INUVO, INC.
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment
No. )
Filed
by the Registrant
☒
Filed
by a party other than the Registrant
☐
Check
the appropriate box:
|
☐
|
Preliminary
Proxy Statement
|
|
☐
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
|
☒
|
Definitive
Proxy Statement
|
|
☐
|
Definitive
Additional Materials
|
|
☐
|
Soliciting
Material Under Rule 14(a)(12)
|
|
Inuvo, Inc.
|
|
(Name
of Registrant as Specified in Its Charter)
|
|
Not
Applicable
|
|
(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)(4) 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 the 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:
|
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
____________________
TO BE HELD ON OCTOBER 4, 2019
We will
hold the 2019 annual meeting of stockholders of Inuvo, Inc. at the
Company’s office located at 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201 on Friday, October 4, 2019
at 9:00 a.m. local time. At the annual meeting you will be asked to
vote on the following matters:
●
the
election of one Class II director;
●
the
ratification of the appointment of Mayer Hoffman McCann P.C. as our
independent registered public accounting firm;
●
the
approval of an amendment to our Articles of Incorporation
increasing the number of authorized shares of our common
stock;
●
the
approval of an amendment to our 2017 Equity Compensation Plan
increasing the number of shares of our common stock available for
grants under the plan;
●
an
advisory vote on executive compensation, commonly referred to as
“say-on-pay"; and
●
any
other business as may properly come before the
meeting.
The
board of directors has fixed the close of business on August 23,
2019 as the record date for determining the stockholders that are
entitled to notice of and to vote at the 2019 annual meeting and
any adjournments thereof.
All
stockholders are invited to attend the annual meeting in person.
Your vote is important regardless of the number of shares you own.
Please vote your shares by proxy over the Internet by following the
instructions provided in the Notice of Internet Availability of
Proxy Materials, or, if you request printed copies of the proxy
materials by mail, you can also vote by mail, by telephone or by
facsimile.
|
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
|
|
|
|
/s/ Richard K. Howe
|
|
|
Little
Rock, Arkansas
|
|
Richard
K. Howe
|
|
|
September
3, 2019
|
|
Chairman
and Chief Executive Officer
|
|
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting to be Held
on October 4, 2019
. This proxy statement, along with our
Annual Report on Form 10-K for the year ended December 31, 2018,
are available free of charge on our website
www.inuvo.com
.
INUVO, INC.
PROXY STATEMENT
2019 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
|
|
Page No.
|
|
|
General
Information
|
1
|
|
|
Proposal
1 - Election of Class II Director
|
3
|
|
|
Proposal
2 - Ratification of appointment of Mayer Hoffman McCann
P.C.
|
4
|
|
|
Proposal
3 – Amendment to the Articles of Incorporation
|
6
|
|
|
Proposal
4 – Amendment to the 2017 Equity Compensation
Plan
|
7
|
|
|
Proposal
5 – Advisory vote on executive compensation
|
8
|
|
|
Other
Matters
|
9
|
|
|
Dissenter’s
Rights
|
9
|
|
|
Corporate
Governance
|
9
|
|
|
Executive
Compensation
|
15
|
|
|
Principal
Stockholders
|
22
|
|
|
Certain
Relationships and Related Transactions
|
23
|
|
|
Stockholder
Proposals to be Presented at the Next Annual Meeting
|
24
|
|
|
Availability
of Annual Report on Form 10-K
|
24
|
|
|
Stockholders
Sharing the Same Last Name and Address
|
24
|
|
|
Where
You Can Find More Information
|
25
|
|
|
|
|
|
|
Exhibit
A:
|
Form of
Articles of Amendment
|
A-1
|
|
Exhibit
B:
|
Form of
Amendment to the 2017 Equity Compensation Plan
|
B-1
|
FORWARD-LOOKING STATEMENTS
This proxy statement contains
“forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements are based on our current expectations and involve risks
and uncertainties which may cause results to differ materially from
those set forth in the statements. The forward-looking statements
may include statements regarding actions to be taken in the future.
We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Forward-looking statements should be evaluated together
with the many uncertainties that affect our business, particularly
those set forth in the section on forward-looking statements and in
the risk factors in Item 1.A of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2018 as filed with the
Securities and Exchange Commission on March 15, 2019 (the
“
2018
10-K
”).
i
Stockholders Should Read the Entire Proxy Statement
Carefully Prior to Returning Their Proxies
PROXY STATEMENT
FOR
2019 ANNUAL MEETING OF STOCKHOLDERS
General Information
The
accompanying proxy is solicited by the board of directors of Inuvo,
Inc. for use at our 2019 annual meeting of stockholders to be held
on Friday, October 4, 2019, or any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of
2019 Annual Meeting of Stockholders. The date of this proxy
statement is September 3, 2019, the approximate date on which this
proxy statement and the enclosed proxy were first sent or made
available to our stockholders.
This
proxy statement and the accompanying proxy card are being mailed to
owners of our common shares in connection with the solicitation of
proxies by the board of directors for the 2019 annual meeting of
stockholders. This proxy procedure is necessary to permit all
common stockholders, many of whom live throughout the United States
and are unable to attend the 2019 annual meeting in person, to
vote. We will pay the entire cost of preparing, assembling,
printing, mailing and distributing these proxy materials and
soliciting votes.
Electronic
access
.
To access
our proxy statement and 2018 10-K electronically, please visit our
corporate website at
www.inuvo.com
. The information
which appears on our website is not part of this proxy
statement.
Voting
securities
.
Only our
stockholders of record as of the close of business on August 23,
2019, the record date for the 2019 annual meeting, will be entitled
to vote at the meeting and any adjournment thereof. As of that
date, there were 48,959,345 shares of our common stock issued and
outstanding, all of which are entitled to vote with respect to all
matters to be acted upon at the 2019 annual meeting. Each holder of
record as of that date is entitled to one vote for each share held.
In accordance with our by-laws, the presence of at least 33 1/3% of
the voting power, regardless of whether the proxy has authority to
vote on all matters, constitutes a quorum which is required in
order to hold the 2019 annual meeting and conduct business.
Presence may be in person or by proxy. You will be considered part
of the quorum if you voted on the Internet, by telephone, by
facsimile or by properly submitting a proxy card or voting
instruction form by mail, or if you are present and vote at the
2019 annual meeting. Votes for and against, abstentions and
“broker non-votes” will each be counted as present for
purposes of determining the presence of a quorum.
Broker
non-votes
.
If you
are a beneficial owner whose shares are held of record by a broker,
bank or other nominee, you must instruct the broker, bank or other
nominee how to vote your shares. If you do not provide voting
instructions, your shares will not be voted on any proposal on
which the broker, bank or other nominee does not have discretionary
authority to vote. This is called a “broker non-vote.”
In these cases, the broker, bank or other nominee can register your
shares as being present at the 2019 annual meeting for purposes of
determining the presence of a quorum, but will not be able to vote
on those matters for which specific authorization is required. Your
broker, bank or other nominee has discretionary voting authority to
vote your shares on the ratification of the independent registered
public accounting firm (proposal 2), even if the broker, bank or
other nominee does not receive voting instructions from you. Your
broker, bank or other nominee, however, does not have discretionary
authority to vote on any of the other proposals to be considered at
the 2019 annual meeting without instructions from you, in which
case a broker non-vote will occur and your shares will not be voted
on these matters.
In any event, it
is particularly important that you instruct your broker as to how
you wish to vote your shares.
1
Voting of
proxies
.
All valid
proxies received prior to the meeting will be exercised. All shares
represented by a proxy will be voted, and where a proxy specifies a
stockholder’s choice with respect to any matter to be acted
upon, the shares will be voted in accordance with that
specification. If no choice is indicated on the proxy, the shares
will be voted by the individuals named on the proxy card as
recommended by the board of directors. A stockholder giving a proxy
has the power to revoke his or her proxy, at any time prior to the
time it is exercised, by delivering to our corporate secretary a
written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person. A
stockholder wanting to vote in person at the 2019 annual meeting
and holding shares of our common stock in street name must obtain a
proxy card from his or her broker and bring that proxy card to the
2019 annual meeting, together with a copy of a brokerage statement
reflecting such share ownership as of the record date.
Vote required.
The
one nominee receiving the greatest numbers of votes at the meeting,
assuming a quorum is present, will be elected as a Class II
directors to serve until his term expires or until his successor
has been duly elected and qualified. Because directors are elected
by plurality, abstentions from voting and broker non-votes will be
entirely excluded from the vote and will have no effect on its
outcome. Assuming a quorum is present, proposals 2, 3 and 4 must be
approved by the affirmative vote of a majority of the shares of
common stock present in person or by proxy at the annual meeting
and entitled to vote. Abstentions will be counted in tabulations of
the votes cast on each such proposal and will have the same effect
as a vote against the proposal, whereas broker non-votes will be
excluded from the vote and will have no effect on the outcome.
Proposal 5 is a non-binding advisory vote.
Board of directors
recommendations
.
The
board of directors recommends a vote FOR proposals 1, 2, 3, 4 and
5.
Attendance at the
meeting
. You are invited to attend the annual meeting only
if you were an Inuvo stockholder or joint holder as of the close of
business on August 23, 2019, the record date, or if you hold a
valid proxy for the 2019 annual meeting. In addition, if you are a
stockholder of record (owning shares in your own name), your name
will be verified against the list of registered stockholders on the
record date prior to your being admitted to the annual meeting. If
you are not a stockholder of record but hold shares through a
broker or nominee (in street name), you should provide proof of
beneficial ownership on the record date, such as a recent account
statement or a copy of the voting instruction card provided by your
broker or nominee. The meeting will begin at 9:00 a.m. local time.
Check-in will begin at 8:45 a.m. local time.
Communications with our
board of directors.
