LAKELAND INDUSTRIES INC
10-Ks and 10-Qs
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United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Information Required In Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
☒
Filed by a Party other than the Registrant
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Check the appropriate box:
☐
Preliminary Proxy Statement
☐ Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §
240.14a-12
Lakeland Industries, 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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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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(4) Date Filed:
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Lakeland
Industries, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Wednesday, June 17, 2020
To Our Stockholders:
WHAT
: Our 2020 Annual Meeting of
Stockholders
WHEN
: Wednesday, June 17, 2020, at 10:00 a.m.,
CDT
WHERE
: Virtual Only at
https://www.issuerdirect.com/virtual-event/lake
PURPOSE:
At this meeting you will be asked
to:
1.
Elect two directors
to serve for a term of three years or until their successors have
been duly elected and qualified;
2.
Ratify the
selection of Friedman LLP as our independent registered public
accounting firm for the fiscal year ending January 31,
2021;
3.
Approve, on an
advisory basis, compensation of our named executive officers;
and
4.
Transact any other
business as may properly come before the Annual Meeting of
Stockholders or any adjournments, postponements or rescheduling of
the Annual Meeting of Stockholders.
Due to
public health concerns resulting from the coronavirus (COVID-19),
and the related protocols that federal, state, and local
governments have implemented, after careful consideration, the
Company has determined to hold a virtual Annual Meeting in order to
facilitate stockholder attendance and participation by enabling
stockholders to participate from any location and at no cost. You
will be able to attend the meeting online, vote your shares
electronically and submit questions during the meeting. Details
regarding how to attend the Annual Meeting online are more fully
described in the accompanying proxy statement
To
participate in our Annual Meeting, including casting your vote
during the meeting, access the meeting website at
https://www.issuerdirect.com/virtual-event/lake
and enter in your stockholder information provided on your ballot
or proxy information previously sent to you.
Only
stockholders of record at the close of business on May 1, 2020 will
receive notice of, and be eligible to vote at, the Annual Meeting
of Stockholders or any adjournment thereof. The foregoing items of
business are more fully described in the Proxy Statement
accompanying this notice.
Your
vote is important, regardless of the number of shares you own.
Please carefully read the Proxy Statement and the voting
instructions. Whether or not you plan to attend the Annual Meeting
of Stockholders, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy card promptly
in the accompanying postage prepaid envelope if you received this
Proxy Statement in the mail, or follow the instructions contained
in the Notice of Internet Availability of Proxy Materials to vote
on the Internet.
INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the
Availability of Proxy Materials for the 2020 Annual Meeting of
Stockholders to be held on Wednesday, June 17, 2020 at 10:00
a.m.
Pursuant to Securities and
Exchange Commission rules we have elected to utilize the
“notice and access” option of providing proxy materials
to our stockholders whereby we are delivering to all stockholders
electronic copies of all of our proxy materials, including a proxy
card, as well as providing access to our proxy materials on a
publicly assessable website.
Lakeland’s Notice of
Annual Meeting, Proxy Statement and Annual Report to Stockholders
for the fiscal year ended January 31, 2020 are available on the
Internet at
www.iproxydirect.com/lake
.
This Notice and Proxy Statement are first being sent or given to
stockholders of record on or about May 4, 2020.
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Decatur, Alabama
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By
Order of the Board of Directors,
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May
4, 2020
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Charles
D. Roberson
Secretary
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Lakeland Industries, Inc.
202
Pride Lane SW
Decatur, AL 35603
(256) 350-3873
PROXY STATEMENT
Annual Meeting of Stockholders to be Held on Wednesday, June 17,
2020
GENERAL INFORMATION
This proxy statement and accompanying proxy are being furnished in
connection with the solicitation by the Board of Directors (the
“Board”) of Lakeland Industries, Inc., a Delaware
corporation (“Lakeland,” the “Company,”
“we,” “our,” or “us”), of
proxies to be used at the Annual Meeting of Stockholders of
Lakeland to be held on Wednesday, June 17, 2020 (the “Annual
Meeting”), and at any adjournment or postponement thereof.
Lakeland will bear the costs of this solicitation. The mailing
address of our principal executive offices is Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603. This proxy statement
and accompanying proxy are first being sent or given to our
stockholders on or about May 4, 2020
.
How can I participate in the Annual Meeting?
This
year’s Annual Meeting will be conducted solely as a virtual
meeting. No physical meeting will be held.
The Board established the close of business on May
1, 2020 as the record date for determining the stockholders of
record entitled to notice of and to vote at the Annual
Meeting.
As of the record
date,
7,972,423
shares of
common stock were outstanding, which number excludes
24,768
shares of unvested restricted stock
that have voting rights and that are held by members of the
Board.
Each share of common stock entitles the record holder thereof to
one vote on each matter brought before the Annual
Meeting.
You can
join the Annual Meeting by accessing the meeting at
https://www.issuerdirect.com/virtual-event/lake
and entering in your stockholder information provided to you on
your Notice of Annual Meeting or on your proxy card if you received
proxy materials by mail.
Please note that if you hold your shares through a broker, bank or
other nominee, in order to join the virtual meeting as a
stockholder and be able to vote and submit questions during the
Annual Meeting, you will need to contact your broker, bank or other
nominee to receive proof of your beneficial ownership and submit
such proof, along with your name and email address, to
proxy@issuerdirect.com
no later than 5:00 p.m., local time,
on May 29, 2020, which may be submitted via: (i) email to
proxy@issuerdirect.com
or (ii) mail to Shareholder Services,
1 Glenwood Avenue, Suite 1001, Raleigh, NC 27612. You
will receive a confirmation of your registration by email after we
receive your registration materials. Alternatively, if you hold
your shares through a broker, bank or other nominee, you may vote
in advance of the Annual Meeting by contacting your holder of
record.
Why is this year’s annual meeting being held in a
virtual-only format?
Due to
public health concerns resulting from the coronavirus (COVID-19),
and the related protocols that federal, state, and local
governments have implemented, after careful consideration, the
Company has determined to hold a virtual Annual Meeting in order to
facilitate stockholder attendance and participation by enabling
stockholders to participate from any location and at no cost. You
will be able to attend the meeting online, vote your shares
electronically and submit questions during the
meeting.
How can I ask questions?
You can
submit questions in writing to the virtual meeting website during
the annual meeting in the Q&A tab on the virtual platform. You
must first join the meeting as described above in “How can I
participate in the Annual Meeting?” No questions will be
taken in any other manner the day of the meeting.
We
intend to answer as many questions that pertain to Company matters,
as time allows during the meeting. Questions that are substantially
similar may be grouped and/or not answered to insure we are able to
answer questions in this virtual format.
Voting Methods
If you
are a registered stockholder on May 1, 2020, the record date, you
may vote your shares by:
●
Attending the
virtual Annual Meeting and voting electronically during the
meeting:
●
Proxy, via the
Internet;
●
Proxy, via
telephone;
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Proxy, via fax;
or
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Completing and
mailing a printed proxy card (if you receive proxy materials by
mail).
Internet
voting facilities will close promptly at the close of the polls at
the virtual meeting. Telephone and fax voting facilities will close
at 11:59 p.m., local time, on June 16, 2020. Stockholders who vote
through the Internet, telephone or fax should be aware that they
may incur costs such as access or usage charges from telephone
companies or Internet service providers, and that these costs must
be borne by the stockholders. Stockholders who vote by Internet,
telephone or fax need not return a proxy card. All shares entitled
to vote and represented by properly executed proxies received
before the polls are closed at the Annual Meeting, and not revoked
or superseded, will be voted at the Annual Meeting in accordance
with the instructions indicated on those proxies.
What if I have technical difficulties or trouble accessing the
annual meeting webcast?
We
encourage you to test your computer and internet browser prior to
the meeting. If your experience technical difficulties, please call
the technical support number that will be posted on the Annual
Meeting log-in page.
How proxies work
The
Board is asking for your proxy. Giving us your proxy means you
authorized us to vote your shares at the Annual Meeting in the
manner you direct. You may vote or withhold your vote in respect of
each of our director nominees. You may also vote for or against
each of the other proposals or abstain from voting.
All
proxies will, unless a different choice is indicated, be voted
“FOR” the election of the two nominees for director
proposed by our Nominating and Governance Committee,
“FOR” the ratification of Friedman LLP as our
independent registered public accounting firm for fiscal year
ending January 31, 2021, and “FOR” the resolution
approving the compensation of our named executive
officers.
You may
receive more than one proxy or voting card depending on how you
hold your shares. Shares registered in your name are covered by one
card. If you hold shares through someone else, such as a
stockbroker or bank, you may get material from them asking how you
want to vote. Specifically, if your shares are held in the name of
your stockbroker or bank you should request your stockbroker or
bank to issue you a proxy covering your shares.
If any
other matters come before the Annual Meeting or any postponement or
adjournment, each proxy will be voted in the discretion of the
individuals named as proxies on the card.
Revoking a proxy
You may
revoke your proxy at any time before the vote is taken by
submitting a new proxy with a later date, by voting via the
Internet or by telephone at a later time, by voting at the meeting
or by notifying Lakeland’s Secretary in writing at the
address under “Questions” on page 26.
Quorum
In
order to carry on the business of the Annual Meeting, we must have
a quorum. The presence at the Annual Meeting by proxy of the
holders of a majority of the shares eligible to vote constitutes a
quorum. If a share of common stock is represented for any purpose
at the Annual Meeting, it is deemed to be present for quorum
purposes and for all other matters as well. Shares of common stock
represented by a properly executed proxy will be treated as present
at the Annual Meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or
abstaining.
2
How votes are counted and how are brokers non-votes
treated?
Votes will be counted by the inspector of election appointed for
the Annual Meeting, who will separately count “for”
votes, “against” votes, abstentions, and broker
non-votes.
Abstentions and broker non-votes are counted as present and
entitled to vote for purposes of determining a quorum. A broker
non-vote occurs when a broker, bank or other nominee has not
received voting instructions from the beneficial owner of shares
held in “street name” and the broker, bank or other
nominee does not have, or declines to exercise, discretionary
authority to vote on a particular matter. Brokers, banks or other
nominees have discretionary authority to vote shares in the absence
of specific instructions on “routine” matters but will
not be allowed to vote your shares without specific instructions
with respect to certain “non-routine” matters. Under
current Nasdaq Stock Market (“NASDAQ”) rules, the
ratification of the selection of independent registered public
accountants (Proposal No. 2) is considered routine and your broker,
bank or other nominee will be able to vote on this proposal even if
it does not receive instructions from you. However, they do not
have discretionary authority to vote on the election of the
directors (Proposal No. 1), or on the approval (on an advisory
basis) of named executive officer compensation (Proposal No. 3),
which are “non-routine” matters. We, therefore,
encourage you to provide instructions to your broker, bank or other
nominee regarding the voting of your shares.
What vote is required to approve each proposal?
Proposal No. 1, the election of two directors requires a
plurality vote of the shares represented by proxy and entitled to
vote at the Annual Meeting. Any shares not voted on the election of
the two director nominees will have no effect on the outcome of the
election.
