BK TECHNOLOGIES CORP
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
BK Technologies Corporation
|
|
(Name of Registrant as Specified In Its Charter)
|
|
|
|
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
|
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
April
28, 2020
Dear
Stockholder:
You are
cordially invited to attend the 2020 annual meeting of stockholders
of BK Technologies Corporation, which we will hold on Wednesday,
June 24, 2020, at 9:00 a.m., local time, at the offices of the
Company at 7100 Technology Drive, West Melbourne, Florida
32904.
We
intend to hold our annual meeting in person. However, we are
actively monitoring the COVID-19 pandemic; we are sensitive to the
public health and travel concerns our stockholders may have and the
protocols that federal, state and local governments may impose. In
the event it is not possible or advisable to hold our annual
meeting in person, we will announce alternative arrangements for
the meeting as promptly as practicable, which may include
postponing or adjourning the meeting or holding the meeting solely
by means of remote communication. Please monitor our annual meeting
website at www.bktechnologies.com, under the tab “Investor
Relations,” for updated information. If you are planning to
attend our meeting, please check the website one week prior to the
meeting date. As always, we encourage you to vote your shares prior
to the annual meeting.
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 6, 2020, 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 April 27, 2020. 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.
|
|
Sincerely,
|
|
|
|
|
|
|
|
/s/ John W. Struble
|
|
|
|
John W. Struble
|
|
|
|
Chairman of the Board of Directors
|
|
BK TECHNOLOGIES CORPORATION
7100 Technology Drive
West Melbourne, Florida 32904
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 24, 2020
To the
stockholders of BK Technologies Corporation:
The
2020 annual meeting of stockholders of BK Technologies Corporation
will be held on Wednesday, June 24, 2020, at 9:00 a.m., local time,
at the offices of the Company at 7100 Technology Drive, West
Melbourne, Florida 32904*, for the following purposes:
1.
To elect six
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 MSL, P.A. as our independent registered public
accounting firm for fiscal year 2020;
3.
To approve, on an
advisory, non-binding basis, the compensation of our named
executive officers; and
4.
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 April 27, 2020
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.
|
|
By
Order of the Board of Directors,
|
|
|
|
|
|
|
|
/s/ William P. Kelly
|
|
|
|
William P. Kelly, Secretary
|
|
West
Melbourne, Florida
April
28, 2020
* We
intend to hold our annual meeting in person. However, we are
actively monitoring the COVID-19 pandemic; we are sensitive to the
public health and travel concerns our stockholders may have and the
protocols that federal, state and local governments may impose. In
the event it is not possible or advisable to hold our annual
meeting in person, we will announce alternative arrangements for
the meeting as promptly as practicable, which may include
postponing or adjourning the meeting or holding the meeting solely
by means of remote communication. Please monitor our annual meeting
website at www.bktechnologies.com, under the tab “Investor
Relations,” for updated information. If you are planning to
attend our meeting, please check the website one week prior to the
meeting date. As always, we encourage you to vote your shares prior
to the annual meeting.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Stockholder Meeting to be held on June 24, 2020
:
Our proxy statement, proxy card and annual report on Form 10-K for
the year ended December 31, 2019 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
________________________________________________________
2020 ANNUAL MEETING OF STOCKHOLDERS
JUNE 24, 2020
________________________________________________________
PROXY STATEMENT
________________________________________________________
This
proxy statement contains information related to the 2020 annual
meeting of stockholders of BK Technologies Corporation (together
with its wholly owned subsidiaries, the
“
Company,
”
“
we,
”
“
our
”
or
“
us
”
) to be held on Wednesday, June 24,
2020, at 9:00 a.m., local time, at the offices of the Company at
7100 Technology Drive, West Melbourne, Florida 32904, 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 6,
2020, 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 April 27, 2020, 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.
Holding Company 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 immediately
following the Reorganization were 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
|
ABOUT THE ANNUAL MEETING
|
1
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
|
5
|
|
PROPOSAL 1: ELECTION OF DIRECTORS
|
8
|
|
CORPORATE GOVERNANCE
|
12
|
|
DIRECTOR COMPENSATION FOR 2019
|
18
|
|
REPORT OF THE AUDIT COMMITTEE
|
20
|
|
EXECUTIVE COMPENSATION
|
21
|
|
SUMMARY COMPENSATION TABLE FOR 2018-2019
|
21
|
|
OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END
|
26
|
|
RETIREMENT BENEFITS FOR 2019
|
27
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR IN CONNECTION WITH A CHANGE
OF CONTROL
|
27
|
|
TRANSACTIONS WITH RELATED PERSONS
|
30
|
|
RELATIONSHIP WITH OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
31
|
|
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
|
32
|
|
FEES PAID TO OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
32
|
|
PROPOSAL 3: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER
COMPENSATION
|
33
|
|
EQUITY COMPENSATION PLAN INFORMATION
|
34
|
|
MISCELLANEOUS
|
34
|
ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the
annual meeting, we are asking stockholders:
●
To elect six
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 MSL, P.A. (
“
MSL
”
) as our independent registered
public accounting firm for the fiscal year ending December 31, 2020
(
“
fiscal 2020
”
);
●
To approve, on an advisory, non-binding basis, the
compensation of our Named Executive Officers (as defined below)
(so-called “say-on-pay”);
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 6, 2020, 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, 2019
(
“
fiscal 2019
”
), 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 6, 2020, 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 2019 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 April 27,
2020, the record date of the annual meeting. On the record date,
12,478,981 shares of our common stock were issued and outstanding
and held by 633 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,
and
what are the rules for admission or voting at 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.
As part
of our effort to maintain a safe and healthy environment at our
annual meeting, we are closely monitoring statements issued by the
World Health Organization (who.int) and the Centers for Disease
Control and Prevention (cdc.gov) regarding the COVID-19 pandemic.
For that reason, we reserve the right to reconsider the date, time,
and/or means of convening the annual meeting, including solely by
means of remote communications. If we take this step, we will
announce the decision to do so in advance, and details on how to
participate will be issued by press release, posted on our website,
and filed with the SEC as additional proxy material. We also
encourage attendees to review guidance from public health
authorities on this issue.
1
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.
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) and the advisory
approval of say-on-pay (Proposal 3) are considered
“
non-routine
”
matters. 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
these proposals. 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 or Proposal 3, 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 any of the proposals.
How will abstentions be counted?
Because
the election of directors requires only a plurality vote, withheld
votes 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)
or Proposal 3 (advisory approval of say-on-pay).
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 six director nominees named in this
proxy statement; (2) to ratify the appointment of MSL as our
independent registered public accounting firm for fiscal 2020; and
(3) to approve, on an advisory, non-binding basis, the compensation
of our Named Executive Officers.
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) and the advisory approval of say-on-pay
(Proposal 3) are
“
non-routine
”
matters, 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
these proposals. The ratification of the appointment of MSL as our
independent registered public accounting firm for fiscal 2020
(Proposal 2) is considered a “routine” matter, meaning
that brokers or nominees who have not been furnished voting
instructions from their clients will be authorized to vote on that
proposal.
2
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 mail, 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.
What are the board’s recommendations?
The
board unanimously recommends a vote
“
FOR
”
:
●
election to our
board of each of the six director nominees named in this proxy
statement;
●
ratification of the
appointment of MSL as our independent registered public accounting
firm for fiscal 2020; and
●
approval, on an
advisory, non-binding basis, of the compensation of our Named
Executive Officers.