You may contact any of our directors by
writing to them c/o Inuvo, Inc., 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201. Each communication should
specify the applicable director or directors to be contacted as
well as the general topic of the communication. We may initially
receive and process communications before forwarding them to the
applicable director. We generally will not forward to the directors
a stockholder communication that is determined to be primarily
commercial in nature, that relates to an improper or irrelevant
topic, or that requests general information about Inuvo. Concerns
about accounting or auditing matters or communications intended for
non-management directors should be sent to the attention of the
Chairman of the Audit Committee at the address above. Our directors
may at any time review a log of all correspondence received by
Inuvo that is addressed to the independent members of the board and
request copies of any such correspondence.
Who can help answer your
questions?
If you have additional questions after reading
this proxy statement, you may seek answers to your questions by
writing, calling or emailing:
John B.
Pisaris, Esq.
General
Counsel
Inuvo,
Inc.
500
President Clinton Avenue
Suite
300
Little
Rock, Arkansas 72201
Telephone:
(501) 205-8508
Telecopier:
(877) 311-5050
email:
john.pisaris@inuvo.com
2
PROPOSAL 1
ELECTION OF CLASS II DIRECTOR
The
board, upon recommendation by the Nominating, Corporate Governance
and Compensation Committee, has nominated Mr. G. Kent Burnett for
re-election as a Class II director, to hold office until the 2022
annual meeting of stockholders or until his successor has been duly
elected and qualified. In the event Mr. Burnett is unable or
unwilling to serve as a director, the individual named as proxy on
the proxy card will vote the shares that he represents for election
of such other person as the board of directors may recommend. The
board has no reason to believe that Mr. Burnett will be unable or
unwilling to serve.
The
following is biographical information on the current members of our
board of directors:
Director Standing for Election as Class II director
|
Name
|
Age
|
Positions
|
Director Since
|
|
G. Kent
Burnett
|
74
|
Class
II Director
|
2016
|
G. Kent
Burnett
.
Mr. Burnett has been a member of our board of
directors since November 2016. He is a retired technology and
ecommerce executive. Mr. Burnett joined Dillard’s, Inc., one
of the nation’s largest fashion retailers, in 1979. Mr.
Burnett held various executive level technology positions at
Dillard’s, including Chief Information Officer, Western
Division Chairman and from 2009 to 2016 was Vice President of
Technology and Ecommerce. Prior to joining Dillard’s Mr.
Burnett held various marketing, technology and engineering
positions with IBM. Since 2012 he has been a member of the Board of
Directors of First Orion Corp., a phone call protection and data
provider, and from February 2012 to April 2013 he served as a
member of the Board of Directors of Acumen Brands, an ecommerce
retailer. Mr. Burnett received his undergraduate degree from the
University of Arkansas.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ELECTION
OF THE CLASS I DIRECTOR NOMINEE.
Directors Not Standing For Election
|
Name
|
Age
|
Positions
|
Director Since
|
|
Richard
K. Howe
|
56
|
Executive
Chairman of the Board and Chief Executive Officer; Class I
Director
|
2008
|
|
Gordon
J. Cameron
|
54
|
Class I
Director
|
2016
|
|
Charles
D. Morgan
|
76
|
Class
III director
|
2009
|
|
Patrick
Terrell
|
64
|
Class
III director
|
2013
|
Class I Directors
Terms Expire at the 2021 Annual Meeting
Richard K.
Howe.
Mr. Howe has been a
member of our board of directors since November 2008, and has
served as Executive Chairman of the board since March 2012 and as
our Chief Executive Officer since December 2012. Previously, he
served as our President and Chief Executive Officer from November
2008 until March 2012. Prior to joining Inuvo, Mr. Howe served as
Chief Marketing, Strategy and M&A Officer at the billion dollar
multi-channel marketing services leader Acxiom Corporation
(NasdaqGS: ACXM) where, since 2004, he led the company's transition
to online marketing services, the expansion into China and the
development of the big data consulting services group. From 2001 to
2004, he served as general manager of Global Marketing Services
(GMS) at Fair Isaac & Company (NYSE: FICO), a leading provider
of analytics products and services where he drove the company's
online initiatives. Between 1999 and 2001, Mr. Howe started, grew
and sold private Internet search innovator, ieWild. Mr. Howe has
over his career led the acquisition, merger or divestiture of a
dozen companies on three continents worth many hundreds of millions
of dollars to shareholders. Mr. Howe earned a bachelor’s
degree with distinction in engineering from Concordia University,
Canada, and he earned his master’s degree in engineering from
McGill University, Canada.
3
Gordon J.
Cameron
. Mr. Cameron has been a
member of our board of directors since November 2016. He is a
business transformation executive with three decades of success in
growing businesses while managing risk. Mr. Cameron is currently an
Executive Vice President in Retail Lending at PNC Financial
Services, one of the largest diversified financial services
institutions in the United States, where he serves as a credit risk
executive, a position he has held since 2008. Prior to PNC
Financial Services, Mr. Cameron was the Chief Credit Officer,
Retail and Small Business Lending, at Canadian Imperial Bank of
Commerce from 2005 to 2008. Mr. Cameron was the Chief Scientist
Transaction Analytics, Global Account Management Solutions at Fair
Isaac Corporation FICO from 2001 to 2005. Prior to his tenure with
Fair Isaac Corporation, Mr. Cameron held executive positions at
IeWild Inc., HNC Software Inc., Advanta National Bank/Fleet, The
Cambell Group LTD and Fidelity Bank N.A. Mr. Cameron received a MBA
from Widener University School of Management and a B.S. in Finance
from Pennsylvania State University.
Class III Directors
Terms Expire at the 2020 Annual Meeting
Charles D.
Morgan.
Mr. Morgan has
been a member of our board of directors since June 2009. Since
2008, he has been the Chief Executive Officer of First Orion Corp.,
a private company that developed and markets PrivacyStar, an
application that helps protect the mobile phone users' privacy. He
also serves as a member and is the past Chairman of the Board of
Trustees of Hendrix College. Mr. Morgan has extensive experience
managing and investing in both private and public companies
including Acxiom Corporation (NasdaqGS: ACXM), an information
services company he helped grow from an early stage company to $1.4
billion in revenues during his tenure as Chief Executive Officer
from 1975 to 2008. Mr. Morgan has served on the board and in
various leadership roles with the Direct Marketing Association
(DMA) throughout his career, serving in 2001 as chairman of the DMA
board. Mr. Morgan was employed by IBM as a systems engineer for six
years prior to joining Acxiom, and he holds a mechanical
engineering degree from the University of
Arkansas.
Patrick
Terrell.
Mr. Terrell has
been a member of our board of directors since January 2013. Since
2002 and 2004, respectively, Mr. Terrell has been the managing
member of both PatRick Investments, LLC and Terrell Group
Management, private equity and real estate investment companies. He
also serves on the board of directors of Routeware Inc. Mr. Terrell
served as founder and CEO of Leading Technology, a $300 million per
year manufacturer of personal computers. Additionally, he founded
Byte Shops Northwest, which serviced personal computers, and grew
to $50 million in annual revenues. Mr. Terrell attended Oregon
State University.
There
are no family relationships between any of the
directors.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF MAYER HOFFMAN MCCANN
P.C.
The
Audit Committee has appointed Mayer Hoffman McCann P.C. as our
independent registered public accounting firm to audit our
consolidated financial statements for the fiscal year ending
December 31, 2019. Representatives of Mayer Hoffman McCann P.C.
will be present at the 2019 annual meeting and will have an
opportunity to make a statement or to respond to appropriate
questions from stockholders. Although stockholder ratification of
the appointment of our independent auditor is not required by our
bylaws or otherwise, we are submitting the selection of Mayer
Hoffman McCann P.C. to our stockholders for ratification to permit
stockholders to participate in this important corporate decision.
If not ratified, the Audit Committee will reconsider the selection,
although the Audit Committee will not be required to select a
different independent auditor for our company. Even if the
appointment is ratified, the Audit Committee, in its discretion,
may direct the appointment of a different independent registered
public accounting firm at any time during the year if the Audit
Committee determines that such a change would be in our best
interests.
4
Fees
and services
The
following table shows the fees that were billed for the audit and
other services provided for the years indicated.
|
|
2018
|
2017
|
|
Audit
Fees
|
$
262,000
|
$
331,711
|
|
Audit-Related
Fees
|
32,000
|
-
|
|
Tax
Fees
|
-
|
-
|
|
All Other
Fees
|
-
|
-
|
|
Total
|
$
294,000
|
$
331,711
|
Audit Fees
— This category
includes the audit of our annual financial statements, review of
financial statements included in our quarterly reports on Form 10-Q
and services that are normally provided by the independent
registered public accounting firm in connection with engagements
for those fiscal years. This category also includes advice on audit
and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.
Audit-Related Fees
— This
category consists of assurance and related services by the
independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial
statements and are not reported above under “Audit
Fees.” The services for the fees disclosed under this
category include consultation regarding our correspondence with the
Securities and Exchange Commission and other accounting
consulting.
Tax Fees
— This category consists
of professional services rendered by CBIZ MHM, an affiliate of our
independent registered public accounting firm, for tax compliance
and tax advice. The services for the fees disclosed under this
category include tax return preparation and technical tax
advice.
All Other Fees
— This category
consists of fees for other miscellaneous items.
Mayer
Hoffman McCann P.C. leases substantially all of its personnel, who
work under the control of Mayer Hoffman McCann P.C. shareholders,
from wholly-owned subsidiaries of CBIZ, Inc., in an alternative
practice structure.
Our
board of directors has adopted a procedure for pre-approval of all
fees charged by our independent registered public accounting firm.
Under the procedure, the Audit Committee of the board approves the
engagement letter with respect to audit, tax and review services.
Other fees are subject to pre-approval by the Audit Committee of
the board. The audit fees paid to the auditors with respect to 2018
were pre-approved by the Audit Committee of the board of
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION
OF THE APPOINTMENT OF MAYER HOFFMAN MCCANN P.C.