Proposal No. 2, the ratification of the selection of Friedman LLP
as our independent registered public accounting firm, requires the
affirmative vote of the holders of a majority of the shares
represented by proxy and entitled to vote at the Annual Meeting. If
you “abstain” from voting with respect to this
proposal, your vote will have the same effect as a vote
“against” the proposal.
Proposal
No. 3, the advisory vote on named executive officer compensation
will be considered approved by the affirmative vote of a majority
of the shares represented by proxy and entitled to vote on the
matter. Although this vote is non-binding, the Board and the
Compensation Committee of the Board, which is comprised of
independent directors, expect to take into account the outcome of
the vote when considering further executive compensation
decisions.
How can I find out the results of the
voting at the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting.
Final voting results will be published in the Company’s
Current Report on Form 8-K, which the Company is required to file
with the Securities and Exchange Commission (“SEC”)
within four business days following the conclusion of our Annual
Meeting.
Householding of proxy material.
Some
banks, brokers and other nominee record holders may be
participating in the practice of “householding,” which
the SEC has approved. Under this procedure, you may only receive
one copy of the Notice of Internet Availability of Proxy Materials
and, if applicable, this Proxy Statement and our annual report, for
multiple stockholders in your household. Upon written or oral
request, we will deliver promptly another copy of the Notice of
Internet Availability of Proxy Materials and, if applicable, this
Proxy Statement and our annual report to any stockholder at a
shared address to which we delivered a single copy of any of these
documents. To receive a separate copy, please contact our Secretary
at Lakeland Industries, Inc.,
202
Pride Lane SW, Decatur, AL 35603
, by mail or at (256)
350-3873, by phone. If you want to receive separate copies of our
proxy statements and annual reports in the future, or if you are
receiving multiple copies and would like to receive only one copy
for your household, you should contact your bank, broker, or other
nominee record holder.
Has the Lakeland Board made a recommendation regarding the matters
to be acted upon at the Annual Meeting?
The Lakeland Board recommends that you vote
“FOR” the election of the two directors proposed by the
Nominating and Governance Committee (Proposal No. 1),
“FOR” the ratification of the selection of Friedman LLP
as our independent registered public accounting firm for the fiscal
year ending January 31, 2021 (Proposal No. 2) and “FOR”
on the approval (on an advisory basis)
of named executive officer compensation
(Proposal No.
3).
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board is divided into three
classes, the classes being divided equally and each class having a
term of three years. Each year the term of office of one class
expires. A director elected to fill a vacancy, including a vacancy
resulting from an increase in the number of directors constituting
the Board, serves for the remaining term of the class in which the
vacancy exists. The Board presently consists of six members, with
two directors serving in Class I, two directors serving in Class
II, and two directors serving in Class III.
The Board proposed that Christopher J. Ryan and A. John Kreft,
whose terms expire at the Annual Meeting, each be elected as a
director to serve for a term expiring at the 2023 annual meeting of
stockholders and until their successors are duly elected and
qualified or until such director’s earlier resignation or
removal. Unless otherwise indicated, the enclosed proxy will be
voted for the election of Messrs. Ryan and Kreft as nominees, to
serve for the term set forth above.
Should either nominee become unable to serve for any reason, which
is not anticipated, the Board may designate a substitute nominee,
in which event the persons named in the enclosed proxy will vote
for the election of such substitute nominee. Each person nominated
by the Board for election has agreed to serve if elected. We have
no reason to believe that any Board nominee will be unavailable or,
if elected, will decline to serve.
Vote Required
Directors are elected by a plurality of the votes properly cast by
proxy at the Annual Meeting. With respect to the election of
directors, you may vote “for” or “withhold”
authority to vote for the nominee listed below. Any shares not
voted “for” the nominee (whether as a result of
stockholder withholding or a broker non-vote) will not be counted
in the nominee’s favor and will have no effect on the outcome
of the election.
INCUMBENT DIRECTORS - CLASS I
Terms Expiring in 2020
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Name
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Age
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Position
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Director Since
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Christopher J.
Ryan
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68
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Executive
Chairman
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1986
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A.
John Kreft
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69
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Director
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2004
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Christopher J. Ryan
has served as our Executive Chairman of the Board since February 1,
2020. Mr. Ryan was our Chief Executive Officer and President from
November 2003 to January 31, 2020, Secretary from April 1991 to
January 31, 2020, and a director since May 1986. Mr. Ryan was our
Executive Vice President-Finance from May 1986 until becoming our
President in November 2003. Mr. Ryan also worked as a Corporate
Finance Partner at Furman Selz Mager Dietz & Birney, Senior
Vice President-Corporate Finance at Laidlaw Adams & Peck, Inc.,
Managing-Corporate Finance Director of Brean Murray Foster
Securities, Inc. and Senior Vice President-Corporate Finance of
Rodman & Renshaw, respectively, between 1983 to 1991. Mr. Ryan
served as a Director of Lessing, Inc., a privately held restaurant
chain based in New York, from 1995 to 2008. Mr. Ryan received his
BA from Stanford University, his MBA from Columbia Business School
and his J.D. from Vanderbilt Law School. Mr. Ryan’s
qualifications to serve on our board include his business and legal
education as well as his lengthy experience as a director at our
Company and at other companies.
A. John Kreft
has
served as a director since 2004, our Chairman of the Board from
June 2016 to January 31, 2020 and lead independent director since
February 1, 2020. Mr. Kreft has been President of Kreft Interests,
a Houston based private investment firm, since 2001. Between 1998
and 2001, he was the Chief Executive Officer of Baker Kreft
Securities, LLC, a NASD broker-dealer. From 1996 to 1998, Mr. Kreft
was a co-founder and manager of TriCap Partners, a Houston based
venture capital firm. From 1994 to 1996, he was employed as a
director at Alex Brown and Sons. Mr. Kreft has also held senior
positions at CS First Boston, including as a managing director from
1989 to 1994. Mr. Kreft received his MBA from the Wharton School of
Business. Mr. Kreft’s qualifications to serve on our board
include his extensive capital markets experience with debt and
equity financings and bank facilities. In addition, his familiarity
with acquisition due diligence and integration issues assists him
in his directorship of our company.
4
INCUMBENT DIRECTORS - CLASS II
Terms Expiring in 2021
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Name
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Age
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Position
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Director Since
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Jeffrey
Schlarbaum
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53
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Director
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2017
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Charles
D. Roberson
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57
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Chief
Executive Officer,
President,
Secretary and Director
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2019
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Jeffrey Schlarbaum
has served as a director since 2017. He has served as President and
Chief Executive Officer of IEC Electronics Corp., a publicly traded
electronic manufacturing company, since February 2015. From
February 2013 to June 2013 and from June 2014 to February 2015, Mr.
Schlarbaum pursued personal interests. From June 2013 to June 2014,
Mr. Schlarbaum served as Chief Operations Officer for LaserMax,
Inc., a manufacturer of laser gun sights for law enforcement and
the shooting sports community. From October 2010 to February 2013,
Mr. Schlarbaum served as President of IEC Electronics Corp. Prior
to that, Mr. Schlarbaum served as Executive Vice President and
President of Contract Manufacturing of IEC Electronics Corp. from
October 2008 to October 2010, Executive Vice President from
November 2006 to October 2008 and Vice President, Sales and
Marketing from May 2004 to November 2006. Mr. Schlarbaum received a
BBA in marketing from National University and an MBA from
Pepperdine University. Mr. Schlarbaum’s qualification to
serve on our Board include his business education and multiple
prior executive positions at several companies.
Charles D.
Roberson
has served as a
director, our Chief Executive Officer, President and Secretary
since February 1, 2020. Mr. Roberson was our Chief Operating
Officer from July 2018 to January 31, 2020. From 2009 to July 2018,
he was our Senior Vice President, International Sales. Mr. Roberson
joined our Company in 2004 as Technical Marketing Manager and later
served as International Sales Manager. Prior to joining our
Company, Mr. Roberson was employed by Precision Fabrics Group, Inc.
as a Market Manager from 1995 to 2001 and as a Nonwovens
Manufacturing Manager from 1991 to 1995. He began his career as a
manufacturing manager for Burlington Industries, Inc. in its
Menswear Division from 1985 to 1991.
NOMINEE DIRECTORS - CLASS III
Terms Expiring in 2022
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Name
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Age
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Position
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Director
Since
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Thomas J.
McAteer
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67
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Director
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2011
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James M.
Jenkins
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55
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Director
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2015
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Thomas J.
McAteer
has
served as a director since 2011. Mr. McAteer
has served as Executive Vice President of
Management Development and Strategic Initiatives of Suffolk
Transportation since March 2013 and Chairman of the Board of New
World Medical Network, a private healthcare organization, since
2015. He also served as the Vice Chair of the Board and Chair of
the Compensation and Personnel Committee for the Long Island Power
Authority (“LIPA”) from December 2014 until January
2020. He served as the Senior Vice President and Regional Market
Head for Aetna's Medicaid Division from March 2007 until March
2013. Prior to joining Aetna’s Medicaid Division, Mr. McAteer
served as the President and CEO of Vytra Health Plans. In a
thirteen-year career at Vytra, Mr. McAteer played an executive
leadership role in growing Vytra from annual revenues of $70
million in 1993 to over $375 million in 2005. In 2001, Mr. McAteer
facilitated the sale of Vytra to HIP Health Plans and, thereafter
assumed the additional responsibilities of Executive Vice President
for Brand Leadership, as well as joining the Executive Committee of
the enterprise. Before joining Vytra, Mr. McAteer served as the
Chief Deputy County Executive in Suffolk County, New York and prior
to that as the Director of Human Resources for the Metropolitan
Transportation Authority. Mr. McAteer's qualifications to serve on
our Board include his business experience and multiple prior
executive positions.
5
James M. Jenkins
has
served as a director since 2016. Mr. Jenkins is a
partner at
Harter Secrest & Emery LLP, a regional law firm located in New
York State. His practice is focused in the areas of corporate
governance and general corporate law matters, including initial and
secondary public offerings, private placements, mergers and
acquisitions, and securities law compliance. Mr. Jenkins joined the
firm in 1989 as an associate and was elected a partner effective
January 1, 1997. He is a Chambers rated attorney and has
served as the Chair of the firm's Securities Practice Group since
2001 and as a member of the firm’s Management Committee from
January 2007 to January 2013. Since 2018, he has been the Partner
in Charge of the firm's New York City office. Mr. Jenkins holds a
BA from Virginia Military Institute and a J.D. from West Virginia
University College of Law. Mr. Jenkins previously served on our
Board from 2012 to 2015 and was a member of our Audit and Corporate
Governance Committees. Mr. Jenkins’s qualifications to serve
on our Board include his corporate governance experience as well
his current business-related experience.
OUR
BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE NOMINEES FOR DIRECTOR
6
CORPORATE GOVERNANCE
Lakeland
operates within a comprehensive plan of corporate governance for
the purpose of defining independence, assigning responsibilities,
setting high standards of professional and personal conduct and
assuring compliance with such responsibilities and
standards.
