KINGSTONE COMPANIES, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant
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[X]
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Filed by a Party other than the Registrant
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[ ]
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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KINGSTONE COMPANIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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[X]
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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[ ]
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing.
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1)
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Amount previously paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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KINGSTONE COMPANIES, INC.
15 Joys Lane
Kingston, New York 12401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 5, 2020
To the Stockholders of Kingstone Companies, Inc.:
NOTICE IS HEREBY GIVEN
that the Annual Meeting of Stockholders of Kingstone Companies, Inc., a Delaware corporation (the “Company” or “we”),
will be held on August 5, 2020 at 15 Joys Lane, Kingston, New York 12401, at 9:00 a.m., for the following purposes:
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1.
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To elect six directors for the coming year.
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2.
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To ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.
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3.
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To approve amendments to the Company’s 2014 Equity Participation Plan (the “Plan”), including to increase the number of shares of common stock authorized to be issued pursuant to the Plan
from 700,000 to 1,400,000.
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4.
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To hold a non-binding advisory vote to approve the Company’s executive compensation.
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5.
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To transact such other business as may properly come before the meeting.
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Only stockholders of record at the close of business on June 12, 2020 are entitled to notice of and to vote at the meeting or at any adjournment thereof.
Important notice regarding the availability of Proxy Materials:
We are sending a Notice of Internet Availability of Proxy Materials (the
“Notice”) to our stockholders of record and beneficial owners, unless they have directed us to provide the materials in a different manner. The Notice provides instructions on how to access and review all of the important information contained in
this proxy statement, as well as how to submit a proxy by telephone or over the Internet. If you receive the Notice and would still like to receive a printed copy of our proxy materials, instructions for requesting these materials are included in the
Notice. The Company plans to mail the Notice to stockholders by June 25, 2020. The proxy statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 are available electronically to the Company’s stockholders of record
as of the close of business on June 12, 2020 at
www.proxyvote.com
.
Floyd R. Tupper
Secretary
Kingston, New York
June 25, 2020
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. FOR SPECIFIC INSTRUCTIONS ON HOW TO VOTE YOUR SHARES,
PLEASE REFER TO THE INSTRUCTIONS IN THE NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS YOU RECEIVED IN THE MAIL OR, IF YOU REQUESTED TO RECEIVE PRINTED PROXY MATERIALS, YOUR ENCLOSED PROXY CARD. ANY STOCKHOLDER MAY REVOKE A SUBMITTED
PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON. THOSE VOTING BY INTERNET OR BY TELEPHONE MAY ALSO REVOKE THEIR PROXY BY VOTING
IN PERSON AT THE MEETING OR BY VOTING AND SUBMITTING THEIR PROXY AT A LATER TIME BY INTERNET OR BY TELEPHONE.
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KINGSTONE COMPANIES, INC.
15 Joys Lane
Kingston, New York 12401
____________________________
PROXY STATEMENT
____________________________
SOLICITING, VOTING AND REVOCABILITY OF PROXY
This proxy statement is being made available to all stockholders of record at the close of business on June 12, 2020 in connection with the solicitation by the Board of Directors of
proxies to be voted at the Annual Meeting of Stockholders to be held on August 5, 2020 at 9:00 a.m., local time, or any adjournment thereof. Proxy materials for the Annual Meeting of Stockholders were made available to stockholders on or about June
25, 2020.
All shares represented by proxies duly executed and received will be voted on the matters presented at the meeting in accordance with the instructions specified in such
proxies. Proxies so received without specified instructions will be voted as follows:
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(i)
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FOR
the nominees named in the proxy to our Board of Directors;
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(ii)
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FOR
the ratification of the selection of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
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(iii)
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FOR
the proposal to approve amendments to the Company’s 2014 Equity Participation Plan (the “Plan”), including to increase the number of shares of
common stock authorized to be issued pursuant to the Plan from 700,000 to 1,400,000;
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(iv)
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FOR
the approval of the compensation of our named executive officers.
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If you are a beneficial owner of shares held in street name and you do not provide specific voting instructions to the organization that holds your shares, the organization will be
prohibited under the current rules of the New York Stock Exchange from voting your shares on “non-routine” matters. This is commonly referred to as a “broker non-vote.” The election of directors, the proposal to approve amendments to the Plan and
the advisory vote on the approval of executive compensation are considered “non-routine” matters and therefore may not be voted on by your bank or broker absent specific instructions from you. The ratification of the selection of our independent
registered public accounting firm is a routine matter. Please instruct your bank or broker so your vote can be counted.
Our Board of Directors does not know of any other matters that may be brought before the meeting nor does it foresee or have reason to believe that the proxy holder will have to vote
for substitute or alternate nominees to the Board of Directors. In the event that any other matter should come before the meeting or any nominee is not available for election, the person named in the enclosed proxy will have discretionary authority
to vote all proxies not marked to the contrary with respect to such matters in accordance with his best judgment.
The total number of shares of common stock outstanding and entitled to vote as of the close of business on June 12, 2020 was 10,685,991. Our common stock is the only class of
securities entitled to vote on matters presented to our stockholders, each share being entitled to one vote. A majority of the shares of common stock outstanding and entitled to vote as of the close of business on June 12, 2020, 5,342,996 or shares
of common stock, must be present at the meeting in person or by proxy in order to constitute a quorum for the transaction of business.
Our Restated Certificate of Incorporation provides for cumulative voting of shares for the election of directors. This means that each stockholder has the right to cumulate his
votes and give to one or more nominees as many votes as equals the number of directors to be elected (six) multiplied by the number of shares he is entitled to vote. A stockholder may therefore cast his votes for one nominee or distribute them among
two or more of the nominees; however, in order to cumulate votes, a stockholder must request a proxy card (as Internet and telephone voting will not be available for such purposes). Only stockholders of record as of the close of business on June 12,
2020 will be entitled to vote. With regard to the election of directors, votes may be cast in favor or withheld. The directors shall be elected by a plurality of the votes cast in favor. Accordingly, based upon there being six nominees, each
person who receives one or more votes will be elected as a director. Votes withheld in connection with the election of one or more of the nominees for director will not be counted as votes cast for such individuals and may be voted for the other
nominees.
Stockholders may expressly abstain from voting on Proposals 2, 3 and 4 by so indicating on the proxy. Abstentions are counted as present in the tabulation of votes on Proposals 2, 3
and 4. Since each of Proposals 2, 3 and 4 requires the affirmative approval of a majority of the shares of common stock present in person or represented by proxy at the meeting and entitled to vote (assuming a quorum is present at the meeting),
abstentions will have the effect of a negative vote while broker non-votes will have no effect.
Any person giving a proxy in the form accompanying this proxy statement has the power to revoke it at any time before its exercise. The proxy may be revoked by filing with us
written notice of revocation or a fully executed proxy bearing a later date. The proxy may also be revoked by affirmatively electing to vote in person while in attendance at the meeting. However, a stockholder who attends the meeting need not
revoke a proxy given and vote in person unless the stockholder wishes to do so. Written revocations or amended proxies should be sent to us at 15 Joys Lane, Kingston, New York 12401, Attention: Corporate Secretary. Those voting by Internet or by
telephone may also revoke their proxy by voting in person at the meeting or by voting and submitting their proxy at a later time by Internet or by telephone.
The proxy is being solicited by our Board of Directors. We will bear the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and other
custodians, nominees and fiduciaries for forwarding proxy materials to beneficial owners of our shares. Solicitations will be made primarily by Internet availability of proxy materials and by mail, but certain of our directors, officers or employees
may solicit proxies in person or by telephone, telecopier or email without special compensation.
A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting, during ordinary business hours,
for ten days prior to the meeting, at our offices located at 15 Joys Lane, Kingston, New York 12401, and also during the whole time of the meeting for inspection by any stockholder who is present. To contact us, stockholders should call (845)
802-7900.
2
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning the compensation for the fiscal years ended December 31, 2019 and 2018 for certain executive officers, including our
Chief Executive Officer (collectively, the “Named Executive Officers”):
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Name and Principal Position
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Year
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Salary
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Bonus
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Stock Awards(1)
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Option Awards(1)
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Non-Equity
Incentive Plan
Compensation
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All Other
Compensation
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Total
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Barry B. Goldstein (1)
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2019
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$636,500
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$-
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$ -
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$-
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$-
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$37,520(5)
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$674,020
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Chief Executive Officer;
Executive Chairman
of the Board
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2018
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$630,000
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$-
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$ -
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$-
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$21,887(4)
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$43,784(6)
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$695,671
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Dale A. Thatcher (2)
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2019
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$625,000
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$-
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$750,000
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$-
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$ 5,000(4)
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$38,200(7)
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$1,418,200
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Chief Executive
Officer;
Chief Operating
Officer
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2018
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$398,630
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$-
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$750,000
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$-
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$59,795(4)
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$79,157(8)
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$1,287,582
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Victor J. Brodsky
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2019
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$369,666
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$-
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$150,000
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$-
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$34,508(4)
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$22,042(9)
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$576,217
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Chief Financial
Officer
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2018
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$350,000
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$-
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$140,009
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$-
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$17,573(4)
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$27,759(10)
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$535,341
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Benjamin Walden
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2019
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$339,025
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$-
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$135,000
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$-
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$31,601(4)
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$11,200(11)
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$516,825
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Executive Vice
President and Chief
Actuary, Kingstone
Insurance Company
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2018
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$315,000
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$-
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$110,856
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$-
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$15,760(4)
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$16,000(12)
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$457,616
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__________
(1)
Mr. Goldstein has served as our
Chief Executive Officer since July 19, 2019 and Executive Chairman of the Board since January 1, 2019. He previously served as Chief Executive Officer from March 2001 through December 31, 2018.
