receive any other compensation during 2018 or 2017, except for
perquisites and other personal benefits, of which the total
aggregate value for each of them did not exceed
$10,000.
Employment Agreements
On
March 20, 2019, the Company entered into employment agreements with
the Named Executive Officers (collectively, the “Employment
Agreements”): (i) Timothy A. Vitou, President; (ii) William
P. Kelly, Executive Vice President, Chief Financial Officer and
Secretary; (iii) Randy Willis, Chief Operating Officer; and (iv)
James R. Holthaus, Chief Technology Officer. Following the
Reorganization, the Employment Agreements are with BK Technologies,
Inc., our wholly-owned subsidiary.
The
Employment Agreements provide for an annual base salary of $275,000
for Mr. Vitou and $215,000 for each of Messrs. Kelly, Willis and
Holthaus. Each Named Executive Officer will be eligible for
performance-based compensation in the form of an annual bonus,
payable in cash or through equity in the Company, as determined by
the compensation committee, and subject to the achievement of
performance metrics and other criteria as determined by the
compensation committee.
23
The
Employment Agreements provide for severance payments in the event
the Named Executive Officer’s employment is terminated by the
Company without “cause.” Each Named Executive Officer
will be entitled to an amount equal to six months (twelve months
for Mr. Vitou) of their base salary in effect at the time of
termination or the original base salary set forth in their
respective Employment Agreement, whichever is greater. Messrs.
Vitou and Kelly will not be entitled to severance payments if, in
connection with their termination without “cause,” they
are entitled to receive a payment under their respective 2016
Change of Control Agreement (as defined below).
Any
severance payable to a Named Executive Officer under his Employment
Agreement will be paid by the Company over a twelve-month period in
accordance with the Company’s normal payroll practices and
subject to applicable law. None of the Named Executive Officers
will be entitled to severance payments in the event he is
terminated for “cause.” For purposes of the Employment
Agreements, “cause” will exist if the Named Executive
Officer (i) acts dishonestly or incompetently or engages in willful
misconduct in performance of his executive duties, (ii) breaches
the Named Executive Officer’s fiduciary duties owed to the
Company, (iii) intentionally fails to perform duties assigned to
him, (iv) is convicted or enters a plea of guilty or nolo
contendere with respect to any felony crime involving dishonesty or
moral turpitude, and/or (v) breaches his obligations under his
Employment Agreement.
The
Named Executive Officer are also eligible to participate in the
Company’s benefit plans. The Employment Agreements contain
customary non-competition and non-solicitation
covenants.
Appointment of Chief Operating Officer
On
March 14, 2018, the board of directors appointed Mr. Willis as
Chief Operating Officer of the Company effective immediately. Mr.
Willis previously served as Vice President of Operations of the
Company since August 2017. As Chief Operating Officer, Mr. Willis
initially received an annual base salary of $200,000. In addition,
the compensation committee approved for Mr. Willis a $25,000 cash
bonus for 2017 and granted to Mr. Willis non-qualified stock
options to purchase 20,000 shares of the Company’s common
stock at an exercise price of $3.75 per share under the
Company’s 2017 Plan. The options have a ten-year term and
will become exercisable in five equal annual installments,
beginning on the first anniversary of the grant date. Mr. Willis
was not a Named Executive Officer for fiscal 2017.
For
his service as Vice President of Operations from August 2017 to
March 2018, Mr. Willis received payments equal to $80,770 in 2017
and an additional $46,154 in 2018, and a grant of non-qualified
stock options to purchase 25,000 shares of the Company’s
common stock, at an exercise price of $4.20 per share, on August
30, 2017. The options have a ten-year term and become exercisable
in one-fifth annual installments, beginning on the first
anniversary of the grant date.
Prior
to Mr. Willis joining the Company in August 2017, the Company
engaged Target Velocity Consulting, Inc., of which Mr. Willis is
President, to provide operational consulting services to the
Company in 2017 for total fees of $59,616.
Retention Agreement
On
December 18, 2018, the compensation committee approved a retention
agreement by and between us and Mr. Willis in connection with Mr.
Willis’s relocation from Charlotte, North Carolina, to
Brevard County, Florida, in order to be near the Company’s
principal executive offices. The agreement provides for a one-time
cash payment of $30,000 from us to Mr. Willis to offset potential
losses incurred by Mr. Willis in connection with the sale of his
house located in Charlotte, North Carolina, which we paid to Mr.
Willis in January 2019. Previously, in 2017, we paid $10,972 to Mr.
Willis as assistance with his moving expenses.
Pursuant
to the retention agreement, if Mr. Willis’s employment with
us is terminated by Mr. Willis either voluntarily (other than for
“good reason”) or by us for “cause” during
(i) the period beginning the date of the retention agreement and
ending on the second anniversary of his employment date (August 1,
2017), the entire relocation allowance ($30,000) provided under the
agreement will be immediately repayable to us, (ii) the period
beginning on the day following the second anniversary of his
employment date and ending on the third anniversary of his
employment date, two-thirds of the relocation allowance ($20,000)
will be immediately repayable to us, and (iii) the period beginning
on the fourth anniversary of his employment date, one-third of the
relocation allowance ($10,000) will be immediately repayable to us.
Any such amounts that are repayable to us may also be deducted from
any amounts otherwise payable to Mr. Willis by us upon his
termination. For purposes of the retention agreement,
“cause” and “good reason” have the meanings
set forth in the 2017 Plan.
