CRIMSON WINE GROUP, LTD
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under
§ 240.14a-12
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Crimson Wine Group, Ltd.
(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):
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x
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No fee required.
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Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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2700 Napa Valley Corporate Drive, Suite B
Napa, California 94558
Notice of the Annual Meeting of Stockholders
To be held July 26, 2019
June 10, 2019
Dear Stockholders,
You are cordially invited to the 2019 annual meeting of stockholders (the “Annual Meeting”) of Crimson Wine Group, Ltd. to be held at Seghesio Family Vineyards, 700 Grove Street, Healdsburg, California 95448, on Friday, July 26, 2019, beginning at 10:00 a.m., local time. The Annual Meeting will be held for the following purposes:
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1.
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To elect seven members to our Board of Directors;
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2.
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To ratify the selection of BPM LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2019;
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3.
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To approve, on an advisory basis, the compensation of the Company's named executive officers ("say-on-pay");
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4.
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To vote, on an advisory basis, on the frequency of future say-on-pay votes ("say-on-frequency"); and
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5.
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To transact such other business that may properly come before the Annual Meeting or any adjournment thereof.
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The Company’s Board of Directors has fixed the close of business on May 28, 2019 as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment thereof.
Only record holders, and people holding proxies from record holders, of Crimson Wine Group common stock as of the record date may attend the Annual Meeting.
On or about June 10, 2019, we began mailing a Notice of Internet Availability of Proxy Materials to our stockholders informing them that our Proxy Statement, Annual Report-Executive Summary, and voting instructions are available on the Internet as of the same date. As more fully described in the Notice of Internet Availability of Proxy Materials, all stockholders may choose to access our proxy materials via the Internet or may request printed copies of the proxy materials.
The Notice of Annual Meeting, Proxy Statement, and 2018 Annual Report-Executive Summary are available at http://crimsonwinegroup.investorroom.com/sec-filings.
YOUR VOTE IS VERY IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE HOPE THAT YOU WILL READ THE PROXY STATEMENT AND VOTE YOUR PROXY BY TELEPHONE, VIA THE INTERNET, OR BY REQUESTING A PRINTED COPY OF THE PROXY MATERIALS AND COMPLETING, SIGNING, AND RETURNING THE PROXY CARD ENCLOSED THEREIN.
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By Order of the Board of Directors
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Tina Hilger
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Corporate Secretary
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2700 Napa Valley Corporate Drive, Suite B
Napa, California 94558
PROXY STATEMENT
Annual Meeting of Stockholders
This proxy statement (the “Proxy Statement”) is being furnished to the stockholders of Crimson Wine Group, Ltd., a Delaware corporation (the “Company”), in connection with the solicitation of proxies by the Company’s Board of Directors (the “Board”) for use in voting at the Annual Meeting of Stockholders to be held on July 26, 2019, and at any adjournments or postponements thereof (the “Annual Meeting”).
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on July 26, 2019:
The U.S. Securities and Exchange Commission, or SEC, has adopted rules that allow us to use a “Notice and Access” model to make our proxy statement and other annual meeting materials available to you. On or about June 10, 2019, we began mailing a notice to our stockholders, called the Notice of Internet Availability of Proxy Materials (the “Notice”), advising that our proxy statement, Annual Report-Executive Summary, and voting instructions can be accessed on the Internet upon the commencement of such mailing. You may then access these materials and vote your shares via the Internet or by telephone or you may request that a printed copy of the proxy materials be sent to you. You will not receive a printed copy of the proxy materials unless you request one in the manner described in the Notice. Using the Notice allows us to conserve natural resources and reduces the costs of printing and distributing the proxy materials while providing our stockholders with access to the proxy materials in a fast and efficient manner via the Internet.
The Notice of Annual Meeting, Proxy Statement, and Annual Report-Executive Summary are available at http://crimsonwinegroup.investorroom.com/sec-filings.
THE MEETING
Date, Time and Place
The Annual Meeting will be held on July 26, 2019 at 10:00 a.m., local time, at Seghesio Family Vineyards, 700 Grove Street, Healdsburg, California 95448.
Matters to be Considered
At the meeting, stockholders will be asked to consider and vote to elect seven directors, to ratify the selection of independent auditors, to approve, on an advisory basis, the compensation of the Company's named executive officers ("NEOs"), and to vote, on an advisory basis, on the frequency of future say-on-pay votes.
See “ELECTION OF DIRECTORS," “RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS,” "SAY-ON-PAY ADVISORY VOTE," and "ADVISORY VOTE ON FREQUENCY OF FUTURE SAY-ON-PAY VOTES."
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The Board of Directors does not know of any matters to be brought before the meeting other than as set forth in the notice of meeting. If any other matters properly come before the meeting, the persons named in the enclosed form of proxy or their substitutes will vote in accordance with their best judgment on such matters.
Record Date; Shares Outstanding and Entitled to Vote
Stockholders of record as of the close of business on May 28, 2019 (the “Record Date”), are entitled to notice of and to vote at the Annual Meeting. As of the record date, there were 23,526,684 common shares outstanding and entitled to vote, with each share entitled to one vote.
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 nominee does not have authority to vote on that particular proposal without receiving voting instructions from the beneficial owner. Under New York Stock Exchange rules applicable to brokers (which are also applicable to companies whose securities are traded through the OTC Bulletin Board), brokers may not vote on “non-routine” proposals unless they have received voting instructions from the beneficial owner, and to the extent that they have not received voting instructions, brokers report such number of shares as “non-votes.” The proposal to elect directors and the say-on-pay and say-on-frequency votes are considered “non-routine” items, which means that brokerage firms may not vote in their discretion regarding those items on behalf of beneficial owners who have not furnished voting instructions. The proposal to ratify the selection of independent auditors, however, is considered a “routine” item, which means that brokerage firms may vote in their discretion regarding the selection of independent auditors on behalf of beneficial owners who have not furnished voting instructions. Because at least one routine item is to be voted upon at the meeting, broker non-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the 2019 Annual Meeting.
Required Votes for Each Proposal
Election of Directors
. Under Delaware law, the affirmative vote of the holders of a plurality of the common shares voted at the meeting is required to elect each director. Consequently, only shares that are voted in favor of a particular nominee will be counted toward the nominee’s achievement of a plurality. Shares present at the meeting that are not voted for a particular nominee, broker non-votes or shares present by proxy where the stockholder withholds authority to vote for the nominee will not be counted toward the nominee’s achievement of a plurality.
Say-On-Pay Advisory Vote.
The proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, and therefore will have no effect on the outcome of the proposal.
Say-On-Frequency Advisory Vote.
The option of one year, two years, or three years that receives the greatest number of votes will be considered the frequency selected by our stockholders. Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the proposal.
