LENDWAY, INC.
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by a Party
other than the Registrant ☐
Check the
appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
|
Insignia
Systems, Inc.
|
|
(Name of Registrant as Specified In Its Charter)
|
|
|
|
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
Payment of Filing
Fee (Check the appropriate box):
☑ No
fee required
☐ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction
applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
☐ Fee
paid previously with preliminary materials.
☐ Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
8799 Brooklyn
Blvd., Minneapolis, MN 55445
_________________________________________________________________________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD JUNE 6, 2019
___________________________________________________________
To the Shareholders
of Insignia Systems, Inc.:
Notice is hereby
given that the Annual Meeting of Shareholders of Insignia Systems,
Inc. (the “Company”), a Minnesota corporation, will be
held on Thursday, June 6, 2019, at 9:00 a.m., Central Time, at
the Minneapolis Marriott West, located at 9960 Wayzata Boulevard,
Minneapolis, Minnesota for the following purposes:
1.
To elect five
nominees named in our proxy statement to serve as
directors;
2.
To approve, by
non-binding vote, the Company’s executive
compensation;
3.
To ratify the
appointment of Baker Tilly Virchow Krause, LLP as the independent
registered public accounting firm for the year ending
December 31, 2019; and
4.
To transact such
other business as may properly come before the meeting or any
adjournment or postponement thereof.
The foregoing items
of business are more fully described in the proxy statement
accompanying this Notice.
The Board of
Directors has set the close of business on April 11,
2019
as the record date
for the determination of shareholders entitled to notice of and to
vote at the meeting.
All
shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are
urged to vote by Internet, by telephone, or if the proxy materials
were mailed to you, by completing, signing and mailing the enclosed
proxy card.
|
|
By Order of the
Board of Directors
Kristine
Glancy
President and Chief
Executive Officer
|
Important
Notice Regarding Availability of Proxy Materials for
the
Shareholder
Meeting to Be Held on June 6, 2019:
The
Proxy Statement and the Annual Report are available free of charge
at: https://materials.proxyvote.com/45765Y
PROXY STATEMENT
FOR
2019
ANNUAL MEETING OF SHAREHOLDERS
TABLE OF CONTENTS
|
|
Page
|
|
1
|
|
|
4
|
|
|
8
|
|
|
10
|
|
|
15
|
|
|
16
|
|
|
17
|
|
|
17
|
|
|
18
|
|
|
19
|
|
|
19
|
|
|
20
|
|
|
20
|
|
|
20
|
|
|
21
|
Annual
Meeting of Shareholders
June
6, 2019
_______________________________________
PROXY STATEMENT
___________________________________________________
G
ENERAL
INFORMATION
This proxy
statement is furnished to the shareholders of Insignia Systems,
Inc. (the “Company”) in connection with the
solicitation of proxies by the Board of Directors (the
“Board”) to be voted at the Annual Meeting of
Shareholders (the “Annual Meeting”) to be held on June
6, 2019, and at any adjournment of the meeting.
Important Notice
Regarding the Internet Availability of Proxy
Materials
for the Annual
Meeting to be Held on June 6, 2019
In accordance with
rules and regulations adopted by the U.S. Securities and Exchange
Commission (the “SEC”), we are furnishing our proxy
materials on the Internet. “Proxy materials” means this
Proxy Statement, our Annual Report for the fiscal year ended
December 31, 2018 and any amendments or updates to these
documents. A Notice Regarding the Availability of Proxy Materials
(“Notice of Internet Availability”) will be mailed to
shareholders on or about April 22, 2019. The Notice of Internet
Availability contains instructions on how to access our Proxy
Statement and Annual Report and how to vote via the Internet, by
telephone or by mail.
What is the purpose of the Annual Meeting and what are the
Board’s recommendations?
At our annual
meeting, shareholders will vote on the following items of
business:
|
Item
of Business
|
|
Board
Recommendation
|
|
|
1.
|
Election of five
directors
|
|
FOR
each nominee
|
|
2.
|
Advisory,
non-binding vote, to approve the Company’s executive
compensation
|
|
FOR
|
|
3.
|
Ratification of
Independent Registered Public Accounting Firm
|
|
FOR
|
If any other matters properly come
before the Annual Meeting or any adjournment or postponement
thereof, then the shares represented by the proxies solicited by
the Board may be voted by the persons named therein at their
discretion.
Who is entitled to vote at the meeting?
As of the record
date, April 11, 2019, there were 11,947,485 shares of common stock,
par value $.01 per share, outstanding and entitled to vote at the
Annual Meeting. Pursuant to the Company’s Articles of
Incorporation, each outstanding share of common stock is entitled
to one vote. Only shareholders of record at the close of business
on the record date, are entitled to vote at the Annual Meeting and
at any adjournment or postponement thereof. See “How many
shares must be present to hold the meeting?” below for a
discussion of quorum.
What
is the difference between a “shareholder of record” and
a shareholder who holds the stock in “street
name”?
Shareholder of Record.
If your shares
are registered directly in your name with our transfer agent, EQ
Shareowner Services, you are considered, with respect to those
shares, a “shareholder of record” (also known as a
“registered shareholder”). The proxy materials will be
sent directly to you by us or our representative.
Beneficial Owner
. If your shares are
held in a brokerage account or by another nominee, your shares are
said to be held in “street name” and you are considered
the beneficial owner of the shares. Technically, the bank or broker
is the shareholder of record with respect to those shares. In this
case, the proxy materials will be forwarded to you by your broker,
bank or other financial institution or its designated
representative. Through this process, your bank or broker will
collect the voting instructions from all their respective customers
who hold our shares, including you, and then submits those votes to
us.
How do I vote my shares?
If you are a
shareholder of
record
, you can submit a proxy to be voted at the meeting in
the following ways:
Vote by Internet
: To vote
over the internet, go to
www.proxyvote.com
. You must
enter your Control Number that appears on your Notice of Internet
Availability or proxy card that was mailed to you and follow the
instructions. The steps have been designed to authenticate your
identity, allow you to give voting instructions, and confirm that
those instructions have been recorded properly.
Vote by Telephone
: To vote
over the telephone, call the toll-free number on the Notice of
Internet Availability that was mailed to you. You must enter your
Control Number that appears on your Notice of Internet Availability
or proxy card and then follow the instructions. The steps have been
designed to authenticate your identity, allow you to give voting
instructions, and confirm that those instructions have been
recorded properly.
Vote by Mail
: You can vote by
mail by requesting a paper copy of the materials, which will
include a proxy card. Mark, sign, date and return the proxy card in
the postage-paid envelope provided.
Vote in Person
: If you choose
to vote your shares in person at the meeting, you must request a
“legal proxy.” To do so, please follow the instructions
at
www.proxyvote.com
or request a paper copy of the materials, which will contain the
appropriate instructions. You may also request a paper or email
copy of the documents by calling 1-800-579-1639 or email your
request to:
sendmaterial@proxyvote.com
.
If you are
a
shareholder who
holds the stock in street name
, you must vote your shares
using the method provided by your broker, bank, trust or other
designee, which is similar to the voting procedure for shareholders
of record outlined below. You will receive a voting instruction
form (not a proxy card) to use to direct your broker, bank, trust
or other designee how to vote your shares.
Any proxy may be
revoked at any time before it is voted by written notice, mailed or
delivered to the Company, or by revocation in person at the Annual
Meeting. If not so revoked, the shares represented by such proxy
will be voted in the manner directed by the shareholder. If no
direction is made, signed proxies received from shareholders will
be voted in accordance with the Board’s
recommendations.
How many shares must be present to hold the meeting?
Under Minnesota law
and our Bylaws, a majority of the voting power of the shares
entitled to vote at the Annual Meeting represent a quorum for the
transaction of business. Votes cast by proxy or in person at the
Annual Meeting will be tabulated at the Annual Meeting to determine
whether or not a quorum is present. To calculate whether a quorum
is present, the total number of shares present and entitled to vote
at the meeting will be divided by the total number of shares
outstanding and authorized to vote under the Company’s
Articles of Incorporation.
How many votes are required to approve the proposals?
Unless a larger
proportion or number is required under the Company’s Articles
of Incorporation or Minnesota law, each item of business properly
presented at a meeting of shareholders at which a quorum is present
must be approved by the affirmative vote of the holders of the
greater of (i) a majority of the voting power of the shares
present, in person or by proxy, and entitled to vote on that item
of business, or (ii) a majority of the voting power of the minimum
number of the shares entitled to vote that would constitute a
quorum for the transaction of business at the meeting (each a
“Majority Vote”).
|
Item
of Business
|
|
Vote
Requirement
|
|
|
1.
|
Election of five
directors
|
|
Plurality
Vote
|
|
2.
|
Advisory,
non-binding vote, to approve the Company’s executive
compensation
|
|
More
FOR than AGAINST
|
|
3.
|
Ratification of
Independent Registered Public Accounting Firm
|
|
Majority
Vote
|
For Proposal 1,
directors are elected by the affirmative vote of the holders of a
plurality of the shares present and entitled to vote. Shareholders
are not entitled to cumulate their votes for the election of
directors.