(2)
Mr. Thatcher served as our Chief
Executive Officer from January 1, 2019 to July 19, 2019. He previously served as our Chief Operating Officer from March 15, 2018 through December 31, 2018.
(3)
Amounts reflect the aggregate
grant date fair value of grants made in each respective fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock Compensation), excluding the effect of estimated forfeitures. Assumptions used in the
calculations of these amounts are included in Note 12 to our Consolidated Financial Statements included in the Annual Report available electronically to our stockholders.
(4)
Represents amounts earned
pursuant to the KICO employee bonus plan for 2019 and profit sharing plan for 2018.
(5)
Represents employer matching
contributions under our deferred compensation plan of $17,025, employer matching contributions under our defined contribution plan of $8,495 and a car allowance of $12,000.
3
(6)
Represents employer matching
contributions under our deferred compensation plan of $15,018, employer matching contributions under our defined contribution plan of $10,266, a car allowance of $12,000 and KICO director fees.
(7)
Represents employer matching
contributions under our deferred compensation plan of $2,090, employer matching contributions under our defined contribution plan of $9,110, severance payment of $20,000 and a car allowance of $7,000.
(8)
Represents compensation paid for
services as a non-employee director during 2018 comprised of a cash retainer of $11,458 and restricted shares of our common stock with a grant date fair value of $41,300, matching contributions under our defined contribution plan of $10,615, a car
allowance of $9,567 and KICO director fees.
(9)
Represents employer matching
contributions under our deferred compensation plan of $4,090, employer matching contributions under our defined contribution plan of $10,752 and a car allowance of $7,200.
(10)
Represents employer matching
contributions under our defined contribution plan of $10,847, a car allowance of $7,200 and KICO director fees.
(11)
Represents employer matching
contributions under our defined contribution plan of $11,200.
(12)
Represents employer matching
contributions under our defined contribution plan of $11,000 and $5,000 of KICO director fees.
Employment Contracts
Barry B. Goldstein
Agreement in effect for the year ended December 31, 2018
During the year ended December 31, 2018, Mr. Goldstein was employed as our President, Chairman of the Board and Chief Executive Officer pursuant to an employment agreement, dated
January 20, 2017 (the “2017 Goldstein Employment Agreement”), that was scheduled to expire on December 31, 2019. Pursuant to the 2017 Goldstein Employment Agreement, Mr. Goldstein was entitled to receive an annual base salary of $630,000 (an increase
from $575,000 per annum in effect through December 31, 2016) and an annual bonus equal to 6% of our consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss) and net realized gains (losses) on
investments (consistent with the bonus payable to Mr. Goldstein through December 31, 2016). In addition, pursuant to the 2017 Goldstein Employment Agreement, Mr. Goldstein was entitled to a long-term compensation ("LTC") payment of between $945,000
and $2,835,000 in the event our adjusted book value per share (as defined in the 2017 Goldstein Employment Agreement) increased by at least an average of 8% per annum as of December 31, 2019 as compared to December 31, 2016 (with the maximum LTC
payment being due if the average per annum increase was at least 14%).
4
Agreement in effect for the year ended December 31, 2019
On October 16, 2018, we entered into an amended and restated employment agreement with Mr. Goldstein which took effect as of January 1, 2019 and which was scheduled to expire on
December 31, 2021 (the “Amended and Restated Goldstein Employment Agreement”). Pursuant to the Amended and Restated Goldstein Employment Agreement, Mr. Goldstein stepped down as our Chief Executive Officer on January 1, 2019 and was named Executive
Chairman of the Board.
Pursuant to the Amended and Restated Goldstein Employment Agreement, Mr. Goldstein was entitled to receive an annual base salary of $636,500 for the calendar year 2019. In addition,
Mr. Goldstein was eligible to receive an annual performance bonus equal to 3% of our consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss) and net realized gains (losses) on investments. In
addition, pursuant to the Amended and Restated Goldstein Employment Agreement, Mr. Goldstein was entitled to an LTC payment (which was a continuation of the previous terms under the 2017 Goldstein Employment Agreement) of between $945,000 and
$2,835,000 based on a specified minimum increase in our adjusted book value per share (as defined in the Amended and Restated Goldstein Employment Agreement) as of December 31, 2019 as compared to December 31, 2016 (with the maximum LTC payment being
due if the average per annum increase was at least 14%). Pursuant to the Amended and Restated Goldstein Employment Agreement, Mr. Goldstein was entitled to receive a grant, under the terms of our 2014 Equity Participation Plan (the “2014 Plan”),
during the first 30 days of January 2020, with respect to a number of shares of restricted stock determined by dividing $436,500 by the fair market value of our common stock on the date of grant. The January 2020 grant was to vest with respect to 50%
of the award on each of December 31, 2020 and December 31, 2021 based on the continued provision of services through the applicable vesting date. Also, pursuant to the Amended and Restated Goldstein Employment Agreement, Mr. Goldstein was entitled to
receive a grant, under the 2014 Plan, during the first 30 days of 2021, with respect to a number of shares of restricted stock determined by dividing $236,500 by the fair market value of our common stock on the date of grant. The January 2021 grant
was to vest on December 31, 2021 based on the continued provision of services through such date. The above stock grant provisions were superseded by the provisions of the Second Amended and Restated Goldstein Employment Agreement as discussed below.
Agreement in effect as of January 1, 2020
On October 14, 2019, we entered into a second amended and restated employment agreement with Mr. Goldstein which took effect as of January 1, 2020 and expires on December 31, 2022
(the “Second Amended and Restated Goldstein Employment Agreement”).
Pursuant to the Second Amended and Restated Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of
our consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base
salary. In addition, pursuant to the Second Amended and Restated Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an LTC payment of between $945,000 and $2,835,000 based on a specified minimum increase in our adjusted book value
per share (as defined in the Second Amended and Restated Goldstein Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase is at least 14%).
5
Pursuant to the Second Amended and Restated Goldstein Employment Agreement, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2020, of a number of
shares of restricted stock determined by dividing $1,250,000 by the fair market value of our common stock on the date of grant. The January 2020 grant will become vested with respect to one-third of the award on each of the first and second
anniversaries of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. Also pursuant to the Second Amended and Restated Goldstein Employment Agreement, Mr. Goldstein will be
entitled to receive a grant, under the terms of the 2014 Plan, during January 2021, of a number of shares of restricted stock determined by dividing $1,500,000 by the fair market value of our common stock on the date of grant. The January 2021 grant
will become vested with respect to one-half of the award on each of the first anniversary of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. Further, pursuant to the Second
Amended and Restated Goldstein Employment Agreement, Mr. Goldstein received in January 2020 and will be entitled to receive in 2021 and 2022 a grant, under the terms of the 2014 Plan, of a number of shares of restricted stock determined by dividing
$136,500 by the fair market value of our common stock on the date of grant. The 2020 grant will become vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and on December 31, 2022 based on
the continued provision of services through the applicable vesting date. The 2021 grant will become vested with respect to one-half of the award on each of the first anniversary of the grant date and on December 31, 2022 based on the continued
provision of services through the applicable vesting date. The 2022 grant will become vested on December 31, 2022 based on the continued provision of services through such date.
See “Termination of Employment and Change-in-Control Arrangements – Barry B. Goldstein” below for a discussion of the provisions of the Second Amended and Restated Goldstein
Employment Agreement with regard to payments due in the event of the termination of Mr. Goldstein’s employment.
Dale A. Thatcher
Agreement in effect for the year ended December 31, 2018
On March 14, 2018, we and Dale A. Thatcher, then one of our directors, entered into an employment agreement (the “2018 Thatcher Employment Agreement”) pursuant to which Mr. Thatcher
become our Chief Operating Officer. The 2018 Thatcher Employment Agreement became effective as of March 15, 2018 and expired on December 31, 2018. Pursuant the 2018 Thatcher Employment Agreement, Mr. Thatcher was entitled to receive a base salary of
$500,000 per annum and a minimum bonus equal to 15% of his base salary. Concurrently with the execution of the 2018 Thatcher Employment Agreement, we granted to Mr. Thatcher 35,715 shares of restricted common stock under the 2014 Plan. Such shares
vest to the extent of one-third of the award on each of the first, second and third anniversaries of the grant date.
6
Agreement in effect from January 1, 2019 through July 19, 2019
On October 16, 2018, we and Mr. Thatcher entered into an employment agreement effective as of January 1, 2019 (the “2019 Thatcher Employment Agreement”). Pursuant to the 2019
Thatcher Employment Agreement, Mr. Thatcher succeeded Mr. Goldstein as our Chief Executive Officer and was entitled to receive an annual base salary of $500,000 for 2019 and $630,000 for each of 2020 and 2021. In addition, Mr. Thatcher was eligible
to receive an annual performance bonus equal to 3% of our consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss) and net realized gains (losses) on investments. Pursuant to the 2019 Thatcher
Employment Agreement, Mr. Thatcher was entitled to receive a grant, under the terms of the 2014 Plan, of a number of shares of restricted stock in each of 2019, 2020 and 2021 determined by dividing $750,000, $1,250,000 and $1,500,000, respectively,
by the fair market value of our common stock on the date of grant. See “Certain Relationships and Related Transactions – Dale A. Thatcher” below for a discussion of an agreement entered into with Mr. Thatcher in July 2019 with regard to the
termination of his employment.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information concerning unexercised options held by the above Named Executive Officers as of December 31, 2019.