5
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO
INCREASE THE SHARES OF COMMON STOCK AUTHORIZED FROM 60,000,000 TO
100,000,000
Our board of directors has approved a proposal to
amend our articles of incorporation to increase the number of
authorized shares of our common stock from 60,000,000 to
100,000,000 in the form of the articles of amendment (the
“
Amendment
”)
attached to this proxy statement as
Exhibit
A
. Our board of directors
approved the Amendment on August 21, 2019, subject to stockholder
approval.
As of August 23, 2019, there were 48,959,345
shares of our common stock outstanding, 376,527 shares of common
stock held in treasury, no preferred shares outstanding, 694,886
shares of our common stock subject to outstanding grants under our
2010 Equity Compensation Plan (“
2010
Plan
”) and our 2017
Equity Compensation Plan (“
2017
Plan
”), 848,941 shares of
our common stock subject to vested grants under these plans, and an
aggregate of 2,305,988 shares of our common stock available for
grants under these plans. In addition, pursuant to the terms of
the
$1,440,000 principal
Original Issue Discount Unsecured Subordinated Convertible Notes
due September 1, 2020 (the “
Notes
”),
which are currently convertible into
4,800,000 shares, we have reserved 3,000,000 shares of common
stock.
The
Amendment amends our articles of incorporation, as previously
amended, to increase the number of authorized shares of our common
stock from 60,000,000 shares to 100,000,000 shares. The additional
shares of our common stock which are being authorized in the
Amendment will provide sufficient authorized but unissued and
unreserved shares to be issued upon a potential conversion of the
Notes. The additional shares of common stock to be authorized under
the Amendment would be identical to the shares of common stock now
authorized. Our stockholders will not have preemptive rights to
acquire such shares of our common stock. Whether or not shares of
our common stock are issued as a result of the conversion of
convertible debt is not subject to our stockholders’
approval.
The increase in the number of authorized shares of
our common stock will also provide additional shares that will be
available for use by our board of directors as it deems appropriate
or necessary. The additional shares could be used, among other
things, for potential conversion of the convertible note, for
public or private financings to raise additional capital, for the
declaration of stock splits or stock dividends, for acquisitions of
other companies, for the expansion of business operations, or for
the issuance of stock under warrants granted or to be granted in
the future. However, we have no specific plans or agreements at
this time with respect to any additional acquisitions or financing
transactions and no assurances can be given that an acquisition or
financing transaction or transactions will take place or will be
available on terms that are favorable to us.
Other than as set forth herein,
there are currently no plans, agreements, arrangements, or
understanding, for the issuance of additional shares of our common
stock.
The
issuance of additional shares of our common stock may, among other
things, have a dilutive effect on the earnings per share and on the
equity and voting power of existing holders of our common stock and
may adversely affect the market price of our common stock. The
increase in the authorized number of shares of our common stock
could also have an anti-takeover effect as the availability for
issuance of additional shares of common stock could discourage, or
make more difficult, efforts to obtain control of Inuvo. For
example, without further stockholder approval, our board of
directors could strategically sell common stock in a private
transaction to purchasers who would oppose a takeover. In addition,
because stockholders do not have preemptive rights, the rights of
existing stockholders may (depending on the particular
circumstances in which the additional shares of common stock are
issued) be diluted by any such issuance and increase the potential
cost to acquire control of Inuvo. Although our board of directors
was motivated by business and financial considerations in adopting
the Amendment, and not by the threat of any attempt to accumulate
shares or otherwise gain control of Inuvo, stockholders should
nevertheless be aware that approval of the Amendment could
facilitate our efforts to deter or prevent changes of control in
the future if the mergers are not consummated. Our board of
directors does not intend to issue any additional shares of common
stock except on terms that it deems to be in the best interest of
Inuvo and our stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO OUR ARTICLES OF INCORPORATION
6
PROPOSAL 4
APPROVAL OF AMENDMENT TO THE 2017 EQUITY COMPENSATION
PLAN
On
April 17, 2017, our board of directors approved the 2017 Plan, and
the 2017 Plan was approved by our stockholders at the 2017 annual
meeting. The 2017 Plan reserved 2,000,000 shares of our common
stock for issuance pursuant to the terms of the 2017 Plan upon the
grant of restricted stock awards, deferred stock grants, stock
appreciation rights and/or the exercise of options granted under
the 2017 Plan. The 2017 Plan also contains an “evergreen
formula” pursuant to which the number of shares of common
stock available for issuance under the 2017 Plan will automatically
increase on the first trading day of January each calendar year
during the term of the 2017 Plan, beginning with calendar year
2018, by an amount equal to 1% of the total number of shares of
common stock outstanding on the last trading day in December of the
immediately preceding calendar year, up to a maximum annual
increase of 150,000 shares of common stock.
In the
past we have used, and we intend in the future to use, stock
options and restricted stock grants as incentive devices to
motivate and compensate our salaried officers, directors and other
key employees. Our board believes that equity incentives
represented by restricted stock grants and stock options enhance
our ability to attract and retain the best possible persons for
positions of significant responsibility by providing our officers,
directors and other key employees with additional incentives to
contribute to our success. Our board further believes that the
availability of such equity incentives has served, and will
continue to serve, an important part in the implementation of our
growth strategy.
The board, however,
believes the number of shares now available for future issuance
under the 2017 Plan are not sufficient to permit the effective use
of the plan as a key tool in our overall compensation structure. On
August 21, 2019 our board of directors adopted, subject to
stockholder approval, an amendment to our 2017 Plan which will
increase in the number of shares reserved for issuance upon grants
made under the plan to by an additional 6,800,000 shares of our
common stock. We do not currently have any agreements or
understandings regarding the issuance of additional grants under
the 2017 Plan if this proposal is approved at the 2019 annual
meeting, but rather our board is seeking the flexibility to make
additional grants under the terms of the 2017 Plan should they deem
it advisable and in the best interests of our company and in
accordance with past practices.
The form of amendment to the 2017 Plan is included
as
Exhibit B
to this proxy statement. If approved
at the 2019 annual meeting, the amendment to our 2017 Plan will
become effective immediately.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
APPROVAL
OF THE AMENDMENT TO THE 2017 EQUITY COMPENSATION PLAN.
7
PROPOSAL 5
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As
described in detail later in this proxy statement, our executive
compensation program is designed to attract and retain talented and
dedicated executive officers and to align their compensation with
our business objectives and performance and the interests of our
stockholders. We believe that our program creates an environment of
shared risk between our executive officers and our stockholders by
including equity based awards and cash compensation based on
financial performance as part of our executive compensation
program. We believe that our executive compensation program should
focus management’s attention on achieving both annual
performance targets and profitable growth over a longer time
period. The program is designed to reward management for the
achievement of both short and long term strategic objectives as
established by the Board of Directors. Additional details about our
executive compensation programs, including information about
executive compensation for the fiscal year ended December 31, 2018,
are described under the section entitled “Executive
Compensation” which begins on page 15 of this proxy
statement.
Securities laws
require that we provide our stockholders with the opportunity to
vote to approve, on a nonbinding, advisory basis, the compensation
of our named executives officers as disclosed in this proxy
statement at least once every three years, commonly known as a
“say-on-pay” proposal. In accordance with the
stockholders’ advisory vote on the frequency of the
say-on-pay vote that was held at the 2017 Annual Meeting of
Stockholders, the Board of Directors has determined to hold the
say-on-pay vote on executive compensation once every three years
until we hold another advisory vote on the frequency of the
say-on-pay vote.
We are
asking our stockholders to indicate their support for our named
executive officers' compensation as described in this proxy
statement. 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, but rather the overall compensation of our named
executive officers and the philosophy, policies and practices
described in this proxy statement. Accordingly, the following
resolution is submitted for stockholder vote at the 2019 annual
meeting:
“
RESOLVED
, that the stockholders of
Inuvo, Inc. hereby APPROVE, on an advisory basis, the compensation
paid to its named executive officers, as disclosed in the proxy
statement for the 2019 annual meeting of stockholders pursuant to
the compensation disclosure rules of the Securities and Exchange
Commission, including the compensation tables and the narrative
discussion that accompany the compensation
tables.”
This
say-on-pay vote is advisory, and therefore not binding on Inuvo,
the Nominating, Corporate Governance and Compensation Committee or
our Board of Directors. Our Board and our Nominating, Corporate
Governance and Compensation Committee value the opinion of our
stockholders and to the extent there is any significant vote
against the compensation of named executive officers as disclosed
in this proxy statement, we will consider our stockholders’
concerns and the Nominating, Corporate Governance and Compensation
Committee will evaluate whether any actions are necessary to
address those concerns. Proxies submitted without direction
pursuant to this solicitation will be voted “FOR”
approval of the compensation of our named executive officers as
disclosed in this proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS
DISCLOSED IN THIS PROXY STATEMENT.
8
OTHER MATTERS
As of
the date hereof, there are no other matters that we intend to
present, or have reason to believe others will present, at the 2019
annual meeting. If, however, other matters properly come before the
2019 annual meeting, the accompanying proxy authorizes the person
named as proxy or his substitute to vote on such matters as he
determines appropriate.
DISSENTER'S RIGHTS
Under
Nevada law there are no dissenter's rights available to our
stockholders in connection with any matter submitted to a vote of
our stockholders at the 2019 annual meeting.
CORPORATE GOVERNANCE
We are
committed to maintaining the highest standards of honest and
ethical conduct in running our business efficiently, serving our
stockholders interests and maintaining our integrity in the
marketplace. To further this commitment, we have adopted our Code
of Conduct and Business Code of Ethics, which applies to all our
directors, officers and employees. To assist in its governance, our
board has formed two standing committees composed entirely of
independent directors, Audit and Nominating, Corporate Governance
and Compensation. A discussion of each committee’s function
is set forth below. Additionally, we have adopted and published to
all employees our Whistleblower Notice establishing procedures by
which any employee may bring to the attention of our Audit
Committee any disclosure regarding accounting, internal control or
other auditing issues affecting our company or any improper
activities of any officer or employee. Disclosure may be made
anonymously.