24
Compensation Consultant
In
2018, the compensation committee engaged Pay Governance LLC as an
independent compensation consultant to assist the committee with
the review and design of our executive compensation program,
including providing the committee with pay data regarding the
direct compensation program for our President, Chief Operating
Officer, Chief Financial Officer and Chief Technology Officer. In
connection with the committee’s engagement of the consultant,
the committee solicited information from Pay Governance LLC
regarding any actual or perceived conflicts of interest and to
evaluate the firm’s independence. Based on the information
received from the consultant, the compensation committee believes
that the work Pay Governance LLC performed in 2018 did not raise a
conflict of interest and that it was independent.
Base Salaries
On
March 5, 2019, the compensation committee approved base salaries
for 2019 of $275,000, $215,000, $215,000 and $215,000 to Messrs.
Vitou, Kelly, Willis and Holthaus, respectively.
On
March 14, 2018, the compensation committee approved base salaries
for 2018 of $250,000, $200,000, $200,000 and $200,000 to Messrs.
Vitou, Kelly, Willis and Holthaus, respectively. Mr. Willis was
appointed as Chief Operating Officer of the Company effective March
14, 2018.
On
March 17, 2017, the compensation committee approved base salaries
for 2017 of $250,000 and $200,000 to Messrs. Vitou and Kelly,
respectively.
Effective
August 4, 2017, Mr. Holthaus was appointed as Chief Technology
Officer of the Company. On August 30, 2017, the compensation
committee approved an increase in Mr. Holthaus’s base salary
to a rate of $175,000 per year, effective as of September 1, 2017.
In addition, the committee approved Mr. Holthaus’s continued
participation in a sales bonus plan related to his previous
position as Vice President – Project 25 Solutions of the
Company through the end of fiscal 2017 pursuant to which he
received $120,056.
Bonus Payments
2018 Discretionary Cash Bonuses
On
January 23, 2019, based on management’s recommendations and
the Named Executive Officers’ 2018 performance, the
compensation committee approved the payment of cash bonuses of
$125,000 to Mr. Vitou and $100,000 to each of Messrs. Kelly, Willis
and Holthaus.
2017 Discretionary Cash Bonuses
On
March 14, 2018, based on management’s recommendations and the
Named Executive Officers’ 2017 performance, the compensation
committee approved the payment of cash bonuses of $50,000 to Mr.
Vitou, $25,000 to Mr. Kelly, $25,000 to Mr. Willis and $12,500 to
Mr. Holthaus.
Stock Option Awards
2019 Awards
On
March 5, 2019, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly, Willis and Holthaus to
purchase 30,000, 20,000, 20,000 and 20,000 shares, respectively, of
the Company’s common stock, at an exercise price of $4.07 per
share. The stock options have ten-year terms and become exercisable
in five equal annual installments, beginning on the first
anniversary of the grant date.
2018 Awards
On
March 14, 2018, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly, Willis and Holthaus to
purchase 30,000, 20,000, 20,000 and 20,000 shares, respectively, of
the Company’s common stock, at an exercise price of $3.75 per
share. The stock options have ten-year terms and become exercisable
in five equal annual installments, beginning on the first
anniversary of the grant date.
25
2017 Awards
On
March 17, 2017, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly and Holthaus to purchase
25,000, 25,000 and 5,000 shares, respectively, of the
Company’s common stock, at an exercise price of $5.10 per
share. The stock options have ten-year terms and become exercisable
in five equal annual installments, beginning on the first
anniversary of the grant date.
On
August 30, 2017, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly, Willis and Holthaus to
purchase 10,000, 10,000, 25,000 and 25,000 shares, respectively, of
the Company’s common stock, at an exercise price of $4.20 per
share. The stock options have ten-year terms and become exercisable
in five equal annual installments, beginning on the first
anniversary of the grant date.
2017 Incentive Compensation Plan
The
Company’s stockholders approved the 2017 Plan at the
Company’s 2017 annual meeting of stockholders held on June
15, 2017. The 2017 Plan replaced the 2007 Incentive Compensation
Plan (the “2007 Plan” and, together with the 2017 Plan,
the “Equity Plans”), which had been approved by the
stockholders in 2007. No new awards will be granted under the 2007
Plan.
In
connection with the Reorganization, we assumed the Equity Plans and
all of the outstanding equity awards under such Equity Plans
pursuant to the Omnibus Amendment to Incentive Compensation Plans,
dated as of March 28, 2019 (the “Omnibus Amendment”).
Each outstanding equity award assumed by us is issuable upon the
same terms and conditions as were in effect immediately prior to
the completion of the Reorganization, except that all such equity
awards now entitle the holder thereof to acquire our common
stock.
The
objective of the 2017 Plan is to provide incentives to attract and
retain key employees, non-employee directors and consultants and
align their interests with those of the Company’s
stockholders. The 2017 Plan is administered by the compensation
committee and has a term of ten years. All non-employee directors
of the Company and employees and consultants of the Company and its
subsidiaries designated by the committee are eligible to
participate in the 2017 Plan and to receive awards, including stock
options (which may be incentive stock options or non-qualified
stock options), stock appreciation rights, restricted shares,
restricted share units, or other share-based awards and cash-based
awards.