Proposal 2 is an
advisory, non-binding vote, and will be deemed approved if the
number of votes cast “for” exceeds the number of votes
cast “against.” Abstentions and broker non-votes will
have no effect on this proposal.
Proposal 3 must be
approved by a majority vote of the number of shares entitled to
vote at the meeting.
Broker Non-votes
and abstentions will have the same effect as a vote against
Proposal 3.
What is the effect of not voting or not instructing my bank or
broker how to vote my shares?
If you are a
shareholder of record, and you do not cast your vote, no votes will
be cast on your behalf on any proposals at the Annual
Meeting.
If you hold your
shares in street name, your bank or broker cannot vote your shares
with respect to the election of directors (Proposal 1), and the
advisory vote to approve executive compensation (Proposal 2).
Therefore, if you hold your shares in street name and you do not
instruct your bank or broker how to vote, no votes will be cast on
your behalf on those proposals (a “Broker Non-vote”).
Your bank or broker may exercise discretion and vote uninstructed
shares on the ratification of our independent registered public
accounting firm (Proposal 3). We strongly encourage you to return
your voting instruction form and exercise your full voting rights.
See “How do I vote my shares?” above for a discussion
of how Interested Shares should be voted.
Who pays for the cost of proxy preparation and
solicitation?
All expenses in
connection with solicitation of proxies will be borne by the
Company. The Company will pay brokers, nominees, fiduciaries, or
other custodians their reasonable expenses for sending proxy
material to, and obtaining instructions from, persons for whom they
hold stock of the Company. The Company expects to solicit proxies
by mail, but directors, officers, and other employees of the
Company may also solicit in person, by telephone or by
mail.
C
ORPORATE GOVERNANCE
AND BOARD
MATTERS
The business and
affairs of the Company are conducted under the direction of the
Board in accordance with the Company’s Articles of
Incorporation and Bylaws, the Minnesota Business Corporations Act,
federal securities laws and regulations, applicable rules of the
Nasdaq Stock Market (“Nasdaq Rules”), Board committee
charters and the Company’s Code of Ethics. Members of the
Board are informed of the Company’s business through
discussions with management, by reviewing Board meeting materials
provided to them and by participating in meetings of the Board and
its committees, among other activities. Our corporate governance
practices are summarized below.
Election
to the Board of Directors
All of the
Company’s directors are elected annually. Our Bylaws, as
amended, provide that the Board shall consist of between two and no
more than nine members, as designated by resolution of the Board
from time to time. Pursuant to the recommendation of the
Governance, Compensation and Nominating Committee, the Board has
set the size of the Board to be elected at the 2019 Annual Meeting
at five.
Majority
Independent Board
The Nasdaq Rules
require that a majority of our board of directors be
“independent directors” as that term is defined in the
rules. The Board has determined that each of our non-employee
directors, namely Mr. Berning, Ms. Clarridge, Mr. Unterseher, Ms.
Vegas, and Mr. Zenz, are “independent
directors.”
Meetings
of the Board of Directors and Director Attendance
The Board held 29
meetings during 2018. Each director attended more than 75% of all
meetings of the Board and committees of the Board on which he or
she served. Although the Board does not have a policy regarding
attendance at the Company’s annual meetings of shareholders,
then serving directors, Mr. Berning, Ms. Clarridge, Ms. Glancy, Mr.
Unterseher, Ms. Vegas and Mr. Zenz attended the 2018 Annual Meeting
of Shareholders. Directors are expected to attend substantially all
the meetings of the Board and the committees on which they serve,
as well as the annual meeting of shareholders, except for good
cause. Directors who have excessive absences without good cause
will not be nominated for re-election or, in extreme cases, will be
asked to resign or be removed.
Committees of the Board of Directors
The current
membership of the Board’s standing committees is set forth in
the following table.
|
Director
|
Audit
|
Governance,
Compensation and Nominating
|
Independent
Director
|
|
Jacob J.
Berning
|
Member
|
Member
|
✓
|
|
Suzanne L.
Clarridge
|
|
Member
|
✓
|
|
Kristine A.
Glancy
|
|
|
|
|
Loren A.
Unterseher
|
Member
|
|
✓
|
|
Rachael B.
Vegas
|
|
Chair
|
✓
|
|
Steven R.
Zenz
|
Chair
|
|
✓
|
Audit Committee
Independence; Qualifications
. Each of
the members of the Audit Committee is an “independent
director” as that term is defined by the Nasdaq Rules and
“independent” as that term is defined by Rule
10A-3(b)(1) under the Securities Exchange Act of 1934. The Board
has also determined that Mr. Unterseher and Mr. Zenz each have
acquired the attributes necessary to qualify him as an “audit
committee financial expert,” as that term is defined by the
rules of the SEC. The determination for Mr. Unterseher was based
primarily on experience analyzing and evaluating financial
statements and financial performance of companies as Director of
Mergers and Acquisitions for Craig-Hallum and in similar roles at
Lazard Middle Market and RBC. For Mr. Zenz, the determination was
based primarily on his extensive experience as a former partner of
the audit and advisory firm KPMG LLP, including as lead audit
partner for many of its publicly-held clients.
Duties and Responsibilities
. The Audit
Committee provides independent objective oversight of the
Company’s financial reporting system. As part of its
responsibilities, the committee reviews and evaluates significant
matters relating to the annual audit and the internal controls of
the Company and communicates its analysis with management, reviews
the scope and results of annual independent audits by, and the
recommendations of, the Company’s independent auditors,
reviews the independent auditor’s qualifications and
independence and approves additional services to be provided by the
auditors. The committee is solely responsible for appointing,
setting the compensation of and evaluating the independent
auditors.
In addition, the
committee: (i) meets separately with management and the independent
auditors on a periodic basis; (ii) receives the independent
auditors’ report on all critical accounting policies and
practices and other written communications; (iii) reviews
management’s statements concerning its assessment of the
effectiveness of internal controls and the independent
auditors’ report on such statements, as applicable; and (iv)
reviews and discusses with management and the independent auditors
the Company’s interim and annual financial statements and
disclosures (including Management’s Discussion and Analysis)
in its Quarterly Reports on Form 10-Q and Annual Report on Form
10-K and the results of the quarterly financial reviews and the
annual audit. The committee has direct access to the
Company’s independent auditors. The committee also reviews
and approves all related-party transactions.
The foregoing is a
general summary of the Audit Committee’s duties and
activities. The Audit Committee operates pursuant to a written
charter, which is available on the
Investor Relations
section of the
Company’s website at
www.insigniasystems.com
. This charter
further describes the role of the committee in overseeing the
Company’s financial reporting process. References to the
Company’s website are for informational purposes and are not
intended to, and do not, incorporate information found on the
website into this proxy statement.
Committee Meetings
. The Audit Committee
held six meetings during 2018. In addition to fulfillment of the
Audit Committee’s regular duties and responsibilities, these
meetings were designed to facilitate and encourage private
communication between the committee and the Company’s
independent auditors. Please refer to the Report of the Audit
Committee appearing later in this proxy statement.
Governance, Compensation and Nominating Committee
Governance Changes.
Effective
May 17, 2018, the Board approved the formation of a new
Governance, Compensation and Nominating Committee
(“
GCN
Committee
”) to have all of the powers and
responsibilities of its former Compensation and Nominating and
Corporate Governance Committees.
Independence.
Each of
the members of the GCN Committee
are “independent directors” as that term is defined by
the Nasdaq Rules, including the independence criteria specific to
compensation committee members, and “non-employee
directors” as that term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934.
Duties and Responsibilities.
The GCN
Committee operates pursuant to a written charter, which is
available on the
Investor
Relations
section of the Company’s website at
www.insigniasystems.com
.
The committee’s main duties, as described in its charter,
are: (i) to nominate a slate of directors to be considered for
election at the Company’s annual meeting of shareholders,
(ii) to review, approve and recommend for Board ratification
of annual base salary and incentive compensation levels, employment
agreements, and benefits of the President and Chief Executive
Officer and other key executives; (iii) to review the performance
of the President and Chief Executive Officer; (iv) to review and
assess performance target goals established for bonus plans and
determine if goals were achieved at the end of the plan year; (v)
to act as the administrative committee for the Company’s
stock plans, and any other incentive plans established by the
Company; (vi) to consider and approve grants of incentive stock
options, non-qualified stock options, restricted stock or any
combination to any employee; and (vii) to oversee the filing of
required compensation-related reports or disclosures in the
Company’s SEC reports, proxy statement and other filings.