Our
bylaws, the charters of each board committee, the independent
status of a majority of our board of directors, our Code of Conduct
and Business Code of Ethics and our Whistleblower Notice provide
the framework for our corporate governance. Copies of our bylaws,
committee charters, Code of Conduct and Business Code of Ethics and
Whistleblower Notice may be found on our website at
www.inuvo.com
.
Copies of these materials also are available without charge upon
written request to our corporate secretary.
Board of directors
The
board of directors oversees our business affairs and monitors the
performance of management. In accordance with our corporate
governance principles, the board of directors does not involve
itself in day-to-day operations. The directors keep themselves
informed through discussions with the Executive Chairman and Chief
Executive Officer and our Chief Financial Officer and by reading
the reports and other materials that we send them and by
participating in board of directors and committee meetings.
Commencing with our 2008 annual meeting, our directors were divided
into three classes and designated Class I, Class II and Class III.
Directors may be assigned to each class in accordance with a
resolution or resolutions adopted by the board of directors.
Directors are elected for a full term of three years. Our directors
hold office until their successors have been elected and duly
qualified unless the director resigns or by reason of death or
other cause is unable to serve in the capacity of director. If any
director resigns, dies or is otherwise unable to serve out his or
her term, or if the board increases the number of directors, the
board may fill any vacancy by a vote of a majority of the directors
then in office, although less than a quorum exists. A director
elected to fill a vacancy shall serve for the unexpired term of his
or her predecessor. Vacancies occurring by reason of the removal of
directors without cause may only be filled by vote of the
stockholders.
Board leadership structure and board’s role in risk
oversight
Mr.
Richard K. Howe serves as both the Executive Chairman of our board
of directors and our Chief Executive Officer. Mr. Charles D.
Morgan, an independent director, serves as our Lead Independent
Director. Our board believes our current structure provides
independence and oversight, and facilitates the communication
between senior management and the full board of directors regarding
risk oversight, which the board believes strengthens its risk
oversight activities. Moreover, the structure allows the Executive
Chairman and Chief Executive Officer to better focus on his
responsibilities of running the company, enhancing stockholder
value and expanding and strengthening our business, while allowing
the Lead Independent Director to lead the board in its fundamental
role of providing independent oversight of management.
9
Risk is
inherent with every business, and how well a business manages risk
can ultimately determine its success. We face a number of risks,
including credit risk, interest rate risk, liquidity risk,
operational risk, strategic risk and reputation risk. Management is
responsible for the day-to-day management of the risks we face,
while the board, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk
oversight role, the board of directors has the responsibility to
satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed.
To do this, the board of directors meets regularly with management,
as well as independently, to review Inuvo's risks. Both our General
Counsel and our Chief Financial Officer attend many of the board
meetings and are available to address any questions or concerns
raised by any member of the board on risk management and any other
matter. The independent members of the board work together to
provide strong, independent oversight of our management and affairs
through the board's standing committees and, when necessary,
special meetings of independent directors. Our independent
directors may meet at any time in their sole discretion without any
other directors or representatives of management present. Each
independent director has access to the members of our management
team or other employees as well as full access to our books and
records. We have no policy limiting, and exert no control over,
meetings of our independent directors.
Board committees
The
board of directors has standing Audit and Nominating, Corporate
Governance and Compensation Committees. Each committee has a
written charter. The charters are available on our website at
www.inuvo.com
.
Except as set forth below, all committee members are independent
directors. Information concerning the current membership and
function of each committee is as follows:
|
Director
|
Audit Committee Member
|
|
Nominating, Corporate Governance and Compensation Committee
Member
|
|
|
Charles
D. Morgan
|
|
|
✓
|
|
|
Patrick
Terrell
|
✓
|
|
|
|
|
Gordon
J. Cameron
|
✓
(1)
|
|
✓
|
|
|
G. Kent
Burnett
|
✓
|
|
✓
(1)
|
|
(1)
Denotes
Chairperson.
10
Board committees
Audit Committee
The
Audit Committee assists the board in fulfilling its oversight
responsibility relating to:
●
the
integrity of our financial statements;
●
our
compliance with legal and regulatory requirements; and
●
the
qualifications and independence of our independent registered
public accountants.
The
Audit Committee is composed of three directors, each of whom have
been determined by the board of directors to be independent as
defined by the NYSE American Company Guide. The board has
determined that each of Mr. Cameron, Mr. Terrell and Mr. Burnett
qualifies as an “audit committee financial expert” as
defined by the SEC. During 2018, the Audit Committee held four
meetings.
Report of the Audit Committee of the Board of
Directors
The
primary function of the Audit Committee is to assist the board of
directors in its oversight of our financial reporting processes.
Management is responsible for the preparation, presentation and
integrity of the financial statements, including establishing
accounting and financial reporting principles and designing systems
of internal control over financial reporting. Our independent
auditors are responsible for expressing an opinion as to the
conformity of our consolidated financial statements with generally
accepted accounting principles and auditing management’s
assessment of the effectiveness of internal control over financial
reporting.
With
respect to the year ended December 31, 2018, in addition to its
other work, the Audit Committee:
●
reviewed
and discussed with management and Mayer Hoffman McCann P.C., our
independent registered public accounting firm, our audited
consolidated financial statements as of December 31, 2018 and the
year then ended;
●
discussed
with Mayer Hoffman McCann P.C. the matters required to be discussed
by Statement on Auditing Standards No. 61, “
Communication with Audit Committees
,” as amended, with respect to its review of the findings of
the independent registered public accounting firm during its
examination of our consolidated financial statements;
and
●
received
from Mayer Hoffman McCann P.C. written affirmation of its
independence as required by the Independence Standards Board
Standard No. 1, “
Independence Discussions with Audit
Committees
.” In addition, the Audit Committee
discussed with Mayer Hoffman McCann P.C., its independence and
determined that the provision of non-audit services was compatible
with maintaining auditor independence.
The
audit committee recommended, based on the review and discussion
summarized above, that the board of Directors include the audited
consolidated financial statements in the 2018 10-K for filing with
the SEC.
|
Dated March 6, 2019
|
|
Audit Committee of the Board of Directors of Inuvo,
Inc.
|
|
|
|
|
|
|
|
/s/ Gordon J. Cameron, Chairman
|
|
|
|
/s/Patrick Terrell
|
|
|
|
/s/ G. Kent Burnett
|
11
Nominating, Corporate Governance and Compensation
Committee
The
Nominating, Corporate Governance and Compensation Committee is
responsible for:
●
overseeing
our compensation programs and practices, including our executive
compensation plans and incentive compensation plans;
●
recommending
the slate of director nominees for election to our board of
directors;
●
identifying
and recommending candidates to fill vacancies occurring between
annual stockholder meetings;
●
reviewing
the composition of board committees; and
●
monitoring
compliance with, reviews, and recommends changes to our various
corporate governance policies and guidelines.
The
Chief Executive Officer provides input to the committee with
respect to the individual performance and compensation
recommendations for the other executive officers. The
committee’s charter authorizes the committee to retain an
independent consultant, and from time to time has done so. The
committee did not retain a consultant in 2018. The committee also
prepares and supervises the board’s annual review of director
independence and the board’s annual
self-evaluation.
A
majority of the persons serving on our board of directors must be
independent. Thus, the committee has considered transactions and
relationships between each director or any member of his immediate
family and us or our affiliates, including those reported under
“Certain Relationships and Related Transactions” below.
The committee also reviewed transactions and relationships between
directors or their affiliates and members of our senior management
or their affiliates. As a result of this review, the committee
affirmatively determined that each of Messrs. Morgan, Terrell,
Cameron and Burnett are independent as defined by the NYSE American
Company Guide.
The
committee considers all qualified candidates for our board of
directors identified by members of the committee, by other members
of the board of directors, by senior management and by our
stockholders. The committee reviews each candidate including each
candidate’s independence, skills and expertise based on a
variety of factors, including the person’s experience or
background in management, finance, regulatory matters and corporate
governance. Further, when identifying nominees to serve as
director, while we do not have a policy regarding the consideration
of diversity in selecting directors, the committee seeks to create
a board that is strong in its collective knowledge and has a
diversity of skills and experience with respect to accounting and
finance, management and leadership, vision and strategy, business
operations, business judgment, industry knowledge and corporate
governance. In addition, prior to nominating an existing director
for re-election to the board of directors, the committee will
consider and review an existing director’s board and
committee attendance and performance, length of board service,
experience, skills and contributions that the existing director
brings to the board, equity ownership in Inuvo and
independence.
The
committee follows the same process and uses the same criteria for
evaluating candidates proposed by stockholders, members of the
board of directors and members of senior management. Based on its
assessment of each candidate, the committee recommends candidates
to the board. However, there is no assurance that there will be any
vacancy on the board at the time of any submission or that the
committee will recommend any candidate for the board.
The
Nominating, Corporate Governance and Compensation Committee is
composed of three directors, all of whom have been determined by
the board of directors to be independent as defined by the NYSE
American Company Guide. During 2018, the Nominating, Corporate
Governance and Compensation Committee held one meeting and took
action by unanimous written consent three times.
12
Stockholder nominations
Stockholders who
would like to propose a candidate to serve on our board of
directors may do so by submitting the candidate’s name,
resume and biographical information to the attention of our
corporate secretary. All proposals for nomination received by the
corporate secretary will be presented to the committee for
appropriate consideration. It is the policy of the Nominating,
Corporate Governance and Compensation Committee to consider
director candidates recommended by stockholders who appear to be
qualified to serve on our board of directors. The Nominating,
Corporate Governance and Compensation Committee may choose not to
consider an unsolicited recommendation if no vacancy exists on the
board of directors and the Nominating, Corporate Governance and
Compensation Committee does not perceive a need to increase the
size of the board of directors. In order to avoid the unnecessary
use of the Nominating, Corporate Governance and Compensation
Committee’s resources, the Nominating, Corporate Governance
and Compensation Committee will consider only those director
candidates recommended in accordance with the procedures set forth
below. To submit a recommendation of a director candidate to the
Nominating, Corporate Governance and Compensation Committee, a
stockholder should submit the following information in writing,
addressed to the corporate secretary of Inuvo at our main
office:
●
the
name and address of the person recommended as a director
candidate;
●
all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended;
●
the
written consent of the person being recommended as a director
candidate to be named in the proxy statement as a nominee and to
serve as a director if elected;
●
as to
the person making the recommendation, the name and address, as they
appear on our books, of such person, and number of shares of our
common stock owned by such person;
provided, however
, that if the person
is not a registered holder of our common stock, the person should
submit his or her name and address along with a current written
statement from the record holder of the shares that reflects the
recommending person’s beneficial ownership of our common
stock; and
●
a
statement disclosing whether the person making the recommendation
is acting with or on behalf of any other person and, if applicable,
the identity of such person.