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 six 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 MSL
. The number of votes cast
“
for
”
the ratification of the appointment
of MSL as our independent registered public accounting firm for
fiscal 2020, 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.
Proposal 3: Advisory, Non-Binding Approval of
Named Executive Officer Compensation (Say-on-Pay)
. The
number of votes cast “for” advisory, non-binding
approval of the compensation of our Named Executive Officers,
either in person or by proxy, at the annual meeting must exceed the
number of votes cast “against” advisory approval.
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 5,082,529
shares of our common stock, which represented approximately 41% 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, in favor of ratification of the
appointment of MSL and in favor of advisory approval of the
compensation of our Named Executive Officers.
3
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. We have
retained Alliance Advisors LLC to assist in the solicitation of
proxies for the Annual Meeting and will pay Alliance Advisors a fee
of approximately $12,500, including reimbursement of reasonable
out-of-pocket expenses and disbursements incurred in connection
with the proxy solicitation. It is anticipated that Alliance
Advisors LLC will employ approximately 25 persons to solicit
stockholders of the Company for the Annual Meeting. We have also
agreed to indemnify Alliance Advisors LLC against certain losses,
costs and expenses. In addition, 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.
4
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, April 27,
2020, 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
2018-2019
”
appearing in
this proxy statement (the “Named Executive Officers”);
and
●
all of our current 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 April 27, 2020, as well as shares of common stock
issuable within 60 days of April 27, 2020 upon vesting of
restricted stock units (“RSUs”), are deemed to be
outstanding and beneficially owned by the person holding the stock
options or RSUs, 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 April 27, 2020, we had
outstanding 12,478,981 shares of our common stock.
|
|
|
Shares of Common
Stock Beneficially Owned
|
||
|
Name and Address
of Beneficial Owner
|
|
Number of
Shares
|
|
Percent of
Class
|
|
Beneficial Owners of More Than 5% of Our Common Stock:
|
|
|
|
|
|
Fundamental
Global Investors, LLC
|
|
4,933,460
(1)
|
|
39.5%
|
|
D. Kyle
Cerminara, Director
|
|
4,955,431
(1)(2)(7)(10)(11)
|
|
39.7%
|
|
Lewis
M. Johnson, Director
|
|
4,950,431
(1)(3)(7)(10)(11)
|
|
39.7%
|
|
Benchmark
Capital Advisors
|
|
1,526,473
(4)
|
|
12.2%
|
|
Donald
F.U. Goebert
|
|
1,264,508
(5)
|
|
10.1%
|
|
Renaissance
Technologies LLC
|
|
644,700
(6)
|
|
5.2%
|
|
|
|
|
|
|
|
Directors, Director Nominees and Named Executive Officers (not
otherwise included above):
|
|
|
|
|
|
Timothy
A. Vitou, President
|
|
74,500
(7)(10)
|
|
*
|
|
William
P. Kelly, Executive Vice President and Chief Financial
Officer
|
|
80,827
(7)(8)(10)
|
|
*
|
|
Randy
Willis, Chief Operating Officer
|
|
22,000
(7)(10)
|
|
*
|
|
Branko
Avanic, Chief Technology Officer
|
|
—
(10)
|
|
*
|
|
John W. Struble, Chairman of the Board
|
|
11,971
(10)(11)
|
|
*
|
|
Michael
R. Dill, Director
|
|
11,971
(10)(11)
|
|
*
|
|
Charles
T. Lanktree, Director
|
|
19,887
(9)(10)(11)
|
|
*
|
|
E. Gray
Payne, Director
|
|
26,971
(7)(10)(11)
|
|
*
|
|
All current directors and executive officers as a group (10
persons)
|
|
5,220,529
(10)
|
|
41.4%
|
______________
*Less
than 1%
5
(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 March 17, 2020 and a Form 4
filed by Fundamental Global and its affiliates on April 27, 2020.
Fundamental Global is deemed to beneficially own the shares
disclosed as directly owned by certain of its affiliates. According
to the Form 4, CWA Asset Management Group, LLC (“CWA”),
a wealth advisor and multi-family office of which Fundamental
Global owns 50%, reports ownership of 1,839,529 shares, or 14.7% of
outstanding shares, which are held in its customer accounts and are
included in the number of shares listed in the table above
(including 845,813 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, who are members of our board of directors and
affiliates of Fundamental Global, hold an additional 38,942 shares
of common stock (including exercisable options), which increases
the total number of shares beneficially owned by Fundamental Global
to 4,972,402, or 39.8% of outstanding shares. Fundamental Global
has shared voting power with respect to 3,093,931 of the shares
listed in the table above and shared dispositive power with respect
to all 4,933,460 shares. Fundamental Global, on behalf of the funds
managed by it, has entered into a stock trading plan in accordance
with Rule 10b5-1 (the “10b5-1 Plan”) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
for the purchase of up to 1.0 million shares of the Company’s
common stock. The 10b5-1 Plan became effective on April 2, 2020 and
will terminate on April 2, 2021 or such earlier date as set forth
in the 10b5-1 Plan. Transactions under the 10b5-1 Plan are reported
to the SEC in accordance with applicable securities laws, rules and
regulations. 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 and CWA, Mr. Cerminara is deemed to
beneficially own the 3,093,931 shares disclosed as directly owned
by certain affiliates of Fundamental Global and the 1,839,529
shares held in CWA’s customer accounts and disclosed as
beneficially owned by CWA. Mr. Cerminara expressly disclaims
beneficial ownership of these shares, except to the extent of his
pecuniary interest therein. The business addresses for Mr.
Cerminara are c/o Fundamental Global Investors, LLC, 4201 Congress
Street, Suite 140, Charlotte, North Carolina 28209; 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 3,093,931 shares disclosed as
directly owned by certain affiliates of Fundamental Global and the
1,839,529 shares held in CWA’s customer accounts and
disclosed as beneficially owned by CWA. Mr. Johnson expressly
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein. 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)
The amount shown
and the following information is derived from a Schedule 13G filed
by Renaissance Technologies LLC (“RTC”) on February 12,
2020. According to the Schedule 13G, RTC beneficially owns 644,700
shares, over which it has sole voting and dispositive power.
Renaissance Technologies Holdings Corporation (“RTHC”)
may also be deemed to beneficially own, and have sole voting and
dispositive power over, such shares, due to its majority ownership
of RTC. The principal business address of both RTC and RTHC is 800
Third Avenue, New York, New York 10022.
6
(7)
Share ownership of
the following persons includes options to purchase our common
shares presently exercisable or exercisable within 60 days of April
27, 2020, as follows: for Mr. Cerminara – 10,000 shares; for
Mr. Johnson – 5,000 shares; for Mr. Vitou – 42,000
shares; for Mr. Kelly – 54,000 shares; for Mr. Willis –
22,000 shares; and for General Payne – 5,000
shares.
(8)
Includes 26,827
shares held jointly by Mr. Kelly with his wife.
(9)
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.
(10)
Includes 4,933,460
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 April 27,
2020, as follows: for Mr. Cerminara – 10,000 shares; for Mr.
Johnson – 5,000 shares; for Mr. Vitou – 42,000 shares;
for Mr. Kelly – 54,000 shares; for Mr. Willis – 22,000
shares; and for General Payne – 5,000 shares.