Selection of Auditors
. Ratification of the selection of BPM LLP as our independent auditors requires the affirmative vote of the holders of a majority of the common shares voted on the matter. Abstentions, if any, will not be counted as votes cast and therefore will have no effect for the purpose of determining whether the proposal has been approved.
Voting and Revocation of Proxies
Stockholders are requested to vote either by proxy or in person at the Annual Meeting by written ballot. If you choose to vote by proxy, you may do so via the Internet or by telephone, or by requesting a printed copy of the proxy materials and mailing in the enclosed proxy card. Voting instructions are provided on the proxy card. Even if you plan to attend the Annual Meeting, the Board recommends that you submit a proxy in advance via the Internet, by telephone or by mail. In this way, your shares of common stock will be voted as directed by you even if you should become unable to attend the Annual Meeting. If a stockholder does not return a signed proxy card, and does not attend the meeting and vote in person, his or her shares will not be voted.
If your shares are held in the name of a bank or broker, follow the voting instructions on the form you receive from your record holder.
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Shares of our common stock represented by properly executed proxies received by us which are not revoked will be voted at the meeting in accordance with the instructions contained therein. Subject to the broker non-vote rules discussed above under “Required Votes for Each Proposal,” if instructions are not given, proxies will be voted (i)
for
the election of each nominee for director named, (ii)
for
the say-on-pay resolution approving, on an advisory basis, the compensation of our named executive officers, (iii) for
2 YEARS
for the advisory vote on the frequency of future say-on-pay votes, and (iv)
for
ratification of the selection of independent auditors.
Any proxy signed and returned by a stockholder may be revoked at any time before it is exercised by giving written notice of revocation to the Corporate Secretary of the Company, at our address set forth herein, by executing and delivering a later-dated proxy in writing or by voting in person at the meeting. Attendance at the meeting will not in and of itself constitute revocation of a proxy. If your shares are held in a brokerage, bank, or other institutional account, you must obtain a proxy from that entity showing that you were the record holder as of the close of business on the Record Date, in order to vote your shares at the meeting.
Dissenters’ Rights
Under Delaware law, stockholders are not entitled to dissenters’ rights in connection with any of the proposals to be presented at the Annual Meeting or to demand appraisal of their shares as result of the approval of any of the proposals.
Proxy Solicitation
We will bear the costs of solicitation of proxies for the meeting. In addition to solicitation by mail, directors, officers and our regular employees may solicit proxies from stockholders by telephone, in person or otherwise. These directors, officers and employees will not receive additional compensation, but may be reimbursed for out-of-pocket expenses in connection with this solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of our common stock held of record by them, and such custodians will be reimbursed for their reasonable expenses.
Independent Auditors
We have been advised that representatives of BPM LLP, our independent auditors for 2019, will attend the Annual Meeting, will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to serve until the next annual meeting or until their successors are elected and qualified. All of the following nominees are currently serving as directors. The persons named in the enclosed form of proxy have advised that, unless contrary instructions are received, they intend to vote for the seven nominees named by the Board of Directors and listed on the following table. The Board of Directors expects that each of the nominees will be available for election as a director. However, if by reason of an unexpected occurrence one or more of the nominees is not available for election, the persons named in the form of proxy have advised that they will vote for such substitute nominees as the Board of Directors may propose.
Each of the biographies of the nominees for election as directors below contains information regarding the person’s service as a director, business experience, director positions with other public companies held currently or at any time during the past five years, and the experience, qualifications, attributes and skills that caused the Board of Directors to determine that the person should be nominated as a director of the Company at the Company’s 2019 Annual Meeting.
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Name and present position, if any, with the Company
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Age, period served as director, other business experience during the last five years and family relationships, if any
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John D. Cumming
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John D. Cumming, age 52, was elected as Chairman of Crimson in June 2015 after serving as a director since February 2013. Mr. Cumming is the Founder and Executive Chairman of POWDR Corp., a private ski resort and summer camp operating company. In addition to leading POWDR Corp., Mr. Cumming holds many positions in related fields, including Chairman of Snowbird Resort, Chairman of Outside TV and Chairman of American Investment Company, a family-owned investment company with diversified holdings. He is the Founder and Chairman Emeritus of The Park City Community Foundation and Director and Chairman Emeritus of the United States Ski and Snowboard Association Foundation. Mr. Cumming has managerial and investing experience in a broad range of businesses through his service as a senior executive and director of POWDR Corp., his involvement as a founding shareholder of Mountain Hardwear, and his tenure on various boards of directors.
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Joseph S. Steinberg
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Joseph S. Steinberg, age 75, was elected as a director in February 2013. Mr. Steinberg has been a director of HomeFed Corporation since August 1998 and Chairman of the Board since December 1999. Mr. Steinberg is Chairman of the Board of Directors of Jefferies Financial Group Inc., and from January 1979 until March 1, 2013 served as President of Leucadia National Corporation (now Jefferies Financial Group Inc.). Mr. Steinberg is presently on the Board of Spectrum Brands Holdings, Inc. and has previously served as a director of Mueller Industries, Inc. and Fortescue Metals Group Ltd. Mr. Steinberg has managerial and investing experience in a broad range of businesses through his more than 30 years as President and a director of Leucadia National Corporation. He also has experience serving on the boards and committees of both public and private companies.
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Avraham M. Neikrug
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Avraham M. Neikrug, age 49, was elected as a director in February 2013. Mr. Neikrug has been the Managing Partner of Goldenhill Ventures, a private investment firm that specializes in buying and building businesses in partnership with management, since June 2011. Mr. Neikrug has served as Vice President in Goldenhill Ventures LLC since June 2011. Mr. Neikrug has managerial and investing experience in a broad range of businesses through his founding and operating of JIR Inc., a company involved in the development of regional cable television throughout Russia, JIRP, a business-to-business internet service provider (ISP) based in Austria, and M&A Argentina, a private equity effort in Argentina. Avraham M. Neikrug’s father is a first cousin to Joseph S. Steinberg.
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Douglas M. Carlson
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Douglas M. Carlson, age 62, was elected as a director in March 2013. Mr. Carlson was elected CEO and Chairman of Tommy’s Superfoods, LLC in August 2015. Tommy's is in the frozen vegetables business and is quickly becoming a national brand in the U.S. with 15 different and creative seasoned blends of vegetables. From October 2013 to July 2015, Mr. Carlson was the Executive Vice President and Chief Marketing Officer of NOOK Media LLC, a subsidiary of Barnes & Noble, Inc. From April 2010 to September 2013, Mr. Carlson was Managing Partner of Rancho Valencia Resort & Spa, a tennis resort that includes fractional real estate. Prior to that, Mr. Carlson was Executive Chairman and Managing Director of Zinio, LLC and VIV Publishing, a digital publishing, retail and distribution platform for magazines, since 2005. Mr. Carlson co-founded FIJI Water Company LLC, Inc. in 1996 and served as its Chief Executive Officer from 1996 to 2005. Prior to joining FIJI, Mr. Carlson served as the Senior Vice President and Chief Financial Officer for The Aspen Skiing Company, from 1989 to 1996. Mr. Carlson has managerial and investing experience both within and outside the hospitality industry, as well as having been a certified public accountant.