Director qualification
The
following is a discussion for each director of the specific
experience, qualifications, attributes or skills that led the
Nominating, Corporate Governance and Compensation Committee to
recommend to the board, and for the board to conclude that the
individual should be serving as a director of Inuvo.
Class I Directors
Richard K. Howe -
Mr. Howe’s track record as a successful high-technology
operating and marketing executive in data, analytics, and marketing
services as a result of building and/or running over a dozen
businesses in five countries were factors considered by the
Nominating, Corporate Governance and Compensation Committee and the
board. Specifically, the Nominating, Corporate Governance and
Compensation Committee and the board viewed favorably his position
at companies that include Inuvo as president and CEO, Acxiom
Corporation as chief marketing, business strategy and M&A
officer, Fair Isaac & Company where he served as general
manager, and ieWild, Inc. as co-founder and chairman and CEO; his
service as a board member for the non-profit organization Business
for Diplomatic Action; and his academic achievements at Concordia
University and McGill University in making their
recommendation.
13
Gordon J. Cameron
-
Mr. Cameron's track record as a senior executive in a variety of
business segments and his in excess three decades of experience in
building successful businesses were factors considered by the
Nominating, Corporate Governance and Compensation Committee and the
board. Specifically, the Nominating, Corporate Governance and
Compensation Committee and the board viewed favorably his position
as Executive Vice President in Retail Lending at PNC Financial
Services, one of the largest diversified financial services
institutions in the United States, as well as his positions with
companies such as Canadian Imperial Bank of Commerce, Fair Isaac
Corporation FICO, IeWild Inc., HNC Software Inc., Advanta National
Bank/Fleet, The Cambell Group LTD and Fidelity Bank N.A and his
academic achievements at Widener University School of Management
and Pennsylvania State University in making their
recommendation.
Class II Directors
G. Kent Burnett
-
Mr. Burnett's track record
as a successful technology and ecommerce executive holding
executive level technology positions were factors considered by the
Nominating, Corporate Governance and Compensation Committee of the
board. Specifically, the Nominating, Corporate Governance and
Compensation Committee and the board viewed favorably his
experience at Dillard’s including as Chief Information
Officer, Western Division Chairman and Vice President of Technology
and Ecommerce, as well as his experience in various marketing,
technology and engineering positions with IBM and his membership on
the boards of directors of First Orion Corp. and Acumen Brands in
making their recommendation.
Class III directors
Charles D. Morgan -
Mr. Morgan’s successful track record as a high-technology
executive in data, analytics, outsourcing and marketing services
with a network of relationships worldwide as a result of building a
billion dollar annual revenue enterprise as chairman and chief
executive officer were factors considered by the Nominating,
Corporate Governance and Compensation Committee and the board.
Specifically, the Nominating, Corporate Governance and Compensation
Committee and the board viewed favorably his experience at
companies such as Acxiom Corporation as Chairman and CEO and IBM as
a systems engineer; his role as an equity owner of Bridgehampton
Capital Management LLC and a significant investor in its funds; his
service as Chairman of the Advisory Board and co-manager of
investments for Bridgehampton Capital Management LLC; his
leadership on the board and in various leadership roles with the
Direct Marketing Association (DMA) including his service as
chairman of the DMA in 2001; his service as a member and past
chairman of the board of trustees of Hendrix College; and his
academic achievements at the University of Arkansas in making their
recommendation.
Patrick Terrell
-
Mr. Terrell’s track record as a successful operating
executive and investor were factors considered by the Nominating,
Corporate Governance and Compensation Committee and the board.
Specifically, the Nominating, Corporate Governance and Compensation
Committee and the board viewed favorably Mr. Terrell’s
services as founder and CEO of Leading Technology, a manufacturer
of personal computers, his founding of Byte Shops Northwest, and
his services as managing member of Terrell Group Management and
PatRick Investments, LLC in making their
recommendation.
In
addition to the each of the individual skills and background
described above, the Nominating, Corporate Governance and
Compensation Committee and our board also concluded that each of
these individuals will continue to provide knowledgeable advice to
our other directors and to senior management on numerous issues
facing our company and on the development and execution of our
strategy.
14
Compensation of directors
During
2018 each independent member of our board of directors received the
following fees:
●
$30,000
annual retainer payable quarterly; and
●
$30,000
of restricted stock units, calculated at fair market value on the
date of grant, vesting March 31.
The
following table provides information concerning the compensation
paid to our independent directors for their services as members of
our board of directors for 2018. The information in the following
table excludes any reimbursement of out-of-pocket travel and
lodging expenses which we may have paid.
|
Director
Compensation
|
|||||||
|
Name
|
Fees earned or paid in cash ($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
|
Charles
D. Morgan
|
30,000
|
27,060
|
—
|
—
|
—
|
—
|
57,060
|
|
Charles L. Pope
(1)
|
22,500
|
8,557
|
—
|
—
|
—
|
—
|
31,057
|
|
Patrick
Terrell
|
30,000
|
27,060
|
—
|
—
|
—
|
—
|
57,060
|
|
Gordon
J. Cameron
|
30,000
|
27,060
|
—
|
—
|
—
|
—
|
57,060
|
|
G.
Kent Burnett
|
30,000
|
27,060
|
—
|
—
|
—
|
—
|
57,060
|
(1)
Mr. Pope served as
a member of our board of directors from September 2008 until July
2018.
Compliance with Section 16(a) of the Exchange Act
Based
solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(d) of the Securities Exchange Act
of 1934 during the year ended December 31, 2018 and Forms 5 and
amendments thereto furnished to us with respect to the year ended
December 31, 2018, as well as any written representation from a
reporting person that no Form 5 is required, we are not aware that
any officer, director or 10% or greater stockholder failed to file
on a timely basis, as disclosed in the aforementioned Forms,
reports required by Section 16(a) of the Securities Exchange Act of
1934 during the year ended December 31, 2018.
EXECUTIVE COMPENSATION
Executive officers
|
Name
|
|
Positions
|
|
Richard
K. Howe
|
|
Chairman
of the Board
|
|
Wallace
D. Ruiz
|
|
Chief
Financial Officer, Secretary
|
|
John B.
Pisaris, Esq.
|
|
General
Counsel
|
|
Don
Walker “Trey” Barrett III
|
|
Chief
Operating Officer
|
Executive officers
of our company are appointed by the board of directors and serve at
the pleasure of the board.
Richard K. Howe.
For
information regarding Mr. Howe, please see “Board of
Directors” which appears earlier in this proxy
statement.
15
Wallace D. Ruiz.
Mr.
Ruiz, 68, has served as our Chief Financial Officer since June
2010. From 2005 until April 2009, Mr. Ruiz was Chief Financial
Officer and Treasurer of SRI Surgical Express, Inc. (Nasdaq: STRC),
a Tampa, Florida provider of outsourced sterilization and supply
chain management services to healthcare providers. From 1995 until
2004 he was Chief Financial Officer of Novadigm, Inc. (Nasdaq:
NVDM), a developer and worldwide marketer of enterprise
infrastructure software that was acquired by Hewlett-Packard
Company in 2004. Since March 2018 he has been a member of the board
of directors of Recruiter.com Group, Inc. (OTCQB: RCRT). Mr. Ruiz
received a B.S. in Computer Science from St. John’s
University and a M.B.A. in Accounting and Finance from Columbia
University. Mr. Ruiz is a Certified Public Accountant.
John B. Pisaris
. Mr.
Pisaris, 52, has served as our General Counsel since March 2012
following our acquisition of Vertro. He served as general counsel
of Vertro from October 2004 until March 2012. From February 2004 to
September 2004, Mr. Pisaris served as vice president of legal of
Vertro, and prior to that was a partner at Porter Wright
Morris& Arthur, LLP, a law firm, from January 2002 to January
2004.
Don Walker
“Trey” Barrett, III.
Mr. Barrett, 53, joined Inuvo in
February 2010 as Senior Vice President of Corporate Strategy and
Business Development, and was promoted to Chief Operating Officer
in February 2013. Prior to joining Inuvo, Mr. Barnett served as
Acxiom Corporation's Director of Interactive Media Products
overseeing the innovation and development of the Relevance-X
product line. With over 25 years of data-driven direct marketing
experience, he has been involved in several successful business
start-ups in the direct and interactive marketing industries. Mr.
Barnett earned a bachelor’s degrees in Marketing and
Economics from the University of Arkansas at
Fayetteville.
Compensation philosophy
The
fundamental objectives of our executive compensation program are to
attract and retain highly qualified executive officers, motivate
these executive officers to materially contribute to our long-term
business success, and align the interests of our executive officers
and stockholders by rewarding our executives for individual and
corporate performance based on targets established by the
Nominating, Corporate Governance and Compensation
Committee.
We
believe that achievement of these compensation program objectives
enhances long-term stockholder value. When designing compensation
packages to reflect these objectives, the Nominating, Corporate
Governance and Compensation Committee has adopted the following
four principles as a guide:
●
Alignment with stockholder interests:
Compensation should be tied, in part, to our stock performance
through the granting of equity awards to align the interests of
executive officers with those of our stockholders;
●
Recognition for business performance:
Compensation should correlate in large part with our overall
financial performance;
●
Accountability for individual
performance:
Compensation should partially depend on the
individual executive’s performance, in order to motivate and
acknowledge the key contributors to our success; and
●
Competition:
Compensation should
generally reflect the competitive marketplace and be consistent
with that of other well-managed companies in our peer group. In
implementing this compensation philosophy, the Nominating,
Corporate Governance and Compensation Committee takes into account
the compensation amounts from the previous years for each of the
named executive officers, and internal compensation equity between
the named executive officers and other employees.