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Name
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Option Awards
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Stock Awards
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||||||
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Number of Securities Underlying
Unexercised Options
Exercisable
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Number of Securities Underlying
Unexercised Options
Unexercisable
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Option Exercise
Price
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Option Expiration Date
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Number of Shares of Stock That Have Not Vested
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Market Value of Shares of Stock That Have Not Vested
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Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested
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Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested
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Dale A. Thatcher
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-
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-
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-
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-
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42,230(1)
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$327,283
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-
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$-
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23,810(2)
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$184,528
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-
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$-
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|||||
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Victor J. Brodsky
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-
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-
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-
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-
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555(3)
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$4,304
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-
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$-
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4,655(4)
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$36,076
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-
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$-
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10,933(5)
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$84,731
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-
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$-
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Benjamin Walden
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7,000
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-
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$7.85
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3/11/21
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333(3)
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$2,583
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-
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$-
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3,686(6)
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$28,567
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-
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$-
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|||||
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9,840(7)
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$76,260
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-
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$-
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|||||
____________________
(1)
Such shares vest to the
extent of 14,077 shares on each of January 2, 2020 and 2021, and 14,076 shares on January 2, 2022
.
(2)
Such shares vest to the
extent of 11,905 shares on each of March 14, 2020 and 2021
.
(3)
Such shares vest in two as nearly equal as possible monthly
installments through February 23, 2020.
7
(4)
Such shares vest to the extent of 2,328 shares on February 22,
2020 and 2,327 shares on February 22, 2021.
(5)
Such shares vest to the extent of 3,645 shares on April 10,
2020 and 3,644 shares on each of April 10, 2021 and 2022.
(6)
Such shares vest to the extent of 1,843 shares on each of
February 22, 2020 and 2021.
(7)
Such shares vest to the extent of 3,240 shares on each of
April 10, 2020, 2021 and 2022.
Termination of Employment and
Change-in-Control Arrangements
Barry B. Goldstein
Pursuant to the Second Amended and Restated Goldstein Employment Agreement, in the event that Mr. Goldstein's employment is terminated by us
without cause or he resigns for good reason (each as defined in the Second Amended and Restated Goldstein Employment Agreement), Mr. Goldstein would be entitled to receive his base salary, bonus and LTC payment for the remainder of the term. In
addition, in the event of Mr. Goldstein’s death, his estate would be entitled to receive his base salary, accrued bonus and accrued LTC payment through the date of death. Further, in the event that Mr. Goldstein’s employment is terminated by us
without cause or he resigns for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards will vest.
Mr. Goldstein would be entitled to receive, under certain circumstances, a payment equal to 3.82 times his then annual salary, the target LTC
payment of $1,890,000 and his accrued bonus in the event of the termination of his employment within eighteen months following a change of control of our company.
Dale A. Thatcher
See “Certain Relationships and Related Transactions”
below for a discussion of an agreement entered into with Mr. Thatcher in July 2019 with regard to the termination of his employment.
DIRECTOR COMPENSATION
The following table sets forth certain information concerning the compensation of our directors for the fiscal year ended December 31, 2019:
|
Name
|
Fees Earned or
Paid in Cash
|
Stock Awards(1)
|
Option Awards
|
Total
|
|
|
|
|
|
|
|
Jay M. Haft
|
$ 75,000
|
$ 40,000
|
$-
|
$ 115,000
|
|
Floyd R. Tupper
|
$ 85,000
|
$ 40,000
|
$-
|
$ 125,000
|
|
William L. Yankus
|
$ 80,000
|
$ 40,000
|
$-
|
$ 120,000
|
|
Carla A. D’Andre
|
$ 75,000
|
$ 40,000
|
$-
|
$ 115,000
|
|
Timothy P. McFadden
|
$ 75,000
|
$ 40,000
|
$-
|
$ 115,000
|
__________________
(1)
Amounts reflect the aggregate grant date fair value of grants made in the fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock
Compensation), excluding the effect of estimated forfeitures. Assumptions used in the calculations of these amounts are included in Note 12 to our Consolidated Financial Statements included in the Annual Report available electronically to our
stockholders.
8
The aggregate number of unvested restricted stock awards outstanding as of fiscal year end for each non-employee director is as follows:
|
Name
|
Unvested Restricted Stock Awards
|
|
|
|
|
Jay M. Haft
|
1,999
|
|
Floyd R. Tupper
|
1,999
|
|
William L. Yankus
|
1,999
|
|
Carla A. D’Andre
|
1,749
|
|
Timothy P. McFadden
|
530
|
Our non-employee directors are entitled to receive annual compensation for their services as directors as follows:
●
$60,000;
●
an additional
$25,000 for service as audit committee chair, an additional $20,000 for service as compensation committee chair, an additional $10,000 for service as investment committee chair, and an additional $15,000 for service as chair of other committees;
and
●
$40,000 of our
common stock determined by the closing stock price on the first business day of the year, which vest on the first anniversary of the grant date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 12, 2020 regarding the beneficial ownership of our shares of common stock by (i) each person who we believe to be the
beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each present director, (iii) each Named Executive Officer and (iv) all of our present executive officers and directors as a group.
|
Name and Address
of Beneficial Owner
|
Number of Shares
Beneficially Owned
|
Approximate
Percent of Class
|
|
Barry B. Goldstein
15 Joys Lane
Kingston, New York
|
678,258(1)
|
6.3%
|
|
|
|
|
|
Floyd R. Tupper
220 East 57
th
Street
New York, New York
|
67,718(2)
|
*
|
9
|
Victor J. Brodsky
15 Joys Lane
Kingston, New York
|
35,252
|
*
|
|
|
|
|
|
Benjamin Walden
15 Joys Lane
Kingston, New York
|
31,881(3)
|
*
|
|
|
|
|
|
Dale A. Thatcher
212 Third Street
Milford, Pennsylvania
|
25,982(4)
|
*
|
|
Carla A. D’Andre
3561 Avocado Avenue
Miami, Florida
|
15,821(5)
|
*
|
|
|
|
|
|
William L. Yankus
10 Pheasant Hill Road
Farmington, Connecticut
|
13,086
|
*
|
|
|
|
|
|
Meryl S. Golden
15 Joys Lane
Kingston, New York
|
12,500(6)
|
*
|
|
Timothy P. McFadden
310 8
th
Avenue N.
Saint Petersburg, Florida
|
7,518
|
*
|
|
|
|
|
|
The TCW Group, Inc.
on behalf of the TCW Business Unit
865 South Figueroa Street
Los Angeles, California
|
673,170(7)
|
6.3%
|
|
RenaissanceRe Ventures Ltd.
Renaissance Other Investments
Holding II Ltd.
RenaissanceRe Holdings Ltd.
Renaissance House
12 Crow Lane
Pembrooke HM19
Bermuda
|
595,238(8)
|
5.6%
|
|
|
|
|
|
All executive officers
and directors as a group
(8 persons)
|
862,034(1)(2)(3)(5)(6)
|
8.1%
|
* Less than 1%.
10
|
(1)
|
The information regarding Mr. Goldstein is based solely on publicly available information filed with the SEC. Includes (i) 73,168 shares of common stock owned by Mr. Goldstein's wife and (ii)
15,000 shares held in a retirement trust for the benefit of Mr. Goldstein. Mr. Goldstein has sole voting and dispositive power over 605,090 shares of common stock and shared voting and dispositive power over 73,168 shares of common stock.
The inclusion of the shares owned by Mr. Goldstein's wife and the retirement trust shall not be construed as an admission that Mr. Goldstein is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
|
|
|
|
|
(2)
|
Includes (i) 32,395 shares owned by Mr. Tupper’s wife (ii) 6,675 shares held in a retirement trust for the benefit of Mr. Tupper and (iii) 810 shares held in a retirement trust for the benefit
of Mr. Tupper's wife. Mr. Tupper has sole voting and dispositive power over 34,513 shares of common stock and shared voting and dispositive power over 33,205 shares of common stock. The inclusion of the shares owned by Mr. Tupper's wife and
the retirement trusts for the benefit of Mr. Tupper and his wife shall not be construed as an admission that Mr. Tupper is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
|
|
|
|
|
(3)
|
Includes 7,000 shares issuable upon the exercise of options that are exercisable currently.
|
|
(4)
|
The information regarding Mr. Thatcher is based solely upon publicly available information filed with the SEC and other information provided by Mr. Thatcher.
|
|
|
|
|
(5)
|
Includes 10,000 shares held in a retirement trust for the benefit of Ms. D’Andre’s husband. Ms. D’Andre has sole voting and dispositive power over 5,821 shares of common stock and shared
voting and dispositive power over 10,000 shares of common stock. The inclusion of the shares owned by the retirement trust for the benefit of Ms. D'Andre’s husband shall not be construed as an admission that Ms. D’Andre is, for purposes of
Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
|
|
(6)
|
Represents shares issuable upon the exercise of options that are exercisable currently.