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Craig D. Williams
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Craig D. Williams, age 68, was elected as a director in March 2013. From January 2015 to May 2018, Mr. Williams was the Chief Winegrower & Chief Operating Officer at Crimson Wine Group. Prior to that, Mr. Williams was the owner of Craig Williams Wine Company, a consulting business focused on winemaking and viticulture from 2008 to 2015. From 1976 to 2008, Mr. Williams held a variety of winemaking roles at Joseph Phelps Vineyards, rising to Senior Vice President of Winegrowing, responsible for all viticulture and winemaking activities, from 1999 to 2008. Mr. Williams has managerial experience and experience in multiple aspects of the wine business.
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Colby A. Rollins
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Colby A. Rollins, age 44, was elected as a director on April 25, 2018. Mr. Rollins is currently the Chief Operations Officer of American Investment Company, a family-owned investment company with diversified holdings. Previously, he served as the Chief Financial Officer of American Investment Company from January 2009 to January 2011. Mr. Rollins served as a Director, Chief Operations Officer, and Chief Financial Officer of Wing Enterprises, Inc., a privately-owned ladder company, from 2004 to 2008. He also has managerial and investment experience, including serving on the board of directors for Farm Brothers LLC, IPT, LLC (dba PayLock Parking Solutions), MTI Partners, LLC, PMH Investors, LLC, Snowbird Resort LLC, City Roasting Company LLC and Ready Foods, LLC. Mr. Rollins was also a certified public accountant with Deloitte & Touche LLP.
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Luanne D. Tierney
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Luanne D. Tierney, age 56, was elected as a director on November 5, 2018. Ms. Tierney is a Silicon Valley executive with more than three decades of experience who has held executive positions at Cisco Systems, Juniper Networks, and Proofpoint. Ms. Tierney currently serves as the Chief Marketing Officer for Open Systems, where she leads the company's global marketing initiatives. Known as a creative innovator and respected as a leader, Ms. Tierney has successfully built and led complex marketing organizations for several Fortune 500 and mid-market SaaS companies.
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The Board of Directors recommends a vote
FOR
the above-named nominees.
INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
Director Independence
The Board of Directors has determined that all of the members of the Board of Directors, with the exception of Mr. Williams, are independent under the NASDAQ Stock Market’s listing standards for independence.
Certain Relationships and Related Person Transactions
Policies and Procedures with Respect to Transactions with Related Persons
The Board has adopted a written policy for the review, approval and ratification of transactions that involve “related persons” and potential conflicts of interest (the “Related Person Transaction Policy”).
The Related Person Transaction Policy applies to each director and executive officer of the Company, any nominee for election as a director of the Company, any security holder who is known to own of record or beneficially more than five percent of any class of the Company’s voting securities, any immediate family member of any of the foregoing persons, and any corporation, firm, association or other entity in which one or more directors of the Company are directors or officers, or have a substantial financial interest (each a “Related Person”).
Under the Related Person Transaction Policy, a Related Person Transaction is defined as a transaction or arrangement involving a Related Person in which the Company is a participant or that would require disclosure in the Company’s filings in accordance with SEC rules.
Under the Related Person Transaction Policy, Related Persons must disclose to the Audit Committee any potential Related Person Transactions and must disclose all material facts with respect to such transaction. All Related Person Transactions will be reviewed by the Audit Committee and, in its discretion, approved or ratified. In determining whether to approve or ratify a Related Person Transaction the Audit Committee will consider the relevant facts and circumstances of the Related Person Transaction, which may include factors such as the relationship of the Related Person with the Company, the materiality or significance of the transaction to the Company and the Related Person, the business purpose and reasonableness of the transaction, whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and operations.
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From time to time, our directors and officers may engage in purchases of our products at substantial discounts (but not below cost) as determined to be reasonable under the circumstances. Generally, we do not believe any such transactions to be material to the Company or the related person and do not believe that any such transactions would impair the independence of any director. The Board has considered these possible purchases under the Related Person Transaction Policy and has determined that no such purchase will require prior approval by the Audit Committee.
Meetings and Committees
During 2018, the Board of Directors met three times. All seven of our then directors attended our 2018 Annual Meeting of Stockholders.
The Board of Directors of the Company has a standing Audit Committee and Compensation Committee. The Board of Directors determined that establishing standing Audit and Compensation Committees is an important element of sound corporate governance.
Procedures for Recommending Nominees
A stockholder entitled to vote in the election of directors may nominate one or more persons for election as director at a meeting if written notice of that stockholder’s intent to make the nomination has been given to us, with respect to an election to be held at an annual meeting of stockholders, no earlier than 150 days and no later than 120 days before the first anniversary of our proxy statement in connection with the last annual meeting, and, with respect to an election to be held at a special meeting of stockholders, no earlier than 150 days before such special meeting and no later than 120 days before such special meeting, or if the first public notice of such special meeting is less than 130 days prior to the date of such special meeting, the tenth day following the date on which public notice of the meeting is first given to stockholders. The notice shall provide such information as required under the Company’s By-laws, including, without limitation, the name and address of the stockholder and his or her nominees, a representation that the stockholder is entitled to vote at the meeting and intends to nominate the person, a description of all arrangements or understandings between the stockholder and each nominee, other information as would be required to be included in a proxy statement soliciting proxies for the election of the stockholder’s nominees, the consent of each nominee to serve as a director of the Company if so elected, information concerning the stockholder’s direct and indirect ownership of securities of the Company, including with respect to any beneficial owner of securities of the Company held by the stockholder, and compensation received by or relationships between such stockholder with respect to the securities of the Company from any beneficial owner of such securities. We may require any proposed nominee to furnish other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the Company.
We did not receive any nominations from stockholders for election as directors at the meeting. See “PROPOSALS BY STOCKHOLDERS” below for the deadline for nominating persons for election as directors for the 2019 annual meeting.
Audit Committee
The Board of Directors has adopted a charter for the Audit Committee, which is available on our website, www.crimsonwinegroup.com. The Audit Committee consists of Mr. Carlson, who serves as the Chairman, Mr. Neikrug and Mr. Rollins. The Board of Directors has determined that Mr. Carlson is qualified as an audit committee financial expert within the meaning of regulations of the SEC and that each of Messrs. Carlson, Neikrug and Rollins is independent applying the NASDAQ Stock Market’s listing standards for independence and the SEC’s independence requirements for audit committee members. During 2018, the Audit Committee met four times.