26
OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END
The
following table provides information with respect to outstanding
stock option awards for our shares of common stock classified as
exercisable and unexercisable as of December 31, 2018 for the Named
Executive Officers.
|
Name
|
|
Number of Securities Underlying
Unexercised Options (#) Exercisable
(7)
|
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Option Exercise Price ($)
|
|
Option Expiration Date
|
|
Timothy
A. Vitou
|
|
15,000
(1)
|
|
—
|
|
4.07
|
|
3/04/20
|
|
|
|
5,000
(2)
|
|
—
|
|
2.23
|
|
3/12/23
|
|
|
|
5,000
(3)
|
|
20,000
|
|
5.10
|
|
3/17/27
|
|
|
|
2,000
(4)
|
|
8,000
|
|
4.20
|
|
8/30/27
|
|
|
|
—
(5)
|
|
30,000
|
|
3.75
|
|
3/14/28
|
|
|
|
|
|
|
|
|
|
|
|
William
P. Kelly
|
|
25,000
(1)
|
|
—
|
|
4.07
|
|
3/04/20
|
|
|
|
15,000
(2)
|
|
—
|
|
2.23
|
|
3/12/23
|
|
|
|
4,000
(6)
|
|
6,000
|
|
3.83
|
|
2/24/26
|
|
|
|
5,000
(3)
|
|
20,000
|
|
5.10
|
|
3/17/27
|
|
|
|
2,000
(4)
|
|
8,000
|
|
4.20
|
|
8/30/27
|
|
|
|
—
(5)
|
|
20,000
|
|
3.75
|
|
3/14/28
|
|
|
|
|
|
|
|
|
|
|
|
Randy Willis
|
|
5,000
(4)
|
|
20,000
|
|
4.20
|
|
8/30/27
|
|
|
|
—
(5)
|
|
20,000
|
|
3.75
|
|
3/14/28
|
|
|
|
|
|
|
|
|
|
|
|
James R. Holthaus
|
|
1,000
(3)
|
|
4,000
|
|
5.10
|
|
3/17/27
|
|
|
|
5,000
(4)
|
|
20,000
|
|
4.20
|
|
8/30/27
|
|
|
|
—
(5)
|
|
20,000
|
|
3.75
|
|
3/14/28
|
___________
(1)
The options were
granted on March 4, 2010 and are fully vested and
exercisable.
(2)
The options were
granted on March 12, 2013 and are fully vested and
exercisable.
(3)
The options were
granted on March 17, 2017 and vest in five equal annual
installments, beginning on March 17, 2018.
(4)
The options were
granted on August 30, 2017 and vest in five equal annual
installments, beginning on August 30, 2018.
(5)
The options were
granted on March 14, 2018 and vest in five equal annual
installments, beginning on March 14, 2019.
(6)
The options were
granted on February 24, 2016 and vest in five equal annual
installments, beginning on February 24, 2017.
(7)
None of the Named
Executive Officers exercised any options during fiscal
2018.
27
We
do not have a defined benefit plan for the Named Executive Officers
or other employees. The only retirement plan available to the Named
Executive Officers in 2018 was the qualified 401(k) retirement
plan, which is available to all employees.
2016 Change of Control Agreements
Effective as of February 24, 2016, the Company
entered into change of control agreements (the “2016 Change
of Control Agreements”) with Messrs. Vitou and Kelly, which
were approved by the compensation committee on that same day. The
2016 Change of Control Agreements replaced and terminated the 2012
Change of Control Agreements that the Company previously entered
into with Messrs. Vitou and Kelly, which expired on February 29,
2016, and are substantially similar to the 2012 Change of Control
Agreements. The Company has not entered into any change of control
agreements with Messrs. Willis or Holthaus.
Following the
Reorganization, the 2016 Change of Control Agreements are with BK
Technologies, Inc., our wholly-owned subsidiary, and changes of
control refer to those of our subsidiary.
Each
of the 2016 Change of Control Agreements has a term of four years,
unless a “change of control” (as defined in the
agreements) of the Company occurs within such four-year period, in
which case each agreement is automatically extended for twelve
months after the date of such change of control. Pursuant to the
2016 Change of Control Agreements, if the applicable Named
Executive Officer’s employment is terminated within twelve
months following a change in control (i) by the Company for any
reason other than for “cause” (as defined in the
agreements), disability or death or (ii) by such Named Executive
Officer for “good reason” (as defined in the
agreements), the applicable Named Executive Officer will receive
certain payments and benefits. A Named Executive Officer is not
entitled to any payments and benefits if the Named Executive
Officer terminates the Named Executive Officer’s employment
without good reason.
The
payments and benefits to be paid pursuant to the 2016 Change of
Control Agreements are as follows:
●
Mr.
Vitou will receive (i) a cash payment equal to the sum of (x) 50%
of his then-current base salary and (y) the average of his annual
cash bonuses for the two fiscal years preceding the fiscal year in
which termination occurs, (ii) health, life and disability
insurance benefits for himself and, if applicable, his covered
dependents for a period of six months after the date of
termination, and (iii) outplacement services for a period of six
months following the date of termination, provided that the costs
of such services to the Company may not exceed $7,500.
●
Mr.
Kelly will receive (i) a cash payment equal to the sum of (x) 75%
of his then-current base salary and (y) the average of his annual
cash bonuses for the two fiscal years preceding the fiscal year in
which termination occurs, (ii) health, life and disability
insurance benefits for himself and, if applicable, his covered
dependents for a period of nine months after the date of
termination, and (iii) outplacement services for a period of nine
months following the date of termination, provided that the costs
of such services to the Company may not exceed
$11,250.