16
2018 compensation determination process
In
2018, the compensation program for our executive officers consisted
of the following components:
●
base
salary;
●
cash bonus
plan;
●
2010 Plan
awards;
●
2017 Plan awards;
and
●
other fringe
benefits and perquisites.
The
Nominating, Corporate Governance and Compensation Committee
believes that our executive compensation package consists of
elements of compensation that are typically used to incentivize and
reward executive management at other companies of our size, in our
geographic area or in our industry. Each of these components is
designed to meet the program's objectives of providing a
combination of fixed and variable, performance-based compensation
linked to individual and corporate performance. In the course of
setting the initial compensation level for new hires or adjusting
the compensation of existing employees, the Nominating, Corporate
Governance and Compensation Committee considered the advice and
input of our management. Our Chief Executive Officer typically
makes recommendations to the Nominating, Corporate Governance and
Compensation Committee for any proposed changes in salary, as well
as performance-based awards and stock option grants, for the other
named executive officers. The Nominating, Corporate Governance and
Compensation Committee decides any salary change, as well as
performance-based awards and stock option grants, for the Chief
Executive Officer.
Base salary
Base
salary is an important component of executive compensation because
it provides executives with an assured-level of income, assists us
in attracting executives and recognizes different levels of
responsibility and authority among executives. The determination of
base salaries is based upon the executive’s qualifications
and experience, scope of responsibility and potential to achieve
the goals and objectives established for the executive.
Additionally, contractual provisions in executive employment
agreements, past performance, internal pay equity and comparison to
competitive salary practices are also considered.
In
general, the Nominating, Corporate Governance and Compensation
Committee considers two types of potential base salary increases
including “merit increases” based upon the
executives’ individual performance and/or “market
adjustments” based upon the peer group salary range for
similar executives.
Plan awards
The
objective of our long-term incentive program is to provide a
long-term retention incentive for the named executive officers and
others and to align their interests directly with those of our
stockholders by way of stock ownership. Under our 2010 Plan and our
2017 Plan, the board of directors or the Nominating, Corporate
Governance and Compensation Committee has the discretion to
determine whether equity awards will be granted to named executive
officers and if so, the number of shares subject to each award.
Both plans allow the board or the Nominating, Corporate Governance
and Compensation Committee to grant options and restricted stock
and other stock-based awards with respect to up to shares of our
common stock, valued in whole or in part by reference to the fair
market value of the stock. In most instances, these long-term
grants vest over a multi-year basis.
The
board or the Nominating, Corporate Governance and Compensation
Committee determines the recipients of long-term incentive awards
based upon such factors as performance, the length of continuous
employment, managerial level, any prior awards, and recruiting and
retention demands, expectations and needs. All our employees are
eligible for awards. The board or the Nominating, Corporate
Governance and Compensation Committee grants such awards by formal
action, which awards are not final until a stock option agreement
is delivered by us and executed by both the company and the
employee. There is no set schedule for the board or the Nominating,
Corporate Governance and Compensation Committee to consider and
grant awards. The board and the Nominating, Corporate Governance
and Compensation Committee have the discretion to make grants
whenever it deems it appropriate in our best interests. The
Nominating, Corporate Governance and Compensation Committee has
discretion to grant equity awards at any time.
17
We do
not have any program, plan or practice in place to time option or
other award grants with the release of material, non-public
information and does not release such information for the purpose
of affecting the value of executive compensation. The exercise
price of stock subject to options awarded under the our plans is
the fair market value of the stock on the date the grant is
approved by the board or the Nominating, Corporate Governance and
Compensation Committee. Under the terms of each plan, the fair
market value of the stock is the closing sales price of the stock
on the date the grant is approved by the board or the Nominating,
Corporate Governance and Compensation Committee as reported by the
NYSE American.
Cash Bonus Plan
For
2018 we approved a 2018 Management Incentive Program. The program
established a variable cash incentive pool which may be awarded to
executive officers and our employees, including our Chief Executive
Officer, based on achieving certain revenue and net income levels
as determined by our 2018 financial results or at the discretion of
the Committee. The program provided that the total incentive pool
which was available for distribution would be divided between our
executive officers (75% in the aggregate) and other employees (25%
in the aggregate), subject to their continued employment with our
company. The percentage of pool participation by each of our
individual executive officers was fixed by the program and the
amount of individual awards to our employees, other than our
executive officers, was determined by our Chief Executive Officer.
No cash bonuses were paid to our executive officers for 2018
because the targets under the 2018 Management Incentive Program
were not met.
Other compensation and benefits
We have
historically provided perquisites and other types of non-cash
benefits on a very limited basis in an effort to avoid an
entitlement mentality, reinforce a pay-for-performance orientation
and minimize expense. Such benefits, when provided, can include
additional health care benefits and additional life
insurance.
Retirement and other post-termination benefits
Other
than our 401(k) plan, employment agreements with our named
executive officers and certain other employment agreements which
provide for severance for termination without cause, we have not
entered into any employment agreements that provide for a
continuation of post-employment benefits. Our benefits plans are
generally the same for all employees, and so as of the date of this
report, the Nominating, Corporate Governance and Compensation
Committee does not believe that any such plans in their present
forms would continue post-employment, except as required by law
(including with respect to COBRA), or otherwise set forth in this
report. We do not currently maintain any other retirement or
post-termination benefits plans.
Change in control severance policy
We do
not currently maintain any change in control severance plans or
severance policies, except as provided in the executive employment
agreements and the 2010 Plan and 2017 Plan, both of which are
discussed in this section. Therefore, none of our named executive
officers will receive any cash severance payments in the event we
undergo a change in control, unless their employment agreement
otherwise provides.
Insurance
All
full-time employees, including the named executive officers, are
eligible to participate in our standard medical, dental, long-term
and short-term disability and life insurance plans. The terms of
such benefits for the named executive officers are generally the
same as those for all other company employees, with the exception
of the level of life insurance coverage. We pay approximately 95%
of the annual health insurance premium with employees paying the
balance through payroll deductions. We pay for up to $1,000,000 of
basic life insurance and AD&D insurance for our CEO, CFO, COO
and General Counsel. All other full-time employees can elect basic
life insurance and AD&D insurance coverage equal to their
annual salary, up to $150,000, paid by us.
18
401(k)
Our
employees can participate in a 401(k) plan, which is a qualified
defined contribution retirement plan, sponsored by Insperity,
professional employer organization that provides services to
us. Participants are provided the opportunity to make salary
reduction contributions to the plan on a pre-tax basis. We have the
ability to make discretionary matching contributions and
discretionary profit sharing contributions to such plan. Our
practice has been to match participant’s contributions up to
the first four percent of their annual earnings. The company match
is fully vested when made. The company suspended its match in
November 2018.
Other benefits
We seek
to maintain an open and inclusive culture in our facilities and
operations among executives and other company employees. Thus, we
do not provide executives with separate dining or other facilities,
nor do we have programs for providing personal-benefit perquisites
to executives, such as defraying the cost of personal entertainment
or family travel. Our basic health care and other insurance
programs are generally the same for all eligible employees,
including the named executive officers.
Summary Compensation Table
The
following table summarizes all compensation recorded by us in each
of the last two completed fiscal years for:
●
all individuals
serving as our principal executive officer or acting in a similar
capacity during the year ended December 31, 2018;
●
our two most highly
compensated named executive officers at December 31, 2018 whose
annual compensation exceeded $100,000; and
●
up to two
additional individuals for whom disclosure would have been made in
this table but for the fact that the individual was not serving as
a named executive officer of our company at December 31,
2018.
The
value attributable to any option awards is computed in accordance
with FASB ASC Topic 718. The assumptions made in the valuations of
the option awards are included in Note 12 of the notes to our
consolidated financial statements for the year ended December 31,
2018 appearing in our 2018 10-K.
|
Name and principal position
|
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Nonequity incentive plan compensation ($)
|
Non-qualified deferred compensation earnings ($)
|
All
other
compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard K.
Howe,
|
|
2018
|
425,000
|
—
|
272,897
|
—
|
—
|
—
|
11,000
|
708,897
|
|
Chairman and
Chief Executive Officer
|
|
2017
|
420,000
|
245,000
|
442,175
|
—
|
—
|
—
|
10,800
|
1,117,975
|
|
|
|
|
|
|
|
|
|
|||
|
Wallace D.
Ruiz,
|
|
2018
|
275,000
|
—
|
97,463
|
—
|
—
|
—
|
11,000
|
383,463
|
|
Chief
Financial Officer
|
|
2017
|
275,000
|
105,000
|
157,919
|
—
|
—
|
—
|
10,800
|
548,719
|
|
|
|
|
|
|
|
|
|
|||
|
Don (Trey)
Barrett III
|
|
2018
|
250,000
|
—
|
129,951
|
—
|
—
|
—
|
6,220
|
386,171
|
|
Chief
Operating Officer
|
|
2017
|
250,000
|
140,000
|
210,560
|
—
|
—
|
—
|
3,000
|
603,560
|
19
On
March 1, 2012, we entered into employment agreements with each of
Messrs. Howe and Ruiz. Mr. Barrett does not have an employment
agreement and his compensation is set by the Nominating, Corporate
Governance and Compensation Committee.