The
following options are not reflected in the table, as they are not
presently exercisable or exercisable within 60 days of April 27,
2020: options to purchase 58,000 common shares held by Mr. Vitou;
options to purchase 46,000 common shares held by Mr. Kelly; options
to purchase 43,000 common shares held by Mr. Willis; and options to
purchase 30,000 common shares held by Dr. Avanic.
The
table also does not include the following RSUs held by each of
Messrs. Struble, Cerminara, Dill, Johnson, Lanktree, and Payne:
4,050 RSUs remaining pursuant to a grant made on September 6, 2018
(not including 1,013 RSUs that vested as of September 6, 2019); and
10,389 RSUs granted on September 6, 2019 (none of which have vested
as of April 27, 2020 or will vest within 60 days of such date). The
RSUs vest in five equal annual installments, beginning on the first
anniversary of the respective grant date, in each case subject to
the director’s continued service as a director of the Company
through such date. All RSUs were granted under the Company’s
2017 Incentive Compensation Plan (the “2017 Plan”).
Each RSU represents a contingent right to receive one share of
common stock of the Company.
(11)
The named person is
a nominee for director at the annual meeting.
7
PROPOSAL 1: ELECTION OF DIRECTORS
General
At the
annual meeting, six nominees will be elected as directors. Our
board of directors currently consists of six members, all of whom
are standing for re-election at the annual meeting. At the 2019
annual meeting, our stockholders elected D. Kyle Cerminara, Lewis
M. Johnson, Michael R. Dill, Charles T. Lanktree, E. Gray Payne,
John W. Struble and Ryan R.K. Turner as directors. On April 24,
2020, Mr. Turner resigned from the board, effective immediately. On
the same day, the board reduced the size of the board to six
directors. Our board of directors, based on the recommendation of
the nominating and governance committee, has nominated each of our
six current directors 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, four of
who continue to serve on the board, 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. Struble to serve as a
director because he provides extensive experience in the
accounting/finance field to the board. Mr. Cerminara brings his
extensive experience in the financial industry, including
investing, capital allocation, finance and financial analysis of
public companies, and operational experience as the former Chief
Executive Officer of a publicly-traded company. He also brings the
perspective of one of our most significant stockholders. Mr. Dill
brings over 20 years of extensive leadership and operational
experience to the board, including experience in developing and
implementing strategic plans. 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. 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.
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 six nominees
named in this proxy statement as directors.
8
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
April 27, 2020:
|
Name and Year First Elected
|
|
Age
|
|
Position
|
|
John W.
Struble (2017)
|
|
43
|
|
Chairman
of the Board
|
|
D. Kyle
Cerminara (2015)
|
|
42
|
|
Director
|
|
Michael
R. Dill (2017)
|
|
55
|
|
Director
|
|
Lewis
M. Johnson (2016)
|
|
50
|
|
Director
|
|
Charles
T. Lanktree (2017)
|
|
70
|
|
Director
|
|
E. Gray
Payne (2017)
|
|
72
|
|
Director
|
The
business experience of each nominee for director is set forth below
as of April 27, 2020.
John W.
Struble
was appointed to the
board of directors in March 2017 and as Chairman of the Board in
April 2020. Mr. Struble has served as consultant to Fundamental
Global Management, LLC, an affiliate of Fundamental Global
Investors, LLC, which provides services related to the day-to-day
management of certain of Fundamental Global Investors, LLC’s
portfolio companies and affiliates, since April 2020. From December
2013 to March 2020, Mr. Struble served as Chief Financial Officer
of IntraPac International LLC, a specialty packaging manufacturing
company owned by private equity investment firm Onex Corporation
(TSX: ONEX), where he was 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 produces aluminum, steel, vinyl and
fiberglass products for original equipment manufacturers,
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.
D. Kyle
Cerminara
was appointed to the
board of directors in July 2015 and served as Chairman from March
2017 until April 2020. Mr. Cerminara has served as 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, since May 2015. Mr. Cerminara
previously also served as Chief Executive Officer of Ballantyne
Strong, Inc. from November 2015 through April 2020. 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 is a member of the Board of Directors of a number of
publicly-held companies focused in the reinsurance, investment
management and real estate, technology and communication sectors,
including Ballantyne Strong, Inc. (NYSE American: BTN) since
February 2015, 1347 Property Insurance Holdings, Inc. (Nasdaq:
PIH), which intends to operate as a diversified reinsurance,
investment management and real estate holding company, since
December 2016, and Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex
Capital Corp.), a publicly-traded investment firm, since June 2016.
He was appointed Chairman of 1347 Property Insurance Holdings, Inc.
in May 2018 and was designated as its principal executive officer
in March 2020. He was also appointed Chairman of Itasca Capital
Ltd. in June 2018. He also served on the board of directors of
Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides
building infrastructure services, from March 2019 to March 2020;
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 serves as a Trustee and
President of StrongVest ETF Trust, which was an open-end management
investment company and is in the process of being dissolved, since
July 2016. He previously served on the board of directors of
blueharbor bank, a community bank, from October 2013 to January
2020. 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.
9
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 (NYSE: CIR), a
publicly-traded global manufacturer of highly engineered
environment products, 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.
Lewis M.
Johnson
was elected to the
board of directors in May 2016 and served as Co-Chairman from June
2018 to April 2020. 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 January 2013, 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 interned as
an Analyst at Capital Research and Management during the summer of
1999 and worked 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), which intends to operate as a
diversified reinsurance, investment management and real estate
holding company, 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.
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.
E. Gray
Payne
was appointed to the
board of directors in January 2017. Since December 2011, General
Payne has 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. General Payne
previously 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. 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), which
intends to operate as a diversified reinsurance, investment
management and real estate holding company (since May 2018), and on
the following non-profit boards: VetCV (since December 2017) and
National Wildlife Refuge Association (since June 2018). He
previously served on the Board of Governors of the Marine Corps
Association and the Board of Directors of the Marine Corps
Association Foundation. 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.
10
Information about our Executive Officers
The
following table presents information with respect to our executive
officers as of April 27, 2020.
|
Name
|
|
Age
|
|
Position
|
|
Timothy
A. Vitou
|
|
63
|
|
President
|
|
William
P. Kelly
|
|
63
|
|
Executive
Vice President, Chief Financial Officer and Secretary
|
|
Henry
R. (Randy) Willis
|
|
61
|
|
Chief
Operating Officer
|
|
Branko
Avanic, Ph.D.
|
|
59
|
|
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.
Branko
Avanic, Ph.D.,
has been our
Chief Technology Officer since October 30, 2019. Dr. Avanic
previously served as Senior Vice President of Engineering of BK
Technologies, Inc., our wholly-owned subsidiary, since August 13,
2019. Prior to joining the Company, he served in a number of roles
at Motorola Solutions, Inc. (NYSE: MSI), including Director, Head
Architect – Devices Engineering for several different
projects from 2015 through June 2019 and a variety of other roles
from 1999 to 2015. Dr. Avanic also serves as President of Ph.D.
Research Group Inc. Dr. Avanic has previously served as an adjunct
professor at the University of Miami and Florida Atlantic
University. He received a B.S., M.S. and Ph.D. in Electrical
Engineering from the University of Miami.