From time to time, the committee consults with the President and
Chief Executive Officer on executive compensation matters (other
than with respect to their own compensation).
Compensation Consultant
. In pursuing
its duties, the GCN Committee has the authority to retain and has,
from time to time, retained outside compensation consultants to
advise it on compensation matters. In setting 2018 compensation,
the committee retained Willis Towers Watson as its independent
compensation consultant. Willis Towers Watson was retained by and
reported directly to the committee. The committee consulted with
Willis Towers Watson regarding the Company's plans, policies and
long-term incentive arrangements, with representatives of Willis
Towers Watson attending several committee meetings. Willis Towers
Watson did not provide any other consulting services to the
Company. The committee determined that the work of its compensation
consultant in 2018 did not raise any conflicts of
interest.
Nomination and Candidate Evaluation Processes
. Shareholders
who wish to recommend candidates to the Board or its GCN Committee
should submit the names and qualifications of the candidates at
least 120 days before the date of th
e
In
accordance with its committee charter, the GCN Committee typically
evaluates candidates for election as directors using the following
criteria: education, reputation, experience, industry knowledge,
independence, leadership qualities, personal integrity, diversity,
and such other criteria as the committee deems relevant. The
committee will consider candidates recommended by the Board,
management, shareholders, and others. The committee is also
authorized to retain and pay advisors to assist it in identifying
and evaluating candidates.
Committee Meetings
. The former
Compensation Committee held five meetings in 2018 and the former
Nominating and Corporate Governance Committee held one meeting in
2018. The GCN Committee held 11 meetings in 2018.
Leadership
Structure of the Board of Directors
The Board does not
have a policy regarding the separation of the roles of Chief
Executive Officer and Chairman of the Board. The Board believes it
is in the best interests of the Company to make such a
determination periodically, based on available information. The
positions of Chief Executive Officer and Chairman of the Board are
not currently held by the same person. Ms. Glancy serves as our
President and Chief Executive Officer and Mr. Berning serves as
Chairman of the Board. Under this structure, our President and
Chief Executive Officer and other senior management under her
supervision are primarily responsible for setting the strategic
direction of the Company and managing the day-to-day leadership and
performance of the Company, while the Chairman provides guidance to
the President and Chief Executive Officer and senior management,
sets the agenda for meetings of the Board and presides over
meetings of the full Board. The Board believes the current
leadership structure strengthens the role of the Board in
fulfilling its oversight responsibility and fiduciary duties to the
Company’s shareholders while recognizing the day-to-day
management direction of the Company by Ms. Glancy and other senior
management.
Board
Role in Risk Oversight
The Company faces a
number of risks, including financial, technological, operational,
strategic and competitive risks. Management is responsible for the
day-to-day management of risks we face, while the Board has
responsibility for the oversight of risk management. In its risk
oversight role, the Board ensures that the processes for
identification, management and mitigation of risk by our management
are adequate and functioning as designed.
The Board is
actively involved in overseeing risk management, and it exercises
its oversight both through the full Board and through the two
standing committees of the Board – the Audit and GCN
Committees. The two standing committees exercise oversight of the
risks within their areas of responsibility, as disclosed in the
descriptions of each of the committees above and in the charters of
each of the committees.
The Board and the
two standing committees receive information used in fulfilling
their oversight responsibilities through the Company’s
executive officers and its advisors, including our legal counsel,
our independent registered public accounting firm, and the
compensation consultants we have engaged from time to time. At
meetings of the Board, management makes presentations to the Board
regarding our business strategy, operations, financial performance,
fiscal year budgets, technology and other matters. Many of these
presentations include information relating to the challenges and
risks to our business and the Board and management actively engage
in discussion on these topics. Each of the committees also receives
reports from management regarding matters relevant to the work of
that committee. These management reports are supplemented by
information relating to risk from our advisors. Additionally, the
Board receives reports by each committee chair regarding the
committee’s considerations and actions. In this way, the
Board also receives additional information regarding the risk
oversight functions performed by each of these
committees.
Shareholder
Communications with the Board
Shareholders may
send written communications to the Board or to any individual
director at any time. Communications should be addressed to the
Board or the individual director at the address of the
Company’s headquarters. The Board will respond to shareholder
communications when it deems a response to be
appropriate.
Code
of Ethics
We have in place a
“code of ethics” within the meaning of Rule 406 of
Regulation S-K, which is applicable to our senior financial
management, including specifically our principal executive officer
and principal financial officer. A copy of the
Code of
Ethics is available on our website (
www.insigniasystems.com
) under the
“Investor Relations - Corporate Governance” caption. We
intend to satisfy our disclosure obligations regarding any
amendment to, or a waiver from, a provision of this code of ethics
by posting such information on the same website.
Compensation
of Non-Employee Directors
The following table
summarizes the compensation paid to our non-employee directors for
2018.
|
Name
|
Fees
Earned or
Paid
Cash
(
1
)
|
Stock
Awards
(
2
)
|
Total
|
|
Jacob J.
Berning
|
$
23,918
|
$
30,000
|
$
53,918
|
|
Suzanne L.
Clarridge
(
3
)
|
$
9,500
|
$
15,000
|
$
24,500
|
|
Loren A.
Unterseher
(
3
)
|
$
9,500
|
$
15,000
|
$
24,500
|
|
Rachael B.
Vegas
|
$
22,418
|
$
15,000
|
$
37,418
|
|
F. Peter
Zaballos
(
4
)
|
$
15,750
|
$
–
|
$
15,750
|
|
Steven R.
Zenz
|
$
24,418
|
$
15,000
|
$
39,418
|
____
______________________________________
(1)
Reflects annual
board retainer and fees for attending Board, committee and
conference call meetings earned during 2018.
(2)
On August 10, 2018,
each non-employee director received restricted stock grants
pursuant to the 2018 Plan worth $15,000 for directors and $30,000
for Chairman based on the closing price of the Company’s
common stock on the date of grant.
(3)
Ms. Clarridge and
Mr. Unterseher each became directors on May 17, 2018.
(4)
Mr. Zaballos ceased
service as a director on May 17, 2018.
From January to
June 2018, non-employee directors were eligible to receive an
annual cash retainer of $10,000 per year and the Chairman of the
Board was eligible to receive an additional annual cash retainer of
$5,000. Each such retainer was allocated to a director for the
portion of the year served in each role. Non-employee directors
were also eligible to receive $1,000 for each Board meeting ($250
for each conference call meeting) that they attended. In addition,
the chair of each committee was eligible to receive $1,000 for each
in-person meeting of the committee over which they presided ($500
for each conference call meeting). Members of committees were
eligible to receive $500 for each committee meeting they attended
in person on days separate from regular Board meetings ($250 for
each conference call meeting).
Effective
immediately following the annual meeting of shareholders held on
July 20, 2018, non-employee director compensation was
restructed to simplify administration by eliminating fees for
meetings. The annual cash retainer was increased by the average
annual amount paid for meeting fees in the prior two years, with
the intent to maintain approximately the same annual compensation
as in each of the prior two years. Non-employee directors became
eligible to receive an annual cash retainer of $17,000 per year of
service and the Chairman of the Board and each Committee Chair were
eligible to receive an additional annual cash retainer of $5,000.
Each such retainer is allocated to a director for the portion of
the year served in each role.
In 2018, each
non-employee director received a restricted stock grant of shares
of common stock based on a target grant date fair value of $15,000,
with the Board Chair receiving a target fair value of $30,000.
These restricted stock grants were made on August 10, 2018 pursuant
to the 2018 Plan. Each non-employee director was granted 7,692
restricted stock units, and the Board Chair was granted 15,384
restricted stock units, each based on a closing price of $1.95 for
a share of the Company’s common stock on the date of grant as
reported by The Nasdaq Stock Market. The restricted stock units are
scheduled to vest and settle in a share of common stock for each
unit on the day immediately preceding the date of the 2019 Annual
Meeting of Shareholders, which vesting is expected to occur on June
5, 2019.
Director Deferred Compensation
Each of our
non-employee directors is eligible to participate in our director
deferred compensation plan (the “Director Deferred
Compensation Plan”), which allows a director to make
voluntary deferrals of up to 100% of their annual cash retainer and
any additional committee chair cash retainer. The Company does not
match any contributions to the Director Deferred Compensation Plan.