|
|
(7)
|
The information regarding The TCW Group, Inc. on behalf of the TCW Business Unit is based solely on a Schedule 13G filed by such reporting person with the SEC on February 7, 2020 (the “TCW
13G”). According to the TCW 13G, such reporting person has shared voting and dispositive power over the 673,170 shares of common stock.
|
|
|
|
|
(8)
|
The information regarding RenaissanceRe Ventures Ltd. (“RenaissanceRe Ventures”), Renaissance Other Investments Holding II Ltd. (“ROIHL II”) and RenaissanceRe Holdings Ltd. (“RenaissanceRe
Holdings”) is based solely on a Schedule 13G/A filed by such reporting persons with the SEC on February 14, 2019 (the “Renaissance 13G/A”). According to the Renaissance 13G/A, RenaissanceRe Ventures, ROIHL II and RenaissanceRe Holdings each
has shared voting and dispositive power over the 595,238 shares of common stock.
|
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dale A. Thatcher
In connection with the separation from employment of Dale Thatcher as our Chief Executive Officer and President in July 2019 (the “Separation Date”), we entered into an Agreement and
General Release (the “Separation Agreement”) with Mr. Thatcher. Pursuant to the Separation Agreement, we agreed to provide the following payments and benefits to Mr. Thatcher in full satisfaction of all payments and benefits and other amounts due to
him under the terms of the 2019 Thatcher Employment Agreement upon his separation from employment: (i) $381,111 (representing the amount of base salary he would have received had he remained employed through March 31, 2020), (ii) $5,000 in full
satisfaction of any bonus payments payable under the 2019 Thatcher Employment Agreement, (iii) continuing group health coverage commencing on the Separation Date and ending on March 31, 2020; and (iv) continued vesting of all stock awards previously
granted to Mr. Thatcher in his capacity as an executive officer but which were unvested as of the Separation Date. In addition, we agreed to provide Mr. Thatcher with a severance payment of $20,000 in consideration for a release. Pursuant to the
Separation Agreement, Mr. Thatcher agreed that, for a period of three years following the Separation Date, he shall not accept any operating executive role with another property and casualty insurance company.
Other
The daughter of Barry Goldstein, Amanda Goldstein, is employed as our Investor Relations Director and serves as Vice President of Cosi Agency, Inc., one of our subsidiaries. For the
fiscal year ended December 31, 2019, she earned $155,368 in compensation.
Related Party Transactions
Due to the infrequency of related party transactions, we have not formally adopted procedures for the review of, or standards for approval of, such transactions; however, our Board
of Directors (or a designated committee thereof) will review related party transactions on a case-by-case basis.
PROPOSAL 1: ELECTION OF DIRECTORS
Six directors are to be elected at the meeting to serve until the next annual meeting of stockholders and until their respective successors shall have been elected and have
qualified.
Our Restated Certificate of Incorporation provides for cumulative voting of shares for the election of directors. This means that each stockholder has the right to cumulate his
votes and give to one or more nominees as many votes as equals the number of directors to be elected (six) multiplied by the number of shares he is entitled to vote. A stockholder may therefore cast his votes for one nominee or distribute them among
two or more of the nominees.
12
Nominees for Directors
All of the nominees are currently members of our Board of Directors. The following table sets forth each nominee’s age as of June 12, 2020, the positions and offices presently held
by him or her with us, and the year in which he or she became a director. The Board of Directors recommends a vote
FOR
all nominees. The person named as proxy intends to vote cumulatively all shares
represented by proxies equally among all nominees for election as directors, unless proxies are marked to the contrary.
|
Name
|
Age
|
Positions and Offices Held
|
Director Since
|
|
Barry B. Goldstein
|
67
|
President, Executive Chairman of the Board, Chief Executive Officer and Director
|
2001
|
|
Meryl S. Golden
|
60
|
Chief Operating Officer and Director
|
2020
|
|
Floyd R. Tupper
|
65
|
Secretary and Director
|
2014
|
|
William L. Yankus
|
60
|
Director
|
2016
|
|
Carla A. D’Andre
|
64
|
Director
|
2017
|
|
Timothy P. McFadden
|
58
|
Assistant Secretary and Director
|
2018
|
Barry B. Goldstein
Mr. Goldstein has served as our Chief Executive Officer and President, as well as Chief Executive Officer and President of Kingstone Insurance Company, our wholly-owned New York
property and casualty insurer (“KICO”), since July 19, 2019. He previously served as our Chief Executive Officer, President and Chairman of the Board from March 2001 through December 31, 2018 and as Chief Executive Officer and President of KICO from
January 2012 through December 31, 2018. Mr. Goldstein has served as our Executive Chairman of the Board since January 1, 2019 and as one of our directors since March 2001. He served as our Chief Financial Officer from March 2001 to November 2007 and
as our Treasurer from May 2001 to August 2013. Since January 2006, Mr. Goldstein has served as Chairman of the Board of KICO. He has served as Chairman of its Executive Committee since October 2019 (having previously served in such capacity from
2006 to 2018). Mr. Goldstein has served as Chief Investment Officer of KICO since August 2008. He was Treasurer of KICO from March 2010 through September 2010. Effective July 1, 2009, we acquired a 100% equity interest in KICO. From 1997 to 2004,
Mr. Goldstein served as President of AIA Acquisition Corp., which operated insurance agencies in Pennsylvania and which sold substantially all of its assets to us in 2003. Mr. Goldstein is a certified public accountant (inactive). Mr. Goldstein
received his B.A. and M.B.A. from State University of New York at Buffalo. We believe that Mr. Goldstein’s extensive experience in the insurance industry, including his executive-level service with KICO since 2006, give him the qualifications and
skills to serve as one of our directors.
Meryl S. Golden
Ms. Golden has served as our Chief Operating Officer since September 25, 2019 and as one of our directors since March 11, 2020. She has also served as Chief Operating Officer, a
director and a member of the Executive Committee of KICO since September 25, 2019. Ms. Golden has over 25 years of experience in the insurance industry. She served as Northeast General Manager of Progressive Insurance from 2000 to 2004 (having
served as Connecticut General Manager at Progressive from 1996 to 2000). Ms. Golden was Senior Vice President/General Manager at Liberty Mutual from 2005 to 2007. From 2007 to 2009, she was a Management Committee advisor to Bridgewater Associates,
a hedge fund. Ms. Golden served as General Manager of North America for Earnix, a banking and insurance software company, from 2010 to 2018 and was Sales Manager, Insurance Solutions for Arity, a mobility and data analytics company founded by
Allstate, from 2018 until September 2019. Ms. Golden received her B.S. degree in Accounting from the Wharton School of the University of Pennsylvania and her M.B.A. in Marketing and Finance from the University of Chicago. We believe that Ms.
Golden’s executive level experience in the insurance industry gives her the qualifications and skills to serve as one of our directors.
13
Floyd R. Tupper
Mr. Tupper is a certified public accountant in New York City. For over 30 years, Mr. Tupper has counseled high-net worth individuals by creating tax planning strategies to achieve
their goals as well as those of their families. He has also helped small businesses by developing business strategies to meet their current and future needs. He began his career in public accounting with Ernst & Young LLP prior to becoming
self-employed. Mr. Tupper holds an M.B.A. in Taxation from the New York University Stern School of Business and a B.S. from New York University. Mr. Tupper served as a director of KICO from 2006 to 2018 and has served as Chairman of its Audit
Committee since 2006. From 1990 until 2010, Mr. Tupper served as a Trustee of The Acorn School in New York City. He was also a member of the school’s Executive Committee and served as its Treasurer from 1990 to 2010. Mr. Tupper is a member of the
American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. He has served as one of our directors and Chairman of our Audit Committee since June 2014 and as our Secretary since June 2015. We
believe that Mr. Tupper’s accounting experience, as well as his service on the Board of KICO (including his service as Chairman of its Audit Committee), give him the qualifications and skills to serve as one of our directors.
William L. Yankus
Mr. Yankus brings to the Board over 30 years’ experience in the insurance industry. Since September 2015, Mr. Yankus has provided
insurance-related consulting services through Pheasant Hill Advisors, LLC. From 2011 to 2015, he was Managing Director – Investment Banking at Stern Agee where he focused on small and mid-sized insurers. Mr. Yankus served as Managing
Director-Insurance Research at Fox-Pitt, Kelton from 1993 to 2009 and then as Head of Insurance Research at its successor, Macquerie, from 2009 to 2010. Mr. Yankus served as Vice President, Insurance Research at Conning & Company from 1985 to
1993. He completed the CFA program in 1989 and passed the CT uniform CPA exam in 1984. Mr. Yankus has served as one of our directors since March 2016, Chairman of our Compensation Committee since April 2017 and Chairman of our Investment
Committee since February 2020. He received his B.A. degree in Economics and Accounting from The College of the Holy Cross. We believe that Mr. Yankus’ executive level experience in the insurance industry gives him the qualifications and skills to
serve as one of our directors.