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
The
NYSE American
corporate governance listing standards provide
that the Company, as a smaller reporting company, may have a board
of directors consisting of at least fifty percent (50%) 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. The board of directors reviewed the various factors
described above in April 2020, 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, as well as Mr. Struble’s role as
consultant to Fundamental Global Management, LLC, 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 and Payne were
“independent”
directors within the independence requirements of the NYSE American
corporate governance listing standards and all applicable rules and
regulations of the SEC
. All board
committee members during 2019 were, and all current board committee
members are, independent for the purpose of the committees on which
they served or serve.
There
are no family relationships between any of our directors or
executive officers.
Independent members
of our board of directors meet in executive session without the
presence of non-independent directors and management, 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. All of
our directors serving at the time of the 2019 annual
stockholders’ meeting attended such meeting, including our
six current directors.
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 eight meetings during 2019, and each of the
directors serving during 2019, including our current 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. As of December
31, 2019, 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)
|
|
|
|
|
|
|
|
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.
Effective April 9,
2020, the board reconstituted its committees. Effective April 24,
2020, Mr. Turner resigned from the board of directors, Messrs.
Cerminara and Johnson notified the board of directors of their
desire to step down as Chairman and Co-Chairman of the Board,
respectively, and the board determined to transition to Mr. Struble
as Chairman. As of April 27, 2020, the members of the committees of
the board of directors were as follows:
|
Director
|
|
Audit Committee
|
|
Compensation Committee
|
|
Nominating and Governance Committee
|
|
John W.
Struble
(1)
|
|
|
|
|
|
|
|
D. Kyle
Cerminara
|
|
|
|
|
|
|
|
Michael
R. Dill
|
|
X
|
|
Chair
|
|
X
|
|
Lewis
M. Johnson
|
|
|
|
|
|
|
|
Charles
T. Lanktree
|
|
X
|
|
X
|
|
X
|
|
E. Gray
Payne
|
|
Chair
|
|
X
|
|
Chair
|
_______________
(1)
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, and was during 2019, independent, as defined by Rule
10A-3 of the Exchange Act, and the corporate governance listing
standards of the NYSE American. The board of directors also has
determined that General Payne 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 five times
during 2019. 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; (iii) the independent audit
process; and (iv) compliance with our Code of Conduct and Code of
Ethics, as well as conflicts of interest and related party
transactions. 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, MSL. The policy
requires that all services to be provided by MSL, 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 MSL to us during 2019. MSL
did not provide any audit-related or non-audit services to us
during 2019.
Compensation
Committee
.
All members of the
compensation committee are, and were during fiscal 2019,
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 our executive officers, including equity grants. The
compensation committee reviews the performance of our executive
officers, including the principal executive officer. Our principal
executive officer annually reviews the performance of each of our
executive officers and other officers, and makes recommendations
regarding our 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 2019, the compensation committee met 10
times.
Nominating
and Governance Committee
.
All members of the
nominating and governance committee are, and were during fiscal
2019, 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 2019, the
nominating and governance committee met one time.
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 and monitors our compliance with
these corporate policies.
14
Board Leadership and Board’s Role in Risk
Oversight
During
2019, we had a separate Chairman and Co-Chairman of the Board and
Principal Executive Officer. Our board of directors believed this
board leadership structure was best for the Company and our
stockholders at the time. Our Chairman of the Board was D. Kyle
Cerminara and the Co-Chairman of the Board was Lewis M. Johnson,
and our Principal Executive Officer was our President, Timothy A.
Vitou. The board believed it was 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 could devote his time and energy on the day-to-day
management of the business, while our Chairman and Co-Chairman
during 2019, Messrs. Cerminara and Johnson, respectively, could
each focus on providing advice and oversight of management. Because
our Chairman and Co-Chairman were appointed annually by our
non-management directors, such directors were able to evaluate the
leadership and performance of our Chairman and Co-Chairman each
year. On April 24, 2020, Messrs. Cerminara and Johnson stepped down
as Chairman and Co-Chairman of the Board, respectively, and the
board transitioned to Mr. Struble as Chairman of the Board. The
Co-Chairman position was eliminated. The board believes that it
remains in the Company’s best interests to have a separate
Chairman of the Board and Principal Executive Officer at this time
for the reasons described above, and the Chairman will continue to
be appointed annually by our non-management directors. The board
does not believe that one particular leadership structure is
appropriate at all times and will continue to evaluate the
board’s leadership structure from time to time.
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, which may include
financial, legal and regulatory, human capital, environmental,
information technology, security and reputational risks. In
addition, management and the board of directors have recently
focused on risks relating to, and impact on the Company from, the
COVID-19 pandemic, and will continue to do so while the situation
remains in flux. 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 for director
candidates, 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. 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 2021 annual meeting of stockholders is
required to do so prior to December 29, 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 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. John W.
Struble, D. Kyle Cerminara, Michael R. Dill, Lewis M. Johnson,
Charles T. Lanktree, and E. Gray Payne, all of who are incumbent
directors, and recommended their nomination to the board of
directors. The board, in turn, nominated these six persons for
election as directors at the annual meeting.
17
DIRECTOR COMPENSATION FOR 2019
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 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 RSUs with a
value of $40,000 pursuant to the 2017 Plan. Each RSU represents a
contingent right to receive one share of our common stock. The RSUs
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 RSUs will vest in full as
of the director’s last date of service as a director of the
Company.
In addition, the 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. Through April 2020, the Chairman and Co-Chairman of the
Board also each received an additional annual cash retainer of
$75,000, payable in quarterly cash installments.
On April
24, 2020, Messrs. Cerminara and Johnson stepped down as Chairman
and Co-Chairman of the Board, respectively, and the board
transitioned to Mr. Struble as Chairman of the Board. Following the
transition to Mr. Struble as Chairman, Messrs. Cerminara and
Johnson will receive the standard non-employee director
compensation. On April 27, 2020, the compensation committee
approved an additional cash retainer of $75,000 for the Chairman of
the Board, 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, previously, 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, previously, 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 RSUs for that year, the
non-employee director’s grant of RSUs 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 $200,000.
The
following table shows the compensation paid to our non-employee
directors for fiscal 2019:
|
Name
|
Fees Earned or Paid in Cash ($)
|
Stock Awards ($)
(1)
|
Total ($)
|
|
D. Kyle
Cerminara
(2)(4)
|
126,500
|
40,000
|
166,500
|
|
Lewis M.
Johnson
(2)(4)
|
127,500
|
40,000
|
167,500
|
|
Michael R.
Dill
(2)
|
65,750
|
40,000
|
105,750
|
|
Charles T.
Lanktree
(2)(3)
|
53,000
|
40,000
|
93,000
|
|
E. Gray
Payne
(2)(3)
|
66,000
|
40,000
|
106,000
|
|
John W.
Struble
(2)(4)
|
66,750
|
40,000
|
106,750
|
|
Ryan R.K.
Turner
(2)(5)
|
55,250
|
40,000
|
95,250
|
_________________
(1)
Stock awards
represent the aggregate grant date fair value of 10,389 RSUs
granted on September 6, 2019 to each of the non-employee directors.
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. Each RSU represents a contingent right to
receive one share of our common stock. The RSUs vest in full 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, 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 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 2017 Plan) or in connection with the termination
of the director’s service for any reason prior to the vesting
date.
18
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 1 (Summary of Significant Accounting
Policies) and Note 10 (Share-Based Employee Compensation) of our
consolidated financial statements included in our Annual Report on
Form 10-K for fiscal 2019.