The changes of
control below refer to those of BK Technologies, Inc., our
wholly-owned subsidiary.
Under the
2016 Change of Control Agreements, a change of control will have
occurred if:
●
individuals
who, as of February 24, 2016, constitute the board of directors
(the “Incumbent Board”) cease for any reason to
constitute at least a majority of the board, provided that any
individual becoming a director subsequent to that date whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be considered as though such
individual was a member of the Incumbent Board; or
28
●
the
approval by the stockholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or
series of transactions (but not including an underwritten public
offering of the Company’s common stock or other voting
securities (or securities convertible into voting securities of the
Company) for the Company’s own account registered under the
Securities Act of 1933, as amended), in each case, with respect to
which stockholders of the Company immediately prior to such
reorganization, merger, consolidation or other corporate
transaction do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged
or consolidated entity’s then outstanding voting securities,
or a liquidation or dissolution of the Company or the sale of all
or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently
abandoned or terminated prior to being consummated);
or
●
the
acquisition by any person, entity or “group,” within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
more than fifty percent (50%) of either the then outstanding shares
of the Company’s common stock or the combined voting power of
the Company’s then outstanding voting securities entitled to
vote generally in the election of directors (hereinafter referred
to as a “Controlling Interest”) excluding any
acquisitions by (x) the Company or any of its subsidiaries, (y) any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries, or (z) any person, entity
or “group” that as of February 24, 2016 owns
beneficially (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) a Controlling Interest.
Each
of the 2016 Change of Control Agreements contains term and
post-termination confidentiality, non-solicitation and
non-competition covenants. The post-termination, non-solicitation
and non-competition covenants survive six months for Mr. Vitou and
nine months for Mr. Kelly, while the post-term confidentiality
covenants survive indefinitely for each of them.
Employment Agreements
After the end of fiscal 2018, on March 20, 2019,
the Company entered into the Employment Agreements, which,
following the Reorganization, are with BK Technologies, Inc., our
wholly-owned subsidiary, and the changes
of control referred
to are those of our subsidiary.
The
Employment Agreements
provide for severance payments in the
event the Named Executive Officer’s employment is terminated
by the Company without “cause.” Each Named Executive
Officer will be entitled to an amount equal to six months (twelve
months for Mr. Vitou) of their base salary in effect at the time of
termination or the original base salary set forth in their
respective Employment Agreement, whichever is greater. Messrs.
Vitou and Kelly will not be entitled to severance payments if, in
connection with their termination without “cause,” they
are entitled to receive a payment under their respective 2016
Change of Control Agreement.
Any
severance payable to a Named Executive Officer under his Employment
Agreement will be paid by the Company over a twelve-month period in
accordance with the Company’s normal payroll practices and
subject to applicable law. None of the Named Executive Officers
will be entitled to severance payments in the event he is
terminated for “cause.” For purposes of the Employment
Agreements, “cause” will exist if the Named Executive
Officer (i) acts dishonestly or incompetently or engages in willful
misconduct in performance of his executive duties, (ii) breaches
the Named Executive Officer’s fiduciary duties owed to the
Company, (iii) intentionally fails to perform duties assigned to
him, (iv) is convicted or enters a plea of guilty or nolo
contendere with respect to any felony crime involving dishonesty or
moral turpitude, and/or (v) breaches his obligations under his
Employment Agreement.
In
addition to the 2016 Change of Control Agreements and the
Employment Agreements, the Company’s equity plans and award
agreements entered into with its Named Executive Officers include
change in control provisions.
2017 Incentive Compensation Plan – Change in Control
Provisions
Our
2017 Plan generally provides for “double-trigger”
vesting of equity awards in connection with a change in control of
the Company, as described below.
To
the extent that outstanding awards granted under the 2017 Plan are
assumed in connection with a change in control, then, except as
otherwise provided in the applicable award agreement or in another
written agreement with the participant, all outstanding awards will
continue to vest and become exercisable (as applicable) based on
continued service during the remaining vesting period, with
performance-based awards being converted to service-based awards at
the “target” level. Vesting and exercisability (as
applicable) of awards that are assumed in connection with a change
in control generally would be accelerated in full on a
“double-trigger” basis, if, within two years after the
change in control, the participant’s employment is
involuntarily terminated without cause, or by the participant for
“good reason.” Any stock options or stock appreciation
rights (SARs) that become vested on a “double-trigger”
basis generally would remain exercisable for the full duration of
the term of the applicable award.
To the extent outstanding awards granted under the 2017 Plan are
not assumed in connection with a change in control, then such
awards generally would become vested in full on a
“single-trigger” basis, effective immediately prior to
the change in control, with performance-based awards becoming
vested at the “target” level. Any stock options or SARs
that become vested on a “single-trigger” basis
generally would remain exercisable for the full duration of the
term of the applicable award.
29
The
compensation committee has the discretion to determine whether or
not any outstanding awards granted under the 2017 Plan will be
assumed by the resulting entity in connection with a change in
control, and the committee has the authority to make appropriate
adjustments in connection with the assumption of any awards. The
committee also has the right to cancel any outstanding awards in
connection with a change in control, in exchange for a payment in
cash or other property (including shares of the resulting entity)
in an amount equal to the excess of the fair market value of the
shares subject to the award over any exercise price related to the
award, including the right to cancel any “underwater”
stock options and SARs without payment therefor.