Director Independence
The standards relied upon by the Board in affirmatively determining
whether a director is “independent,” in compliance with
NASDAQ and SEC rules, are comprised, in part, of those objective
standards set forth in such rules. In addition to these objective
standards and in compliance with NASDAQ and SEC rules, no director
will be considered independent who has a relationship which, in the
opinion of the Board, would interfere with the exercise of
independent judgement in carrying out the responsibilities of a
director. The Board exercises appropriate discretion in identifying
and evaluating any such relationship. The Board, in applying the
above-referenced standards and after considering all of the
relevant facts and circumstances, has affirmatively determined that
the Company’s independent directors are: A. John Kreft,
Thomas J. McAteer, James M. Jenkins, and Jeffrey Schlarbaum
representing a majority of the members of the Board.
Lakeland’s independent directors meet in executive sessions
when deemed necessary, but generally no less than twice a
year.
Board and Committee Meetings and Attendance
The Board has three standing committees – the Audit
Committee, the Compensation Committee, and the Nominating and
Governance Committee. Each committee operates under a written
charter adopted by the Board and each charter is available without
charge on our website at
www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies
” Hard
copies may also be obtained, without charge, by writing to our
Secretary at Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603.
During
the fiscal year ended January 31, 2020, there were five (5)
meetings of the Board; four (4) meetings of the Audit Committee;
eight (8) meetings of the Compensation Committee; and three (3)
meetings of the Nominating and Governance Committee. Each director
attended at least 75% of the aggregate number of meetings of the
Board, and the respective committees of which he is a member,
during the period for which he was a director during fiscal year
ended January 31, 2020.
Audit Committee
As of fiscal year ended January 31, 2020 and as of the record date,
the members of our Audit Committee consisted of A. John Kreft
(Chairman), James Jenkins and Jeffrey Schlarbaum. Each member of
the Audit Committee has been determined by the Board, as reviewed
on an annual basis, to meet the standards for independence required
of audit committee members by the NASDAQ listing standards and
applicable SEC rules. Our Board has determined that Mr. Kreft is an
“audit committee financial expert” within the meaning
of applicable SEC rules based upon, among other things, his MBA in
finance from the Wharton School of Business, four and a half
years’ experience with two “Big 4” accounting
firms, eighteen years of investment banking, underwriting and
advisory services experience with several brokerage firms such as
Credit Suisse and Alex Brown and three years as Chief Executive
Officer of a NASD broker dealer. Mr. Kreft has held five levels of
security licenses at various times including General Securities
Principal.
The formal report of our Audit Committee is included in this proxy
statement. The Audit Committee’s responsibilities include,
among other things:
●
the
oversight of the quality of our consolidated financial statements
and our compliance with legal and regulatory
requirements;
●
the
selection, evaluation and oversight of our independent registered
public accountants, including conducting a review of their
independence, determining their fees, overseeing their audit work,
and reviewing and pre-approving any internal control-related
services and permitted non-audit services that may be performed by
them;
●
the
oversight of annual audit and quarterly reviews, including review
of our consolidated financial statements, our critical accounting
policies and any material related-party transactions and the
application of accounting principles; and
●
the
oversight of financial reporting process and internal controls,
including a review of the adequacy of our accounting and internal
controls and procedures.
7
Compensation Committee
As of fiscal year ended January 31, 2020 and as of the record date,
the members of our Compensation Committee consisted of Thomas
McAteer (Chairman), A. John Kreft, and James Jenkins. All members
of the Compensation Committee have been determined to meet the
applicable NASDAQ and SEC standards for independence. Our
Compensation Committee’s role includes setting and
administering the policies governing the compensation of executive
officers, including cash compensation and equity incentive
programs, and reviewing and establishing the compensation of the
Chief Executive Officer and other executive officers. Our
Compensation Committee’s principal responsibilities, which
have been authorized by the Board, are:
●
approving
the corporate goals and objectives applicable to the compensation
for the Chief Executive Officer, evaluating at least annually the
Chief Executive Officer’s performance in light of those goals
and objects and determining and approving the Chief Executive
Officer’s compensation level based on this
evaluation;
●
reviewing
and approving other executive officers’ annual base salaries
and annual incentive opportunities (after considering the
recommendation of our Chief Executive Officer with respect to the
form and amount of compensation for executive officers other than
the Chief Executive Officer);
●
evaluating
the level and form of compensation for the Board of Directors and
committee service by non-employee members of our Board and
recommending changes when appropriate;
●
advising the Board on our compensation and
benefits matters, including making recommendations and decisions
where authority has been granted regarding our equity-based
compensation plans
and benefit
plans generally, including employee bonus and retirement plans and
programs;
●
approving
the amount of and vesting of equity awards;
●
evaluating
the need for, and provisions of, any employment contracts/severance
arrangements for the Chief Executive Officer and other executive
officers; and
●
reviewing
and discussing with management our disclosure relating to executive
compensation proposed by management to be included in our proxy
statement and recommending that such disclosures be included in our
proxy statement.
Our Compensation Committee does not delegate any of its
responsibilities to other committees or persons. Participation by
executive officers in the recommendation or determination of
compensation for executive officers or directors is limited to (i)
recommendations by our Chief Executive Officer to our Compensation
Committee regarding the compensation of executive officers other
than with respect to himself and (ii) our Chief Executive
Officer’s participation in Board determinations of
compensation for the non-employee directors.
Nominating and Governance Committee
As of the fiscal year ended January 31, 2020 and as of the record
date, the members of our Nominating and Governance Committee
consisted of James Jenkins (Chairman), A. John Kreft, and Thomas
McAteer. All of the members of the Nominating and Governance
Committee have been determined to meet the applicable NASDAQ and
SEC standards for independence. The purpose of the Nominating and
Governance Committee is to identify, screen and recommend to the
Board qualified candidates to serve as directors, to develop and
recommend to the Board a set of corporate governance principles
applicable to Lakeland, and to oversee corporate governance and
other organizational matters. The Nominating and Governance
Committee’s responsibilities include, among other
things:
●
reviewing
qualified candidates to serve as directors;
●
aiding
in attracting qualified candidates to serve on the
Board;
●
considering,
reviewing and investigating (including with respect to potential
conflicts of interest of prospective candidates) and either
accepting or rejecting candidates suggested by our stockholders,
directors, officers, employees and others;
●
recommending
to the Board nominees for new or vacant positions on the Board and
providing profiles of the qualifications of the
candidates;
●
monitoring
our overall corporate governance and corporate compliance
program;
●
reviewing
and adopting policies governing the qualification and composition
of the Board;
●
reviewing
and making recommendations to the Board regarding Board structure,
including establishing criteria for committee membership,
recommending processes for new Board member orientation, and
reviewing and monitoring the performance of incumbent
directors;
●
recommending
to the Board action with respect to implementing resignation,
retention and retirement policies of the Board;
●
reviewing
the role and effectiveness of the Board, the respective Board
committees and the directors in our corporate governance
process; and
●
reviewing
and making recommendations to the Board regarding the nature and
duties of Board committees, including evaluating the committee
charters, recommending appointments to committees, and recommending
the appropriate chairperson for the Board.
8
Director Nomination Procedures
The Nominating and Governance Committee will consider individuals
recommended by stockholders for nomination as candidates for
election to the Board at annual meetings of stockholders. Such
suggested nominees will be considered in the context of the
Nominating and Governance Committee’s determination regarding
all issues relating to the composition of the Board, including the
size of the Board, any criteria the Nominating and Governance
Committee may develop for prospective Board candidates and the
qualifications of candidates relative to any such criteria. The
Nominating and Corporate Governance Committee may also take into
consideration the number of shares held by the recommending
stockholder and the length of time that such shares have been held.
Any stockholder who wants to nominate a candidate for election to
the Board must deliver timely notice to our Secretary at our
principal executive offices. In order to be timely, the notice must
be delivered:
●
in the case of an annual meeting, not less than 90
days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders, although if
the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, the notice must be received not less
than 90 days nor more than 120 days prior to the date of such
annual meeting or, if the first public announcement of the date of
such annual meeting is less than 100 days prior to the date of such
meeting, the 10
th
day following the date public
disclosure of the annual meeting was made; and
●
in the case of a special meeting, not less than 90
days nor more than 120 days prior to the date of such special
meeting or, if the first public announcement of the date of such
special meeting is less than 100 days prior to the date of such
meeting, the 10
th
day following the date public
disclosure of the special meeting was made.
The stockholder’s notice to the Secretary must set
forth:
●
as
to each person whom the stockholder proposes to nominate for
election as a director
o
the
nominee’s name, age, business address and residence
address;
o
the
nominee’s principal occupation and employment;
o
the
class and series and number of shares of each class and series of
capital stock of Lakeland which are owned beneficially or of record
by the nominee, and any other direct or indirect pecuniary or
economic interest in any capital stock of Lakeland held by the
nominee, including without limitation, any derivative instrument,
swap (including total return swaps), option, warrant, short
interest, hedge or profit sharing arrangement, and the length of
time that such interest has been held by the nominee;
and
o
any
other information relating to the nominee that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities and Exchange Act
of 1934, as amended (the “Exchange Act”), and the rules
and regulations promulgated thereunder.
●
as to the
stockholder giving the notice
o
the
stockholder’s name and record address;
o
the
class and series and number of shares of each class and series of
capital stock of Lakeland which are owned beneficially or of record
by the stockholder, and any other direct or indirect pecuniary or
economic interest in any capital stock of Lakeland held by the
stockholder, including without limitation, any derivative
instrument, swap (including total return swaps), option, warrant,
short interest, hedge or profit sharing arrangement, and the length
of time that such interest has been held by the
stockholder;
o
a description of
any proxy, contract, arrangement, understanding, or relationship
between the stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the
nomination(s) are to be made by the stockholder;
o
a representation by
the stockholder that the stockholder is a holder of record of stock
of Lakeland entitled to vote at such meeting by proxy at the
meeting to nominate the person or persons named in the
stockholder’s notice; and
o
any other
information relating to the stockholder that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder.
A
stockholder providing notice of any nomination proposed to be made
at an annual meeting or special meeting shall further be required,
for such notice of nomination to be proper, to update and
supplement the notice, if necessary, so that the information
provided or required to be provided in the notice is true and
correct as of the record date for the meeting and as of the date
that is ten business days prior to the meeting or any adjournment
or postponement thereof, and such update and supplement shall be
delivered to the Secretary at the principal executive offices of
the Company not later than five business days after the record date
for the meeting in the case of the update and supplement
requirement to be made as of the record date, and not later than
eight business days prior to the date for the meeting, any
adjournment or postponement thereof in the case of the update and
supplement required to be made as of ten business days prior to the
meeting or any adjournment or postponement thereof.
9
The
notice delivered by a stockholder must be accompanied by a written
consent of each proposed nominee to be named as a nominee and to
serve as a director if elected. The stockholder must be a
stockholder of record on the date on which the stockholder gives
the notice described above and on the record date for the
determination of stockholders entitled to vote at the
meeting.
The Nominating and Governance Committee believes that the minimum
qualifications for serving as a director are that a nominee
demonstrate, by significant accomplishment in his or her field, an
ability to make a meaningful contribution to the Board’s
oversight of the business and affairs of Lakeland and have an
impeccable record and reputation for honesty and ethical conduct in
both his or her professional and personal activities. In addition,
the Nominating and Governance Committee examines a
candidate’s specific experiences and skills, relevant
industry background and knowledge, time availability in light of
other commitments, potential conflicts of interest, interpersonal
skills and compatibility with the Board, and independence from
management and the Company. The Nominating and Governance Committee
also seeks to have the Board represent a diversity of backgrounds
and experience.