(2)
The aggregate
number of option and stock awards outstanding (including exercised
and unexercised stock options and unvested RSUs) as of December 31,
2019 for each non-employee director was as follows:
|
Name
|
|
Option Awards (#)
|
|
Stock Awards (#)
|
|
D. Kyle Cerminara
|
|
10,000 (all exercisable)
|
|
14,439 RSUs
|
|
Lewis
M. Johnson
|
|
5,000 (all exercisable)
|
|
14,439 RSUs
|
|
Michael
R. Dill
|
|
—
|
|
14,439 RSUs
|
|
Charles
T. Lanktree
|
|
—
|
|
14,439 RSUs
|
|
E. Gray
Payne
|
|
5,000 (all exercisable)
|
|
14,439 RSUs
|
|
John W.
Struble
|
|
—
|
|
14,439 RSUs
|
|
Ryan
R.K. Turner
|
|
—
|
|
14,439 RSUs
|
The
14,439 RSUs outstanding for each director listed above as of
December 31, 2019 include 4,050 RSUs remaining pursuant to a grant
made on September 6, 2018 (not including 1,013 RSUs that vested
prior to December 31, 2019) and 10,389 RSUs granted on September 6,
2019. Such RSUs vest in full in five equal annual installments,
beginning on the first anniversary of the respective grant date, in
each case subject to the director’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 RSUs will vest in full as of the
director’s last date of service as a director of the Company.
See footnote 1 above for more information.
(3)
Amount includes
fees ($13,250 for Mr. Lanktree and $16,500 for General Payne)
earned for board and committee service in the fourth quarter of
fiscal 2019 that were paid in January 2020.
(4)
On April 24, 2020,
Messrs. Cerminara and Johnson stepped down as Chairman and
Co-Chairman of the Board, respectively, and the board transitioned
to Mr. Struble as Chairman of the Board. Following the transition,
Messrs. Cerminara and Johnson will receive the standard
non-employee director compensation, and Mr. Struble will receive an
additional cash retainer of $75,000 for his services as
Chairman.
(5)
Mr. Turner resigned
from the board of directors on April 24, 2020. On the same day, the
compensation committee approved the accelerated vesting of all of
his outstanding RSUs.
19
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, 2019 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, MSL, 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 MSL, 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 MSL, 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
2019 be included in our Annual Report on Form 10-K for the year
ended December 31, 2019, 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
|
|
|
E. Gray
Payne
|
* Mr.
Struble served on the audit committee until April 9, 2020 and
participated in the review, discussion and recommendation to the
board to include the audited financial statements in our Annual
Report on Form 10-K for the year ended December 31, 2019. Charles
T. Lanktree was appointed as a member of the audit committee
effective April 9, 2020. Mr. Lanktree did not sign this report
because he was not a member of the audit committee at the time of
the audit committee’s review, discussion and recommendation
to the board regarding the inclusion of the audited financial
statements in our Annual Report on Form 10-K for the year ended
December 31, 2019.
20
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
serving in such role at the time of the Reorganization retained
their officer positions with BK Technologies, Inc., while also
being appointed officers of us.
The disclosures regarding executive compensation
in this proxy statement describe our executive compensation program
for 2019; accordingly, they do not address the potential impact of
the
COVID-19 pandemic
on our
executive compensation for 2020. The compensation committee will
consider such impacts when reviewing our 2020 executive
compensation program and may align 2020 executive compensation with
the current economic environment. Those 2020 executive compensation
program decisions will be described in our proxy statement for next
year’s annual meeting of stockholders.
SUMMARY COMPENSATION TABLE FOR 2018-2019
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,
2019:
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(4)
|
|
Stock Awards ($)
|
|
Option
Awards
($)
(5)
|
|
Non-Equity Incentive Plan
Compensation ($)
|
|
All Other Compensation
($)
|
|
Total
($)
|
|
Timothy A.
Vitou
|
|
2019
|
|
270,096
|
|
—
|
|
—
|
|
51,480
|
|
—
|
|
15,870
(6)
|
|
337,446
|
|
President
|
|
2018
|
|
250,000
|
|
125,000
|
|
—
|
|
49,110
|
|
—
|
|
24,816
(6)
|
|
448,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William P.
Kelly
|
|
2019
|
|
212,058
|
|
—
|
|
—
|
|
34,320
|
|
—
|
|
15,480
(7)
|
|
261,858
|
|
Executive Vice
President,
|
|
2018
|
|
200,000
|
|
100,000
|
|
—
|
|
32,740
|
|
—
|
|
34,266
(7)
|
|
367,006
|
|
Chief Financial Officer and
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy Willis
(1)
|
|
2019
|
|
212,058
|
|
—
|
|
—
|
|
34,320
|
|
—
|
|
41,415
(8)
|
|
287,793
|
|
Chief Operating
Officer
|
|
2018
|
|
200,000
|
|
100,000
|
|
—
|
|
32,740
|
|
—
|
|
5,501
(8)
|
|
338,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branko Avanic
(2)(3)
|
|
2019
|
|
82,808
|
|
—
|
|
—
|
|
38,070
|
|
—
|
|
853
(9)
|
|
121,731
|
|
Chief Technology
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________
(1)
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’s compensation for 2018
includes compensation received from January 1, 2018 through March
14, 2018 in his role as Vice President of Operations.
(2)
Effective October
30, 2019, Dr. Avanic, then Senior Vice President of Engineering of
BK Technologies, Inc., was appointed as Chief Technology Officer of
the Company, effective immediately.
(3)
Dr. Avanic was not
a Named Executive Officer for the year ended December 31, 2018
(“fiscal 2018”). Dr. Avanic’s compensation for
2019 includes $48,462 in compensation received from August 13, 2019
through October 30, 2019 in his role as Senior Vice President of
Engineering of BK Technologies, Inc.
(4)
On January 23,
2019, the compensation committee approved payment of cash bonuses
of $125,000 to Mr. Vitou, $100,000 to Mr. Kelly and $100,000 to Mr.
Willis.
(5)
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
1 (Summary of Significant Accounting Policies) and Note 10
(Share-Based Employee Compensation) of our consolidated financial
statements included in our Annual Report on Form 10-K for fiscal
2019.
21
On March 5, 2019, the compensation committee
granted non-qualified stock options to Messrs. Vitou, Kelly and
Willis to purchase 30,000, 20,000 and 20,000 shares, respectively,
of the Company’s common stock, at an exercise price of $4.07
per share. On October 30, 2019, in connection with Dr.
Avanic’s appointment as Chief Technology Officer, the
compensation committee granted non-qualified stock options to Dr.
Avanic to purchase 30,000 shares of the Company’s common
stock, at an exercise price of $3.61 per share. On March 14, 2018,
the compensation committee granted non-qualified stock options to
Messrs. Vitou, Kelly and Willis to purchase 30,000, 20,000 and
20,000 shares, respectively, of the Company’s common stock,
at an exercise price of $3.75 per share.
Additional
information about the stock option awards can be found below under
“—
Stock Option
Awards.
”
(6)
The amounts in this
column for Mr. Vitou represent the Company’s matching
contributions for fiscal 2019 and fiscal 2018 of $6,752 and $6,308,
respectively, to Mr. Vitou’s account under the
Company’s 401(k) plan; the Company’s payments for
fiscal 2019 and fiscal 2018 of $9,118 and $8,893, 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.