For
purposes of the 2017 Plan, subject to exceptions set forth in the
2017 Plan, a “change in control” generally includes (a)
the acquisition of more than 50% of the Company’s common
stock; (b) the incumbent board of directors ceasing to constitute a
majority of the board of directors; (c) a reorganization, merger,
consolidation or similar transaction, or a sale of substantially
all of the Company’s assets; and (d) the complete liquidation
or dissolution of the Company. The full definition of “change
in control” is set forth in the 2017 Plan.
Whether
a participant’s employment has been terminated for
“cause” will be determined by the compensation
committee. Unless otherwise provided in the applicable award
agreement or in another written agreement with the participant,
“cause,” as a reason for termination of a
participant’s employment, generally includes (a) the
participant’s failure to perform, in a reasonable manner, his
or her assigned duties; (b) the participant’s violation or
breach of his or her employment agreement, consulting agreement or
other similar agreement; (c) the participant’s violation or
breach of any non-competition, non-solicitation, non-disclosure
and/or other similar agreement; (d) any act of dishonesty or bad
faith by the participant with respect to the Company or a
subsidiary; (e) the participant’s breach of fiduciary duties
owed to the Company; (f) the use of alcohol, drugs or other similar
substances in a manner that adversely affects the
participant’s work performance; or (g) the
participant’s commission of any act, misdemeanor, or crime
reflecting unfavorably upon the participant or the Company or any
subsidiary.
For
purposes of the 2017 Plan, unless otherwise provided in the
applicable award agreement or in another written agreement with the
participant, “good reason” generally includes (a) the
assignment to the participant of any duties that are inconsistent
in any material respect with his or her duties or responsibilities
as previously assigned by the Company or a subsidiary, or any other
action by the Company or a subsidiary that results in a material
diminution of the participant’s duties or responsibilities,
other than any action that is remedied by the Company or a
subsidiary promptly after receipt of notice from the participant;
or (b) any material failure by the Company or a subsidiary to
comply with its obligations to the participant as agreed upon,
other than an isolated, insubstantial and inadvertent failure which
is remedied by the Company or subsidiary promptly after receipt of
notice from the participant.
Except
as described above with respect to a change in control,
unexercisable stock options generally become forfeited upon
termination of employment. The stock options that are exercisable
at the time of termination of employment expire (a) twelve months
after the termination of employment by reason of death, or
disability or (b) three months after the termination of employment
for other reasons. With respect to unvested restricted shares and
restricted stock units, unless otherwise provided in the applicable
award agreement, the compensation committee, in its sole
discretion, may provide for the full or partial acceleration of
vesting of the restricted shares or restricted share units, as
applicable, in connection with the termination of the
grantee’s employment for any reason prior to a vesting date,
including, but not limited to, termination of employment as a
result of the grantee’s death or disability. Unless action is
otherwise taken by the compensation committee, any restricted
shares or restricted share units that have not yet vested will be
forfeited automatically in the event of the termination of the
grantee’s employment for any reason prior to a vesting
date.
The
Company’s Named Executive Officers, other employees and
directors are prohibited from hedging or pledging the
Company’s securities. Awards granted under the 2017 Plan also
may be subject to forfeiture or recoupment, as provided pursuant to
any compensation recovery (or “clawback”) policy that
the Company may adopt or maintain from time to time.
2007 Incentive Compensation Plan – Change in Control
Provisions
Our
2007 Plan, under which some equity awards remain outstanding, also
contains provisions providing for the vesting of equity awards in
connection with a change in control of the Company, as described
below.
To
the extent that outstanding awards granted under the 2007 Plan are
assumed in connection with a change in control, then, except as
otherwise provided in the applicable award agreement, all
outstanding awards will continue to vest and become exercisable (as
applicable) based on continued service during the remaining vesting
period.
To
the extent outstanding awards granted under the 2007 Plan are not
assumed in connection with a change in control, then such awards
generally would become vested in full on a
“single-trigger” basis in connection with the change in
control. With respect to any outstanding performance-based awards
subject to achievement of performance goals and conditions, the
compensation committee may, in its discretion, deem such
performance goals and conditions as having been met as of the date
of the change in control. Any stock options or SARs that become
vested on a “single-trigger” basis generally would
remain exercisable for the full duration of the term of the
applicable award.
The
compensation committee has the discretion to determine whether or
not any outstanding awards granted under the 2007 Plan will be
assumed by the resulting entity in connection with a change in
control, and the committee has the authority to make appropriate
adjustments in connection with the assumption of any awards. The
committee also has the right to cancel any outstanding awards in
connection with a change in control, in exchange for a payment in
cash or other property (including shares of the resulting entity)
in an amount equal to the excess of the fair market value of the
shares subject to the award over any exercise price related to the
award, including the right to cancel any “underwater”
stock options and SARs without payment
therefor.
30
For
purposes of the 2007 Plan, subject to exceptions set forth in the
2007 Plan, a “change in control” generally includes:
(a) the acquisition of more than 50% of the Company’s common
stock; (b) the incumbent board of directors ceasing to constitute a
majority of the board of directors; (c) a reorganization, merger,
consolidation or similar transaction, or a sale of substantially
all of the Company’s assets; and (d) the complete liquidation
or dissolution of the Company. The full definition of “change
in control” is set forth in the 2007 Plan.