The Nominating and Governance Committee does
not assign specific weights to particular criteria and no
particular criterion is necessarily applicable to all prospective
nominees. The Nominating and Governance Committee believes
that the backgrounds and qualifications of the directors,
considered as a group, should provide a composite mix of
experience, knowledge and abilities that will allow the Board to
fulfill its responsibilities.
The Nominating and Governance Committee identifies potential
nominees through independent research and through consultation with
current directors and executive officers and other professional
colleagues. The Nominating and Governance Committee looks for
persons meeting the criteria above and takes note of individuals
who have had a change in circumstances that might make them
available to serve on the Board, for example, retirement as a
Chief Executive Officer or Chief Financial Officer of a company.
The Nominating and Governance Committee also, from time to time,
may engage firms that specialize in identifying director
candidates. As described above, the Nominating and Governance
Committee will also consider candidates recommended by
stockholders.
Once a person has been identified by the Nominating and Governance
Committee as a potential candidate, the committee may collect and
review publicly available information regarding the person to
assess whether the person should be considered further. If the
Nominating and Governance Committee determines that the candidate
warrants further consideration by the committee, the Chairman or
another member of the committee will contact the person. Generally,
if the person expresses a willingness to be considered and to serve
on the Board, the Nominating and Governance Committee requests a
resume and other information from the candidate, reviews the
person’s accomplishments and qualifications, including in
light of any other candidates that the committee might be
considering. The Nominating and Governance Committee may also
conduct one or more interviews with the candidate, either in
person, telephonically or both. In certain instances, Nominating
and Governance Committee members may conduct a background check,
may contact one or more references provided by the candidate or may
contact other members of the business community or other persons
that may have greater first-hand knowledge of the candidate’s
accomplishments. The Nominating and Governance Committee’s
evaluation process does not vary based on whether a candidate is
recommended by a stockholder, although, as stated above, the
committee may take into consideration the number of shares held by
the recommending stockholder and the length of time that such
shares have been held.
Interested Party Communications
The Board has established a process to receive communications from
stockholders and other interested parties. Stockholders and other
interested parties may contact any member (or all members) of the
Board by mail. To communicate with the Board, any individual
director or any group or committee of directors, correspondence
should be addressed to the Board or any such individual director or
group or committee of directors by either name or title. All such
correspondence should be sent our Secretary at Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603.
10
All communications received as set forth in the preceding paragraph
will be opened by the office of our Secretary for the sole purpose
of determining whether the contents represent a message to our
directors. Any contents that are not in the nature of advertising,
promotions of a product or service, or patently offensive material
will be forwarded promptly to the addressee. In the case of
communications to the Board or any group or committee of directors,
the Secretary’s office will make sufficient copies of the
contents to send to each director who is a member of the group or
committee to which the envelope is addressed.
Director Attendance at Annual Stockholder Meetings
We expect that each of our directors attend our annual meetings of
stockholders, as provided in our Corporate Governance Guidelines.
All our directors attended the annual meeting of stockholders held
on June 19, 2019.
Corporate Governance Guidelines and Practices
We are committed to good
corporate governance practices and as such we have adopted formal
Corporate Governance Guidelines. A copy of the Corporate Governance
Guidelines may be found on our website at
www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Corporate
Governance Guidelines.”
Below
are some highlights of our corporate governance guidelines and
practices:
o
Board Independence
.
We believe that the Board
should be comprised of a majority of independent directors and that
no more than two management executives may serve on the Board at
the same time. Currently, the Board has six directors: four of whom
are independent directors under the applicable NASDAQ Rules, one of
whom is Executive Chairman (employee status), and one of whom is a
current member of management.
o
Board Committees
.
All of our Board
committees consist entirely of independent directors as defined
under the applicable NASDAQ Rules.
o
Chairman, CEO and Position Separation;
Leadership Structure
.
Our general policy is that there should be a
separation of the offices of the Chairman of the Board and Chief
Executive Officer. We currently have a different person serving in
each such role. Christopher J. Ryan is our Executive Chairman and
Charles D. Roberson is our Chief Executive Officer. In addition,
Mr. John Kreft is our lead independent director. The decision
whether to combine or separate these positions depends on what our
Board deems to be in the long-term interest of stockholders in
light of prevailing circumstances. Mr. Kreft had served as Chairman
of the Board from June 2016 until January 31, 2020. Mr. Ryan served
as CEO from November 2003 until January 31, 2020 and since February
1, 2020 serves as our Executive Chairman. Charles D. Roberson has
served as our Chief Executive Officer since February 1, 2020. This
arrangement has allowed our Chairman to lead the Board, while our
Chief Executive Officer has focused primarily on managing the
operations of the Company. The separation of duties provides strong
leadership for the Board while allowing the Chief Executive Officer
to be the leader of the Company, focusing on its customers,
employees, and operations. Our Board believes the Company is
well-served by this flexible leadership structure and that the
combination or separation of these positions should continue to be
considered on an ongoing basis.
o
Independent Advisors
.
The Board and each
committee have the power to hire independent legal, financial or
other advisors at any time as they deem necessary and appropriate
to fulfill their Board and committee responsibilities.
o
Directors Are Subject to our Code of
Conduct
.
Board members must act at
all times in accordance with the requirements of our Code of
Conduct. This obligation includes adherence to our policies with
respect to conflicts of interest, ethical conduct in business
dealings and respect for and compliance with applicable law. Any
requested waiver of the requirements of the Code of Conduct with
respect to any individual director or executive officer must be
reported to, and is subject to the approval of, the Board, or the
Audit Committee.
o
Board Engagement
.
The Board has regularly
scheduled presentations from our finance and major business
operations personnel.
o
No Corporate Loans
.
Our stock plans and
practices prohibit us from making corporate loans to employees for
the exercise of stock options or for any other
purpose.
11
Risk Oversight
Management
is responsible for the day-to-day management of risks for Lakeland,
while our Board, as a whole and through its committees, is
responsible for the oversight of risk management. The Board sets
our overall risk management strategy and our risk appetite and
ensures the implementation of our risk management framework.
Specific committees of the Board are responsible for overseeing
specific types of risk. Our Audit Committee periodically discusses
risks as they relate to the Company’s financial statements,
the evaluation of the effectiveness of internal control over
financial reporting, compliance with legal and regulatory
requirements including the Sarbanes-Oxley Act, and related party
transactions, among other responsibilities set forth in the Audit
Committee’s charter. Our Audit Committee also periodically
may review our tax exposures and our internal processes to ensure
compliance with applicable laws and regulations. Our Board monitors
risks as they may be related to financing matters such as
acquisitions and dispositions, our capital structure, credit
facilities, equity issuances, and liquidity. Our Compensation
Committee establishes our compensation policies and programs in
such a manner that our executive officers are not incentivized to
take on an inappropriate level of risk. Our Audit Committee
Chairman reviews any employee reports regarding suspected
violations of our Code of Conduct. Each of our committees of the
Board regularly delivers reports to the members of the Board, in
order to keep the Board informed about what transpires at committee
meetings. In addition, if a particular risk is material or where
otherwise appropriate, the full Board may assume oversight over
such risk, even if the risk was initially overseen by a
committee.
Code of Ethics
The Board adopted our Code of Ethics that applies to all officers,
directors and employees. The Code of Ethics sets forth information
and procedures for employees to report ethical or accounting
concerns, misconduct or violations of the Code in a confidential
manner. The Code of Ethics is available on our website at
www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Code of
Ethics.” Amendments to, and waivers from, the Code of Ethics
will be disclosed at the same website address provided above and,
in such filings, as may be required pursuant to applicable law or
listing standards. We intend to satisfy the disclosure requirement
under Item 5.05(c) of Form 8-K regarding certain amendments to, or
waivers from a provision of our Code of Ethics by posting such
information on our website at
www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Code of
Ethics.”
Compensation Committee Interlocks and Insider
Participation
No
member of our Compensation Committee is an officer or employee of
Lakeland, and none of our executive officers serves as a member of
a compensation committee of any entity that has one or more
executive officers serving as a member of our Compensation
Committee.
DIRECTOR COMPENSATION
For the
fiscal year ended January 31, 2020, non-employee directors each
received $75,000 plus an additional annual fee of $10,000 for each
of the Chairman of the Board and Chairman of the Audit Committee
and $5,000 for each other committee chair position held. For the
fiscal year ending January 31, 2021, non-employee directors are
anticipated to receive the same cash compensation as described in
the previous sentence, and Mr. Ryan will receive compensation of
$185,000 for his services as Executive Chairman, including for
several defined duties, and A. John Kreft will receive additional
compensation of $10,000 for his services as lead independent
director. In fiscal year 2020, two of the independent directors
chose to receive a percentage of their compensation in company
restricted stock rather than all cash compensation, while two of
the independent directors chose to receive all cash compensation.
Since the directors choosing to receive restricted stock in lieu of
cash are giving up cash for shares subject to a vesting
requirement, the amount of restricted shares awarded is valued at
133% of the cash amount based on the grant date stock price.
Non-employee directors also were issued awards of performance-based
restricted stock under our 2017 Equity Incentive Plan in an amount
of up to 7,550 shares at maximum level for fiscal 2020, with a
vesting period of three years. The actual number of shares that
will vest at the end of a three-year performance period will be
based on several defined performance and other factors over the
entirety of the three-year period. Members of the Board of
Directors are reimbursed for all travel-related expenses to and
from meetings of the Board and committees. Directors who are also
officers of the Company are not compensated for their duties as
directors.
The
following table sets forth compensation paid by the Company to
non-employee directors during the fiscal year ended January 31,
2020. Disclosure relating to the compensation of Christopher J.
Ryan and Charles D. Roberson can be found in the “Executive
Officer Compensation” section below.
12
DIRECTOR COMPENSATION - FISCAL 2020
|
Name
|
Fees Earned or Paid
in Cash
($)
|
Stock
Awards
(1)
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compen-sation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other
Compen-sation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
A. John
Kreft
|
59,375
|
109,588
(2)
|
--
|
--
|
--
|
--
|
168,963
|
|
Thomas
McAteer
|
80,000
|
78,000
(3)
|
--
|
--
|
--
|
--
|
158,000
|
|
James
Jenkins
|
40,000
|
131,200
(4)
|
--
|
--
|
--
|
--
|
171,200
|
|
Jeffrey
Schlarbaum
|
75,000
|
78,000
(5)
|
--
|
--
|
--
|
--
|
153,000
|
(1)
R
epresents the aggregate grant date fair
value of restricted stock granted to the director during fiscal
year ended January 31, 2020. The amounts in this column do not
necessarily correspond to the actual value that will be realized by
the director. The assumptions used to calculate the fair value are
set forth in the footnotes to the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year
ended January 31, 2020, as filed with the SEC. In respect of
valuing performance-based restricted stock grants, we estimated
that the maximum level of shares would vest over a three-year cycle
pursuant to our 2017 Equity Incentive Plan based on the stock price
at grant date ($10.33 per share), as reflected in the fair value
above. The level of award (minimum, target, or maximum) and final
vesting is based on the Company’s performance over the
entirety of the three-year cycle including revenue growth, EBITDA
margin and free cash flow. Certain of the shares are time based and
are awarded at the end of the three-year cycle as long as the they
continue as a director. As of January 31, 2020, stock awards or
options (determined, where applicable, at maximum level) held by
independent directors were: (i) Mr. Kreft held 18,864 restricted
common shares, (ii), Mr. McAteer held 15,159 restricted common
shares, (iii) Mr. Jenkins held 24,150 restricted common shares, and
(iv) Mr. Schlarbaum held 11,135 restricted common shares, as of
that date.