(7)
The amounts in this
column for Mr. Kelly represent the Company’s matching
contributions for fiscal 2019 and fiscal 2018 of $6,362 and $6,142,
respectively, to Mr. Kelly’s account under the
Company’s 401(k) plan; the Company’s payments for
fiscal 2019 and fiscal 2018 of $9,118 and $8,894, 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.
(8)
The amounts in this
column for Mr. Willis represent the Company’s matching
contribution for fiscal 2019 of $5,900 to Mr. Willis’s
account under the Company’s 401(k) plan and the
Company’s payments for fiscal 2019 and fiscal 2018 of $5,515
and $5,501 for long-term disability, life and health insurance
premiums for the benefit of Mr. Willis. The amounts in this column
also include the Company’s payment to Mr. Willis during
fiscal 2019 of a one-time cash payment of $30,000 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
“—Named Executive Officer Appointments and
Agreements—Retention Agreement” below for more
information about this agreement.
(9)
The amount in this
column for Dr. Avanic represents the Company’s matching
contributions for fiscal 2019 of $271 to Dr. Avanic’s account
under the Company’s 401(k) plan and the Company’s
payments for fiscal 2019 of $582 for long-term disability, life and
health insurance premiums for the benefit of Dr.
Avanic.
Except
as disclosed above, Mr. Vitou, Mr. Kelly, Mr. Willis and Dr. Avanic
did not receive any other compensation during fiscal 2019 or fiscal
2018, except for perquisites and other personal benefits, of which
the total aggregate value for each of them did not exceed
$10,000.
Named Executive Officer Appointments and Agreements
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. The
compensation committee also 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 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. In addition, on December 31, 2018, we entered
into a retention agreement with Mr. Willis in connection with his
relocation from Charlotte, North Carolina, to Brevard County,
Florida, in order to be near the Company’s principal
executive offices, as described below under “Retention
Agreement.”
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.
22
Prior
to Mr. Willis joining the Company in August 2017, the Company
engaged Target Velocity Consulting, Inc., of which Mr. Willis
served as President, to provide operational consulting services to
the Company in 2017 for total fees of $59,616.
Appointment of Chief Technology Officer
On
October 30, 2019, the board of directors appointed Dr. Avanic as
Chief Technology Officer of the Company, effective immediately. In
connection with such appointment, BK Technologies, Inc. entered
into an employment agreement with Dr. Avanic, executed November 5,
2019 (the “Avanic Employment Agreement”), which is
described below under “Employment
Agreements.”
Dr.
Avanic previously served as Senior Vice President of Engineering of
BK Technologies, Inc., since August 2019, pursuant to an offer
letter, dated July 15, 2019 (the “Avanic Offer
Letter”). The Avanic Offer Letter provided for an annual base
salary of $225,000 and the opportunity to earn a bonus of up to 30%
of his annual base salary, as well as eligibility to participate in
the Company’s benefit plans. For his service in such role,
Dr. Avanic received payments equal to $48,462. The Avanic Offer
Letter also provided Dr. Avanic the opportunity to receive a
stock-based grant of 20,000 shares. On October 30, 2019, as
contemplated under the Avanic Offer Letter and in connection with
his appointment as Chief Technology Officer, the compensation
committee granted to Dr. Avanic non-qualified stock options to
purchase 30,000 shares of the Company’s common stock at an
exercise price of $3.61 per share under the 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.
Employment Agreements
On
March 20, 2019, the Company entered into employment agreements with
each of the following (collectively, the “March 2019
Employment Agreements” and, collectively with the Avanic
Employment Agreement, the “Employment Agreements”): (i)
Timothy A. Vitou, President; (ii) William P. Kelly, Executive Vice
President, Chief Financial Officer and Secretary; and (iii) Randy
Willis, Chief Operating Officer. Following the Reorganization, the
March 2019 Employment Agreements are with BK Technologies, Inc.,
our wholly-owned subsidiary. The March 2019 Employment Agreements
provide for an annual base salary of $275,000 for Mr. Vitou and
$215,000 for each of Messrs. Kelly and Willis. The Avanic
Employment Agreement provides for an annual base salary of $235,000
for Dr. Avanic.
Each
Named Executive Officer is 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.
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 his base salary in effect at the time of termination or
the original base salary set forth in his respective Employment
Agreement, whichever is greater.
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 Officers are also eligible to participate in the
Company’s benefit plans. The Employment Agreements contain
customary non-competition and non-solicitation
covenants.
Retention Agreement
On
December 31, 2018, we entered into a retention agreement with Mr.
Willis in connection with his relocation from Charlotte, North
Carolina, to Brevard County, Florida, in order to be near the
Company’s principal executive offices. The agreement provided
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. We had previously paid
$10,972 to Mr. Willis as assistance with his moving expenses in
2017.
23
Pursuant
to the retention agreement, if Mr. Willis’s employment with
us is terminated either by Mr. Willis voluntarily (other than for
“good reason”) or by us for “cause” during:
(i) December 31, 2018 through August 1, 2019 (the second
anniversary of August 1, 2017, his employment date), the entire
relocation allowance ($30,000) provided under the agreement will be
immediately repayable to us; (ii) August 2, 2019 through August 1,
2020, two-thirds of the relocation allowance ($20,000) will be
immediately repayable to us; and (iii) August 2, 2020 through
August 1, 2021, 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.
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 and $215,000 to Messrs. Vitou, Kelly
and Willis, respectively. On October 30, 2019, the board of
directors approved a base salary for 2019 of $235,000 to Dr.
Avanic.
On
March 14, 2018, the compensation committee approved base salaries
for 2018 of $250,000, $200,000 and $200,000 to Messrs. Vitou, Kelly
and Willis, respectively. Mr. Willis was appointed as Chief
Operating Officer of the Company effective March 14,
2018.
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 and
Willis.
Stock Option Awards
2019 Awards
On
March 5, 2019, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly and Willis to purchase
30,000, 20,000 and 20,000 shares, respectively, of the
Company’s common stock, at an exercise price of $4.07 per
share. On October 30, 2019, the compensation committee granted
non-qualified stock options to Dr. Avanic to purchase 30,000 shares
of the Company’s common stock, at an exercise price of $3.61
per share. The stock options have ten-year terms and become
exercisable in five equal annual installments, beginning on the
first anniversary of the respective grant date.
2018 Awards
On
March 14, 2018, the compensation committee granted non-qualified
stock options to Messrs. Vitou, Kelly and Willis to purchase
30,000, 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.
24
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, RSUs, or other share-based awards and cash-based
awards.