Compensation Committee
The Compensation Committee, formed in 2018, (i) reviews and approves the compensation of the Company’s executive officers, (ii) establishes, oversees and administers compensation policies and programs for the Company’s employees and (iii) administers the Company’s incentive compensation plan. The Board of Directors has adopted a charter for the Compensation Committee, which is available on our website, www.crimsonwinegroup.com. The Compensation Committee currently consists of Mr. Cumming, who serves as the Chairman, and Mr. Rollins, each of whom is independent applying the NASDAQ Stock Market’s listing standards for independence and the SEC’s independence requirements for compensation committee members. Each member of our Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. During 2018, the Compensation Committee met one time.
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Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 2018 were John D. Cumming and Colby A. Rollins. No member of the Compensation Committee was at any time during the past fiscal year an officer or employee of the Company, was formerly an officer of the Company or any of its subsidiaries, or had any relationship with the Company requiring disclosure under Item 104 of Regulation S-K. No executive officer of the Company has served as a director or member of the Compensation Committee (or other committee serving an equivalent function) of any other entity that has one or more executive officers who served as a director of or member of the Compensation Committee of the Company.
Board Structure and Risk Oversight
John D. Cumming serves as our Chairman. Patrick M. DeLong serves as our President and Chief Executive Officer. As Chairman, Mr. Cumming focuses primarily on long-term strategic issues facing the Company along with the rest of the Board. As President and Chief Executive Officer, Mr. DeLong focuses primarily on the Company’s day-to-day operations and management of the Company’s business. The Board believes that this is an effective leadership structure from which the Company has benefited as it strengthens the Company’s ability to pursue its strategic and operational objectives.
The Board is responsible for the general oversight of risks that affect the Company. The Board regularly receives reports on the operations of the Company from the President and other members of management and discusses the risks related thereto. The Board also fulfills its oversight role through the operation of its Audit Committee, which is composed of independent directors. The Audit Committee has responsibility for risk oversight in connection with its review of the Company’s financial reports filed with the SEC. The Audit Committee receives reports from the Company’s Chief Financial Officer, the Company’s Chief Executive Officer and the Company’s independent auditors in connection with the review of the Company’s quarterly and annual financial statements regarding significant transactions, accounting and reporting matters, critical accounting estimates and management’s exercise of judgment in accounting matters. When reporting on such matters, the Company’s independent auditors also communicate their assessment of management’s conclusions. The Audit Committee also oversees the Related Person Transactions Policy.
Attendance
In 2018, all directors attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of the committees on which they served. It is the Company’s policy that each director is expected to dedicate sufficient time to the performance of his or her duties as a director, including by attending meetings of the stockholders, the Board of Directors and committees of which he or she is a member.
Communicating with the Board
Stockholders and other parties interested in communicating directly with the Board of Directors as a group may do so by writing to the Board of Directors, c/o Corporate Secretary, Crimson Wine Group, 2700 Napa Valley Corporate Drive, Suite B, Napa, California 94558. The Corporate Secretary will review all correspondence and regularly forward to the Board of Directors a summary of all such correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or committees thereof or that the Corporate Secretary otherwise determines requires attention. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of all such correspondence. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Chairman of the Audit Committee.
Code of Business Practice
We have a Code of Business Practice, which is applicable to all of our directors, officers and employees, and includes a Code of Practice applicable to our principal executive officers and senior financial officers. Both the Code of Business Practice and the Code of Practice are available on our website, www.crimsonwinegroup.com. We intend to post amendments to or waivers from our Code of Practice on our website as required by applicable law.
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INFORMATION ON STOCK OWNERSHIP
Present Beneficial Ownership
Set forth below is certain information as of May 28, 2019, with respect to the beneficial ownership of common shares, determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended, by (1) each person who, to our knowledge, is the beneficial owner of more than 5% of our outstanding common shares, which is our only class of voting securities, (2) each director, (3) each of the executive officers named in the Summary Compensation Table under “Executive Compensation,” (4) charitable foundations established by our directors and (5) all of our executive officers and directors as a group. The percentage ownership information under the column entitled “Percent of Class” is based on 23,526,684 shares of common stock outstanding as of May 28, 2019. Unless otherwise stated, the business address of each person listed is c/o Crimson Wine Group, 2700 Napa Valley Corporate Drive, Suite B, Napa, CA 94558.
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Name and Address of Beneficial Owner
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Number of Shares and Nature of Beneficial Ownership
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Percent of Class
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Named directors and executive officers
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John D. Cumming
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2,648,724
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(a)
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11.3
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%
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Joseph S. Steinberg
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2,593,548
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(b)
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11.0
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%
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Patrick M. DeLong
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23,759
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0.1
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%
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Douglas M. Carlson
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5,000
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*
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Avraham M. Neikrug
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4,030
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(c)
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*
|
|
|||
|
Craig D. Williams
|
1,000
|
|
|
*
|
|
|||
|
Karen L. Diepholz
|
1,000
|
|
|
*
|
|
|||
|
Nicolas M.E. Quillé
|
500
|
|
*
|
|
||||
|
Mike S. Cekay
|
100
|
|
|
*
|
|
|||
|
Luanne D. Tierney
|
—
|
|
*
|
|
||||
|
All directors and executive officers as a group (10)
|
5,277,661
|
|
|
22.4
|
%
|
|||
|
Charitable foundations and 5% or greater stockholder
|
|
|
|
|
||||
|
Cumming Foundation
|
18,320
|
|
(d)
|
0.1
|
%
|
|||
|
John D. Cumming Family Foundation
|
9,166
|
|
(e)
|
*
|
|
|||
|
Joseph S. and Diane H. Steinberg 1992 Charitable Trust
|
33,000
|
|
(f)
|
0.1
|
%
|
|||
|
Beck, Mack & Oliver LLC
|
2,587,837
|
|
(g)
|
11.0
|
%
|
|||
|
565 Fifth Avenue
|
|
|
|
|
||||
|
New York, NY 10017
|
|
|
|
|||||
|
Mario J. Gabelli
|
1,225,503
|
|
(h)
|
5.2
|
%
|
|||
|
One Corporate Center
|
|
|
|
|||||
|
Rye, New York 10580-1435
|
|
|
|
|||||
* Less than 0.1%.
|
(a)
|
Includes 237,896 (1.0%) shares owned directly by Mr. John D. Cumming and 2,410,828 (10.2%) shares owned by the Estate of Ian M. Cumming. Mr. John D. Cumming serves as Personal Representative of the Estate of Ian M. Cumming and has sole voting and dispositive control over the shares owned by the Estate.