Any
transaction with a related person is subject to our written policy
for transactions with related persons, which is available on our
website at www.bktechnologies.com/investor-relations. The
nominating and corporate governance committee is responsible for
applying this policy. As set forth in the policy, the committee
reviews the material facts of the transaction and considers, among
other factors it deems appropriate, whether the transaction is on
terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar circumstances
and the extent of the related person’s interest in the
transaction. The policy also prohibits our directors from
participating in any discussion or approval of any interested
transaction for which he is a related person, except that the
director is required to provide all material information concerning
the transaction to the committee.
If
a transaction with a related party will be ongoing, the committee
will establish guidelines for our management to follow in its
ongoing relationships with the related person, will review and
assess ongoing relationships with the related person to determine
if such relationships are in compliance with the committee’s
guidelines, and based on all the relevant facts and circumstances,
will determine if it is in the best interests of the Company and
our stockholders to continue, modify or terminate any such
interested transaction.
The
policy provides exceptions for certain transactions, including (i)
those involving compensation paid to a director or executive
officer required to be reported in the Company’s proxy
statement, (ii) transactions with another company at which a
related person’s only relationship is as an employee (other
than an executive officer), director or beneficial owner of less
than 10% of that company’s shares, if the aggregate amount
involved does not exceed the greater of $500,000, or two percent
(2%) of that company’s total annual revenues, (iii) certain
charitable contributions, (iv) transactions where all stockholders
of the Company receive proportional benefits, (v) transactions
involving competitive bids, (vi) certain regulated transactions,
and (vii) certain banking-related services.
Repurchase of Common Shares
On
December 12, 2018, we entered into a purchase agreement with Donald
F.U. Goebert, a greater-than-five percent stockholder of us,
pursuant to which we repurchased 200,000 shares of our common stock
held by Mr. Goebert, at a price of $3.70 per share, for an
aggregate cash amount of $740,000. The transaction was approved by
our board of directors. Mr. Goebert previously served as our
director until his resignation on January 9, 2017.
Payments to Consulting Firm
On March 14, 2018, Randy Willis was
appointed as Chief Operating Officer of the Company, having served
as Vice President of Operations of the Company since August
2017. Prior to Mr. Willis joining the Company in August 2017, the
Company engaged Target Velocity Consulting, Inc., of which Mr.
Willis is President, to provide operational consulting services to
the Company in 2017 for the total fees of $59,616. See also
“Executive Compensation
—Appointment of Chief
Operating Officer” in this proxy statement.
Except
as set forth above, during 2018 and 2017, we did not have any
transactions with related persons that were reportable under Item
404 of Regulation S-K, and we do not have any transactions with
related persons currently proposed for 2019 that are reportable
under Item 404 of Regulation S-K.
Moore
Stephens Lovelace, an independent registered public accounting
firm, audited our financial statements for fiscal 2018 and fiscal
2017. We had no disagreements with Moore Stephens Lovelace on
accounting and financial disclosures. Moore Stephens
Lovelace
’
s work on our
audit for fiscal 2018 was performed by full time, permanent
employees and partners of Moore Stephens Lovelace.
Moore
Stephens Lovelace, which has served as our independent registered
public accounting firm since November 2015, has been reappointed to
serve as our independent registered public accounting firm for
fiscal 2019. The audit committee, in discussing the reappointment
of Moore Stephens Lovelace, considered the qualifications,
experience, independence, compliance with regulations, quality
control, candor, objectivity, and professional skepticism of Moore
Stephens Lovelace and the effectiveness of the firm
’
s processes, including its
timeliness and responsiveness and communication and interaction
with management. The audit committee also considered the tenure of
Moore Stephens Lovelace as our independent registered public
accounting firm and its related depth of understanding of our
businesses, operations and systems. The audit committee and the
board of directors believe that the continued retention of Moore
Stephens Lovelace as our independent registered public accounting
firm is in the best interests of the Company and our
stockholders.
31
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
General
Our
audit committee has appointed Moore Stephens Lovelace to serve as
our independent registered public accounting firm for fiscal 2019.
Representatives of Moore Stephens Lovelace are expected to be
present at the annual meeting and will have the opportunity to make
a statement if they so desire, and will be available to respond to
appropriate stockholder questions.
Although applicable
law does not require stockholder ratification of the appointment of
Moore Stephens Lovelace to serve as our independent registered
public accounting firm, our board has decided to ascertain the
position of our stockholders on the appointment. If our
stockholders do not ratify the appointment of Moore Stephens
Lovelace, our audit committee will reconsider the appointment. Even
if the selection is ratified, our audit committee in its discretion
may appoint a different independent registered public accounting
firm at any time during the year if it determines that such a
change would be in our best interests and in the best interests of
our stockholders.
Vote Required
This
proposal will be approved if the number of votes cast
“
for
”
the ratification of Moore Stephens
Lovelace as our independent registered public accounting firm
exceed the number of votes cast
“
against
”
ratification. Abstentions and
broker non-votes will have no effect on the outcome of the vote.
Shares represented by properly executed proxies will be voted, if
specific instructions are not otherwise given, in favor of this
proposal.