Deferred cash retainer amounts, if any, are deemed to be invested
in common stock equivalents having a value equal to the deferred
cash retainer amounts based on the fair market value of a share of
our common stock on the dates such amount would have otherwise been
paid to the participant. Dividends, if any, accrued on such commons
stock equivalents are deemed to be similarly deferred and credited
to the director’s deferred stock account. A participating
director will receive a distribution of their deferred stock
account, consisting of one share of stock for each common stock
equivalent credited to
their deferred
stock account as of the date of distribution, as soon as
practicable following the director’s separation from service
as a director of the Company.
7
P
ROPOSAL ONE –
ELECTION OF DIRECTORS
Nominations
The Board believes
it is important that the Board be composed of members whose
collective judgment, experience, qualifications, attributes and
skills ensure that the Board will be well-positioned to fulfill its
responsibilities to see that the Company is governed in a manner
consistent with the interests of the shareholders of the Company
and in compliance with applicable laws, regulations, rules and
orders, and to satisfy its oversight responsibilities
effectively.
Cooperation
Agreement
The Company is
party to a Cooperation Agreement, dated May 17, 2018 (the
“Cooperation Agreement”), with Air T, Inc. Groveland
Capital LLC, and Nicholas J Swenson (collectively the
“Shareholder Group”), which requires that the Company
include Ms. Clarridge and Mr. Unterseher in its slate of nominees
for election at the Annual Meeting and solicit proxies with a
recommendation that shareholders vote in favor of their election at
such meeting. Also pursuant to the Cooperation Agreement, Mr. Zenz
promptly announced his retirement from the Board to be effective as
of this Annual Meeting.
Composition
In determining the
nominees for election to serve as directors of the Company, the
Board first determined that the Board will consist of five members
as of the Annual Meeting. The Board, in conjunction with its GCN
Committee, then considered the Company’s obligations under
the Cooperation Agreement and the qualifications and experience and
any other desirable skills, experience or knowledge. The Board,
upon recommendation by its GCN Committee, then approved a slate of
directors to be nominated for election at the Annual
Meeting.
When identifying
and evaluating candidates for director, the Board and its
applicable committee (if any) historically consider the general and
specific qualifications, experience and characteristics which may
have been approved by the Board or determined by the committee from
time to time including qualifications reflecting the
individual’s integrity, reputation, education, experience,
industry knowledge, leadership qualities and independence.
Specifically, the Board seeks independent directors who have
experience relevant to the Company’s business and strategic
objectives, specifically experience in retailing, the
consumer-packaged goods industry, and with technology innovation.
The Board maintains a detailed set of criteria aligned with these
objectives and has historically evaluated potential candidates
against these criteria. The Board and its applicable committee (if
any) also consider diversity in a broad sense when evaluating a
director nominee, taking into account various factors, including
but not limited to, differences of viewpoint, professional
experience, education, skill, race, gender and national origin, but
does not have a formal policy regarding diversity of Board
members.
Director
Nominees
The Board has
nominated five current directors as named below for election at the
Annual Meeting. If elected, each will serve for a term of one year,
or until their successors are elected and qualified, subject to
their prior death, resignation, retirement or removal from office.
Should one or more of these nominees become unavailable to accept
nomination or election as a director (which is not anticipated),
the individuals named as proxies on the enclosed proxy card will
vote the shares that they represent for the election of such other
persons as the Board may recommend, or the Board may reduce the
number of directors to be elected. Unless otherwise instructed by
the shareholder, proxy holders will vote all proxies received for
each of the nominees.
The specific
qualifications of each nominee, including biographical data for at
least the last five years and the particular experience,
qualifications, attributes or skills that led to a conclusion that
he or she should serve as a director of the Company, are set forth
below.
|
Director
& Nominee
|
Age
|
Position
|
Director
Since
|
|
Jacob J.
Berning
|
46
|
Director, Chairman
of the Board
|
June 2017
(
1
)
|
|
Suzanne L.
Clarridge
|
62
|
Director
|
May 2018
|
|
Kristine A.
Glancy
|
41
|
Director,
President, Chief Executive Officer & Secretary
|
June 2017
|
|
Loren A.
Unterseher
|
54
|
Director
|
May 2018
|
|
Rachael B.
Vegas
|
43
|
Director
|
June 2017
|
____
______________________________________
1) Mr. Berning also
served as a director of the Company from December 2014 to
June 2016.
Jacob J. Berning
has served as Chairman
of the Board since May 2018 and has served as President of
Food Service at The Schwan Company since September 2018. Prior
to that role, Mr. Berning has held several positions since he
joined The Schwan Company in 2014. Mr. Berning has extensive
leadership experience across a diverse set of businesses and teams
in the consumer-packaged goods industry. His 20 years of marketing
experience working with a variety of different brands also includes
time as Marketing Director of WhiteWave Foods Company from
July 2011 to September 2014 and Marketing Manager at
General Mills, Inc. from September 2003 to July 2011.
These experiences provide knowledge and understanding of the
industry representing the majority of our customer base. He has a
BA degree from the University of Minnesota and an MBA from New York
University.
Suzanne L. Clarridge
is the founder of
My Brands Inc., a company providing direct-to consumer solutions to
consumer-packaged goods (CPG) companies, and has served as
President, Chief Executive Officer and the director of My Brands
since 2001. At My Brands, Ms. Clarridge develops the strategic
vision for the company, oversees finances, operations and
employees, and manages the full sales cycle. Ms. Clarridge began
her career at the State University of New York at Brockport,
teaching marketing and management. Following that, she pursued a
career in marketing and general business management with companies
including Diamond Packaging, Hefty (Mobil) and Fisher Price
(Mattel). The majority of her CPG career was spent with Hefty where
she began as Assistant Brand Manager. She was promoted to senior
brand management positions as she worked on Hefty Cinch Sak, Hefty
Cups and Hefty Plates. We believe Ms. Clarridge’s leadership,
marketing and consumer-packaged goods experience will be valuable
to the Board. Ms. Clarridge has a B.A. from Oakland University in
Rochester, Michigan, and an M.B.A. in Marketing from the Rochester
Institute of Technology. She serves on the President’s
advisory board of the Rochester Institute of
Technology.
Kristine A. Glancy
has served as our
President and Chief Executive Officer since May 2016. Prior to
joining the Company, Ms. Glancy served in various roles at The
Kraft Heinz Company from 1999 to 2016, most recently as Customer
Vice President from May 2013 to April 2016. She held the
positions of Director of Sales from June 2012 to May 2013
and National Customer Manager from November 2010 to
June 2012. Her more than 17 years as a sales and marketing
executive provide the necessary skills to the Board and Company in
the areas of Sales, Product Strategy, Customer Relations, Business
and Brand Development. Ms. Glancy holds a Bachelor of Arts degree
in Marketing and International Business from Saint Mary’s
University and an MBA from Fordham University, New York
City.
Loren A. Unterseher
is a Managing
Director of Oxbow Industries, LLC, a holding company investing in
middle-market private companies, which position he has held since
2004. Over his career, Mr. Unterseher has completed over $2.5
billion in corporate finance transactions. Prior to Oxbow
Industries, Mr. Unterseher was a Principal/Shareholder &
Director of Mergers and Acquisitions for Craig-Hallum Capital
Group. Prior to Craig-Hallum, he was Director of Private Equity for
Lazard Middle Market (f/k/a Goldsmith Agio Helms). Mr. Unterseher
started his investment banking career as a Vice-President in
Mergers and Acquisitions at RBC (f/k/a Dain Rauscher). He began his
professional career as an attorney and was a Partner at Stinson
Leonard Street (f/k/a Leonard, Street & Deinard), a major
Minneapolis based law firm. Mr. Unterseher is currently Chairman of
the Board of Inno-flex, LLC, a private company (a director since
2016), and serves on the boards of SkyWater Technology Foundry,
Inc. (since 2017), SixSpeed, LLC (since 2016) and Town &
Country Fence, LLC (since 2017), each of which is a private
company. Mr. Unterseher has served on several private company and
not for profit boards of directors. We believe Mr.
Unterseher’s investment, mergers and acquisitions, and
finance experience will benefit the Board. He holds a B.B.A. degree
in Finance from the University of Iowa and a J.D. from the
University of North Dakota.
Rachael B. Vegas
has served as the Chief
Merchant at Brandless, Inc. since March 2016. She previously
served in various roles at Target Corporation, Food Lion and
Hannaford Supermarkets from 1997 to 2016. Most recently, from
February 2014 to February 2016 as Vice President, General
Merchandising Manager; Center Store, Grocery; from
February 2013 to February 2014 as Vice President
Merchandising Manager; Dry Grocery, Snacks, Candy; from
February 2011 to February 2013 as Vice President
Merchandising Manager; Snacks, Beverages, Pet Care, Candy and
Liquor. Ms. Vegas’ experience in retail and consumer packaged
goods industries are valuable to the Company. Ms. Vegas holds
Bachelor of Arts degree in International Relations from Tufts
University and an MBA from Kenan-Flagler Business School,
University of North Carolina.