|
|
(b)
|
Includes 15,120 (less than 0.1%) shares of common stock beneficially owned by Mr. Steinberg’s wife and daughter, 1,786,627 (7.6%) shares of common stock held by corporations that are wholly owned by Mr. Steinberg, or held by corporations that are wholly owned by family trusts as to which Mr. Steinberg has sole voting and dispositive control, or held by such trusts, and 323,582 (1.4%) shares of common stock held in a trust for the benefit of Mr. Steinberg’s children as to which Mr. Steinberg may be deemed to be the beneficial owner.
|
|
(c)
|
Includes 30 shares of common stock owned of record by Mr. Neikrug’s minor son.
|
|
(d)
|
Mr. John D. Cumming is a trustee of the Cumming Foundation, a private charitable foundation, and disclaims beneficial ownership of the shares of common stock held by the foundation.
|
|
(e)
|
Mr. John D. Cumming is President and a director of the John D. Cumming Family Foundation, a private charitable foundation, and disclaims beneficial ownership of the shares of common stock held by the foundation.
|
11
|
(f)
|
Mr. Steinberg and his wife are the trustees of the charitable trust. Mr. Steinberg and his wife disclaim beneficial ownership of the shares of common stock held by the charitable trust.
|
|
(g)
|
Based on Schedule 13G filed by Beck, Mack & Oliver LLC with the SEC on February 4, 2019.
|
|
(h)
|
Based on Schedule 13D filed by Mr. Gabelli with the SEC on March 3, 2016. All shares are held directly or indirectly in entities that Mr. Gabelli either controls or for which he acts as chief investment officer, including 345,000 shares (1.5%) owned by GAMCO Asset Management Inc., 370,503 shares (1.6%) owned by Gabelli Funds, LLC and 510,000 shares (2.2%) owned by Teton Advisors, Inc.
|
As of May 28, 2019, Cede & Co. held of record 19,336,953 shares of our common stock (approximately 82.2% of our total common stock outstanding). Cede & Co. held such shares as a nominee for broker-dealer members of The Depository Trust Company, which conducts clearing and settlement operations for securities transactions involving its members.
As described herein, our common stock is subject to transfer restrictions that are designed to reduce the possibility that certain changes in ownership could result in limitations on the use of our tax attributes. Our certificate of incorporation contains provisions that generally restrict the ability of a person or entity from acquiring ownership (including through attribution under the tax law) of 5% or more of our common shares and the ability of persons or entities now owning 5% or more of our common shares from acquiring additional common shares. Stockholders (and prospective stockholders) are advised that, under the tax law rules incorporated in these provisions, the acquisition of even a single share of common stock may be proscribed under our certificate of incorporation, given (among other things) the tax law ownership attribution rules as well as the tax law rules applicable to acquisitions made in coordination with or in concert with others. The restriction will remain until the earliest of (a) December 31, 2022, (b) the repeal of Section 382 of the Internal Revenue Code (or any comparable successor provision) and (c) the beginning of our taxable year to which these tax attributes may no longer be carried forward. The restriction may be waived by our Board of Directors.
Stockholders are advised to carefully monitor their ownership of our common stock and consult their own legal advisors and/or us to determine whether their ownership of our common shares approaches the proscribed level.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Based solely upon a review of such reports on the SEC’s website, we believe that all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis except for one Form 4 filing by Ian Cumming (reporting 1 transaction) and one Form 4 filing by Nicolas M.E. Quillé (reporting 1 transaction) which were filed late.
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Introduction
The Compensation Committee makes all decisions regarding executive officer compensation. The Compensation Committee periodically reviews the elements of compensation for executive officers and, subject to any existing employment agreements, sets each element of compensation for the Chief Executive Officer and the other executive officers, including annual base salary and annual incentive bonus.
Directors and Executive Officers
The following table sets forth the names of each of our executive officers, and each such person’s position with the Company and age.
|
Name
|
Position
|
Age
|
||
|
Patrick M. DeLong
|
President and Chief Executive Officer
|
54
|
||
|
Karen L. Diepholz
|
Chief Financial Officer
|
55
|
||
|
Nicolas M.E. Quillé
|
Chief Winemaking & Operations Officer
|
47
|
||
|
Mike S. Cekay
|
Senior Vice President, Global Sales
|
47
|
||
12
Set forth below is additional information as to each non-director executive officer.
Patrick M. DeLong, age 54, has served as President and Chief Executive Officer of Crimson since November 2014 and served as Chief Financial & Operating Officer of Crimson from July 2007 through November 2014. Mr. DeLong served as the Senior Vice President & CFO of Icon Estates, which was a fine wine division of Constellation Brands, Inc., from 2004 to 2006. Mr. DeLong was at the Robert Mondavi Corporation in a variety of roles from 1998 to 2004, including Senior Vice President of Finance & Planning. Mr. DeLong’s early career included ten years in operational and financial leadership roles, including with premium cruise line Holland America Line. Mr. DeLong began his career with Deloitte & Touche LLP in San Francisco.
Karen L. Diepholz, age 55, has served as Chief Financial Officer of Crimson since June 2018. Prior to that, Ms. Diepholz served for three years as the Chief Financial Officer of Vintage Wine Estates, a privately held wine company, where she led many aspects of the operations. From 2011 to 2014 Ms. Diepholz was the Vice President & Chief Financial Officer of Equinox Payments, a payment technology company, and from 2008 to 2011 the Vice President of Financial Planning and Analysis for Hypercom Corporation, a New York Stock Exchange listed global payment technology company. Ms. Diepholz also served as the Vice President, Corporate Controller at Fender Musical Instruments and spent her early career in the consumer products industry in a variety of financial and leadership roles at the The Dial Corporation, now Henkel U.S.
Nicolas M.E. Quillé, MW, age 47, has served as Chief Winemaking and Operations Officer since May 2018. Mr. Quillé was most recently General Manager and Head Winemaker of Banfi Vintners’ boutique portfolio of wineries in the Pacific Northwest. He spent the last 26 years in a variety of winegrowing positions in both France and the United States. In addition to his role with Banfi, his U.S. experience includes winegrowing and management positions with Pacific Rim and Bonny Doon. Prior to moving to the United States, Mr. Quillé worked in Burgundy (Antonin Rodet and Domaine Prieur), Provence (Domaine de la Courtade), Champagne (Laurent Perrier) and Portugal (Taylor’s Port).
Mike S. Cekay, age 47, has served as Senior Vice President of Global Sales of Crimson since May 2012. Mr. Cekay served as the Executive Vice President, Global Sales Manager of Don Sebastiani & Sons from 2009 to 2012. Mr. Cekay was Vice President of Sales at Future Brands LLC from 2007 to 2009. Mr. Cekay was Divisional Sales Vice President for Beam Wine Estates from 2005 to 2007.