Recommendation of the Board
Our
board of directors unanimously recommends that stockholders vote
“
FOR
”
the ratification of the appointment
of Moore Stephens Lovelace as our independent registered public
accounting firm.
The
rules of the SEC require us to disclose fees billed by our
independent registered public accounting firm for services rendered
to us for each of the years ended December 31, 2018 and 2017. The
following table represents aggregate fees billed for the fiscal
years ended December 31, 2018 and 2017 by Moore Stephens
Lovelace.
|
Fees
(1)(2)(3)(4)
|
|
2018
|
|
2017
|
|
Audit Fees
|
|
$135,000
|
|
$135,000
|
|
Audited-Related Fees
|
|
—
|
|
—
|
|
Tax Fees
|
|
—
|
|
—
|
|
All Other Fees
|
|
—
|
|
—
|
|
Total
|
|
$135,000
|
|
$135,000
|
(1)
For
2018 and 2017, includes fees paid to Moore Stephens Lovelace for
professional services rendered for the audit of our annual
financial statements for the years ended December 31, 2018 and 2017
and for reviews of the financial statements included in our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, June 30 and September 30 in each of those years.
(2)
No
audit-related services were performed for us by Moore Stephens
Lovelace in 2018 or 2017. Audit-related services include assurance
and related services that are related to the performance of the
audit or review of our financial statements.
(3)
No
tax services were performed for us by Moore Stephens Lovelace in
2018 or 2017. Tax services include tax compliance, tax advice and
tax planning.
(4)
No
other services were performed for us by Moore Stephens Lovelace in
2018 or 2017.
As
previously discussed, the audit committee has implemented
pre-approval procedures consistent with the rules adopted by the
SEC.
The
audit committee has determined that the provision of the services
by Moore Stephens Lovelace reported hereunder had no impact on its
independence.
32
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of
December 31, 2018 with respect to our 2017 Plan, under which our
common stock is authorized for issuance, and the 2007 Plan. Our
stockholders approved the 2017 Plan at the 2017 annual
stockholders’ meeting. On December 31, 2018, 519,353 shares
of our common stock were available for issuance under the 2017
Plan
.
|
Plan Category
|
|
(a)
Number of securities to be issued upon exercise of outstanding
options, warrants and rights
(1)
|
|
(b)
Weighted-average exercise price of outstanding options, warrants
and rights
|
|
(c)
Number of securities remaining available for future issuance under
equity compensation plan (excluding securities reflected in column
(a))
(2)
|
|
Equity
compensation plans approved by security holders
|
|
460,500
|
|
$4.22
|
|
519,353
|
|
Equity
compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
|
Total
|
|
460,500
|
|
$4.22
|
|
519,353
|
(1)
Includes
220,000 shares issuable upon the exercise of awards outstanding
under the 2017 Plan and 240,500 shares issuable upon the exercise
of awards outstanding under the 2007 Plan.
(2)
Represents
shares available for issuance under the 2017 Plan.
MISCELLANEOUS
Delinquent Section 16(a) Reports
Section
16(a) of the Exchange Act requires that our directors and executive
officers, and persons who own more than ten percent (10%) of our
common stock, file with the SEC initial statements of beneficial
ownership of common stock and statements of changes in beneficial
ownership of common stock.
Based
solely on a review of the copies of such reports and
representations that no other reports were required, we believe
that all Section 16 filing requirements applicable to our
directors, executive officers and ten percent (10%) beneficial
owners were timely complied with during fiscal 2018, except as
follows: as previously disclosed, General Payne’s Form 4
reporting a purchase of shares of our common stock, filed on
February 12, 2018, was inadvertently filed late, and Mr.
Dill’s Form 4 reporting a grant of restricted stock units,
filed on September 11, 2018, was inadvertently filed
late.
Annual
Report on Form 10-K
Copies
of our Annual Report on Form 10-K for fiscal 2018, as filed with
the SEC, are available to stockholders without charge upon written
request to our Corporate Secretary at 7100 Technology Drive, West
Melbourne, Florida 32904.
Eliminating Duplicative Proxy Materials
A
single Notice of Internet Availability of Proxy Materials or a
single copy of our Annual Report on Form 10-K for fiscal 2018 and
this proxy statement will be delivered to multiple stockholders who
live at the same address. If you live at the same address as
another stockholder and would like to receive your own copy of the
Notice of Internet Availability of Proxy Materials, the 2018 annual
report, or this proxy statement, or would like to receive multiple
copies of our proxy materials in the future, please contact us at
7100 Technology Drive, West Melbourne, Florida 32904; telephone
number: (321) 984-1414. A separate copy of the Notice of Internet
Availability of Proxy Materials, or of our 2018 annual report and
this proxy statement, will be delivered to you promptly and without
charge. If you live at the same address as another stockholder and
are receiving multiple copies of our proxy materials, please
contact us at the telephone number or address above if you only
want to receive one copy of those materials.
33
Stockholder Proposals
Inclusion of Proposals in our Proxy Statement Pursuant to SEC
Rules
Pursuant to Rule
14a-8 under the Exchange Act, some stockholder proposals may be
eligible for inclusion in our proxy statement for our 2020 annual
meeting of stockholders. To be eligible for inclusion in our 2020
proxy statement, any such proposals must meet the requirements of
Rule 14a-8 under the Exchange Act and be delivered in writing to
our Corporate Secretary no later than January 25, 2020, unless the
date of the 2020 annual meeting of stockholders is more than 30
days from the anniversary date of the 2019 annual meeting of
stockholders, in which case the proposals must be submitted a
reasonable time before we begin to print and send our proxy
materials. The submission of a stockholder proposal does not
guarantee that it will be included in our proxy
statement.