Required
Vote
Directors are
elected by the affirmative vote of the holders of a plurality of
the shares present and entitled to vote.
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”
EACH OF THE FIVE NOMINEES.
E
XECUTIVE
COMPENSATION
Current
Executive Officers
The following
individuals are our current executive officers:
|
Name
|
|
Age
|
|
Position
|
|
Kristine A.
Glancy
|
|
41
|
|
Director,
President, Chief Executive Officer and Secretary
|
|
Jeffrey A.
Jagerson
|
|
52
|
|
Vice President of
Finance, Chief Financial Officer and Treasurer
|
Kristine A. Glancy
’s background
information is disclosed in Proposal 1 above under the heading
“Director Nominees.”
Jeffrey A. Jagerson
,
has been our Vice President of
Finance, Chief Financial Officer and Treasurer since
July 2017. Prior to joining the Company, Mr. Jagerson served
as Chief Financial Officer at Christensen Farms from
March 2014 to March 2017. He previously served as Vice
President of Finance and Accounting at Digital River from
July 2009 to March 2014 and served as the Corporate
Controller from February 2008 to July 2009. Mr. Jagerson
also served in various executive and financial roles at ADC
Telecommunications from May 1995 to February 2008 and
Honeywell from June 1988 to May 1995. His more than 29
years as an Accounting and Finance professional and executive
provides the necessary skills to the Board and Company in the areas
public company financial reporting, tax, audit, and treasury
management. Mr. Jagerson holds a Bachelor of Science degree in
Accounting from Minnesota State University, Mankato and an MBA from
the Carlson School of Business at the University of
Minnesota.
Executive officers
are elected annually by the Board and serve for a one-year period.
There are no family relationships among any of the executive
officers and directors of the Company.
The following table
sets forth information about all compensation (cash and non-cash)
awarded to, earned by or paid to our Chief Executive Officer and
the only other executive officer serving at the end of fiscal 2018
(collectively, our “Named Executive Officers”) for the
fiscal years ended December 31, 2018 and 2017.
|
Name
and Position
|
|
Year
|
|
Salary
|
|
Bonus
(
1)
|
|
Option
Awards
(2)
|
|
Stock
Awards
(3)
|
|
|
Non-Equity
Incentive Plan Compensation
(4)
|
|
Total
|
|
||||||
|
Kristine A.
Glancy
|
|
2018
|
|
$
|
306,350
|
|
$
|
–
|
|
$
|
56,090
|
|
$
|
193,771
|
(5
)
|
|
$
|
258,601
|
|
$
|
814,812
|
|
|
President, Chief Executive Officer and Secretary
|
|
2017
|
|
$
|
283,038
|
|
$
|
80,000
|
|
$
|
–
|
|
$
|
16,650
|
(6)
|
|
$
|
190,922
|
|
$
|
570,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey A.
Jagerson
(7)
|
|
2018
|
|
$
|
243,361
|
|
$
|
–
|
|
$
|
14,099
|
|
$
|
65,402
|
(8)
|
|
$
|
202,830
|
|
$
|
525,692
|
|
|
Vice President of Finance, Chief Financial Officer and
Treasurer
|
|
2017
|
|
$
|
99,423
|
|
$
|
–
|
|
$
|
–
|
|
$
|
6
5,400
|
(9)
|
|
$
|
71,101
|
|
$
|
235,924
|
|
____
_______________________________________
(1)
As part of Ms.
Glancy’s initial employment agreement, she received a cash
signing bonus in the amount of $180,000, of which $100,000 was paid
in May 2016 and the remaining $80,000 was paid in May
2017.
(2)
The Option Awards
granted in 2018 were granted pursuant to the 2018 Equity Incentive
Plan and are scheduled to vest in three substantially equal
increments on the second, third and fourth anniversaries of the
date of grant. The dollar value of the options shown represents the
estimated grant date fair value in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Top 718, Compensation-Stock Compensation ("ASC 718") pursuant
to the Black-Scholes option pricing model, which requires several
significant judgments and assumptions.
(3)
Amounts shown in
the Stock Awards column represent the aggregate grant date fair
value of restricted stock and restricted stock unit awards granted
during the applicable year. Grant date fair values are computed in
accordance with ASC Topic 718 using assumptions discussed in Note 7
to the financial statements included in the Company’s annual
report on Form 10-K for the fiscal year ended December 31,
2018. Accordingly, the grant date fair value was determined by
multiplying the number of shares of restricted stock or shares of
common stock underlying the restricted stock unit by the closing
stock price on the date of grant. Further information regarding
these awards is included in the
“
Outstanding
Equity Awards at Fiscal Year-End
”
table on page 14.
(5)
Consists of 50,000
restricted stock units granted on June 13, 2018 (based on a closing
stock price of $1.77 on the date of grant and scheduled to vest in
three substantially equal increments on the first, second, and
third anniversaries of the date of grant) and 53,985 restricted
stock units granted on August 10, 2018 (based on a closing stock
price of $1.95 on the date of grant and scheduled to vest and
settle in three substantially equal increments on the second, third
and fourth anniversaries of the date of grant).
(6)
Consists of 15,000
resticted stock units granted on September 19, 2017 (based on a
closing stock price of $1.11 of grant).
(7)
Mr. Jagerson joined the Company in July 2017.
(8)
Consists of 22,000
restricted stock units granted on June 13, 2018 (based on a closing
stock price of $1.77 on the date of grant and scheduled to vest in
three substantially equal increments on the first, second, and
third anniversaries of the date of grant) and 13,570 restricted
stock units granted on August 10, 2018 (based on a closing stock
price of $1.95 on the date of grant and scheduled to vest and
settle in three substantially equal increments on the second, third
and fourth anniversaries of the date of grant).
Fiscal
2018 Executive Compensation
The principal
components of compensation for the Named Executive Officers are:
(i) base salary; (ii) non-equity incentive compensation in the form
of an annual cash bonus under the Executive Incentive Plan; and
(iii) long-term, equity-based incentive compensation in the form of
restricted stock units. These components of compensation are
summarized below, followed by a description of each Named Executive
Officer’s individual agreements with the Company and the
compensation received thereunder.
Executive Incentive Plan
In April 2018,
the Board, as recommended by its Compensation Committee, adopted
the 2018 Executive Cash Incentive Plan (the “2018 Cash
Plan”), which replaced the Executive Incentive Plan. Members
of the Company's senior management, including both of the Company's
two executive officers, Ms. Glancy and Mr. Jagerson, participated
in the 2018 Cash Plan.
The 2018 Cash Plan
provided that for each of the participants, (a) 70% of the bonus
potential was allocated to the Company’s performance against
target operating income (loss), inclusive of all compensation
expenses (“Profit”), and (b) the remaining 30% of the
bonus potential was allocated to individual performance against
personal goals established by the Board. The total target bonuses
under the 2018 Cash Plan was equal to 50% of each
participant’s respective base salary and payouts, if any,
could have ranged from 8.75% to 82.2% of each participant’s
base salary. Similar to 2017, the 2018 Cash Plan provided for a
potential revenue-based multiplier of between 110% and 120% based
on Company performance against target operating income (loss) and
total net sales.
The GCN Committee,
as successor to the Compensation Committee, was responsible for
determining the level of each participant’s satisfaction of
their personal goals and the resulting payout of up to a maximum of
30% of their respective bonus potential, which determination was
independent of achievement Company performance against the Profit
target and subject to final approval by the Board. All bonus
calculations under the 2018 Cash Plan were subject to review and
final approval prior to payment.
Company Performance-Based Payment
For 2018, the
Compensation Committee established a target operating income of
$3,000 and approved the following schedule of potential payments
under the Executive Incentive Plan:
|
Operating
Income/(Loss)
|
Percent
of Target Variable Compensation
|
|
<
($303,001)
|
0
%
|
|
($303,000k) -
($150,001)
|
25
%
|
|
$
(150,000
)-
$3,000
|
75
%
|
|
$
3,001- $164,999
|
100
%
|
|
$
165,000- $429,999
|
115
%
|
|
$
430,000- $649,999
|
140
%
|
|
>
$650,000
|
160
%
|
Based on an actual
operating income of $1,832,000 for 2018, as reported in Part II,
Item 8, of the Company's Annual Report on Form 10-K, the Board, as
recommended by its GCN Committee, approved payments representing
160% of target variable compensation, representing payments of
$176,176 to Ms. Glancy and $138,181 to Mr. Jagerson.