14
Carla A. D’Andre
Ms. D’Andre has more than 40 years of experience in the insurance industry. Since 2009, Ms. D’Andre has been Chairman, CEO and President of D’Andre Insurance Group, Inc., which she
co-founded. D’Andre Insurance Group, Inc. is the parent of two independent insurance agencies. Prior to co-founding D’Andre Insurance Group, Ms. D’Andre held executive-level roles at several companies in the insurance industry, including Executive
Vice President, Head – Global Corporate Practice and Member – Partner’s Council at Willis Group Holdings plc, a multinational risk advisor, insurance brokerage and reinsurance brokerage company; Managing Director and Strategic Account Manager at AON
Risk Services, a global provider of risk management solutions; Chief Operating Officer at XL Capital’s insurance and technology start-up firm, Inquis Logic Inc.; Member of Senior Management and Managing Director of Swiss Re New Markets and Director
of Alternative Markets at Swiss ReAmerica, affiliates of Swiss Reinsurance Company Ltd, a global reinsurance company; Senior Vice President of Sedgwick North America, an insurance brokerage firm; and Vice President of Johnson & Higgins, an
insurance brokerage firm. Ms. D’Andre serves in senior capacities in several insurance industry groups. In January 2019 she was elected by her peers to a three-year term as a member of The Institutes’ CPCU Society Leadership Council. She also serves
as a member of the Executive Advisory Council of St. John’s University School of Risk Management, Insurance and Actuarial Science. She has served as one of our directors since May 2017 and currently serves as Co-Chair of our Finance Committee. Ms.
D’Andre has an M.B.A. from Pace University’s Lubin School of Business and a B.B.A. from St. John’s University’s School of Risk Management, Insurance and Actuarial Science. We believe that Ms. D’Andre’s extensive experience in multiple capacities in
the insurance industry gives her the qualifications and skills to serve as one of our directors.
Timothy P. McFadden
Mr. McFadden has more than 28 years of experience in the insurance industry. Since 2012, Mr. McFadden has served as CEO and President of State Farm Indemnity Auto Insurance Company
and Senior Vice President of State Farm Insurance, Eastern Market Area. Since 2015, he has also served as CEO and President of State Farm Florida Fire Company. Mr. McFadden served as Senior Vice President of State Farm Insurance Companies, Southern
Zone from 2008 to 2011 and Senior Vice President of State Farm Insurance Companies, Southern & Mid Atlantic Zones from 2011 to 2013. Prior to joining the insurance industry, he was a Captain in the United States Army. Mr. McFadden is a member
of Stetson University’s College of Law Board of Overseers. He formerly served as a member of the Board of State Farm Indemnity Auto Insurance Company, Local Initiatives Support Corporation, American College Ethics Board, State Farm Florida Fire
Company, Top Layer Reinsurance and Florida Council of 100. Mr. McFadden received his B.S. degree from the United States Military Academy at West Point and his J.D. from Stetson College of Law. He also completed the General Management Program at
Harvard Business School and received his Chartered Life Underwriter Designation from The American College of Financial Services. Mr. McFadden has served as one of our directors and Chair of our Nominating and Corporate Governance Committee since
August 2018. We believe that Mr. McFadden's executive level experience in the insurance industry gives him the qualifications and skills to serve as one of our directors.
15
Family Relationships
There are no family relationships among any of our executive officers and directors.
Term of Office
Each director will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or
removal. Each executive officer will hold office until the initial meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected and qualified or until his earlier resignation or removal.
Committees
Audit Committee
The Audit Committee of the Board of Directors is responsible for overseeing our accounting and financial reporting processes and the audits of our financial statements. The
responsibilities and duties of the Audit Committee include the following:
|
•
|
assist the Board of Directors in fulfilling its responsibilities by reviewing the financial reports provided by us to the Securities and Exchange Commission, our stockholders or to the
general public, and our internal financial and accounting controls,
|
|
•
|
oversee the appointment, compensation and retention of, and the work performed by, any independent public accountants engaged by us,
|
|
•
|
recommend, establish and monitor procedures designed to improve the quality and reliability of the disclosure of our financial condition and results of operations,
|
|
•
|
recommend, establish and monitor procedures designed to facilitate:
|
|
◾
|
the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters, and
|
|
◾
|
the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters.
|
The members of our Board’s Audit Committee currently are Messrs. Tupper, Yankus and McFadden. Our Board has adopted a written charter for the Audit Committee. A copy of the charter
is available on our website,
www.kingstonecompanies.com
.
Nominating and
Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board of Directors is responsible for assisting the Board in identifying and recruiting qualified individuals to become Board
members, selecting director nominees to be presented for Board and/or stockholder approval, identifying members of the Board to serve on each Board committee, and developing corporate governance guidelines.
16
The members of the Nominating and Corporate Governance Committee currently are Messrs. McFadden and Tupper and Ms. D’Andre. Our Board has adopted a written charter for the Nominating
and Corporate Governance Committee. A copy of the charter is available on our website,
www.kingstonecompanies.com
.
The Nominating and Corporate Governance Committee considers, among other things, diversity of background, experience, skills, expertise, personal and professional integrity,
character, business judgment, time availability and conflicts of interest in evaluating prospective Board members. The Nominating and Corporate Governance Committee Charter requires that the Nominating and Corporate Governance Committee ensure that
the initial list of candidates from which new independent director nominees are chosen by the Board include at least one candidate who is a person of color and one candidate who is female. The Nominating and Corporate Governance Committee will
consider qualified director candidates recommended by stockholders if such recommendations are provided in accordance with the procedures set forth in the section entitled “Stockholder Proposals - Stockholder Nominees” below. The Nominating and
Corporate Governance Committee evaluates all candidates based upon the considerations discussed above, as well as ‘independence’ (for purposes of compliance with the rules of the SEC and the NASDAQ Marketplace Rules). After conducting an initial
evaluation of a prospective nominee, the Nominating and Corporate Governance Committee will interview that candidate if it believes the candidate might be suitable to be a director. The Nominating and Corporate Governance Committee may also ask the
candidate to meet with management. If the Nominating and Corporate Governance Committee believes a candidate would be a valuable addition to our Board of Directors, it may recommend to the full Board that candidate's nomination and election. At
this time, except as discussed above, the Nominating and Corporate Governance Committee has not adopted minimum criteria for consideration of a proposed candidate for nomination. The Board has determined that no independent director will serve for
more than a total of 20 years in that capacity, unless otherwise determined by the Board, and that any independent director who reaches age 75 while serving as a director must retire from the Board effective at the end of his or her then current
term, unless otherwise determined by the Board.
Compensation Committee
The Compensation Committee of the Board of Directors is responsible for the management of our business and affairs with respect to the compensation of our employees. The
responsibilities and duties of the Compensation Committee include the following:
|
•
|
review and approve the compensation of our Chief Executive Officer,
|
|
•
|
make recommendations to our Board regarding the compensation of all other executive officers,
|
|
•
|
review, and make recommendations to our Board regarding, incentive compensation plans and equity-based plans, and where appropriate or required, recommend for approval by our stockholders,
which includes the ability to adopt, amend and terminate such plans,
|
17
|
•
|
administer our incentive compensation plans and equity-based plans, including designating the employees to whom awards are to be granted, the amount of the award or equity to be granted and
the terms and conditions applicable to each award or grant, subject to the provisions of each plan,
|
|
•
|
review, and make recommendations to our Board regarding, employment agreements and severance arrangements or plans, including any benefits to be provided in connection with a change in
control, for our Chief Executive Officer and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans,
|
|
•
|
review, and make recommendations to our Board regarding, all employee benefit plans, which includes the ability to adopt, administer, amend and terminate such plans,
|
|
•
|
review director compensation for service on our Board and Board committees and recommend any changes to our Board.
|
The members of the Compensation Committee currently are Messrs. Yankus and Tupper and Ms. D’Andre. Our Board has adopted a written charter for the Compensation Committee. A copy of
the charter is available on our website,
www.kingstonecompanies.com
.
The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee. Our Chief
Executive Officer assists the Compensation Committee from time to time by advising on a variety of compensation matters, such as assisting the Compensation Committee in determining appropriate salaries and bonuses for our executive officers. The
Compensation Committee has the authority to consult with management and to engage the services of outside advisors, experts and others to assist it in its efforts.
Board Leadership Structure and Role in Risk Oversight
Our Board of Directors as a whole is responsible for our risk oversight. Our executive officers address and discuss with our Board of Directors our risks and the manner in which we
manage or mitigate such risks. While our Board of Directors has the ultimate responsibility for our risk oversight, our Board of Directors works in conjunction with its committees on certain aspects of its risk oversight responsibilities. In
particular, our Audit Committee focuses on financial reporting risks and related controls and procedures and our Compensation Committee strives to create compensation practices that do not encourage excessive levels of risk taking that would be
inconsistent with our strategies and objectives.
Since January 2019, Barry B. Goldstein has served as our Executive Chairman of the Board, having served from 2001 through 2018 as our Chairman of the Board. Mr. Goldstein served as
our Chief Executive Officer from 2001 through 2018 and has served in such capacity since July 2019. We do not currently have a lead independent director. At this time, our Board of Directors believes that Mr. Goldstein’s combined role as Chief
Executive Officer and Executive Chairman of our Board enables us to benefit from Mr. Goldstein’s significant institutional and industry knowledge and experience, while at the same time promoting unified leadership and direction for our Board and
executive management without duplication of effort and cost. Given our history, position, Board composition and the relatively small size of our company and management team, at this time, our Board believes that we and our stockholders are best
served by our current leadership structure.
18
Report of the Audit Committee
In overseeing the preparation of the financial statements of the Company as of December 31, 2019 and for the years ended December 31, 2019 and 2018, the Audit Committee met with
management to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted
accounting principles, and the Audit Committee discussed the statements with management. The Audit Committee also discussed with Marcum LLP (“Marcum”), our outside auditors, the matters required to be discussed by Public Company Accounting Oversight
Board’s Auditing Standard No. 1301,
Communications with Audit Committees
, as currently in effect.