Advance Notice Requirements for Stockholder Submission of
Nominations and Proposals
In
addition, pursuant to the advance notice provisions set forth in
our bylaws, for a stockholder
’
s proposal or nomination to be
properly presented at the 2020 annual meeting of stockholders, but
not submitted for inclusion in our proxy statement, such
stockholder
’
s written
notice of the intent of such stockholder to make a nomination of a
person for election as a director or to bring any other matter
before the annual meeting must be received by our Corporate
Secretary at our principal executive offices no less than 120 days
nor more than 180 days prior to the first anniversary of the date
on which we first mailed our proxy materials for the preceding
year
’
s annual meeting of
stockholders. As a result, stockholder nominations of director
candidates for the 2020 annual meeting of stockholders, and
proposals for the 2020 annual meeting of stockholders submitted
outside the provisions of Rule 14a-8, will be considered untimely
if submitted prior to November 26, 2019 or after January 25, 2020.
However, in the event that the date of the annual meeting is more
than 30 days prior to or after the anniversary date of the previous
year’s annual meeting of stockholders, notice by the
stockholder must be received by our Corporate Secretary at our
principal offices not earlier than the close of business on the
120th day prior to such annual meeting of stockholders and not
later than the close of business on the later of the 75th day prior
to such annual meeting or the 10th day following the day on which
public announcement (as defined in the bylaws) of the date of such
annual meeting is first made. Since the date of the 2019 annual
meeting of stockholders has been delayed by more than 30 days from
the anniversary date of the previous annual meeting, for a
stockholder’s notice to be timely to be presented at the 2019
annual meeting of stockholders, it must have been received by our
Corporate Secretary no earlier than March 14, 2019 and no later
than April 28, 2019. The bylaws specify the information that had to
accompany any such stockholder notices. The Company did not receive
any stockholder proposals or nominations.
Any
proxy granted with respect to the 2019 annual meeting of
stockholders or 2020 annual meeting of stockholders will confer on
management discretionary authority to vote with respect to a
stockholder proposal or director nomination if notice of such
proposal or nomination is not received by our Corporate Secretary
within the timeframes provided above.
Other Matters
As of
the date of this proxy statement, our board of directors does not
know of any other matters for consideration at the annual meeting
other than as described in this proxy statement. If, however, any
other matters are properly brought before the annual meeting, the
persons named as proxies will vote in accordance with their best
judgment with respect to such matters.
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BK TECHNOLOGIES CORPORATION -
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS –
JULY
12, 2019 AT 9:00 A.M., LOCAL TIME
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CONTROL ID:
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REQUEST ID:
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The
undersigned stockholder(s) of BK Technologies Corporation, a Nevada
corporation (the “Company”), hereby revoking any proxy
heretofore given, does hereby appoint Timothy A. Vitou and William
P. Kelly, and each of them, with full power to act alone, the true
and lawful attorneys-in-fact and proxies of the undersigned, with
full powers of substitution, and hereby authorize(s) them and each
of them, to represent the undersigned and to vote all shares of
common stock of the Company that the undersigned held of record as
of the close of business on May 14, 2019, and is/are entitled to
vote at the 2019 Annual Meeting of Stockholders of the Company to
be held on July 12, 2019 at 9:00 a.m., local time, at the offices
of Capital Wealth Advisors, 9130 Galleria Court, Third Floor,
Naples, Florida 34109, and any and all adjournments and
postponements thereof, with all powers the undersigned would
possess if personally present, on the following proposals, each as
described more fully in the accompanying proxy statement, and any
other matters coming before said meeting.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
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FAX:
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Complete
the reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/BKTI
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OF
BK TECHNOLOGIES CORPORATION
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PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
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WITHHOLD
ALL
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FOR ALL
EXCEPT
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Election
of Directors:
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☐
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D. Kyle
Cerminara
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☐
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Lewis
M. Johnson
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☐
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Michael
R. Dill
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☐
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CONTROL
ID:
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Charles
T. Lanktree
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REQUEST
ID:
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E. Gray
Payne
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☐
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John W.
Struble
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☐
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Ryan
R.K. Turner
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Proposal 2
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FOR
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AGAINST
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ABSTAIN
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To
ratify the appointment of Moore Stephens Lovelace, P.A. as our
independent registered public accounting firm for fiscal
2019.
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Proposal 3
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To
transact such other business properly brought before the meeting
and any adjournment or postponement of the meeting.
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This
proxy will be voted in the manner directed herein by the
undersigned.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE, AND IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED, “FOR” THE
ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN PROPOSAL 1,
“FOR” RATIFICATION OF THE AUDITOR APPOINTMENT IN
PROPOSAL 2, AND
IN THE
DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW.
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MARK “X” HERE IF YOU PLAN
TO ATTEND THE MEETING:
☐
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MARK
HERE FOR ADDRESS CHANGE ☐
New
Address (if applicable):
___________________________
___________________________
___________________________
IMPORTANT:
Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 2019
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(Print Name of Stockholder and/or Joint
Tenant)
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(Signature of Stockholder)
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(Second Signature if held jointly)
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TABLE OF CONTENTS