Revenue-Based
Multiplier
If the
Company’s operating income for the fiscal year was at or
greater than $165,000, then participants were also eligible to have
their payment based on operating income increased based on a
multiplier determined by total net sales. For 2018, the GCN
Committee established a total net sales target of $31,329,000 and
approved the following schedule of potential payments:
|
Operating Income
|
|
Total Net Sales
|
|
Resulting Multiplier
|
|
$165,000-$429,999
|
|
100% or
greater of Target
|
|
110%
|
|
$430,000-$649,999
|
|
100% or
greater of Target
|
|
115%
|
|
>$650,000
|
|
100% or
greater of Target
|
|
120%
|
Participants were
only eligible to receive this supplemental bonus amount if both (i)
operating income exceeded 100% target performance and
(ii)
total net sales revenue met or
exceeded the applicable target performance level. Based on actual
operating income as reported above and total net sales exceeding
100% of target, the multiplier was applied at 120%, representing
payments of $35,235 to Ms. Glancy and $27,636 to Mr.
Jagerson.
Individual Performance
For 2018, the
remaining 30% of the potential payments under the 2018 Cash Plan
was determined based on individual performance against personal
goals established by the Board. Based on a variety of factors,
including company-wide business development performance under their
leadership during 2018, the Board, as recommended by its GCN
Committee, approved a final payment of $47,190 to Ms. Glancy and a
final payment of $37,013 to Mr. Jagerson under this part of the
program.
Long-term, Equity-Based Incentive Compensation
The GCN Committee
has determined that a combination of common stock options and
restricted stock units are each appropriate under certain
circumstances, based upon factors including market practices and
our overall compensation philosophy. Historically, options have a
ten-year term and bear an exercise price equal to the fair market
value of a share of our common stock on the date of grant,
determined in accordance with the applicable equity plan. Each
restricted stock unit generally represents a contingent right to
receive one share of our common stock upon vesting.
On June 13, 2018,
Ms. Glancy and Mr. Jagerson received 50,000 and 22,000 restricted
stock units, respectively, under the 2013 Omnibus Stock and
Incentive Plan (the “2013 Plan”). Each such award is
scheduled to vest in three substantially equal increments on the
first, second, and third anniversaries of the date of
grant.
On August 10, 2018,
Ms. Glancy received options to purchase up to 53,985 shares of
common stock and 53,985 restricted stock units and Mr. Jagerson
received options to purchase up to 13,570 shares of common stock
and 13,570 restricted stock units, each under the 2018 Equity
Incentive Plan (the “2018 Plan”). Each such award is
scheduled to vest in three substantially equal increments on the
second, third and fourth anniversaries of the date of
grant.
Actions
Relating to Fiscal 2019 Executive Compensation
In January 2019,
the non-employee directors, as recommended by the GCN Committee,
approved changes in base salaries for 2019, resulting in revised
annual base salaries of $314,600 for Ms. Glancy and $246,750 for
Mr. Jagerson. Additionally, the non-employee directors, as
recommended by the GCN Committee, approved, the 2019 Executive Cash
Incentive Plan (the “2019 Cash Plan”). The only
employees currently eligible to participate in the 2019 Cash Plan
are the Company’s two executive officers: Ms. Glancy and Mr.
Jagerson. The 2019 Cash Plan provides that each of the participants
is eligible to receive a potential payout based solely on the
Company’s performance against target operating income,
inclusive of all compensation expenses. The total target cash
payments under the 2019 Cash Plan are equal to 50% of each
participant’s respective base salary and payouts, if any,
would range from 12.5% to 75% of each participant’s base
salary. Similar to 2018, the 2019 Cash Plan provides for a
potential revenue-based multiplier of between 110% and 120% based
on Company performance against target net operating income and
threshold net revenue. All bonus calculations under the 2019 Cash
Plan will be subject to review and final approval by the GCN
Committee prior to payment.
Employment
and Change in Control Agreements
The Company entered
into an Employment Agreement and a Change in Control Agreement with
Ms. Glancy in connection with the commencement of her employment as
President and Chief Executive Officer, each effective as of
May 9, 2016.
The Company also
entered into an Employment Agreement and a Change in Control
Agreement with Mr. Jagerson in connection with the commencement of
his employment as Chief Financial Officer of the Company, each
effective as of July 17, 2017.
Each Employment
Agreement provides that the employee will receive an established
annual base salary, subject to increase from time to time, target
incentive compensation awards, and participation in customary
benefit plans and programs. In addition, in the event of the
employee’s involuntary termination without cause or voluntary
termination with good reason, she or he will be eligible to receive
accrued and unpaid compensation as well as the following severance
pay and benefits: (1) the annual incentive compensation they would
have been entitled to receive for the year in which their
termination occurs as if they had continued until the end of that
fiscal year, determined based on the Company’s actual
performance for that year relative to any applicable performance
goals, prorated for the number of days in the fiscal year through
the termination date and
generally payable
in a cash lump sum at the time such incentive awards are payable to
other participants; (2) a percentage (100% for Ms. Glancy; 50% for
Mr. Jagerson) of their annual base salary as in effect at the time
of termination, payable in a single lump sum payment no later than
60 days following the termination date; and (3) welfare benefit
continuation for four
months following termination. In
the event of death, disability, involuntary termination for cause
or voluntary termination without good reason, each will be entitled
to accrued and unpaid compensation as provided in the Employment
Agreement.
“Cause”
is defined in each Employment Agreement as (a) the deliberate
and continued failure to substantially perform the duties and
responsibilities; (b) the criminal felony conviction of, or a plea
of guilty or nolo contendere; (c) the material violation of Company
policy; (d) the act of fraud or dishonesty resulting or intended to
result in personal enrichment at the expense of the Company; (e)
the gross misconduct in performance of duties that results in
material economic harm to the Company; or (f) the material breach
of the Employment Agreement by the employee. “Good
reason” includes demotion, reduction in salary or benefits,
and certain other events.
Under their
respective Change in Control Agreements, as amended, upon a
qualifying termination, employee would be eligible to receive the
following, subject to offset by the amount of any severance
previously paid to her under any employment agreement with the
Company: (1) a lump sum severance payment equal to a
percentage (200% for Ms. Glancy; 75% for Mr. Jagerson) of their
annual base salary, (2) cash payment equal to the sum of (x)
unpaid incentive compensation that has been allocated or awarded to
them for a completed fiscal year preceding the date of the
Qualifying Termination which is contingent only upon the continued
employment to a subsequent date plus (y) a pro rata portion to the
date of the Qualifying Termination of her target bonus for the year
calculated through the date of the Qualifying Termination,
(3) welfare benefit continuation for a specified period
(12 months for Ms. Glancy; 6 months for Mr. Jagerson),
(4) certain post-retirement health care or life insurance benefits
if they would have become eligible for such benefits during the 24
months after the date of termination, (5) a lump sum payment equal
to all earned but unused paid time off days, and
(6) outplacement fees not to exceed $5,000.
Each of the Change
in Control Agreements defines “qualifying termination”
as a termination by the Company without cause or a termination by
the employee with good reason, in each case either concurrent with
or within 24 months following a change in control or a
termination by the Company without cause within six months
prior to a change in control if termination is in connection with
or in anticipation of the change in control. “Change in
control” is defined as a sale of all or substantially all of
the assets of the Company, a merger in which the shareholders of
the Company own less than 50% of the surviving entity, the
acquisition of 40% or more of the Company’s outstanding stock
by a single person or a group, or the election of a majority of the
Company’s directors who consist of persons who were not
nominated by the Company’s prior Board. “Cause”
is defined in the Change in Control Agreements as (i) the
deliberate and continued failure to devote substantially all
business time and best efforts to the performance of the his or her
duties; (ii) the deliberate engaging in gross misconduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iii) conviction of, or plea of guilty or nolo
contendere to, a felony or any criminal charge involving moral
turpitude.
All of the
Employment Agreements and Change in Control Agreements define
“Good reason” to include demotion, reduction in salary
or benefits, and certain other events.
Outstanding
Equity Awards at Fiscal Year End
The following table
sets forth summary information regarding the outstanding equity
awards held by our Named Executive Officers at December 31,
2018. The market value of restricted stock units that had not
vested equals $1.49, which was the closing price of a share of our
common stock on that date.
|
|
|
Option
Awards
|
Stock
Awards
|
||||
|
Name
|
Grant Date
|
Number of
Securities Underlying Unexercised Options Exercisable
|
Number of
Securities Underlying Unexercised Options
Unexercisable
|
Option Exercise
Price
|
Option Expiration
Date
|
Number of Units
of Stock That Have Not Vested
|
Market Value of
Units of Stock That Have Not Vested
|
|
Kristine A.