25
OUTSTANDING EQUITY AWARDS AT 2019 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, 2019 for the Named
Executive Officers.
|
Name
|
|
Number of Securities Underlying
Unexercised Options (#) Exercisable
(9)
|
|
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
|
|
|
|
10,000
(3)
|
|
15,000
|
|
5.10
|
|
3/17/27
|
|
|
|
4,000
(4)
|
|
6,000
|
|
4.20
|
|
8/30/27
|
|
|
|
6,000
(5)
|
|
24,000
|
|
3.75
|
|
3/14/28
|
|
|
|
—
(7)
|
|
30,000
|
|
4.07
|
|
3/05/29
|
|
|
|
|
|
|
|
|
|
|
|
William
P. Kelly
|
|
25,000
(1)
|
|
—
|
|
4.07
|
|
3/04/20
|
|
|
|
15,000
(2)
|
|
—
|
|
2.23
|
|
3/12/23
|
|
|
|
6,000
(6)
|
|
4,000
|
|
3.83
|
|
2/24/26
|
|
|
|
10,000
(3)
|
|
15,000
|
|
5.10
|
|
3/17/27
|
|
|
|
4,000
(4)
|
|
6,000
|
|
4.20
|
|
8/30/27
|
|
|
|
4,000
(5)
|
|
16,000
|
|
3.75
|
|
3/14/28
|
|
|
|
—
(7)
|
|
20,000
|
|
4.07
|
|
3/05/29
|
|
|
|
|
|
|
|
|
|
|
|
Randy Willis
|
|
10,000
(4)
|
|
15,000
|
|
4.20
|
|
8/30/27
|
|
|
|
4,000
(5)
|
|
16,000
|
|
3.75
|
|
3/14/28
|
|
|
|
—
(7)
|
|
20,000
|
|
4.07
|
|
3/05/29
|
|
|
|
|
|
|
|
|
|
|
|
Branko Avanic
|
|
—
(8)
|
|
30,000
|
|
3.61
|
|
10/30/29
|
___________
(1)
The options were
granted on March 4, 2010 and were fully vested and exercisable as
of December 31, 2019. The options expired on March 4, 2020 without
being exercised.
(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)
The options were
granted on March 5, 2019 and vest in five equal annual
installments, beginning on March 5, 2020.
(8)
The options were
granted on October 30, 2019 and vest in five equal annual
installments, beginning on October 30, 2020.
(9)
None of the Named
Executive Officers exercised any options during fiscal
2019.
26
RETIREMENT BENEFITS FOR 2019
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 2019 was the qualified 401(k) retirement
plan, which is available to all employees.
POTENTIAL PAYMENTS UPON TERMINATION OR IN CONNECTION WITH A CHANGE
OF CONTROL
Employment Agreements
On March 20, 2019, the Company entered into the
March 2019 Employment Agreements, which, following the
Reorganization, are with BK Technologies, Inc., our wholly-owned
subsidiary. In addition, BK Technologies, Inc. entered into the
Avanic Employment Agreement, executed November 5, 2019. 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 his base salary in effect at the time of
termination or the original base salary set forth in his respective
Employment Agreement, whichever is greater.
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.
Equity Plans and Award 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.
27
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 compensation committee has the authority to make
appropriate adjustments in connection with the assumption of any
awards. The compensation 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
RSUs, 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 RSUs, 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 RSUs 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.
28
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.
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.
29
TRANSACTIONS WITH RELATED PERSONS
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 audit
committee is responsible for applying this policy. As set forth in
the policy, the audit 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 audit
committee will establish guidelines for our management to follow in
our 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 audit
committee’s guidelines, and, based on all the relevant facts
and circumstances, will determine if it is in the best interests of
us 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 of our
stockholders receive proportional benefits, (v) transactions
involving competitive bids, (vi) certain regulated transactions,
and (vii) certain banking-related services.
Except
as set forth below, during 2019 and 2018, 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 2020 that are reportable
under Item 404 of Regulation S-K.
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.
Fundamental Global Investors, LLC
Fundamental
Global, together with its affiliates, is the largest stockholder of
the Company. Mr. Cerminara, a member of our board of directors, is
Chief Executive Officer, Co-Founder and Partner of Fundamental
Global, and Mr. Johnson, a member of our board of directors, is
President, Co-Founder and Partner of Fundamental Global. In
addition, Mr. Struble, Chairman of the Board, serves as a
consultant to Fundamental Global Management, LLC, an affiliate of
Fundamental Global. The funds managed by Fundamental Global,
including the funds that directly own shares of our common stock,
have agreed to indemnify Fundamental Global and its principals,
including Messrs. Cerminara and Johnson, or any other person
designated by Fundamental Global, for claims arising from Messrs.
Cerminara’s and Johnson’s service on our board of
directors, provided that a fund’s indemnity obligations are
secondary to any obligations we may have with respect to Messrs.
Cerminara’s and Johnson’s service on our board of
directors.
In
addition, we have an investment in a limited partnership, FGI 1347
Holdings, LP, of which we are the sole limited partner. FGI 1347
Holdings, LP was established for the purpose of investing in
securities using a portion of the proceeds from our previously
successful investment in Iteris, Inc. (Nasdaq: ITI), which was
liquidated for a substantial gain. Affiliates of Fundamental Global
serve as the general partner and investment manager of FGI 1347
Holdings, LP. We invested approximately $3.7 million in FGI 1347
Holdings, LP during 2018. During 2019, FGI 1347 Holdings, LP
incurred total expenses of $32,263 related to audit, legal and
other professional services that were paid by the limited
partnership directly to the third-parties for services rendered on
behalf of the limited partnership. Fundamental Global has not
received any management fees or performance fees for its services
to the limited partnership. Principals of Fundamental Global serve
on the board of directors of portfolio companies and receive
compensation for their service.
30
RELATIONSHIP WITH OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
MSL, an
independent registered public accounting firm, audited our
financial statements for fiscal 2019 and fiscal 2018. We had no
disagreements with MSL on accounting and financial disclosures.
MSL
’
s work on our audit
for fiscal 2019 was performed by full time, permanent employees and
partners of MSL.
MSL,
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 2020. The
audit committee, in discussing the reappointment of MSL, considered
the qualifications, experience, independence, compliance with
regulations, quality control, candor, objectivity, and professional
skepticism of MSL 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
MSL 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 MSL 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 MSL to serve as our independent
registered public accounting firm for fiscal 2020. Representatives
of MSL are not expected to be present at the annual meeting. If any
shareholder desires to ask MSL a question, management will ensure
that the question is sent to MSL and that an appropriate response
is made directly to the stockholder.
Although applicable
law does not require stockholder ratification of the appointment of
MSL 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 MSL, 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 MSL 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 MSL as our independent registered public accounting
firm.
FEES PAID TO 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, 2019 and 2018. The
following table represents aggregate fees billed for the fiscal
years ended December 31, 2019 and 2018 by MSL.
|
Fees
(1)(2)(3)(4)
|
2019
|
2018
|
|
Audit
Fees
|
$
142,040
|
$
135,000
|
|
Audited-Related
Fees
|
—
|
—
|
|
Tax
Fees
|
—
|
—
|
|
All
Other Fees
|
—
|
—
|
|
Total
|
$
142,040
|
$
135,000
|
(1)
For
2019 and 2018, includes fees paid to MSL for professional services
rendered for the audit of our annual financial statements for the
years ended December 31, 2019 and 2018 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. For 2019, also includes fees related to
services rendered in connection with issuance of a consent related
to our registration statements on Form S-8.
(2)
No
audit-related services were performed for us by MSL in 2019 or
2018. 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 MSL in 2019 or 2018. Tax
services include tax compliance, tax advice and tax
planning.
(4)
No
other services were performed for us by MSL in 2019 or
2018.
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 MSL reported hereunder had no impact on its
independence.
32
PROPOSAL 3: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER
COMPENSATION
General
The
board of directors recognizes the interests that stockholders have
in the compensation of executives. In recognition of that interest
and as required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and Section 14A of the Exchange Act, we are
providing stockholders with the opportunity to cast an advisory,
non-binding vote on the compensation of our Named Executive
Officers at this annual meeting. At the 2017 annual meeting of
stockholders, stockholders were asked to recommend how often they
should be given the opportunity to cast this advisory vote. The
stockholders voted to hold the advisory vote on executive
compensation every three years, and the board of directors approved
this choice. Stockholders are expected to have the opportunity to
vote on the frequency of future votes on named executive officer
compensation at the 2023 annual meeting of stockholders. The last
advisory vote on named executive officer compensation was held at
our 2017 annual meeting of stockholders. At that meeting,
approximately 99% of stockholders who cast votes on the matter
voted in favor of the compensation of our Named Executive Officers.