Stock Ownership Requirements
We do not have a formal stock ownership requirement, although two of our directors, Messrs. John D. Cumming and Joseph S. Steinberg, respectively, beneficially own approximately 11.3% and 11.0% of our outstanding common stock as of May 28, 2019.
Accounting and Tax Matters
The Company does not currently provide share-based compensation to employees or directors. In the future, if share-based compensation is provided to employees or directors, the cost of such share-based compensation would be recognized in the Company’s financial statements based on their fair values at the time of grant and would be recognized as an expense over the vesting period of any such award in accordance with GAAP.
13
Summary Compensation Table
The following table shows, for fiscal years 2018 and 2017, all of the compensation earned by, awarded to or paid to our Chief Executive Officer and our two other highest paid executive officers:
|
Summary Compensation Table
|
||||||||||
|
Name and Principal Position
|
Year
|
Salary
(1)
|
Bonus
|
All Other Compensation
(2)
|
Total
|
|||||
|
Patrick M. DeLong,
|
2018
|
$347,854
|
$90,000
|
$23,393
|
$461,247
|
|||||
|
President and Chief Executive Officer
|
2017
|
$345,000
|
$120,000
|
$23,268
|
$488,268
|
|||||
|
Craig D. Williams,
|
2018
|
$140,972
|
$60,000
|
$49,303
|
$250,275
|
|||||
|
Chief Operating Officer and Chief Winegrower
(3)
|
2017
|
$230,000
|
$70,000
|
$17,268
|
$317,268
|
|||||
|
Mike S. Cekay,
|
2018
|
$287,242
|
$45,000
|
$21,893
|
$354,135
|
|||||
|
Senior Vice President of Sales
|
2017
|
$285,000
|
$57,000
|
$20,995
|
$362,995
|
|||||
|
Nicolas M.E. Quillé,
|
2018
|
$148,096
|
$—
|
$6,403
|
$154,499
|
|||||
|
Chief Winemaking & Operations Officer
(4)
|
||||||||||
(1) Base salary under employment agreements with subsequent increases at the Board of Director’s sole discretion. For Mr. Williams includes $15,833 of directors fees paid in 2018 following his resignation as described in footnote 3 below.
(2) Includes 401k contributions, health club reimbursements and car allowance paid by the Company. For Mr. Williams includes $42,000 of consulting fees paid in 2018.
(3) Effective May 21, 2018, Craig D. Williams resigned from his role as an officer of the Company.
(4) Effective May 21, 2018, Nicolas M.E. Quillé became an employee of the Company.
Executive Agreements
Patrick M. DeLong.
On June 27, 2007, we entered into an agreement with Mr. DeLong. The agreement continues until terminated by us or Mr. DeLong, or due to his death or disability which renders him unable to perform his duties under the agreement for 90 consecutive days in any 12-month period. Mr. DeLong is entitled to an annual bonus opportunity based on performance goals established by the Board of Directors and Mr. DeLong at the beginning of each calendar year. Mr. DeLong’s target bonus was 40% of his annual base salary for the first full calendar year, 45% for the second full calendar year and 50% for the third full calendar year and subsequent calendar years. We will notify Mr. DeLong if the bonus target becomes different than 50% of his base salary. Notwithstanding the provisions of the agreement, the Board of Directors may make a determination as to bonus payable to Mr. DeLong at its discretion. Pursuant to the agreement, Mr. DeLong is also eligible to participate in and receive any stock option grants, to participate in any standard company benefits and to receive a car allowance benefit of $1,400 per month. Mr. DeLong is also eligible to share a percentage of our pre-tax income, subject to terms determined by us pursuant to any long-term incentive or deferred compensation program. Mr. DeLong is entitled to certain benefits if his employment is terminated or upon other events. See “Potential Payments on Termination or Change of Control” below.
Mike S. Cekay
. On March 26, 2012, we entered into an agreement with Mr. Cekay. The agreement continues until terminated by us or Mr. Cekay at any time and for any reason or for no reason with or without notice. Mr. Cekay is eligible for an annual bonus in an amount to be determined by us in our discretion up to 30% bonus target of base salary plus an accelerator, based on sales contribution as compared to target, to be determined annually. The amount of any annual bonus will be based upon our performance and Mr. Cekay’s performance, as determined by us, against goals mutually agreed upon between Mr. Cekay and us. Pursuant to the agreement, Mr. Cekay is also eligible to participate in a long term incentive plan, receive a car allowance benefit of $1,400 per month and participate in standard company benefits. Mr. Cekay is not entitled to any benefits if his employment is terminated or upon other events.
Nicolas M.E. Quillé.
On March 14, 2018, we entered into an agreement with Mr. Quillé. The agreement continues until terminated by us or Mr. Quillé at any time and for any reason or for no reason with or without notice. Mr. Quillé is eligible for an annual bonus in an amount to be determined by us in our discretion up to 40% bonus target of base salary. The amount of any annual bonus will be based upon our performance and Mr. Quillé’s performance, as determined by us, against goals mutually agreed upon between Mr. Quillé and us. Pursuant to the agreement,
14
Mr. Quillé is also eligible to receive a car allowance benefit of $1,400 per month and participate in standard company benefits. Mr. Quillé is entitled to certain benefits if his employment is terminated or upon other events. See “Potential Payments on Termination or Change of Control” below.
Craig D. Williams.
Effective May 21, 2018, Mr. Williams resigned from the Company as Chief Operating Officer and Chief Winegrower. Following Mr. Williams’ resignation, on June 1, 2018 the Company entered into a consulting agreement (the “Initial Consulting Agreement”) with Mr. Williams pursuant to which Mr. Williams provided winemaking consulting services. Under the Initial Consulting Agreement, Mr. Williams was paid a $6,000 monthly retainer for his consulting services, and was entitled to be reimbursed for his out-of-pocket expenses. On January 30, 2019, the Company and Mr. Williams entered into a new consulting agreement (the “New Consulting Agreement”) to replace the Initial Consulting Agreement. Under the New Consulting Agreement, the Company will pay Mr. Williams for his services at the rate of $250 per hour, and Mr. Williams will be reimbursed for his out-of-pocket expenses. The parties estimate that Mr. Williams will provide 40 hours of consulting services each year under the New Consulting Agreement.
Potential Payments on Termination or Change of Control
The information below describes and quantifies certain compensation that would become payable under each named executive officer’s employment agreement if, as of December 31, 2018, their employment had been terminated (including termination in connection with a change in control). Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event.
Patrick M. DeLong.
In the event Mr. DeLong’s employment is terminated by us without cause, by him with good reason or by a successor (whether direct, indirect, by purchase, merger, consolidation or otherwise) before a change in control, he shall be entitled to continue to receive as severance, payment, in accordance with our current payroll practices, of his base salary in effect at the time of termination for 12 months.
Nicolas M.E. Quillé.