Executive Employment Agreements
The
employment agreements entered into by Messrs. Howe and Ruiz, each
referred to as an executive, have an initial term of one year,
after which each executive’s employment agreement
automatically renews for additional one-year periods on the same
terms and conditions, unless either party to the agreement
exercises the respective termination rights available to such party
in the agreement. The employment agreements currently provide for a
minimum annual base salary of $425,000 for Mr. Howe, and $275,000
for Mr. Ruiz. The employment agreements require our company to
compensate the executives and provide them with certain benefits if
their employment is terminated. The compensation and benefits the
executives are entitled to receive upon termination of employment
vary depending on whether their employment is
terminated:
●
by us for cause (as
defined in the employment agreements);
●
by us without
cause, or by the executive for good reason (as defined in the
employment agreements);
●
due to death or
disability; or
●
by the executive
without good reason.
In the
event of a termination by our company without cause or a
termination by the executive for good reason, the executive would
be entitled to receive the following:
●
his earned but
unpaid basic salary through the termination date, plus a portion of
the executive’s bonus based upon the bonus he would have
earned in the year in which his employment was terminated,
pro-rated for the amount of time employed by us during such year
and paid on the original date such bonus would have been
payable;
●
an amount payable
over the 12-month period following termination equal to one times
the sum of his basic salary at the time of termination, plus a
termination bonus equal to the bonus paid to the executive during
the four fiscal quarters prior to the date of termination (except
that if a target bonus has been established for Mr. Howe, each such
person’s termination bonus is equal to his target bonus for
the fiscal year in which the termination occurs, increased or
decreased pursuant to actual performance versus targeted
performance in the then current plan measured as of the end of the
calendar month preceding the termination date), or in the event of
a change of control (as defined below), the greater of the relevant
calculation above or the bonus paid to the executive during the
four fiscal quarters prior to the change of control;
●
any other amounts
or benefits owing to the executive under our then-applicable
employee benefit, long-term incentive, or equity plans and
programs, within the terms of such plans, payable over the 12-month
period following termination; and
●
benefits (including
health, life, and disability) as if the executive was still an
employee during the 12-month period following
termination.
Finally, in the
event of a termination without cause by our company, with good
reason by the executive, or following a change of control (as
defined in the employment agreements), any equity award held by the
executive will immediately and fully vest and become exercisable
throughout the full term of such award as if the executive were
still employed by us. In the event of a termination by us with
cause, Messrs. Ruiz and Howe would be entitled to receive the
earned but unpaid portion of such executive’s base salary
through the date of termination.
20
In the
event of a termination by us of Mr. Ruiz upon the death or
permanent disability of such executive, the executive would be
entitled to receive the earned but unpaid portion of such
executive’s base salary through the date of termination, the
earned but unpaid portion of any vested incentive compensation
under and consistent with plans adopted by us prior to the date of
termination, and over the 12 months following the date of
termination an amount equal to 20% base salary at the time of
termination for each year of employment with us, capped at 100% of
the base salary.
In the
event of a termination by us of Mr. Howe upon the death or
permanent disability of such executive, the executive would be
entitled to receive the earned but unpaid portion of such
executive’s base salary through the date of termination, any
other amounts or benefits owing to the executive under any of our
then-applicable employee benefit, long-term incentive or equity
plans and programs, and over the 12 months following the date of
termination an amount equal to 20% base salary at the time of
termination for each year of employment with us, capped at 100% of
the base salary.
In the
event of a termination by Mr. Ruiz without good reason, such
executive is entitled to receive the earned but unpaid portion of
such executive’s base salary through the date of termination,
and the earned but unpaid portion of any vested incentive
compensation under and consistent with our plans adopted by us
prior to the date of termination. In the event of a termination by
Mr. Howe without good reason, such executive is entitled to receive
the earned but unpaid portion of his base salary through the
termination date and any other amounts and benefits owing to the
executive under our then applicable employee benefit, long term
incentive or equity plans and programs.
The
executive may terminate employment for any reason (other than good
reason) upon giving 30 days’ advance written notice to us. As
to a termination by Mr. Ruiz for any reason other than a good
reason, we will pay the executive the earned but unpaid portion of
his base salary through the termination date and any earned but
unpaid vested incentive compensation under and consistent with
plans adopted by us prior to the date of termination. As to a
termination by Mr. Howe for any reason other than a good reason, we
will pay the executive the earned but unpaid portion of his base
salary through the termination date and any other amounts and
benefits owing to the executive under our then applicable employee
benefit, long term incentive or equity plans and
programs.
Outstanding
equity awards at year end
The
following table provides information concerning unexercised
options, stock that has not vested and equity incentive plan awards
for each named executive officer outstanding as of December 31,
2018.
|
OPTION AWARDS
|
STOCK AWARDS
|
||||||||
|
Name
|
Number of
securities underlying unexercised options
(#)
exercisable
|
Number of
securities underlying unexercised options
(#)
unexercisable
|
Equity incentive
plan awards: Number of securities underlying unexercised unearned
options
(#)
|
Option exercise
price
($)
|
Option expiration date
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)
|
Equity incentive plan awards: Number of unearned shares, units or
other rights that have not vested (#)
|
Equity incentive plan awards: Market or payout value of unearned
shares, units or other rights that have not vested (#)
|
|
Richard K.
Howe
|
120,000
|
—
|
—
|
2.93
|
3/14/2021
|
126,000
|
134,820
|
294,000
|
314,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Wallace D.
Ruiz
|
43,000
|
—
|
—
|
2.93
|
3/14/2021
|
45,000
|
48,150
|
105,000
|
112,350
|
|
|
|
|
|
|
|
|
|
|
|
|
Don (Trey)
Barrett III
|
40,000
|
—
|
—
|
2.93
|
3/14/2021
|
60,000
|
64,200
|
140,000
|
149,800
|
21
Our equity compensation plans
Information
regarding our 2010 Plan and 2017 Plan is contained in Note 12 to
the notes to our audited consolidated financial statements
appearing in our 2018 10-K.
PRINCIPAL STOCKHOLDERS
At
August 23, 2019, we had 48,959,345 shares of common stock issued
and outstanding. The following table sets forth information known
to us as of August 23, 2019 relating to the beneficial ownership of
shares of our common stock by:
●
each person who is
known by us to be the beneficial owner of more than 5% of our
outstanding common stock;
●
each director and
nominee;
●
each named
executive officer; and
●
all named executive
officers and directors as a group.
Unless
otherwise indicated, the address of each beneficial owner in the
table set forth below is care of 500 President Clinton Avenue,
Suite 300, Little Rock, Arkansas 72201. We believe that all
persons, unless otherwise noted, named in the table have sole
voting and investment power with respect to all shares of common
stock shown as being owned by them. Under securities laws, a person
is considered to be the beneficial owner of securities owned by him
(or certain persons whose ownership is attributed to him) and that
can be acquired by him within 60 days from August 23, 2019,
including upon the exercise of options, warrants or convertible
securities. We determine a beneficial owner’s percentage
ownership by assuming that options, warrants or convertible
securities that are held by him, but not those held by any other
person, and which are exercisable within 60 days of the that date,
have been exercised or converted.
|
Name of Beneficial Owner
|
No. of Shares Beneficially Owned
|
% of Class
|
|
|
|
|
|
Charles Morgan
(1)
|
3,711,200
|
7.6
%
|
|
Richard K. Howe
(1)
|
1,112,305
|
2.3
%
|
|
Patrick Terrell
(2)
|
1,351,694
|
2.8
%
|
|
Wallace D.
Ruiz
|
377,128
|
*
|
|
John
B. Pisaris
|
349,699
|
*
|
|
Don Walker
“Trey” Barrett III
|
394,087
|
*
|
|
G. Kent Burnett
(1)
|
173,685
|
*
|
|
Gordon J. Cameron
(3)
|
120,815
|
*
|
|
All named executive
officers, directors and director nominees as a group (eight
persons)
(1)(2)(3)
|
7,590,613
|
15.35
%
|
|
Onset V L.P.
(4)
|
2,559,691
|
5.2
%
|
|
Ingalls &
Snyder, LLC
(5)
|
4,162,392
|
8.5
%
|
|
Herald Investment
Management Limited
(6)
|
5,000,000
|
10.2
%
|
*
represents less
than 1%.
(1)
Includes shares of
common stock held by Ingalls & Snyder, LLC on his behalf. See
footnote 5.
(2)
Includes 334,000
shares of common stock held by trusts where Mr. Terrell claims an
indirect beneficiary ownership.
(3)
Includes 6,630
shares held by Mr. Cameron’s spouse.
(4)
Onset V
L.P.’s address is 2400 Sand Hill Road, Suite 150, Menlo Park
CA 94025.
(5)
Pursuant to the
Schedule 13D filed with the SEC on July 19, 2019, Ingalls &
Snyder, LLC has dispositive power over shares held by Mr. Charles
D. Morgan and Mr. G. Kent Burnett who serve as members of Inuvo's
board of directors and Mr. Richard K. Howe who serves as Inuvo's
Chairman and CEO. The principal business address of Ingalls &
Snyder, LLC is 1325 Avenue of the Americas, 18th Floor, New York,
NY 10019-6066. See footnote 1.
(6)
Herald Investment
Management Limited’s address is
10-11 Charterhouse Square, London EC1M6EE
UK
.
22
Securities Authorized for Issuance under Equity Compensation
Plans
The
following table sets forth securities authorized for issuance under
any equity compensation plans approved by our stockholders as well
as any equity compensation plans not approved by our stockholders
as of December 31, 2018.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding
options, warrants and rights(a) (1)
|
Weighted average exercise price of outstanding options, warrants
and rights (a) (2)
|
Number of securities remaining available for future issuance under
equity compensation plans (excluding securities reflected in column
(a)
|
|
|
|
|
|
|
Plans approved by our stockholders:
|
|
|
|
|
2005
Long-Term Incentive Plan*
|
13,748
|
$
2.97
|
—
|
|
2010
Equity Compensation Plan
|
1,088,862
|
$
2.83
|
612,237
|
|
2017
Equity Compensation Plan
|
733,500
|
$
—
|
1,524,836
|
|
Plans not approved by stockholders
|
—
|
—
|
—
|
(1)
The numbers in this
column (a) reflect shares of common stock to be issued upon
exercise of outstanding stock options and the vesting of
outstanding RSUs.