The compensation committee considered the results of the last
advisory say-on-pay vote when setting executive compensation and
decided, based upon strong stockholder support, not to make any
changes to our compensation program.
This
proposal gives our stockholders the opportunity to express their
views on the compensation of our Named Executive Officers. This
vote is not intended to address any specific item of compensation
or any single compensation philosophy, policy or practice, but
rather the overall compensation of our Named Executive Officers as
described in this proxy statement.
We
are asking our stockholders to indicate their support for the
compensation of our Named Executive Officers by voting on the
following resolution at the annual meeting:
“RESOLVED,
that the stockholders of BK Technologies Corporation approve, on an
advisory, non-binding basis, the compensation of the
Company’s Named Executive Officers, as disclosed in the
Company’s Proxy Statement for the 2020 Annual Meeting of
Stockholders pursuant to the compensation disclosure rules of the
Securities and Exchange Commission, including the Summary
Compensation Table and the other related tables and
disclosure.”
Stockholders
should note that the say-on-pay vote is advisory and is not binding
on the Company, the board of directors or the compensation
committee. The compensation committee will consider the results of
the vote when evaluating our executive compensation practices and
considering future executive compensation arrangements. The board
of directors and the compensation committee value the opinion of
stockholders, and to the extent there is any significant vote
against our Named Executive Officer compensation as disclosed in
the proxy statement, stockholders’ concerns will be
considered, and the compensation committee will evaluate whether
any actions are necessary to address those concerns.
Vote Required
The
number of votes cast by stockholders, either in person or by proxy,
at the annual meeting “for” advisory approval of the
compensation of our Named Executive Officers pursuant to the above
resolution must exceed the number of votes cast
“against” advisory approval. Abstentions and broker
non-votes will have no effect on the vote. Shares represented by
properly executed proxies will be voted, if specific instructions
are not otherwise given, for the advisory approval of the
compensation of our Named Executive Officers.
Recommendation of the Board
Our board of directors unanimously recommends that
stockholders vote “
FOR
” advisory approval of the compensation of
our Named Executive Officers pursuant to the above
resolution.
33
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of
December 31, 2019 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, 2019, 531,575 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
|
670,575
|
$
4.16
|
531,575
|
|
Equity compensation
plans not approved by security holders
|
—
|
—
|
—
|
|
Total
|
670,575
|
$
4.16
|
531,575
|
(1)
Includes
430,075 shares issuable upon the exercise or vesting of awards
(including stock options and RSUs) 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 2019.
Annual
Report on Form 10-K
Copies
of our Annual Report on Form 10-K for fiscal 2019, 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 2019 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 2019 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 2019 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.
34
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 2021 annual
meeting of stockholders. To be eligible for inclusion in our 2021
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 6, 2021, unless the
date of the 2021 annual meeting of stockholders is more than 30
days from the anniversary date of the 2020 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 2021 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 2021 annual meeting of stockholders, and
proposals for the 2021 annual meeting of stockholders submitted
outside the provisions of Rule 14a-8, will be considered untimely
if submitted prior to November 7, 2020 or after January 6, 2021.
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. The bylaws specify the information
that must accompany any such stockholder notices.
Any
proxy granted with respect to the 2021 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 timeframe 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.
35
If
you have any questions, require any assistance in voting your
shares in the Company, need any additional copies of the
Company’s proxy materials, or have any other questions,
please call Alliance Advisors LLC, the Company’s proxy
solicitor, at the toll-free telephone number included
below.
|
Alliance Advisors LLC
200
Broadacres Drive, 3rd Floor
Bloomfield,
NJ 07003
Toll-free
number:
833-501-4814
Fax:
973-338-1430
|
36
|
BK TECHNOLOGIES CORPORATION -
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – JUNE 24, 2020 AT 9:00 A.M., LOCAL
TIME
|
|
|
|
|
|
|||||||
|
CONTROL ID:
|
|
|
|
|
|
|
|
|||||
|
REQUEST ID:
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
||||||
|
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 April 27, 2020, and is/are entitled to
vote at the 2020 Annual Meeting of Stockholders of the Company to
be held on June 24, 2020 at 9:00 a.m., local time, at the offices
of the Company at 7100 Technology Drive, West Melbourne, Florida
32904, 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.
|
||||||||||||
|
|
|
|||||||||||
|
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
|
||||||||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
VOTING INSTRUCTIONS
|
|
|
|
|
|
|
||||||
|
If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
MAIL:
|
Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
|
|
|
|
|
|
|||||
|
FAX:
|
Complete
the reverse portion of this Proxy Card and Fax to
202-521-3464.
|
|
|
|
|
|
|||||
|
INTERNET:
|
https://www.iproxydirect.com/BKTI
|
|
|
|
|
|
|||||
|
PHONE:
|
1-866-752-VOTE(8683)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
ANNUAL MEETING OF THE STOCKHOLDERS OF
BK TECHNOLOGIES CORPORATION
|
PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE:
☒
|
|||||||||
|
|
|
|||||||||
|
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
|
|
|||||||||
|
Proposal 1
|
|
FOR
|
|
WITHHOLD
|
|
|
|
|
|
|
|
|
Election
of Directors:
|
|
|
|
|
|
|
|
|
|
|
|
John W.
Struble
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
D. Kyle
Cerminara
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
Michael
R. Dill
|
|
☐
|
|
☐
|
|
|
|
CONTROL
ID:
|
|
|
|
Lewis M.
Johnson
|
|
☐
|
|
☐
|
|
|
|
REQUEST
ID:
|
|
|
|
Charles T.
Lanktree
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
E. Gray
Payne
|
|
☐
|
|
☐
|
|
|
|
|
|
|
Proposal 2
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
|
To
ratify the appointment of MSL, P.A. as our independent registered
public accounting firm for fiscal 2020.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
Proposal 3
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
|
To
approve, on an advisory, non-binding basis, the compensation of our
Named Executive Officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
Proposal 4
|
|
|
|
|
|
|
|
|
|
|
|
|
To transact such other business properly brought before the meeting
and any adjournment or postponement of the meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARK “X”
HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
|
|||||
|
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 EACH OF THE NOMINEES FOR DIRECTOR NAMED IN PROPOSAL 1,
“FOR” RATIFICATION OF THE AUDITOR APPOINTMENT IN
PROPOSAL 2, “FOR” APPROVAL, ON AN ADVISORY, NON-BINDING
BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IN
PROPOSAL 3, 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.
|
|
|
|
MARK
HERE FOR ADDRESS CHANGE
☐
New Address (if
applicable):
___________________________
___________________________
___________________________
IMPORTANT:
Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 2020
|
||||||
|
|
||||||||||
|
|
(Print Name of Stockholder and/or Joint Tenant)
|
|||||||||
|
|
||||||||||
|
(Signature of Stockholder)
|
||||||||||
|
|
||||||||||
|
(Second Signature if held jointly)
|
||||||||||
TABLE OF CONTENTS