(2)
Mr. Kreft was paid
a percentage of his fees in restricted common stock totaling
$31,588, subject to two-year vesting, and received a
performance-based restricted stock grant of up to 7,550 shares at
maximum totaling $78,000.
(3) Mr.
McAteer received a performance-based restricted stock grant of up
to 7,550 shares at maximum totaling
$78,000.
(4) Mr.
Jenkins was paid a percentage of his fees in restricted common
stock totaling $53,200, subject to two-year vesting, and received a
performance-based restricted stock grant of up to 7,550 shares at
maximum totaling $78,000.
(5) Mr.
Schlarbaum received a performance-based restricted stock grant of
up to 7,550 shares at maximum totaling $78,000.
13
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF FRIEDMAN LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
Audit Committee has selected Friedman LLP (“Friedman”)
as our independent registered public accounting firm to audit our
consolidated financial statements for the fiscal year ending
January 31, 2021 and has directed that management submit the
selection of Friedman as our independent registered public
accounting firm for ratification by the stockholders at the Annual
Meeting. A representative of Friedman is expected to be available
by phone at the Annual Meeting and will be available to respond to
appropriate questions from our stockholders and will be given an
opportunity to make a statement if he or she desires to do
so.
Neither our Bylaws nor other governing documents or applicable law
require stockholder ratification of the selection of
Friedman
as our independent registered
public accounting firm. However, the Audit Committee seeks to have
the selection of
Friedman ratified
as a matter of good corporate governance. If the
stockholders fail to ratify the selection, the Audit Committee will
reconsider whether to retain that firm. Even if the selection is
ratified, the Audit Committee may in its discretion direct the
appointment of different independent registered public accountants
at any time during the year if they determine that such a change
would be in the best interests of the Company and its
stockholders.
Vote Required
The affirmative vote of the holders of a majority of the shares
present or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the selection of
Friedman
. You may vote
“for,” “against” or “abstain.”
If you “abstain” from voting with respect to this
proposal, your vote will have the same effect as a vote
“against” this proposal.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL
14
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee of the Board of
Directors of Lakeland Industries, Inc., describing the Audit
Committee’s responsibilities and practices, specifically with
respect to matters involving Lakeland’s accounting, auditing,
financial reporting and internal control functions. Among other
things, the Audit Committee reviews and discusses with management
and with Lakeland’s independent registered public accounting
firm the results of Lakeland’s year-end audit, including the
audit report and audited financial statements. The members of the
Audit Committee of the Board are presenting this report for the
fiscal year ended January 31, 2020.
The Audit Committee acts pursuant to a written charter. The
Nominating and Governance Committee and the Board consider
membership of the Audit Committee annually. The Audit Committee
reviews and assesses the adequacy of its charter annually. The
Audit Committee held four meetings during the fiscal year ended
January 31, 2020.
All members of the Audit Committee are independent directors,
qualified to serve on the Audit Committee pursuant to the
applicable
NASDAQ
Rules. In
accordance with its charter, the Audit Committee oversees
accounting, financial reporting, internal control over financial
reporting, financial practices and audit activities of Lakeland and
its subsidiaries.
The Audit Committee provides advice,
counsel, and direction to management and the independent registered
public accounting firm, based on the information it receives from
them.
The Audit Committee relies, without independent
verification, on the information provided by Lakeland and on the
representations made by management that the financial statements
have been prepared with integrity and objectivity, on the
representations of management, and the opinion of the independent
registered public accounting firm that such financial statements
have been prepared in conformity with accounting principles
generally accepted in the United States, or
GAAP.
In connection with its review of Lakeland’s audited financial
statements for the fiscal year ended January 31, 2020, the
Audit Committee reviewed and discussed the audited financial
statements with management and discussed with
Friedman
, Lakeland’s independent
registered public accounting firm, the matters required to be
discussed by Public Company Accounting Oversight Board
(“PCAOB”) standards and the SEC. The Audit Committee
received the written disclosures and the letter from
Friedman
required by the applicable
requirements of the PCAOB and discussed with
Friedman
its independence from Lakeland. The
Audit Committee has also considered whether the provision of
certain permitted non-audit services by
Friedman
is compatible with their
independence.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited consolidated
financial statements be included in Lakeland’s Annual Report
on Form 10-K for its fiscal year ended January 31, 2020
for filing with the SEC.
During fiscal 2020, the Audit Committee met with management and
Lakeland’s independent registered public accountants and
received the results of the audit examination, evaluations of
Lakeland’s internal controls and the overall quality of
Lakeland’s financial organization and financial reporting.
The Audit Committee also meets at least once each quarter with
Lakeland’s independent registered public accountants and
management to review Lakeland’s interim financial results
before the publication of Lakeland’s quarterly earnings press
releases. The Audit Committee believes that a candid, substantive
and focused dialogue with the independent registered public
accountants is fundamental to the committee’s
responsibilities. To support this belief, the Audit Committee meets
separately with the independent registered public accountants
without the members of management present on at least an annual
basis.
The Audit Committee has established procedures for the receipt,
retention and treatment of complaints received by Lakeland
regarding accounting, internal accounting controls, or auditing
matters, including the confidential, anonymous submission by
Lakeland employees, received through established procedures, of
concerns regarding questionable accounting or auditing matters. We
have established a confidential email and hotline for employees to
report violations of Lakeland’s Code of Ethics or other
company policies and to report any ethical concerns.
The information contained in this report shall not be deemed
“soliciting material” to be “filed” with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except
to the extent that Lakeland specifically incorporates it by
reference into such filing.
The Audit Committee:
A. John
Kreft, Chairman
James
Jenkins
Jeffrey
Schlarbaum
15
INDEPENDENT AUDITOR FEE INFORMATION
The Audit Committee appointed Friedman LLP as the independent
registered public accounting firm to audit the financial statements
for the fiscal year ended January 31, 2020.
Fees billed for services by Friedman LLP during fiscal 2020 and
2019 are as follows:
|
|
Friedman
LLP
|
Friedman
LLP
|
|
|
Fiscal
2020
|
Fiscal
2019
|
|
Audit
Fees
|
$
665,000
|
$
525,000
|
|
Audit-Related
Fees
|
$
-----
|
$
-----
|
|
Tax
Fees
|
$
----
|
$
----
|
|
All
Other Fees
|
$
-----
|
$
-----
|
|
Total
|
$
665,000
|
$
525,000
|
Audit Fees
Includes fees billed for professional services rendered for audit
of our annual financial statements in compliance with Section 404
of the Sarbanes-Oxley Act of 2002 and review of financial
statements included in our Forms 10-Q and other filings with the
SEC.
Audit-Related Fees
Includes certain services that are reasonably related to the
performance of the audit or review of Lakeland’s consolidated
financial statements.
Tax Fees
Includes service for tax compliance, tax advice and tax
planning.
All Other Fees
Includes fees billed for services not classified in any of the
above categories.
Audit Committee Pre-Approval Policy
In
accordance with applicable laws and regulations, the Audit
Committee reviews and pre-approves any non-audit services to be
performed by our independent registered public accounting firm to
ensure that the work does not compromise their independence in
performing their audit services. The Audit Committee generally also
reviews and pre-approves all audits, audit related, tax and all
other fees, as applicable. In some cases, pre-approval may be
provided by the full committee for up to a year and relates to a
particular category or group of services and is subject to a
specific budget and SEC rules. In other cases, the chairman of the
Audit Committee has the delegated authority from the committee to
pre-approve additional services, and such pre-approvals are then
communicated to the full Audit Committee at its next
meeting.
16
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As
required by Section 14A of the Exchange Act, the Company is
providing stockholders with an advisory (non-binding) vote on
compensation programs for our named executive officers (sometimes
referred to as “say on pay”). See “Executive
Officer Compensation.” Accordingly, you may vote on the
following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the named executive
officers, as disclosed in this Proxy Statement pursuant to the
SEC’s executive compensation disclosure rules (which
disclosure includes the compensation tables and the narrative
discussion that accompanies the compensation tables), is hereby
approved.
This
non-binding advisory vote on executive compensation will be
considered approved by the affirmative vote of a majority of the
shares represented by proxy and entitled to vote on the matter. You
may vote “for,” “against” or
“abstain.” Although this vote is non-binding, the Board
and the Compensation Committee, which is comprised of independent
directors, expect to take into account the outcome of the vote when
considering future executive compensation decisions.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL
EXECUTIVE OFFICERS
Our Executive Officers are appointed by our Board and serve at its
discretion. Set forth below is information regarding our current
Executive Officers:
|
NAME
|
POSITION
|
AGE
|
|
Charles D. Roberson
(1)
|
CEO, President and Secretary
|
57
|
|
Allen E. Dillard
|
Chief Financial Officer
|
60
|
|
Daniel L. Edwards
|
Senior Vice President Sales North America
|
53
|
(1)
Mr.
Roberson’s biography is included under the heading
“Election of Directors.” Mr. Roberson became Chief
Executive Officer, President and Secretary of the Company on
February 1, 2020, replacing Christopher J. Ryan, who held those
positions throughout the fiscal year ended January 31,
2020.
Allen E. Dillard
has served as our Chief Financial Officer
since August 2019. Mr. Dillard was Chief Financial Officer of
Digium, Inc., a provider of telecommunications solutions from
September 2015 to August 2019. Mr. Dillard served as Chief
Executive Officer of Mobular Technologies, Inc., a technology
solutions provider, from September 2003 to September 2015.
Mr. Dillard has also served as CFO/Treasurer for Nichols Research
Corporation and Wolverine Tube, Inc. and was a senior manager at
Ernst and Young.
Daniel L. Edwards
has been our
Senior Vice President Sales for North America since March 2017
after most recently serving as our Vice President of USA Sales
since March 2013. Mr. Edwards has been employed by us in various
capacities since joining Lakeland in 2005, including as our
National Accounts Manager and Eastern Regional Sales Manager. Prior
to joining our Company, Mr. Edwards was a Senior Market Manager at
Precision Fabrics Group, Inc., where he began his career in 1990
and held various roles at that company in manufacturing, technical
and quality management.
17
EXECUTIVE
OFFICER COMPENSATION
The Company is both an accelerated
filer and a smaller reporting company. For purposes of executive
officer compensation, the Company is governed by the disclosure
rules applicable to smaller reporting companies. Therefore, the
following Executive Compensation Overview is not comparable to the
“Compensation Discussion and Analysis” that is required
of SEC reporting companies that are not smaller reporting
companies.