The Audit Committee received the written disclosures and the letter from Marcum required by applicable requirements of the Public Company Accounting Oversight Board regarding
Marcum’s communications with the Audit Committee concerning independence and the Audit Committee discussed Marcum’s independence with Marcum.
On the basis of these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2019, for filing with the Securities and Exchange Commission.
Members of the Audit Committee
Floyd R. Tupper
William L. Yankus
Timothy P. McFadden
Meetings
Our Board of Directors held six meetings during the fiscal year ended December 31, 2019.
The Audit Committee of the Board of Directors held four meetings during the fiscal year ended December 31, 2019.
The Nominating and Corporate Governance Committee of the Board of Directors held three meetings during the fiscal year ended December 31, 2019.
The Compensation Committee of the Board of Directors held seven meetings during the fiscal year ended December 31, 2019.
19
During 2019, all of our then directors attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of the meetings of the committees of
the Board on which they served.
We do not have a formal policy regarding director attendance at our annual meeting of stockholders. However, all directors are encouraged to attend. Each of our directors was in
attendance at last year’s annual meeting of stockholders.
Communications with Board of Directors
Any security holder who wishes to communicate with our Board of Directors or a particular director should send the correspondence to the Board of Directors, Kingstone Companies,
Inc., 15 Joys Lane, Kingston, New York 12401, Attention: Corporate Secretary. Any such communication so addressed will be forwarded by the Corporate Secretary to the members or a particular member of the Board.
Audit Committee Financial Expert
Our Board of Directors has determined that Mr. Tupper is an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. Mr. Tupper is an
“independent director” based on the definition of independence in Listing Rule 5605(a)(2) of The Nasdaq Stock Market.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act requires that reports of beneficial ownership of common stock and changes in such ownership be filed with the Securities and Exchange Commission by
Section 16 “reporting persons,” including directors, certain officers, holders of more than 10% of the outstanding common stock and certain trusts of which reporting persons are trustees. We are required to disclose in this proxy statement each
reporting person whom we know to have failed to file any required reports under Section 16 on a timely basis during the fiscal year ended December 31, 2019. To our knowledge, based solely on a review of copies of Forms 3, 4 and 5 filed with the
Securities and Exchange Commission and written representations that no other reports were required, during the fiscal year ended December 31, 2019, our officers, directors and 10% stockholders complied with all Section 16(a) filing requirements
applicable to them, except that Mr. Brodsky filed two Forms 4 one day late, each reporting one transaction.
Director Independence
Board of Directors
Our Board of Directors is currently comprised of Barry B. Goldstein, Floyd R. Tupper, William L. Yankus, Carla A. D’Andre, Timothy P. McFadden and Meryl S. Golden. Our board of
directors has determined that each of Messrs. Tupper, Yankus and McFadden and Ms. D’Andre is independent under applicable Nasdaq listing standards and federal securities rules and regulations.
20
Audit Committee
The members of our Board’s Audit Committee currently are Messrs. Tupper, Yankus and McFadden, each of whom is an “independent director” based on the definition of independence in
Listing Rule 5605(a)(2) of The Nasdaq Stock Market and Rule 10A-3(b)(1) under the Exchange Act.
Nominating and Corporate Governance Committee
The members of our Board’s Nominating and Corporate Governance Committee currently are Messrs. McFadden and Tupper and Ms. D’Andre, each of whom is independent under applicable
Nasdaq listing standards and federal securities rules and regulations on independence.
Compensation Committee
The members of our Board’s Compensation Committee currently are Messrs. Yankus and Tupper and Ms. D’Andre, each of whom is independent under applicable Nasdaq listing standards and
federal securities rules and regulations on independence.
Recommendation
The Board of Directors recommends a vote FOR all nominees.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board of Directors has selected Marcum LLP as our independent registered public accounting firm to examine our financial statements for the year ending
December 31, 2020.
Although ratification by stockholders is not required by our organizational documents or other applicable law, our Board of Directors has determined that requesting ratification by
stockholders of the appointment of Marcum as our independent registered public accounting firm for the fiscal year ending December 31, 2020 is a matter of good corporate practice. If stockholders do not ratify the selection, the Audit Committee may
reconsider whether or not to retain Marcum, but may still determine to retain them. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change
would be in the best interests of us and our stockholders.
Marcum has served as our independent registered public accountants with respect to each fiscal year since the year ended December 31, 2013.
It is not expected that a representative of Marcum will attend the meeting.
The following is a summary of the fees billed to us by Marcum LLP, our independent auditors, for professional services rendered for the fiscal years ended December 31, 2019 and 2018.
21
|
Fee Category
|
Fiscal 2019 Fees
|
Fiscal 2018 Fees
|
|
|||||
|
Audit Fees(1)
|
|
$
|
306,940
|
|
|
$
|
309,684
|
|
|
Audit-Related Fees(2)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Tax Fees(3)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
All Other Fees(4)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
TOTAL FEES
|
|
$
|
306,940
|
|
|
$
|
309,684
|
|
____________________
(1)
Audit Fees consist of fees billed
for services rendered for the audit of our consolidated financial statements and review of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, and services provided in connection with other statutory or
regulatory filings.
(2)
Marcum did not provide any tax services during the fiscal
year.
(3)
Marcum did not provide any “Audit-Related” services during the
fiscal year.
(4)
Marcum did not provide any other services during the fiscal
year.
The Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent auditors and approves in advance any services
to be performed by the independent auditors, whether audit-related or not. The Audit Committee reviews each proposed engagement to determine whether the provision of services is compatible with maintaining the independence of the independent
auditors. Substantially all of the fees shown above were pre-approved by the Audit Committee.
Vote Required
The ratification of the selection of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 requires the affirmative vote of
stockholders who hold a majority of the common stock present in person or represented by proxy at the meeting and entitled to vote.
Recommendation
The Board of Directors recommends a vote FOR the ratification of the selection of Marcum LLP as our independent registered public accounting firm for the fiscal
year ending December 31, 2020.
PROPOSAL 3: APPROVAL OF AMENDMENTS TO THE COMPANY’S 2014 EQUITY PARTICIPATION PLAN (THE “PLAN”), INCLUDING TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED
PURSUANT TO THE PLAN FROM 700,000 TO 1,400,000
Our Board of Directors has approved the adoption of the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan” or the “Amended and Restated Plan”), to increase
the number of shares of common stock authorized to be issued under the Plan from 700,000 to 1,400,000, among other revisions. The Plan is being submitted to the stockholders for approval.
22
The 2014 Equity Participation Plan (the “2014 Plan”) was originally adopted by our Board on August 12, 2014. Pursuant to the 2014 Plan, up to 700,000 shares of common stock were
authorized to be issued. Stockholder approval of the 2014 Plan was obtained on August 11, 2015. On May 27, 2020, our Board increased the number of shares authorized to be issued under the Plan from 700,000 to 1,400,000, among other revisions,
subject to stockholder approval.
As of June 12, 2020, options for the purchase of 176,716 shares of common stock (net of cancellations) had been granted pursuant to the Plan. In addition, as of such date,
399,564 shares of restricted stock had been granted pursuant to the Plan and 123,720 shares were reserved for future grants under the Plan (without giving effect to the amendment to the Plan increasing the number of shares authorized to be issued
under the Plan to 1,400,000). See "Plan Benefits" below for additional details.
The Plan plays an important role in our efforts to attract and retain employees of outstanding ability and to align the interests of employees with those of the
stockholders through increased stock ownership. In order to continue to provide appropriate equity incentives to employees in the future, our Board has approved an increase in the number of authorized shares under the Plan. As discussed below,
the Plan is also designed to provide incentives to our non‑employee directors, consultants and advisors.
The following statements include summaries of certain provisions of the Plan. The statements do not purport to be complete and are qualified in their entirety
by reference to the provisions of the Plan, a copy of which is available at our offices and has been included as an exhibit to our Current Report on Form 8-K for an event dated May 27, 2020.
Purpose
The purpose of the Plan is to advance our interests by inducing individuals or entities of outstanding ability and potential to join and remain with, or provide consulting or
advisory services to, us by encouraging and enabling eligible employees, non-employee directors, consultants and advisors to acquire proprietary interests in our company, and by providing the participating employees, non-employee directors,
consultants and advisors with an additional incentive to promote our success.
Administration
The Plan provides for its administration by our Board or by a committee (the "Committee") consisting of at least two persons chosen by the Board each of whom is intended to be an
"outside independent director" to the extent required by the rules and regulations of any established stock market exchange or national market system, including, without limitation, The Nasdaq Stock Market. The following discussion of the Plan
assumes that the Plan is administered by the Committee.
The Committee has authority to select from the group of eligible employees, non-employee directors, consultants and advisors the individuals or entities to whom awards will be
granted under the Plan, and to determine the times at which awards will be granted and the terms of such grants, subject to certain restrictions as set forth in the Plan. The Committee is authorized to interpret the Plan and the interpretation and
construction by the Committee of any provision of the Plan or of any award granted under the Plan shall be final and conclusive. The receipt of awards under the Plan by any members of the Committee shall not preclude their vote on any matters in
connection with the administration or interpretation of the Plan.