In the event Mr.
Quillé
’s employment is terminated by us without cause, by him with good reason or by a successor (whether direct, indirect, by purchase, merger, consolidation or otherwise) before a change in control, he shall be entitled to continue to receive as severance, payment, in accordance with our current payroll practices, of his base salary in effect at the time of termination for 12 months. The Company will make available COBRA benefits for 18 months, subject to legal limitations at the time, and reimbursement of up to 3 months of COBRA cost.
Director Compensation
As approved in March 2013, our non-employee directors receive an annual retainer of $25,000 for serving on the Board of Directors and a per meeting fee of $2,500 for each Board, committee or stockholder meeting attended in person. Mr. Carlson receives an additional $26,000 annually for serving as Chairman of the Audit Committee, and Messers. Neikrug and Rollins receive an additional $17,000 annually for serving on the Audit Committee. Mr. Cumming receives an additional $26,000 annually for serving as the Chairman of the Compensation Committee and Mr. Rollins receives an additional $17,000 annually for serving on the Compensation Committee. The Company reimburses directors for reasonable travel expenses incurred in attending board and committee meetings. The 2018 director compensation for our non-employee directors is set forth below. See “Summary Compensation Table” above for details of Mr. Williams’ compensation.
15
|
Director Compensation Table
|
||||||
|
Name
|
Fees paid in cash
|
All Other Compensation
|
Total
|
|||
|
Directors
|
|
|
|
|||
|
Douglas M. Carlson
(1)
|
$61,000
|
$—
|
$61,000
|
|||
|
Avraham M. Neikrug
(1)
|
$52,000
|
$—
|
$52,000
|
|||
|
John D. Cumming
(2)
|
$41,500
|
$—
|
$41,500
|
|||
|
Joseph S. Steinberg
|
$35,000
|
$—
|
$35,000
|
|||
|
Francesca H. Schuler
(3)
|
$29,715
|
$—
|
$29,715
|
|||
|
Colby A. Rollins
(1)(2)(4)
|
$28,917
|
$—
|
$28,917
|
|||
|
Luanne D. Tierney
(5)
|
$—
|
$—
|
$—
|
|||
(1) Member of the audit committee.
(2) Member of the compensation committee.
(3) Ms. Schuler resigned from the Board of Directors effective August 20, 2018.
(4) Mr. Rollins was elected to the Board of Directors effective April 25, 2018.
(5) Ms. Tierney was elected to the Board of Directors effective November 5, 2018.
Compensation Policies and Risk Management
The Company does not have a formal compensation plan for any of its employees. Annually, the Compensation Committee will consider making incentive compensation awards that are purely discretionary, taking into account the employee’s individual performance as well as the Company’s performance for the particular year. Accordingly, the Company believes that its compensation policies do not reward employees for imprudent risk taking.
Equity Compensation Plan Information
Our Board of Directors previously adopted an equity compensation plan, which allows the Company to grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, and other stock-based awards, and performance-based compensation awards to its officers, employees, and non-employee directors. The equity compensation plan will be administered by our Board of Directors, which is authorized to select the officers, employees and non-employee directors to whom awards will be granted, and to determine the type and amount of such awards. The maximum number of shares available for issuance under the plan is 1 million. The equity compensation plan was filed as an Exhibit to the Company’s Form 8-K, filed on February 25, 2013. This summary of the plan is qualified in its entirety by reference to the full text of the plan. As of the date of this report, no grants have been made under the plan.
AUDIT COMMITTEE REPORT
The following is the report of our Audit Committee with respect to our audited financial statements for the fiscal year ended December 31, 2018.
Review with Management
The Audit Committee reviewed and discussed our audited financial statements with management.
Review and Discussions with Independent Auditors
The Audit Committee discussed the Company’s audited financial statements with management, which has primary responsibility for the financial statements. Our independent auditors are responsible for expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States of America. The Audit Committee discussed with our independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities
16
and Exchange Commission. The Audit Committee also received the written disclosures and the letter from our independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding our independent auditors’ communications with the Audit Committee concerning independence; and has discussed with our independent auditors their independence. The Audit Committee also concluded that our independent auditors’ provision of audit and non-audit services to the Company and its subsidiaries, as described in this proxy statement, was compatible with our independent auditors’ independence.
Conclusion
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that our audited consolidated financial statements be included in our Form 10-K for the year ended December 31, 2018 for filing with the Securities and Exchange Commission.
|
Submitted by the Audit Committee of the
|
|
|
Board of Directors
|
|
|
Douglas M. Carlson, Chairman
|
|
|
Avraham M. Neikrug
|
|
|
Colby A. Rollins
|
|
17
INDEPENDENT ACCOUNTING FIRM FEES
Prior to formation of the Audit Committee, the Board of Directors adopted a policy for pre-approval by the Audit Committee of all audit and non-audit work performed by the Company’s independent registered public accounting firm and has pre-approved (i) certain general categories of work where no specific case-by-case approval is necessary (“general pre-approvals”) and (ii) categories of work which require the specific pre-approval of the Audit Committee (“specific pre-approvals”). For additional services or services in an amount above the annual amount that has been pre-approved, additional authorization from the Audit Committee is required. The Audit Committee has delegated to the Chairman of the Audit Committee the ability to pre-approve all of these services in the absence of the full committee. Any pre-approval decisions made by the Chairman of the Audit Committee under this delegated authority will be reported to the full Audit Committee. All requests for services to be provided by our independent registered public accounting firm that do not require specific approval by the Audit Committee must be submitted to the Chief Financial Officer of the Company, who determines whether such services are in fact within the scope of those services that have received the general pre-approval of the Audit Committee. The Chief Financial Officer reports to the Audit Committee periodically, at a minimum quarterly.
In accordance with the SEC’s definitions and rules, Audit Fees are fees paid to our independent registered public accounting firm for professional services for the audit of the Company’s consolidated financial statements included in the Company’s Form 10-K, the review of financial statements included in the Company’s Form 10-Qs, services that are normally provided in connection with statutory and regulatory filings or engagements, assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. Audit Related Fees include professional services for the audit of the Company’s 401K plan, including compliance with regulatory matters, consulting with respect to technical accounting and disclosure rules. For the year ended December 31, 2017, Moss Adams, LLP, our then independent registered public accounting firm, did not perform any tax related services for the Company. For the year ended December 31, 2018, BPM LLP, our independent registered public accounting firm did not perform any tax related services for the Company.
During the fiscal years ended December 31, 2018 and 2017, fees paid to the Company’s independent public accountants, consisted of the following:
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
2017
|
|||||
|
Audit fees
|
$
|
285,000
|
|
$
|
302,000
|
|
|
|
Audit-related fees
|
10,000
|
|
10,000
|
|
|||
|
Total
|
$
|
295,000
|
|
$
|
312,000
|
|
|
Information About Our Independent Auditors
On April 2, 2018, the Company dismissed Moss Adams LLP as its independent registered public accounting firm and approved the engagement of BPM LLP to replace Moss Adams LLP as its independent registered public accounting firm. Both actions were approved by the Company’s Audit Committee.