EXECUTIVE COMPENSATION
OVERVIEW
Compensation Committee
.
The Compensation Committee assists
the Board in discharging its responsibilities relating to
compensation of the Company’s executive officers and
supervision of the Company’s stock plans and 401(k) Plans.
The Compensation Committee reports to the Board and is responsible
for:
●
Reviewing
and recommending the Company’s goals and objectives relevant
to executive officer compensation;
●
Evaluating the
executive officers’ performance in light of these goals and
objectives;
●
Approving
the compensation for the Chief Executive Officer and other
executive officers (after considering the recommendation of our
Chief Executive Officer with respect to the form and amount of
compensation for executive officers other than the Chief Executive
Officer); and
●
Making
recommendations to the Board regarding the management contracts of
executive officers when they are proposed or renewed.
Compensation Philosophy and Objectives
.
The Company seeks to pay its
executive officers’ total compensation that is competitive
with other companies of comparable size and complexity. Generally,
the types of compensation and benefits provided to the Chief
Executive Officer and other executive officers are comparable to
those provided to other executive officers of small cap, publicly
traded and similarly sized companies in the industry in which the
Company operates.
The
compensation policies of the Company are designed to:
●
Increase
stockholder value;
●
Increase the
overall performance of the Company;
●
Attract, motivate
and retain experienced and qualified executives; and
●
Incentivize the
executive officers to achieve the highest level of Company
financial performance.
While
the Company seeks to maintain competitive compensation arrangements
for its executives, it also strongly believes that the
competitiveness of the compensation packages should be based on the
total compensation achievable by the executive officers and that a
portion of that compensation should be linked to the performance of
the Company. Accordingly, the executive compensation packages
provided to the Chief Executive Officer and the other executive
officers are structured to include, among other things and in
addition to base salary, bonus, benefits and equity incentives. A
reasonable portion of the compensation packages for executive
officers is in the form of restricted stock grants, which are
intended to provide incentives to executive officers to achieve
long-term growth in the earnings and price of the Company’s
common stock and additional annual cash bonus opportunities based
on such parameters as determined by the Compensation Committee.
Overall compensation levels are set such that for executive
officers to achieve a competitive compensation level, there must be
growth in the market price of the Company’s common stock and
growth in the Company’s financial performance
parameters.
The
Compensation Committee believes that executive officer compensation
should seek to align the interests of executives with those of the
Company’s stockholders, by seeking to reward long-term growth
(not short-term) in the value of the Company’s common stock
and to reward the achievement of financial goals by the Company.
The current incentive components of restricted stock grants are
based upon levels of revenues, Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) margins, free
cash flow, as well as Board discretion and retention of employment,
and annual cash bonuses for executive officers are based on such
financial and operational parameters, as determined by the
Compensation Committee in connection with the Company’s
annual bonus program. This is intended to keep the executive team
focused on the core goal of overall long-term corporate
performance.
When
setting or recommending compensation levels, the Compensation
Committee considers the overall performance of the Company, the
individual performance of each of the executive officers, and their
individual contributions to and ability to influence the
Company’s performance, and also seeks to encourage teamwork
amongst the executives. The Compensation Committee believes that
the level of total compensation, including base salary, bonus,
restricted stock grants and benefits of executives should generally
be maintained to compete with other public and private companies of
comparable size and complexity. The Compensation Committee bases
its determinations on a variety of factors, including the personal
knowledge of market conditions that each member of the Compensation
Committee has gained in his own experience managing businesses,
salary surveys available to the Company, the knowledge of the Chief
Executive Officer and other executives as to local market
conditions, and information learned regarding the compensation
levels at other small cap companies in the industrial apparel
industry and other similarly sized businesses. The Compensation
Committee periodically evaluates the types and levels of
compensation paid by the Company to ensure that it is able to
attract and retain qualified executive officers and that their
compensation remains comparable to compensation paid to similarly
situated executives in comparable companies.
The
following describes in more specific terms the elements of
compensation that implement the compensation philosophy and
objectives described above, with specific reference to compensation
earned by the named executive officers for the fiscal year ended
January 31, 2020. “Named executive officers” refers to
those executive officers named in the Summary Compensation Table
that immediately follows this discussion.
18
Base Salaries
. The base salary of each of our current named
executive officers is fixed pursuant to the terms of their
respective employment agreements with us and is determined by
evaluating the responsibilities of the position, the experience and
knowledge of the individual and the competitive marketplace at that
time for executive talent, including a comparison to base salaries
for comparable positions (considered in the context of the total
compensation paid by such companies). Salaries are reviewed from
time to time thereafter, generally in connection with the
expiration of employment agreements or when other considerations
warrant such review in the discretion of the Compensation Committee
and the Board, considering the foregoing factors as well as the
executive’s performance and the other factors considered in
setting total compensation described above.
When
salary adjustments are considered, they are made in the context of
the total compensation for executive officers, consistent with the
core principles discussed above. In each case, the participants
involved in recommending and approving salary adjustments consider
the performance of each executive officer, including consideration
of new responsibilities and the previous year’s corporate
performance. Individual performance evaluations take into account
such factors as achievement of specific goals that are driven by
the Company’s strategic plan and attainment of specific
individual objectives. The factors impacting base salary levels are
not assigned specific weights but are considered as a totality,
against the backdrop of the Company’s overall compensation
philosophy, and salary adjustments are determined in the discretion
of the Compensation Committee and the Board.
Bonuses
. The Company has historically made its annual
bonuses eligible for executive officers based on corporate
performance, as measured by reference to factors which the
Compensation Committee believes reflect objective performance
criteria over which management generally has the ability to exert
some degree of control. With respect to the fiscal year ended
January 31, 2020, the Compensation Committee and the Board of
Directors jointly approved a bonus program pursuant to which the
named executive officers, as well as other key employees, would
earn bonuses based upon defined corporate performance goals and
individual financial and operational parameters. Corporate
performance goals include revenue growth, EBITDA margin, free cash
flow and working capital.
Equity Awards/Restricted Stock Grants
. A third component of
executive officers’ compensation is grants of restricted
shares of common stock issued pursuant to our stock plans then in
effect; although the Compensation Committee may consider using
other equity-based incentives in the future and in fact issued a
stock option to Allen Dillard, the Company’s Chief Financial
Officer, upon his commencement of employment in August 2019. The
Compensation Committee grants restricted stock to the
Company’s executives in order to align their interests with
the interests of the stockholders. Restricted stock grants are
considered by the Company to be an effective long-term incentive
because the executives’ gains are linked to increases in
stock value, which in turn provides stockholder gains. Restricted
stock was granted to executive officers in accordance with the
terms of our 2017 Equity Incentive Plan in each of fiscal 2019 and
fiscal 2020. Such restricted stock grants vest at the end of a
three-year performance period, based on the aggregate level of
EBITDA for the fiscal 2019 grants, and based upon revenue growth
(35%), EBITDA margin (25%), free cash flow (15%), retention (10%)
and Board discretion (15%) with regard to the fiscal 2020 grants,
subject to discretionary adjustment for non-recurring items,
achieved by the Company over the entirety of this three-year
period. At the end of the applicable performance period, the number
of shares based on minimum, target, maximum or cap (cap only with
respect to fiscal 2019 grants) levels achieved will vest. With
respect to future restricted stock grants to executive officers,
the Compensation Committee expects to set specific performance
goals for vesting to be achieved.
Setting Executive Compensation
.
Base salaries and other compensation
for the Chief Executive Officer and other executive officers are
set by the Compensation Committee and reflect a number of elements
including recommendations by our Chief Executive Officer as to the
other executive officers based on evaluation of their performance
and the other factors described above. The Compensation Committee
works closely with the Chief Executive Officer in establishing
compensation levels for the other executive officers. Until his
retirement as Chief Executive Officer on February 1, 2020,
Christopher J. Ryan and the individual executives had typically
engaged in discussions regarding the executive’s salary, and
Mr. Ryan reported on such discussions and made his own
recommendations to the Compensation Committee. Such role has now
been assumed by Charles D. Roberson, who became Chief Executive
Officer on February 1, 2020. The Compensation Committee will
separately discuss with Mr. Roberson any proposed adjustment
to his own compensation. The Compensation Committee reports to the
Board on all proposed changes in executive compensation after it
has formed a view on appropriate adjustments and makes
recommendations for consideration of the Board for executive
officers other than the Chief Executive Officer. The Compensation
Committee sets the compensation level for the Chief Executive
Officer, and, with recommendations from the Board, for the other
executive officers. Salary levels and other aspects of compensation
for executive officers historically have been set forth in
employment agreements.
The
Compensation Committee is charged with the responsibility for
approving the compensation package for the Chief Executive Officer.
The Chief Executive Officer is not present during voting or
deliberation on his performance or compensation.
Retirement Benefits
.
The Company does not provide any retirement benefits to its named
executive officers, other than matching from time to time a portion
of employee contributions to the Company’s 401(k)
plan.
Employment Agreements
. The Company has entered into
employment agreements with its current named executive officers.
These employment agreements are described in more detail under the
caption “Narrative to Compensation Table”
below.
Taxation and Accounting Matters
.
Section 162(m) of the Internal
Revenue Code (the “Code”) may impose a limit on the
amount of compensation the Company may deduct in any one year with
respect to certain specified employees. Section 162(m) of the Code
denies a federal income tax deduction for certain compensation in
excess of $1.0 million per year paid to the chief executive
officer, the chief financial officer and the three other most
highly-paid executive officers of a publicly-traded corporation. We
believe that Section 162(m) of the Code will not limit our tax
deductions for executive compensation for fiscal year 2020. The
Compensation Committee’s policy is to qualify compensation
paid to our executive officers for deductibility for federal income
tax purposes to the extent feasible. However, to retain highly
skilled executives and remain competitive with other employers, the
Compensation Committee has the right to authorize compensation that
would not otherwise be deductible under Section 162(m) or
otherwise.
19
SUMMARY
COMPENSATION TABLE
The
table below sets forth all salary, bonus and other compensation
paid (or payable in respect of bonuses) to our principal executive
officer and each of the two highest paid executive officers other
than the principal executive officer (our “named executive
officers”) for the fiscal years ended January 31, 2020 and
2019. As used in this Proxy Statement, FY refers to a fiscal year
ended January 31. For example, FY20 refers to the fiscal year ended
January 31, 2020.
|
Name and Principal
Position
|
Fiscal Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards
(1)
($)
|
Option Awards
($)
|
Non-Equity Incentive Plan
Compensation
($)
|
All other
Compensation
($)
|
Total ($)
|
|
Charles D. Roberson
Chief Executive Officer, President and Secretary
(2)
|
2020
|
285,577
|
55,000
|
198,000
|
--
|
--
|
68,347
(3)
|
606,924
|
|
|
2019
|
245,460
|
35,000
|
86,000
|
--
|
--
|
--
|
336,000
|
|
Allen E. Dillard
Chief Financial Officer
|
2020
|
110,769
|
48,000
|
172,800
|
174,549
(4)
|
--
|
--
|
506,118
|
|
Christopher J. Ryan
Executive Chairman
(5)
|
2020
|
415,385
|
40,000
|
312,000
|
--
|
--
|
36,630
(6)
|
804,015
|
|
|
2019
|
400,000
|
75,000
|
260,000
|
--
|
--
|
36,265
(6)
|
771,265
|
(1)
“Stock
Awards” includes the value of restricted stock and stock
options awarded based on the aggregate grant date fair value of the
awards. At grant date, with respect to the restricted stock we had
estimated that the maximum level of shares (for the fiscal 2019
grants) and target level of shares (for the fiscal 2020 grants)
would vest over a three-year cycle pursuant to the 2017 Equity
Incentive Plan based on the stock price at date of grant ($10.33
per share for fiscal 2020 and $13.95 per share for fiscal 2019), as
reflected in the fair value above. The amounts in this column do
not necessarily correspond to the actual value that will be
realized by the named executive officer. The level of award
(minimum, target, maximum or cap) and final vesting is based on the
Company’s aggregate level of stated parameters over the
entirety of the three-year cycle.