(2)
The
weighted-average exercise prices in this column are based on
outstanding options and do not take into account unvested awards of
RSUs as these awards do not have an exercise price.
*
Expired June
2005.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In
April 2013, we entered into a Services Agreement with First Orion
Corp. whereby we provided each other with office and technical
support services on a cost plus 30% basis. The fees under the
Services Agreement fluctuated depending on usage and in 2018 and
2017, we received a total of $31,500 and $117,385, respectively
from First Orion Corp. for providing services.
On
November 2, 2018, each of Messrs. Howe, Morgan, Burnett and Cameron
lent us $62,500, for an aggregate of $250,000, under the terms of
10% Promissory Notes. We used the proceeds from these notes to pay
certain costs associated with the pending Merger. The notes are
unsecured, bear interest at 10% per annum and the principal and
accrued interest is due on November 2, 2019, subject to
acceleration upon an Event of Default or Change of Control (as both
terms are defined in the note).
Other
than these transactions, there have been no transactions since
January 1, 2017 nor are there any currently proposed transactions
in which we were or are to be participant in which any related
person had or will have a direct or indirect material
interest.
23
STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL
MEETING
As of
the date of this proxy statement, we had not received notice of any
stockholder proposals for the 2019 annual meeting described herein
and proposals received subsequent to the date of this proxy
statement will be considered untimely. For a stockholder proposal
to be considered for inclusion in our proxy statement for the 2020
annual meeting, the corporate secretary must receive the written
proposal at our principal executive offices no later than the
deadline stated below. Such proposals must comply with SEC
regulations under Rule 14a-8 regarding the inclusion of stockholder
proposals in company-sponsored proxy materials. Proposals should be
addressed to:
Inuvo,
Inc.
Attention:
Corporate Secretary
500
President Clinton Avenue
Suite
300
Little
Rock, Arkansas 72201
Facsimile:
(877) 311-5050
Under
Rule 14a-8, to be timely, a stockholder’s notice must be
received at our principal executive offices not less than 120
calendar days before the date of our proxy statement release to
stockholders in connection with the previous year’s annual
meeting. However, if we did not hold an annual meeting in the
previous year or if the date of this year’s annual meeting
has been changed by more than 30 days from the date of the previous
year’s annual meeting, then the deadline is a reasonable time
before we begin to print and send our proxy materials. Therefore,
stockholder proposals intended to be presented at the 2020 annual
meeting must be received by us at our principal executive office no
later than December 13, 2019 in order to be eligible for inclusion
in our 2020 proxy statement and proxy relating to that meeting.
Upon receipt of any proposal, we will determine whether to include
such proposal in accordance with regulations governing the
solicitation of proxies.
You may
propose director candidates for consideration by the board’s
Nominating, Corporate Governance and Compensation Committee. Any
such recommendations should include the nominee’s name and
qualifications for board membership, information regarding the
candidate as would be required to be included in a proxy statement
filed pursuant to SEC regulations, and a written indication by the
recommended candidate of her or his willingness to serve, and
should be directed to the Corporate Secretary of Inuvo at our
principal executive offices: Inuvo, Inc., 500 President Clinton
Avenue, Suite 300, Little Rock, Arkansas 72201 within the time
period described above for proposals other than matters brought
under SEC Rule 14a-8.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
As
required, we have filed our 2018 10-K with the SEC. Stockholders
may obtain, free of charge, a copy of the 2018 10-K by writing to
us at 500 President Clinton Avenue, Suite 300, Little Rock,
Arkansas 72201, Attention: Corporate Secretary, or from our
website,
www.inuvo.com
.
STOCKHOLDERS SHARING THE SAME LAST NAME AND ADDRESS
The SEC
has adopted rules that permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience
for stockholders and cost savings for companies. We and some
brokers household proxy materials, delivering a single proxy
statement to multiple stockholders sharing an address unless
contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker or us
that they are or we will be householding materials to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If, at any time, you no longer wish
to participate in householding and would prefer to receive a
separate proxy statement, or if you currently receive multiple
proxy statements and would prefer to participate in householding,
please notify your broker if your shares are held in a brokerage
account or us if you hold registered shares. You can notify us by
sending a written request to Inuvo, Inc., Attention: Corporate
Secretary, 500 President Clinton Avenue, Suite 300, Little Rock,
Arkansas 72201 or by faxing a communication to: (877)
311-5050.
24
WHERE YOU CAN FIND MORE INFORMATION
This
proxy statement refers to certain documents that are not presented
herein or delivered herewith. Such documents are available to any
person, including any beneficial owner of our shares, to whom this
proxy statement is delivered upon oral or written request, without
charge. Requests for such documents should be directed to Corporate
Secretary, Inuvo, Inc., 500 President Clinton Avenue, Suite 300,
Little Rock, Arkansas 72201. Please note that additional
information can be obtained from our website at
www.inuvo.com
.
We file
annual and special reports and other information with the SEC.
Certain of our SEC filings are available over the Internet at the
SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference
facilities:
Public
Reference Room Office
100 F
Street, N.E.
Room
1580
Washington,
D.C. 20549
25
|
INUVO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
2019 ANNUAL MEETING OF STOCKHOLDERS ON
OCTOBER 4, 2019 AT 9:00 A.M. LOCAL TIME
|
|
|
|
|
|
|||||||
|
CONTROL ID:
|
|
|
|
|
|
|
|
|||||
|
REQUEST ID:
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
||||||
|
The undersigned, a stockholder of Inuvo, Inc. (the
“
Company
”), hereby
revoking any proxy heretofore given, does hereby appoint John B.
Pisaris and Wallace D. Ruiz, and each of them, proxy, with power of
substitution, for and in the name of the undersigned to attend the
2019 annual meeting of Stockholders of the Company to be held at
the Company's offices located at 500 President Clinton Boulevard,
Suite 300, Little Rock, AR 72201 on October 4, 2019 at 9:00 a.m.
local time, or at any adjournment or postponement thereof, and
there to vote, as designated below:
|
||||||||||||
|
|
|
|||||||||||
|
(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/INUV
|
|
|
|
|
|
|||||
|
PHONE:
|
1-866-752-VOTE(8683)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||
|
2019 ANNUAL MEETING OF THE STOCKHOLDERS OF INUVO, INC.
|
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
|
|
AGAINST
|
|
|
|
|
|
|
|
Election of one Class II director:
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
G. Kent
Burnett
|
|
|
|
|
|
|
|
|
|
|
Proposal 2
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
The ratification of the appointment of Mayer Hoffman McCann P.C. as
the Company's independent registered public accounting
firm.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
Proposal 3
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
Approval of an amendment to the Company’s Articles of
Incorporation increasing the number of authorized shares of its
common stock
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
Proposal 4
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
Approval of an amendment to the Company’s 2017 Equity
Compensation Plan increasing the number of shares of common stock
reserved for issuance under the plan
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
Proposal 5
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
An advisory vote on executive compensation
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARK “X” HERE IF YOU PLAN
TO ATTEND THE MEETING:
☐
|
|||||
|
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the 2019 annual meeting,
and any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE ‘FOR’ THE
ELECTION OF THE CLASS II DIRECTOR NOMINEE AND ‘FOR’
PROPOSALS 2, 3, 4 AND 5.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CONTRARY INSTRUCTION IS
INDICATED, THE VOTE OF THE UNDERSIGNED WILL BE CAST
“FOR” ALL OF THE PROPOSALS. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT
THE 2019 ANNUAL MEETING.
|
|
|
|
MARK HERE FOR ADDRESS CHANGE
☐
New
Address (if applicable):
_______________________________
IMPORTANT:
Please sign exactly
as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by authorized person.
Dated: ________________________, 2019
|
||||||
|
|
||||||||||
|
|
(Print Name of Stockholder and/or Joint Tenant)
|
|||||||||
|
|
||||||||||
|
(Signature of Stockholder)
|
||||||||||
|
|
||||||||||
|
(Second Signature if held jointly)
|
||||||||||
Exhibit A
A-1
A-2
A-3
Exhibit B
AMENDMENT NO. 1
TO THE
INUVO, INC. 2017 EQUITY COMPENSATION PLAN
Section
4.1 of the Inuvo, Inc. 2017 Equity Compensation Plan (the
“
Plan
”)
is hereby deleted in its entirety and replaced with the
following:
4.1
Number of
Shares
. The total number of
shares of Common Stock reserved and available for issuance under
the Plan shall be eight million eight hundred thousand (8,800,000)
shares. Shares of Common Stock under the Plan may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
The number of shares of Common Stock available for issuance under
the Pla
n shall automatically
increase on the first trading day of January each calendar year
during the term of the Plan, beginning with calendar year 2018, by
an amount equal to one percent (1%) of the total number of shares
of Common Stock outstanding on the last trading day in December of
the immediately preceding calendar year, but in no event shall any
such annual increase exceed 150,000 shares of Common Stock. If any
shares of Common Stock that have been granted pursuant to a Stock
Option cease to be subject to a Stock Option, or if any shares of
Common Stock that are subject to any Stock Appreciation Right,
Restricted Stock, Deferred Stock Award, or Other Stock-Based Award
granted hereunder are forfeited or any such Award otherwise
terminates without a payment being made to the Holder in the form
of Common Stock, such shares shall again be available for
distribution in connection with future grants and Awards under the
Plan.
Except
as provided herein, all other terms and conditions of the Plan
remain in full force and effect. The foregoing amendment was
approved by the Company’s Board of Directors on August 21,
2019 pursuant to Section 11 of the Plan and by the Company’s
stockholders on [October 4, 2019]. All terms not otherwise defined
herein shall have the same meaning as in the Plan. This Amendment
No. 1 to the Plan is effective as of [October 4,
2019].
|
|
INUVO,
INC.
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Wallace D. Ruiz,
Chief Financial Officer
|
|
|
|
|
|
|
B-1
TABLE OF CONTENTS