The report issued by Moss Adams LLP with respect to the Company’s financial statements for the fiscal year ended on December 31, 2017 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s two most recent fiscal years (and the subsequent interim period preceding Moss Adams LLP’s dismissal), there were no disagreements between the Company and Moss Adams LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Moss Adams LLP, would have caused Moss Adams LLP to make reference to the subject matter of the disagreement(s) in connection with its report(s). In addition, there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K during such periods.
18
During the Company’s two most recent fiscal years (including the interim period preceding the Company’s engagement of BPM LLP), neither the Company nor anyone on its behalf consulted BPM LLP regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered by BPM LLP with respect to the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that BPM LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was either the subject of a disagreement between the Company and BPM LLP or a “reportable event” as defined in Item 304(a)(1)(v) of Regulation S-K.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The ratification of the selection of BPM LLP as independent auditors is being submitted to stockholders because we believe that this action follows sound corporate practice and is in the best interests of the stockholders. If the stockholders do not ratify the selection by the affirmative vote of the holders of a majority of the common shares voted at the meeting, the Audit Committee of the Board of Directors will reconsider the selection of independent auditors, but such a vote will not be binding on the Audit Committee. If the stockholders ratify the selection, the Audit Committee, in its discretion, may still direct the appointment of new independent auditors at any time during the year if they believe that this change would be in our and our stockholders’ best interests.
The Board of Directors recommends that the stockholders ratify the selection of BPM LLP, an independent registered public accounting firm, as the independent auditors to audit our accounts for 2019. The Audit Committee approved the selection of BPM LLP as our independent auditors for 2019. BPM LLP are currently our independent auditors.
Ratification of the selection of BPM LLP as our independent auditors requires the affirmative vote of the holders of a majority of the common shares voted on the matter. Abstentions, if any, will not be counted as votes cast and therefore will have no effect for the purpose of determining whether the proposal has been approved.
The Board of Directors recommends a vote
FOR
this proposal.
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS ("SAY-ON-PAY")
As required by Section 14A of the Exchange Act and in accordance with SEC rules, stockholders are being given the opportunity to vote at the Annual Meeting on this advisory resolution regarding the compensation of our named executive officers (commonly referred to as "say-on-pay"). For more information about the compensation that we paid to our named executive officers during 2018, as well as a description of our overall executive compensation philosophy and program, please refer to the "Executive Compensation" section of this Proxy Statement.
Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to our named executive officers and will not be binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee will consider the outcome of the vote when making future executive compensation decisions.
The proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, and therefore will have no effect on the outcome of the proposal.
The Board recommends a vote
FOR
this proposal.
ADVISORY VOTE ON FREQUENCY OF FUTURE SAY-ON-PAY VOTES
At the Annual Meeting, stockholders will be given the opportunity to vote on whether they prefer to have future say-on-pay votes occur:
1) every year;
2) every two years; or
3) every three years.
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In addition to providing our stockholders with the opportunity to cast an advisory vote on the compensation of our named executive officers, we also are seeking a non-binding, advisory vote on how frequently such say-on-pay votes should be presented to stockholders. In accordance with SEC rules, stockholders will have the opportunity at least every six years to recommend the frequency of future say-on-pay votes.
Stockholders may vote to recommend that future say-on-pay votes be held every year, every two years or every three years. The Board currently believes that future say-on-pay votes should occur every two years. The Board believes that holding a say-on-pay vote every two years offers the closest alignment with the Company's approach to executive compensation and its underlying philosophy that seeks to enhance the long-term growth of the Company and to attract, retain and motivate our executive officers over the long term. The Board believes a two-year cycle for the advisory vote on executive compensation will provide investors the most meaningful timing alternative by which to evaluate the effectiveness of our executive compensation strategies and their alignment with the Company's business and results of operations. It will also minimize the administrative, compliance and other corporate expenses associated with holding say-on-pay votes more frequently (e.g., every year).
Because the vote on this proposal is advisory in nature, it will not be binding on the Board. However, the Board will consider the outcome of the vote along with other factors when making its decision about the frequency of future say-on-pay votes.
The option of one year, two years or three years that receives the greatest number of votes will be considered the frequency selected by our stockholders. Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the proposal.
The Board recommends that the stockholders vote in favor of holding future say-on-pay advisory votes every
TWO
years.
ANNUAL REPORT AND COMPANY INFORMATION
A copy of our 2018 Annual Report is being furnished to stockholders concurrently herewith. Exhibits to the Annual Report will be furnished to stockholders upon payment of photocopying charges. Stockholders may request a written copy of our Audit Committee Charter and our Code of Business Practice, which includes our Code of Practice, by writing to Corporate Secretary, Crimson Wine Group, 2700 Napa Valley Corporate Drive, Suite B, Napa, CA 94558. Each of these documents is also available on our website, www.crimsonwinegroup.com.
PROPOSALS BY STOCKHOLDERS
Proposals that stockholders wish to include in our proxy statement and form of proxy for presentation at our 2020 annual meeting of stockholders must be received by us at Crimson Wine Group, 2700 Napa Valley Corporate Drive, Suite B, Napa, California 94558, Attention of Tina Hilger, Corporate Secretary, no later than February 10, 2020. Any stockholder proposal must be in accordance with the rules and regulations of the SEC.
Proposals to be presented at the 2020 annual meeting that are not intended for inclusion in the proxy statement, including director nominations, must be submitted in accordance with our bylaws. To be timely, a stockholder’s notice of such a proposal must be delivered to the Secretary at the principal executive offices of the Company not earlier than the close of business on the 150th day nor later than the close of business on the 120th day prior to the first anniversary date of this year’s annual meeting, which is to be held on July 26, 2019; however, in the event that the date of the 2020 annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder must be delivered not earlier than the close of business on the 150th day prior to such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than 130 days prior to the date of such annual meeting, not later than the 10th day following the date on which public announcement of the date of such meeting is first made by the Company.
Any proxies solicited by the Board of Directors for the 2020 annual meeting may confer discretionary authority to vote on any proposals of which notice is not timely received.
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By Order of the Board of Directors
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Tina Hilger
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Corporate Secretary
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Annual Meeting Location
Seghesio Family Vineyards
700 Grove Street
Healdsburg, California 95448
Directions
You may obtain directions to the Annual Meeting by visiting the Seghesio Family Vineyards website https://www.seghesio.com/visit-us/or by contacting Seghesio Family Vineyards at 707-433-3579
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