(2)
Mr. Roberson became
Chief Executive Officer, President and Secretary on February 1,
2020. Prior to such time he was Chief Operating Officer of the
Company.
(3)
Payments to Mr.
Roberson for relocation expenses in FY20.
(4)
Represents a stock
option grant of 24,900 shares.
(5)
Mr. Ryan became
Executive Chairman on February 1, 2020. He retired as Chief
Executive Officer, President and Secretary on January 31,
2020.
(6)
Represents $26,765
in life insurance premiums paid by the Company in FY20 and FY19,
respectively, and a $9,865 and $9,500 per annum auto allowance in
FY20 and FY19, respectively.
20
NARRATIVE TO
SUMMARY COMPENSATION TABLE
We are
party to employment agreements with our two named executive
officers, a summary of the terms of which are set forth
below.
Charles D. Roberson
has served as our Chief Executive
Officer, President and Secretary since February 1, 2020. Mr.
Roberson served as Chief Operating Officer of the Company from
July 2018 until January 31,
2020
.
Prior to such time, Mr.
Roberson served as Senior Vice President of International
Sales.
In respect of FY19, Mr. Roberson was paid a salary
which represents a portion of
his
$275,000 annual base salary for the time Mr. Roberson
served as Chief Operating Officer plus a portion of his $215,000
annual base salary for the time Mr. Roberson served as Senior Vice
President International Sales. Pursuant to the employment agreement
entered into in January 2020 with respect to his position as Chief
Executive Officer, which has a two-year term expiring on January
31, 2022, Mr. Roberson receives a base salary of $325,000. Pursuant
to this agreement, Mr. Roberson is also eligible to participate, as
determined in the discretion of the Compensation Committee, in the
Company’s 2017 Equity Incentive Plan and any other
restrictive stock, stock appreciation rights, stock option or other
equity plans of the Company as may become effective; and based upon
parameters set forth in the Company’s annual bonus program,
if any, to receive an annual bonus of up to 20% of annual base
salary. In respect of fiscal 2020, Mr. Roberson earned a
performance and discretionary bonus of $55,000 and, in respect of
fiscal 2019, earned a discretionary performance bonus of $35,000.
The Company granted Mr. Roberson, under the 2017 Equity Incentive
Plan during fiscal 2020, a performance-based award of up to 15,973
restricted shares, based on target performance level, subject to
vesting in fiscal 2022, and granted during fiscal 2019 a
performance-based award of up to 6,165 restricted shares, based on
maximum performance level, subject to vesting in fiscal 2021. Mr.
Roberson participates in the Company’s benefit plans and is
entitled to the benefits available to all other senior executives,
including health insurance coverage, and disability and life
insurance. Pursuant to his employment agreement, Mr. Roberson is
subject to non-competition and confidentiality restrictions which,
in the case of non-competition, covers the term of his employment
and for a period of one year thereafter. The potential payments to
Mr. Roberson in connection with any termination are discussed below
under “Potential Payments Upon
Termination.”
Allen E. Dillard
serves as Chief Financial Officer of the
Company. Pursuant to the terms of his employment agreement with the
Company, Mr. Dillard’s term of employment is for a period of
18 months which commenced on August 12, 2019 and will expire on
February 11, 2021. Mr. Dillard was paid an annual base salary of
$240,000 in FY20. Pursuant to his agreement, Mr. Dillard is also
eligible to participate, as determined in the discretion of the
Compensation Committee, in the Company’s 2017 Equity
Incentive Plan and any other restrictive stock, stock appreciation
rights, stock option or other equity plans of the Company as may
become effective; and if determined in its sole discretion by the
Compensation Committee, to receive an annual bonus in such amount,
and based upon such parameters (if any), as determined by the
Compensation Committee. Such annual bonus was up to 20% of base
salary for fiscal 2020. In respect of fiscal 2020, Mr. Dillard
earned a performance and discretionary bonus of $48,000. The
Company granted Mr. Dillard, under the 2017 Equity Incentive Plan,
during fiscal 2020 (a) a stock option to purchase 24,900 shares of
common stock, exercisable at $11.17 per share, and vesting over a
three year period, and (b) a performance-based award of up to
13,940 restricted shares, based on target performance level,
subject to vesting in fiscal 2022. Mr. Dillard participates in the
Company’s benefit plans and is entitled to the benefits
available to other officers and employees, including pension plans,
profit sharing plans, health insurance coverage, and disability
insurance. Pursuant to his employment agreement, Mr. Dillard is
subject to non-competition and confidentiality restrictions which,
in the case of non-competition, covers the term of his employment
and for a period of one year thereafter. The potential payments to
Mr. Dillard in connection with any termination are discussed below
under “Potential Payments Upon
Termination.”
21
OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END
The
following table sets forth information with respect to outstanding
equity-based awards at January 31, 2020 for our named executive
officers.
|
|
Option
Awards
|
Stock
Awards
|
|||||||
|
Name
|
Number of Securities Underlying
Un-exercised Options (#) Exercisable
|
Number of Securities Underlying
Unexercised Options (#)
Unexercisable
|
Equity Incentive Plan Awards:
Number of Securities Underlying Unexercised Unearned Options
(#)
|
Option Exercise Price
($)
|
Option Expiration
Date
|
Number of Shares or Units of Stock
that have not Vested (#)
|
Market Value of Shares or Units of
Stock that have not Vested ($)
|
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or Other Rights that have not
Vested (#)
(1)
|
Equity Incentive Plan Awards:
Market or Payout of Unearned Shares, Units or Other Rights that
have not Vested ($)
(1)
|
|
Charles
D. Roberson,
CEO
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
22,138
|
308,604
|
|
Allen
E. Dillard,
CFO
|
-----
|
-----
|
24,900
(2)
|
11.17
|
8/12/2030
|
-----
|
-----
|
13,940
|
194,324
|
|
Christopher
J. Ryan,
Executive
Chairman
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
43,807
|
610,670
|
(1)
The number of
shares and their respective values in this chart reflect the total
over the three-year performance period pursuant to the 2017 Equity
Incentive Plan based on the stock price as at January 31, 2020 of
$13.94. The level of award (minimum, target, maximum or cap) and
final vesting is based on the Company’s levels of EBITDA in
respect of the fiscal 2019 grants and on the levels of revenues,
EBITDA, margins, free cash flow, as well as Board discretion and
retention of employment, in respect of the fiscal 2020 grants. The
award was based on the target level for the fiscal 2020 grants and
the maximum level for the fiscal 2019 grants. Actual total number
of shares vested may differ, and the awards are spread over the
three-year vesting period of the plan, not just one, as implied by
the chart.
(2)
The stock options
are for a term of 10 years, exercisable at $11.17, and vest in
three equal annual installments beginning August 12, 2020, subject
to continued employment through the vesting date.
22
POTENTIAL PAYMENTS UPON TERMINATION
Charles D. Roberson
Pursuant
to the terms of Mr. Roberson’s employment agreement, if Mr.
Roberson’s employment is terminated “for cause”
(as defined in the employment agreement), his employment agreement
would terminate immediately and he would be paid his accrued and
unpaid base salary through the date of termination, any annual
bonus earned for the year prior to the year of termination but not
yet paid and any other employee benefits generally paid by the
Company up to the date of termination (collectively, the “CR
Accrued Obligations”). In the event Mr. Roberson terminates
his employment for “good reason” (as defined in the
employment agreement) or he is terminated by the Company without
cause, Mr. Roberson is entitled to be paid (a) the CR Accrued
Obligations, (b) an additional twelve months of his then current
base salary payable in equal monthly installments, and (c) a pro
rata portion of any annual bonus earned for the year of termination
through the date of termination, as determined in good faith by the
Compensation Committee. In the event Mr. Roberson is terminated
without cause or if he terminates for good reason within 24 months
after a change in control (as defined in the employment agreement),
the Company is obligated to pay him (a) the CR Accrued Obligations,
(b) a lump sum amount equal to 24 months of base salary as in
effect at termination or during the year immediately prior to the
change in control, whichever is greater, and (c) two times a target
bonus amount, if any, in effect at termination. In the event of Mr.
Roberson’s death or disability (as defined in the employment
agreement), Mr. Roberson or his beneficiary or estate is entitled
to receive the CR Accrued Obligations and a pro-rata portion of his
annual bonus, if any, for the year of termination through the date
of termination. Mr. Roberson has the right to terminate his
agreement at any time on 60 days written notice, in which event he
will be entitled to the CR Accrued Obligations.
Allen E. Dillard
Pursuant
to the terms of Mr. Dillard’s employment agreement, if Mr.
Dillard’s employment is terminated “for cause”
(as defined in the employment agreement), his employment agreement
would terminate immediately and he would be paid his accrued and
unpaid base salary through the date of termination, any annual
bonus earned for the year prior to the year of termination but not
yet paid and any other employee benefits generally paid by the
Company up to the date of termination (collectively, the “AD
Accrued Obligations”). In the event Mr. Dillard terminates
his employment for “good reason” (as defined in the
employment agreement) or he is terminated by the Company without
cause, Mr. Dillard is entitled to be paid (a) the AD Accrued
Obligations, (b) an additional twelve months of his then current
base salary payable in equal monthly installments, and (c) a pro
rata portion of any annual bonus earned for the year of termination
through the date of termination, as determined in good faith by the
Compensation Committee. In the event Mr. Dillard is terminated
without cause or if he terminates for good reason within 18 months
after a change in control (as defined in the employment agreement),
the Company is obligated to pay his (a) the AD Accrued Obligations,
(b) a lump sum amount equal to 24 months of base salary as in
effect at termination or during the year immediately prior to the
change in control, whichever is greater, and (c) two times a target
bonus amount, if any, in effect at termination. In the event of Mr.
Dillard’s death or disability (as defined in the employment
agreement), Mr. Dillard or his beneficiary or estate is entitled to
receive the AD Accrued Obligations and a pro-rata portion of his
annual bonus, if any, for the year of termination through the date
of termination. Mr. Dillard has the right to terminate his
agreement at any time on 60 days written notice, in which event he
will be entitled to the AD Accrued Obligations.