Glancy
|
5/13/2016
|
|
|
|
|
60,000
(1)
|
$
89,400
|
|
|
9/19/2017
|
|
|
|
|
7,500
(2)
|
$
11,175
|
|
|
6/13/2018
|
|
|
|
|
50,000
(1)
|
$
74,500
|
|
|
8/10/2018
|
|
|
|
|
53,985
(3)
|
$
80,438
|
|
|
8/10/2018
|
—
|
53,985
(3)
|
$
1.95
|
8/10/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey A.
Jagerson
|
9/1/2017
|
|
|
|
|
30,000
(2)
|
$
44,700
|
|
|
6/13/2018
|
|
|
|
|
22,000
(1)
|
$
32,780
|
|
|
8/10/2018
|
|
|
|
|
13,570
(3)
|
$
20,219
|
|
|
8/10/2018
|
—
|
13,570
(3)
|
$
1.95
|
8/10/2028
|
|
|
____
_______________________________________
(1)
Remainder scheduled
to vest in three equal annual installments on each of the next
three anniversaries of the grant date.
(2)
Scheduled to vest
on the next anniversary of the grant date.
(3)
Scheduled to vest
in three equal installments on each of the next three years
starting on the 2
nd
anniversary of
the grant date.
Section 162(m) of
the Internal Revenue Code as in effect prior to the enactment of
tax reform legislation in December 2017 generally disallowed a
tax deduction to public companies for compensation of more than
$1 million paid in any taxable year to each “covered
employee,” consisting of the chief executive officer and the
three other highest paid executive officers employed at the end of
the year (other than the chief financial officer).
Performance-based compensation was exempt from this deduction
limitation if the Company met specified requirements set forth in
the Code and applicable Treasury Regulations.
Recent tax reform
legislation retained the $1 million deduction limit but
repealed the performance-based compensation exemption from the
deduction limit and expanded the definition of “covered
employees,” effective for taxable years beginning after
December 31, 2017. “Covered employees” now also
includes any person who served as chief executive officer or chief
financial officer at any time during a taxable year, as well as any
person who was ever identified as a covered employee in 2017 or any
subsequent year. Consequently, compensation paid in 2018 and later
years to our named executive officers in excess of $1 million
will not be deductible unless it qualifies for transitional relief
applicable to certain binding, written performance-based
compensation arrangements that were in place as of November 2,
2017.
The deductibility
of some types of compensation payments can depend upon the timing
of the vesting or an executive’s exercise of previously
granted equity awards. Interpretations of and changes to applicable
tax laws and regulations as well as other factors beyond our
control also can affect deductibility of compensation. The GCN
Committee, like its predecessor, the Compensation Committee,
considers the anticipated tax treatment to the Company when
determining executive compensation and seeks to preserve the
deductibility of compensation payments and benefits to the extent
reasonably practicable, consistent with our compensation policies a
what we believe is in the best interests of our shareholders. The
GCN Committee continues to believe that shareholder interests are
best served if its discretion and flexibility in structuring and
awarding compensation is not restricted, even though some
compensation awards may have resulted in the past, and are expected
to result in the future, in non-deductible compensation expenses to
the Company. The Committee’s ability to continue to provide a
competitive compensation package to attract, motivate and retain
the Company’s most senior executives is considered critical
to the Company’s success and to advancing the interests of
its shareholders.
Section 409A
of the Internal Revenue Code also affects the payments of certain
types of deferred compensation to key employees and includes
requirements relating to when payments under such arrangements can
be made, acceleration of benefits, and timing of elections under
such arrangements. Failure to satisfy these requirements will
generally lead to an acceleration of the timing for including
deferred compensation in an employee’s income, as well as
certain penalties and
interest. Our
nonqualified deferred compensation arrangements meet the effective
requirements of Section 409A as required by law or
regulation.
P
ROPOSAL TWO
–
NON-BINDING ADVISORY VOTE ON EXECUTIVE
COMPENSATION
At the annual
meeting held in 2018, shareholders voted to continue to cast
advisory, non-binding votes on executive compensation on an annual
basis. Accordingly, we are requesting this non-binding advisory
vote on the executive compensation paid to our Named Executive
Officers. Under the Dodd-Frank Wall Street Reform and Consumer
Protection Act and SEC rules, the vote of the shareholders on this
resolution is a “non-binding” advisory vote. The
purpose of the vote is for the shareholders to give their opinion
to the Board on the Company’s executive
compensation.
Our executive
compensation received substantial shareholder support and was
approved, on an advisory basis, by approximately 73.0% of the votes
cast “for” or “against” the corresponding
proposal at the annual meeting of shareholders held in 2018. The
non-employee directors, based on the recommendation of the GCN
Committee, believe that this vote reflected our shareholders’
support of the compensation decisions made by its predecessor, the
Compensation Committee, for our named executive officers for
2018.
Compensation
Philosophy and Compensation of our Named Executive
Officers
Our discussion of
the authority and processes of the former Compensation Committee
and its successor, the GCN Committee in this proxy statement
explains the responsibilities of the applicable committee of the
Board. The narrative disclosure of our Executive Compensation,
beginning on pag
e
10
provides information
concerning the compensation philosophy, plans and policies under
which we paid the Named Executive Officers for 2018. As set forth
in the Summary Compensation Table on page 10 and the narrative
disclosure of Fiscal 2018 Executive Compensation that follows that
table, our compensation policies and procedures are centered on a
pay-for-performance philosophy and are strongly aligned with the
long-term interests of our shareholders.
Given the
pay-for-performance structure of our executive compensation
program, the non-employee directors and the GCN Committee believe
that the compensation of our Named Executive Officers is reasonable
and appropriate and justified by the performance of the Company in
a challenging environment.
Form
of Resolution
The shareholders
are being asked at the Annual Meeting to vote “FOR” or
“AGAINST” the following resolution:
RESOLVED
, that the holders of the
Company’s common stock approve the compensation of the Named
Executive Officers, as disclosed in this proxy statement pursuant
to the compensation disclosure rules of the SEC, including the
summary compensation table and other related tables and narrative
disclosure.
Required
Vote; Effect of Proposal
This proposal is an
advisory, non-binding vote, and will be deemed approved if the
number of votes cast “for” exceeds the number of votes
cast “against.” The approval or disapproval of this
proposal by shareholder will not require the Board or its GCN
Committee to take any action regarding our executive compensation
practices. The final decision on the compensation and benefits of
our executive officers and on whether, and if so, how, to address
any shareholder disapproval remains with the Board and the
applicable committee.
Notwithstanding the
foregoing, the Board values the opinions of our shareholders as
expressed through their votes and other communications. Although
this proposal is non-binding, the Board and its GCN Committee will
carefully consider the outcome of the advisory vote on executive
compensation and shareholder opinions received from other
communications when making future compensation
decisions.
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”
THE ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE
COMPENSATION.
P
ROPOSAL THREE
–
RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee
of the Board has appointed Baker Tilly Virchow Krause, LLP
(“Baker Tilly”) as our independent registered public
accounting firm for the year ending December 31, 2019.
Although we are not required to do so, the Board is submitting the
appointment of Baker Tilly for ratification in order to ascertain
the views of our shareholders on this appointment. If the
appointment is not ratified by the shareholders, the Audit
Committee will reconsider its selection. Baker Tilly has been the
Company’s auditor since July 2011. A representative of
Baker Tilly is expected to be present at the Annual Meeting and
will be given the opportunity to make a statement and will be
available to respond to appropriate questions.
Required
Vote; Effect of Proposal
The affirmative
vote of the holders of a majority of the outstanding shares of our
common stock of the entitled to vote on this item and present in
person or by proxy at the Annual Meeting is required for approval
of this proposal. Proxies solicited by the Board will be voted for
approval of this proposal, unless otherwise specified. If
shareholder approval is not obtained, then the Audit Committee
would reconsider its selection.
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR”
RATIFICATION OF THE APPOINTMENT OF BAKER TILLY VIRCHOW KRAUSE, LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2019.
Fees
Paid to Independent Registered Public Accounting Firm
The following table
shows the fees for services rendered by Baker Tilly for the years
ended December 31, 2018 and 2017.
|
|
2018
|
2017
|
|
Audit
Fees
(1)
|
$
164,000
|
$
120,600
|
|
Audit-RelatedFees
(2)
|
6,000
|
7,700
|
|
Total
|
$
170,000
|
$
128,300
|
____
______________________________________
(1)
Audit fees
represent fees for professional services provided in connection
with the audit of the Company’s financial statements and
review of quarterly financial statements.