23
Eligibility
Subject to certain limitations as set forth in the Plan, options to purchase shares may be granted thereunder to persons or entities who, in the case of incentive stock options,
are employees of our company or, in the case of nonstatutory stock options, are employees or non‑employee directors of, or certain consultants or advisors to, our company. Subject to certain limitations as set forth in the Plan, stock appreciation
rights and stock bonus awards may be granted thereunder to persons or entities who are employees or non-employee directors of, or certain consultants or advisors to, us.
As of June 12, 2020, 87 employees, our four non-employee directors, and persons providing certain consulting services to us were eligible to receive awards under the Plan.
Options
Nature of Options
The Committee may grant options under the Plan which are intended to either qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986 (the “Code”) or not so qualify. We refer to options that do not so qualify as "nonstatutory stock options." The Federal income tax consequences relating to the grant and exercise of incentive stock options and nonstatutory stock options are
described below under "Federal Income Tax Consequences."
Option Price
The option price of the shares subject to an incentive stock option or a nonstatutory stock option may not be less than the fair market value (as such term is defined in the Plan)
of the common stock on the date upon which such option is granted. In addition, in the case of a recipient of an incentive stock option who, at the time the option is granted, owns more than 10% of the total combined voting power of all classes of
our stock or of a parent or of any of our subsidiaries, the option price of the shares subject to such option must be at least 110% of the fair market value of the common stock on the date upon which such option is granted.
On June 12, 2020, the last reported sale price for our common stock, as reported by The Nasdaq Stock Market, was $4.71 per share.
Exercise of Options
An option granted under the Plan shall be exercised by the delivery by the holder to our Secretary at our principal office of a written notice of the number of shares with respect
to which the option is being exercised. The notice must be accompanied, or followed within ten days, by payment of the full option price of such shares which must be made by the holder's delivery of (i) a check in such amount, (ii) previously
acquired common stock, the fair market value of which shall be determined as of the date of exercise, or (iii) if provided for in a stock option agreement pursuant to which the option is granted, and subject to applicable law, a check in an amount
equal to the par value of the common stock being acquired and a promissory note in an amount equal to the balance of the exercise price, or a combination of (i), (ii) and (iii). Alternatively, if provided for in the award agreement, the holder may
elect to have us reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised.
24
Duration of Options
No incentive stock option granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant. However, if an incentive stock option is granted
to a 10% stockholder, the option shall not be exercisable after the expiration of five years from the date of its grant.
Nonstatutory stock options granted under the Plan shall be exercisable for a period of up to ten years from the date of their grant.
Reload Options
The 2014 Plan provided for the grant of options with a reload feature. Such provision has been removed and is not included in the Amended and Restated Plan.
Non-Transferability
Options granted under the Plan are not transferable otherwise than by will or the laws of descent and distribution and such options are exercisable, during a holder's lifetime,
only by the grantee; provided, however, that a nonstatutory stock option granted under the Plan may, upon the approval of the Committee be transferred in whole or in part during a grantee's lifetime to certain family members of a grantee through a
gift or domestic relations offer.
Death, Disability or Termination of Employment
Subject to the terms of the agreement pursuant to which the options are granted, if the employment of an employee or the services of a non-employee director, consultant or advisor
shall terminate other than by reason of death or disability, such option may be exercised at any time within three months after such termination, but in no event after the expiration of the option.
Subject to the terms of the agreement pursuant to which the options are granted, if an option holder under the Plan (i) dies while employed by us or while serving as a non‑employee
director of, or consultant or advisor to, us, or (ii) dies within three months after the termination of his or her employment or services for any reason, then such option may be exercised by the estate of the employee, non‑employee director,
consultant or advisor, or by a person who acquired such option by bequest or inheritance from the deceased option holder, at any time within one year after his or her death.
25
Subject to the terms of the stock option agreement pursuant to which the options are granted, if the holder of an option under the Plan ceases employment or services because of
permanent and total disability (within the meaning of Section 22(e)(3) of the Code) while employed by, or while serving as a non‑employee director of, or consultant or advisor to, us, then such option may be exercised at any time within one year
after his termination of employment, termination of directorship, or termination of consulting or advisory arrangement or agreement due to the disability. Notwithstanding the foregoing, in the event we are a party to an employment, consulting or
advisory agreement with a holder of an option and such agreement provides for termination of employment or engagement based upon a disability or other incapacity, then, for such holder, a termination of employment or engagement for disability or
other incapacity pursuant to the provisions thereof shall be considered to be a termination based upon permanent and total disability.
If an optionee is not an employee or non-employee director of, or a consultant or advisor to, our company as of a particular vesting date for an option due to death or termination
of employment, termination of directorship or termination of consulting or advisory services due to permanent and total disability or generally following a change of control (as defined in the Plan), then the optionee shall be deemed to have
remained an employee or non-employee director of, or consultant or advisor to, us through the vesting date next following the date of death or date of termination of employment, termination of directorship or termination of consulting or advisory
services due to permanent and total disability or following the change of control.
Stock Appreciation Rights
The Committee may grant stock appreciation rights (an "SAR") to such persons eligible under the Plan as selected from time to time. SARs shall be granted at such times, in such
amounts and under such other terms and conditions as the Committee shall determine. An SAR entitles the grantee to exercise the SAR, in whole or in part, in exchange for payment of shares of our common stock, cash or a combination thereof, as
determined by the Committee, equal in value to the excess of the fair market value of the shares of our common stock underlying the SAR, determined on the date of exercise, over the fair market value of our common stock underlying the SAR on the
date of grant.
No SAR granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant.
Restricted Stock Grants
The 2014 Plan provided for the grant of restricted stock. Such provision has been removed and is not included in the Amended and Restated Plan. See, however, “Stock Bonus Grants”
below.
Stock Bonus Grants
The Committee may grant stock bonus awards to such persons eligible under the Plan as the Committee may select from time to time. Stock bonus awards shall be granted at such
times, in such amounts and under such other terms and conditions as the Committee shall determine. Shares granted pursuant to a stock bonus shall vest as determined by the Committee, subject to certain restrictions as set forth in the Plan. Except
as otherwise provided in the award agreement, a grantee shall forfeit the right to receive all shares not previously vested, if any, at such time as the grantee is no longer employed by, or serving as a director of, or rendering consulting or
advisory services to, us or one of our parents or subsidiaries; however, if a stock bonus grantee is not an employee or non-employee director of, or a consultant or advisor to, our company as of a particular vesting date due to death or termination
of employment, termination of directorship or termination of consulting or advisory services due to permanent and total disability or generally following a change of control, then the stock bonus grantee shall be deemed to have remained an employee
or non-employee director of, or consultant or advisor to, us through the vesting date next following the date of death or date of termination of employment, termination or directorship or termination of consulting or advisory services due to
permanent and total disability or following the change of control.
26
Amendment and Termination
The Plan (but not the options or stock bonuses previously granted thereunder) shall terminate on August 12, 2024, ten years from the date that the 2014 Plan was originally adopted
by the Board. Subject to certain limitations, the Plan may be amended or modified from time to time or terminated at an earlier date by the Board or by the stockholders.
Federal Income Tax Consequences
The following discussion is intended only as a brief summary of the federal income tax rules relevant to stock options granted under the Plan. These rules are highly technical and
subject to change. The following discussion is limited to the federal income tax rules relevant to us and to the individuals who are citizens or residents of the United States. The discussion does not address state, local or foreign income tax
consequences.
Nonstatutory Stock Options
Under the Code and the Treasury Department Regulations, a nonstatutory stock option does not ordinarily have a readily ascertainable fair market value when it is granted. This rule
will apply to our grant of nonstatutory stock options. Consequently, the grant of a nonstatutory stock option to an optionee will result in neither income to him or her nor a deduction to us. Instead, the optionee will recognize compensation
income at the time he or she exercises the nonstatutory stock option in an amount equal to the excess, if any, of the then fair market value of the shares transferred to the optionee over the option price. Subject to the applicable provisions of
the Code and the Treasury Department Regulations regarding withholding of tax, a deduction will be allowable to us in the year of exercise in the same amount as is includable in the optionee's income.
For purposes of determining the optionee's gain or loss on the sale or other disposition of the shares transferred to him or her upon exercise of a nonstatutory stock option, the
optionee's basis in such shares will be the sum of the optionee’s option price plus the amount of compensation income recognized by him or her on exercise. Such gain or loss will be capital gain or loss and will be long-term or short-term
depending upon whether the optionee held the shares for more than one year or one year or less. No part of any such gain will be an item of tax preference for purposes of the alternative minimum tax.
27
Incentive Stock Options
Options granted under the Plan which qualify as incentive stock options under Section 422 of the Code will be treated as follows:
Except to the extent that the alternative minimum tax rule described below applies, no tax consequences will result to the optionee or us from the grant of an incentive stock
option to, or the exercise of an incentive stock option by, the optionee. Instead, the optionee will recognize gain or loss when he or she sells or disposes of the shares transferred to him or her upon exercise of the incentive stock option. For
purposes of determining such gain or loss, the optionee's basis in such shares will be his or her option price. If the date of sale or disposition of such shares is at least two years after the date of the grant of the incentive stock option, and
at least one year after the transfer of the shares to the optionee upon exercise of the incentive stock option, the optionee will realize long-term capital gain treatment upon their sale or disposition.
Generally, we will not be allowed a deduction with respect to an incentive stock option. However, if an optionee fails to meet the foregoing holding period requirements (a
so-called disqualifying disposition), any gain recognized by the optionee upon the sale or disposition of the shares transferred to him or her upon exercise of an incentive stock option will be treated in the year of such sale or disposition as
ordinary income, rather than capital gain, to the extent of the excess, if any, of the fair market value of the shares at the time of exercise (or, if less, in certain cases the amount realized on such sale or disposition) over their option price,
and in that case we will be allowed a corresponding deduction.