23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following tables set forth certain information regarding the
beneficial ownership of the Company’s outstanding common
stock as of May 1, 2020, the record date, including shares as to
which a right to acquire ownership within 60 days of the record
date exists within the meaning of Rule 13d-3(d)(1) under the
Exchange Act of 1934, by: (i) each of the named executive officers
of the Company; (ii) each director and nominee for director of the
Company; (iii) all directors and executive officers of the Company
as a group and (iv) each person who is known by the Company to
beneficially own more than 5% of the Common Stock.
Except
as otherwise noted, the persons named in the table have sole voting
and investment power with respect to their shares of Common Stock
shown as beneficially owned by them and the address for each
beneficial owner, unless otherwise noted, is c/o Lakeland
Industries, Inc., 202 Pride Lane SW, Decatur, AL
35603.
|
Directors and
Officers
Name
|
Amount and Nature
of
Beneficial
Ownership
(1)
|
Percent of
Class
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Christopher J.
Ryan
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263,250
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3.3
%
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A. John
Kreft
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41,767
(2)
|
*
|
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Thomas
McAteer
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43,666
(3)
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*
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James M.
Jenkins
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21,256
(4)
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*
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Jeffrey
Schlarbaum
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-----
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*
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Charles D.
Roberson
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16,570
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*
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Allen E.
Dillard
|
-----
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*
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Daniel L.
Edwards
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5,738
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*
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All officers and
directors as a group (8 persons)
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392,247
(5)
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4.9
%
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* Less
than 1%
(1)
Table does not
include performance-based restricted stock grants under the
Company’s 2017 Equity Incentive Plan (performance vesting at
end of three years, date of grants December 2019 and June 2018) at
minimum, target, maximum or cap, as the number of restricted shares
to be awarded is not determinable at the time of grant and the
recipients do not have the right to vote or other elements of
beneficial ownership until vesting.
(2)
Includes7,728
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a two-year vesting period from the date of
grant.
(3)
Includes 4,024
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a two-year vesting period from the date of
grant.
(4)
Represents 13,016
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a two-year vesting period from the date of
grant.
(5)
Includes an
aggregate of 24,768 restricted
shares.
24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
|
Name and Address of Certain
Beneficial Owners
|
Amount and Nature of Beneficial
Ownership
|
Percent of Class
|
|
|
|
|
|
Dimensional Fund
Advisors LP
6300
Bee Cave Road, Bldg. #1
Austin,
Texas 78746
|
604,651
(7)
|
7.6
%
|
|
|
|
|
|
Private Capital
Management, LLC
8889 Pelican Bay
Blvd, Suite 500
Naples, FL
34108
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315,714
(8)
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4.0
%
|
|
Renaissance
Technologies LLC
800
Third Avenue
New
York, NY 10022
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559,492
(9)
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7.0
%
|
|
Wellington Trust
Company, NA
280 Congress
Street
Boston, MA
02210
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442,800
(6)
|
5.6
%
|
(6)
Based on the
Schedule 13G filed with the Securities and Exchange Commission on
March 10, 2020 by Wellington Trust Company, NA, National
Association Multiple Trust Funds Trust, Micro Cap Equity
Portfolio.
(7)
Information
obtained from a Schedule 13G/A filed with the SEC on February 12,
2020 by Dimensional Fund Advisors LP. According to the Schedule
13G/A, Dimensional Fund Advisors LP, an investment adviser,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager or sub-adviser to certain other commingled funds, group
trusts and separate accounts (such investment companies, trusts and
accounts, collectively referred to as the “Funds”). In
certain cases, subsidiaries of Dimensional Fund Advisors LP may act
as an adviser or sub-adviser to certain Funds. In its role as
investment advisor, sub-adviser and/or manager, Dimensional Fund
Advisors LP or its subsidiaries (collectively,
“Dimensional”) may possess voting and/or investment
power over the securities of Lakeland that are owned by the Funds
and may be deemed to be the beneficial owner of the shares of
Lakeland held by the Funds. However, all such securities are owned
by the Funds. Dimensional disclaims beneficial ownership of such
securities.
(8)
Based on the
Schedule 13G/A filed with the Securities and Exchange Commission on
March 4, 2020 by Private Capital Management, LLC.
(9)
Based on the
Schedule 13G/A filed with the Securities and Exchange Commission on
February 13, 2020 by Renaissance Technologies LLC and its majority
owner, Renaissance Technologies Holdings Corporation.
DELINQUENT SECTION 16(A) REPORTS
Section
16(a) of the Exchange Act requires the Company’s directors,
officers and beneficial owners of more than 10% of the Common Stock
(“Reporting Persons”) to file with the SEC initial
reports of ownership of the Company’s equity securities and
to file subsequent reports when there are changes in such
ownership. Based solely upon our review of the copies of all Forms
3, 4 and 5 and amendments to these forms that have been filed with
the SEC, we believe that all Reporting Persons complied on a timely
basis with all filing requirements applicable to them with respect
to our fiscal year ended January 31, 2020, except that Allen E.
Dillard filed a late Form 3.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is
the Company’s policy that any material transaction involving
our directors, executive officers and any other person that is a
“related person” within the meaning of SEC regulations
is required to be reported to our Chief Executive Officer. In
addition, pursuant to NASDAQ Rule 5630(a), all related party
transactions are required to be reported to the Audit Committee,
which, with the assistance of legal counsel and such other advisors
as it deems appropriate, is responsible for reviewing, approving or
ratifying any such related party transaction. The Audit Committee
shall approve only those related party transactions that it
believes are in, or not inconsistent with, the best interests of
the Company. A written policy to this effect has been adopted by
our Board.
In
addition, the Audit Committee generally conducts an annual review
of all such transactions. In addition, every quarter, a report
maintained by the Company’s accounting staff is reviewed and
approved by the Chief Executive Officer and Chief Financial
Officer.
There
were no related party transactions entered into, for either fiscal
year ended January 31, 2020 or January 31, 2019, and there are no
currently proposed related party transactions.
25
STOCKHOLDER PROPOSALS-2021 ANNUAL MEETING
The
submission deadline for stockholder proposals to be included in our
proxy materials for the 2021 annual meeting of stockholders (the
“2021 Annual Meeting”) pursuant to Rule 14a-8 of the
Exchange Act is January 5, 2021. All proposals must be received by
the Secretary at Lakeland Industries, Inc., 202 Pride Lane SW,
Decatur, AL 35603 by the required deadline and must comply with all
other applicable legal requirements in order to be considered for
inclusion in the Company’s 2021 Annual Meeting proxy
materials. Any such proposal should be submitted by certified mail,
return receipt requested, or other means, including electronic
means, that allow the stockholder to prove the date of
delivery.
In
addition, our Bylaws require that we be given advance notice of
stockholder nominations for election to the Board and of other
matters which stockholders wish to present for action at an annual
meeting of stockholders. The required notice must be delivered to
the Secretary of the Company at our principal offices not less than
90 days and not more than 120 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders. These
requirements are separate from and in addition to the SEC
requirements that a stockholder must meet to have a stockholder
proposal included in our proxy statement.
Pursuant
to our Bylaws, if notice of any stockholder proposal is received
prior to February 18, 2021 or after March 20, 2021, the notice will
be considered untimely and we are not required to present such
proposal at the 2021 Annual Meeting. If the Board chooses to
present a proposal submitted prior to February 18, 2021 or after
March 20, 2021 at the 2021 Annual Meeting, then the persons named
in proxies solicited by the Board for the 2021 Annual Meeting may
exercise discretionary voting power with respect to such
proposal.
OTHER MATTERS
The
Board knows of no matters other than those described above that
have been submitted for consideration at this Annual Meeting. As to
other matters, if any, that properly may come before the Annual
Meeting, the Board intends that the proxy cards will be voted in
respect thereof in accordance with the judgment of the person or
persons named thereon.
QUESTIONS
For
information about your record holding, call Computershare at
(800) 368-5948. We also invite you to
visit Lakeland’s Internet site at
www.lakeland.com
,
under the heading “Investor Relations-View SEC Filings and
Reports.” Internet site materials are for your general
information and are not part of this proxy solicitation. If your
shares are held by your broker or bank as a nominee or agent, you
should follow the instructions provided by your broker or
bank.
If you
have questions or need more information about the Annual Meeting
write to be address below. Any written
notice of revocation, or later dated proxy card, should be
delivered to Lakeland Industries, Inc.,
202 Pride Lane SW,
Decatur, AL 35603,
Attn:
Secretary.
Lakeland
makes available, free of charge on its website, all of its filings
that are made electronically with the SEC, including Forms 10-K,
10-Q and 8-K. These filings are also available on the SEC’s
website (
www.sec.gov
).
To access these filings, go to our website (
www.lakeland.com
)
and click on the
heading
“Investor Relations-View SEC Filings and Reports.”
Copies of Lakeland’s Annual Report on Form 10-K for the
fiscal year ended January 31, 2020, including financial statements
and schedules thereto, filed with the SEC, are also available
without charge to stockholders upon written request addressed to
the Secretary, Lakeland Industries, Inc.,
202 Pride Lane SW,
Decatur, AL 35603.
By
Order of the Board of Directors,
Charles D. Roberson
Secretary
May 4, 2020
26
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LAKELAND
INDUSTRIES, INC
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – WENDNESDAY, JUNE 17, 2020 AT 10: 00
AM
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CONTROL ID:
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REQUEST ID:
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The undersigned hereby appoints, Charles D.
Roberson and Christopher J. Ryan, and each of them, as proxies,
each with full power of substitution, to represent and to vote all
the shares of common stock of Lakeland Industries, Inc. (the
“Company”), which the undersigned would be entitled to
vote, at the Company’s 2020 Annual Meeting of Stockholders to
be held online at:
https://www.issuerdirect.com/virtual-event/lake
on June 17, 2020 and at any
adjournments thereof, subject to the directions indicated on this
Proxy Card.
In
their discretion, the proxy is authorized to vote upon any other
matter that may properly come before the meeting or any
adjournments thereof.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
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FAX:
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Complete the reverse portion of this Proxy Card
and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/LAKE
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OFLAKELAND INDUSTRIES,
INC
.
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PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE:
☒
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal
1
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FOR
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WITHHOLD
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Election
of Directors:
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Christopher
J. Ryan
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☐
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☐
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A.
John Kreff
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☐
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☐
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CONTROL ID:
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REQUEST ID:
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Proposal
2
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FOR
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AGAINST
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ABSTAIN
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Ratify
the selection of Friedman LLP as our independent registered public
accounting firm for the fiscal year ending January 31,
2021
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☐
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☐
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☐
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Proposal
3
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FOR
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AGAINST
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ABSTAIN
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Approve,
on an advisory basis, compensation of our named executive
officers
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☐
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☐
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☐
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Proposal
4
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FOR
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AGAINST
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ABSTAIN
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Transact
any other business as may properly come before the Annual Meeting
of Stockholders or any adjournments, postponements or rescheduling
of the Annual Meeting of Stockholders.
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
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MARK HERE FOR ADDRESS CHANGE
☐
New Address (if applicable):
____________________________________________________________________________________
IMPORTANT:
Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized
person.
Dated:
________________________, 2020
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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TABLE OF CONTENTS