For purposes of the alternative minimum tax, the amount, if any, by which the fair market value of the shares transferred to the optionee upon such exercise exceeds the option
price will be included in determining the optionee's alternative minimum taxable income. In addition, for purposes of such tax, the basis of such shares will include such excess.
To the extent that the aggregate fair market value (determined at the time the option is granted) of the stock with respect to which incentive stock options are exercisable for the
first time by the optionee during any calendar year exceeds $100,000, such options will not be incentive stock options. In this regard, upon the exercise of an option which is deemed, under the rule described in the preceding sentence, to be in
part an incentive stock option and in part a nonstatutory stock option, under existing Internal Revenue Service guidelines, we may designate which shares issued upon exercise of such options are incentive stock options and which shares are
nonstatutory stock options. In the absence of such designation, a pro rata portion of each share issued is to be treated as issued pursuant to the exercise of an incentive stock option and the balance of each share treated as issued pursuant to
the exercise of a nonstatutory stock option.
New Plan Benefits
The benefits that will be awarded or paid under the Plan are not currently determinable. Awards granted under the Plan are within the discretion of the Committee, and the Committee
has not determined future awards or who might receive them.
28
Plan Benefits
The following table sets forth certain information regarding options and stock bonuses granted under the Plan (net of forfeitures), as of June 12, 2020, to (i) each person listed
in the Summary Compensation Table under Executive Compensation, (ii) all current executive officers as a group, (iii) all current directors who are not executive officers as a group, (iv) each nominee for election as a director, (v) each associate
of any such directors, executive officers or nominees, (vi) each other person who received 5% of the options granted and (vii) all employees, including current officers who are not executive officers, as a group:
|
Name and Position
|
Common Stock
Underlying
Options Granted
|
Weighted Average
Exercise Price
Per Share
|
Common
Stock Bonus Grants
|
|
Barry B. Goldstein
Chief Executive Officer, President, Executive Chairman of the Board and Director
|
50,000
|
$6.73
|
174,622
|
|
Floyd R. Tupper
Secretary and Director
|
-
|
$-
|
11,038
|
|
Victor J. Brodsky
Chief Financial Officer and Treasurer
|
26,064
|
$7.99
|
27,916
|
|
Benjamin Walden
Executive Vice President and Chief Actuary,
Kingstone Insurance Company
|
29,207
|
$7.87
|
21,369
|
|
Dale A. Thatcher
(1)
Chief Executive Officer, President and Director
|
-
|
$-
|
77,945
|
|
Carla A. D’Andre
Director
|
-
|
$-
|
8,288
|
|
William L. Yankus
Director
|
-
|
$-
|
10,538
|
|
Meryl S. Golden
Chief Operating Officer and Director
|
50,000
|
$8.72
|
-
|
|
Timothy P. McFadden
Assistant Secretary and Director
|
-
|
$-
|
5,833
|
|
All current executive officers as a group
|
155,271
|
$7.80
|
223,907
|
|
All current directors who are not executive officers as a group
|
-
|
$-
|
35,697
|
|
All employees, including all current officers who are not executive officers, as a group
|
17,695
|
$7.95
|
58,091
|
____________________
|
(1)
|
Mr. Thatcher resigned his employment with us in July 2019.
|
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information as of December 31, 2019 with respect to compensation plans (including individual compensation arrangements) under which our shares of
common stock are authorized for issuance, aggregated as follows:
|
|
•
|
All compensation plans previously approved by security holders; and
|
|
|
•
|
All compensation plans not previously approved by security holders.
|
29
Equity Compensation Plan Information
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
(a)
|
(b)
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
82,000
|
$8.61
|
327,900
|
|
|
|||
|
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|
|
|||
|
Total
|
82,000
|
$8.61
|
327,900
|
Vote Required
The approval of the amendment to the Plan requires the affirmative vote of stockholders who hold a majority of the shares of common stock present in person or represented by proxy
at the meeting and entitled to vote.
Recommendation
The Board of Directors recommends a vote FOR approval of amendments to the Plan including to increase the number of shares authorized to be issued under the Plan
from 700,000 to 1,400,000.
PROPOSAL 4: ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
In accordance with the rules of the SEC, we are providing our stockholders with the opportunity to cast a non-binding advisory vote on the compensation of our named executive
officers as disclosed pursuant to Item 402(m) through (q) of Regulation S-K, including the compensation tables and narrative discussion in this proxy statement.
The compensation structure established by our Compensation Committee is designed to attract and retain motivated executives who substantially contribute to our long-term success and
the creation of stockholder value, to reward executives when we perform financially or operationally well, to align the financial interests of our executives with the interests of our stockholders, and to be competitive within our industry. We
believe that our philosophy and practices have resulted in executive compensation decisions that are appropriate and that have benefited us over time.
We are requesting stockholder approval of the compensation of our executive officers as disclosed in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal,
gives our stockholders the opportunity to express their views on our executive officers’ compensation. Because the stockholder vote is advisory, it is not binding on us or our Board of Directors. However, our Board and the Compensation Committee,
which is responsible for designing and administering our executive compensation program, value the opinions that our stockholders express in their votes. The Compensation Committee will review the results of the stockholder votes on this “say-on-pay”
proposal and consider whether to recommend any changes or modifications to our executive compensation policies and practices as a result of such votes.
30
We are asking our stockholders to indicate their support for our named executive officer compensation through the following resolution:
“
RESOLVED
, that the stockholders approve the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the compensation tables and narrative discussion in this proxy statement.”
Vote Required
The affirmative vote of the holders of a majority of our shares of common stock present in person or represented by proxy at the meeting and entitled to vote is required for approval
of this proposal.
Recommendation
The Board of Directors recommends a vote FOR approval of the compensation of our executive officers as disclosed in this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at our next annual meeting of stockholders pursuant to the provisions of Rule 14a-8 of the Securities and Exchange Commission,
promulgated under the Exchange Act, must be received at our offices in Kingston, New York by February 25, 2021 for inclusion in our proxy statement and form of proxy relating to such meeting.
The following requirements with respect to stockholder proposals and stockholder nominees to our Board of Directors are included in our By-Laws.
Stockholder Proposals
In order for a stockholder to make a proposal at an annual meeting of stockholders, under our By-Laws, timely notice must be received by us in advance of the meeting. To be timely,
the proposal must be received by our Secretary at our principal executive offices (as provided below) on a date which is not less than 60 days nor more than 90 days prior to the date which is one year from the date of the mailing of the notice
regarding the availability of proxy materials for the prior year’s annual meeting of stockholders. If during the prior year we did not hold an annual meeting, or if the date of the meeting for which a stockholder intends to submit a proposal has
changed by more than 30 days from the date of the meeting in the prior year, then the notice must be received a reasonable time before we mail the notice regarding the availability of proxy materials for the current year. A stockholder’s notice must
set forth as to each matter the stockholder proposes to bring before the annual meeting certain information regarding the proposal, including the following:
31
|
•
|
a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at such meeting;
|
|
•
|
the name and address of the stockholder proposing such business;
|
|
•
|
the class and number of our shares which are beneficially owned by such stockholder; and
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any material interest of such stockholder in such business.
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Stockholder Nominees
In order for a stockholder to nominate a candidate for director, under our By-Laws, timely notice of the nomination must be received by us in advance of the meeting. To be timely,
the notice must be received at our principal executive offices (as provided below) not less than 60 days nor more than 90 days prior to the meeting; however, if less than 70 days’ notice of the date of the meeting is given to stockholders and public
disclosure of the meeting date, pursuant to a press release, is either not made at all or is made less than 70 days prior to the meeting date, notice by a stockholder to be timely made must be so received no later than the close of business on the
tenth day following the earlier of the following:
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the day on which the notice of the date of the meeting was made available to stockholders, or
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the day on which such public disclosure of the meeting date was made.
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The stockholder sending the notice of nomination must describe various matters, including such information as:
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the name, age, business and residential addresses, occupation or employment and shares held by the nominee;
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any other information relating to such nominee required to be disclosed in a proxy statement; and
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the name, address and number of shares held by the stockholder.
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These requirements are separate from and in addition to the requirements a stockholder must meet to have a proposal included in our proxy statement.
Any notice given pursuant to the foregoing requirements must be sent to our Corporate Secretary at 15 Joys Lane, Kingston, New York 12401.
The
foregoing is only a summary of the provisions of our By-Laws that relate to stockholder proposals and stockholder nominations for director. Any stockholder desiring a copy of our By-Laws will be furnished one without charge upon receipt of a
written request therefor.
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OTHER BUSINESS
While the accompanying Notice of Annual Meeting of Stockholders provides for the transaction of such other business as may properly come before the meeting, we have no knowledge of
any matters to be presented at the meeting other than those listed as Proposals 1, 2, 3 and 4 in the notice. However, the enclosed proxy gives discretionary authority in the event that any other matters should be presented.
FORM 10-K
This proxy statement is accompanied by a copy of our Annual Report on Form 10-K for the year ended December 31, 2019 (excluding exhibits). We may charge a fee equal to our
reasonable expenses in furnishing the exhibits.
Barry B. Goldstein
Chief Executive Officer
Kingston, New York
June 25, 2020
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