(2)
Audit-related fees
represent fees for services relating to registration statement
filings.
Audit
Committee Pre-Approval Policy
The Company’s
Audit Committee Charter states that before the principal accountant
is engaged by the Company to render audit or non-audit services in
any year, the engagement will be approved by the Company’s
Audit Committee. All of the fees paid in 2018 and 2017 were
pre-approved by the Company’s Audit Committee.
A
UDIT COMMITTEE
REPORT
The Audit Committee
provides independent and objective oversight of our financial
reporting. Management has primary responsibility for our financial
statements and reporting process, including our systems of internal
controls. Our independent registered public accounting firm is
responsible for expressing an opinion on the conformity of our
financial statements with accounting principles generally accepted
in the United States.
In performing its
functions, the Audit Committee:
▪
Met with the
Company’s independent registered public accounting firm, with
and without management present, to discuss the overall scope and
plans for their audit, the results of their audit and their
evaluation of the Company’s internal
controls;
▪
Reviewed and
discussed with management and the independent registered accounting
firm the audited financial statements included in our Annual
Report;
▪
Discussed with the
Company’s independent registered public accounting firm the
matters required to be discussed by the applicable Public Company
Oversight Board standards; and
▪
Received from the
independent registered public accounting firm the written
disclosures and the letter regarding its independence as required
by applicable requirements of the Public Company Accounting
Oversight Board and discussed with representatives of such firm its
independence from management and the Company.
Based on the
discussions with management and the Company’s independent
registered public accounting firm, the Audit Committee’s
review of the representations of management and the report of such
firm, the Audit Committee recommended to the Board that the audited
financial statements be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2018,
for filing with the SEC.
Audit Committee Members:
Jacob J.
Berning
Loren A.
Unterseher
Steven R. Zenz, Chairman
The preceding Audit
Committee Report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 (the
“1933 Act”) or the Securities Exchange Act of 1934 (the
“1934 Act”), except to the extent the Company
specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934
Act.
EQUITY
COMPENSATION PLAN INFORMATION
The following table
presents certain information regarding our equity compensation
plans, the 2003 Stock Plan (the “2003 Plan”), the 2013
Plan, the 2018 Plan and our Employee Stock Purchase Plan, as of
December 31, 2018.
|
Plan
Category
|
Number
of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and
Rights
|
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans
|
|
Equity compensation
plans approved by security holders
|
866,249
(1)
|
|
$
2.36
(2)
|
|
1,103,312
(3)
|
|
Equity compensation
plans not approved by security holders
|
–
|
|
–
|
|
–
|
|
Total
|
866,249
|
|
$
2.36
|
|
1,103,312
|
____________________________________
___
(1)
Includes 119,515
shares underlying common stock options and 165,667 shares
underlying unvested restricted stock units outstanding under the
2018 Plan, 79,234 shares underlying common stock options and
327,655 shares underlying unvested restricted stock units
outstanding under the 2013 Plan and 174,178 shares underlying
common stock options outstanding under the 2003 Stock Plan. We
ceased issuing awards under the 2003 Plan upon approval of the 2013
Plan in 2013. We ceased issuing awards under the 2013 Plan upon
approval of the 2018 Plan in 2018.
(2)
Represents
weighted-average exercise price of options outstanding under the
2018 Plan, 2013 Plan and 2003 Plan. See note (
1
) above with respect to restricted
stock units under the 2018 Plan and 2013 Plan. The weighted-average
exercise price does not take those awards into account
(3)
Includes 278,380
shares available for issuance under our Employee Stock Purchase
Plan and 824,932 shares available for issuance pursuant to future
awards under the 2018 Plan. The Company maintains the Employee
Stock Purchase Plan, pursuant to which eligible employees,
including named executive officers, can contribute up to ten
percent of their base pay per year to purchase shares of Common
Stock. The shares are issued by the Company at a price per share
equal to 85% of market value on the first day of the offering
period or the last day of the plan year, whichever is
lower.
S
ECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table
presents information provided to the Company as to the beneficial
ownership of common stock as of April 11, 2019, by: (i)
persons known to the Company to hold 5% or more of such stock; (ii)
each of the directors of the Company; (iii) each of the Named
Executive Officers; and (iv) by all directors and current executive
officers as a group. The address of each director and executive
officer is 8799 Brooklyn Boulevard, Minneapolis, Minnesota 55445.
Beneficial ownership includes shares available for purchase under
options and subject to settlement under restricted stock units
within 60 days after April 11, 2019. Unless otherwise
indicated, each person had sole voting power and sole investment
power for all such shares beneficially held.
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(1)
|
|
|
Percent of
Shares
|
|
|
Shareholders / Shareholder Groups
|
|
|
|
|
|
|
|
Air T,
Inc., et al.
|
|
3,850,282
|
(2)
|
|
32.2
|
%
|
|
3524
Airport Road
|
|
|
|
|
|
|
|
Maiden,
NC 28650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable
Car Capital LLC
|
|
1,681,021
|
(3)
|
|
14.1
|
%
|
|
1449
Washington Street #6
|
|
|
|
|
|
|
|
San
Francisco, CA 94109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renaissance
Technologies LLC
|
|
827,479
|
(4)
|
|
6.9
|
%
|
|
800
Third Avenue
|
|
|
|
|
|
|
|
New
York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
Kristine A.
Glancy
|
|
228,941
|
|
|
1.9
|
%
|
|
Jeffrey
A. Jagerson
|
|
84,736
|
|
|
*
|
|
|
Steven
R. Zenz
|
|
58,470
|
(5)
|
|
*
|
|
|
Jacob
J. Berning
|
|
35,126
|
|
|
*
|
|
|
Loren
A. Unterseher
|
|
27,242
|
|
|
*
|
|
|
Rachael
B. Vegas
|
|
22,115
|
|
|
*
|
|
|
Suzanne
L. Clarridge
|
|
7,692
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All
current directors and executive officers as a group (7
persons)
|
|
450,661
|
(5)
|
|
3.8
|
%
|
*Less than one
percent.
(1)
Does not include
12,277 and 6,302 common stock equivalents held by Mr. Berning and
Mr. Zenz, respectively, under the Insignia Systems Inc. Deferred
Compensation Plan for Directors. These common stock equivalents
carry no voting rights and the recipient does not have the right to
acquire any underlying shares within 60 days of April 11,
2019.
(2)
Based on Amendment
No. 12 to Schedule 13D filed with the SEC on May 22, 2018 by Air T,
Inc., Groveland Capital LLC, and Nicholas J. Swenson, reporting
ownership as of May 21, 2018. Mr. Swenson is the Chief Executive
Officer and a director of Air T. Air T, Inc. has sole dispositive
and voting power over 3,416,114 shares and disclaims beneficial
ownership of the securities held by Groveland. Groveland owns
422,000 shares and each of Groveland and Mr. Swenson share
dispositive and voting power over all 422,000 shares. Mr. Swenson
personally owns 12,168 shares of common stock. Groveland disclaims
beneficial ownership of the securities held by Air T. Mr. Swenson
disclaims beneficial ownership of the securities held by Air T and
Groveland except to the extent of his pecuniary interest
therein.
(3)
Based on Amendment
No. 7 to Schedule 13D filed with the SEC on January 31, 2019 by
Cable Car Capital LLC, Jacob Haft Ma-Weaver and The Funicular Fund,
LP, for which Cable Car serves as investment adviser with full
discretionary authority, reporting ownership as of January 30,
2019. Mr. Ma-Weaver is the Managing Member and investment advisor
of Cable Car Capital LLC. Cable Car Capital LLC owns 1,077,682
shares and The Funicular Fund, LP owns 603,339 shares.
(4)
Based on Amendment
No. 2 to Schedule 13G filed with the SEC on February 13, 2019 by
Renaissance Technologies LLC and Renaissance Technologies Holdings
Corporation, reporting ownership as of December 31, 2018. Shares
are beneficially owned by Renaissance Technologies Holdings
Corporation, which is a majority ownership of Renaissance
Technologies LLC.
(5)
Includes 13,661
shares subject to options.
S
ECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of
the Securities and Exchange Act of 1934 requires that our directors
and executive officers file initial reports of ownership and
reports of changes in ownership with the SEC. Directors and
executive officers are required to furnish us with copies of all
Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished to us and written representations
from our directors and executive officers, all Section 16(a) filing
requirements were met for 2018 except for one report by each of Mr.
Berning and Mr. Zenz relating to common stock equivalents issued
pursuant to their participation in the Director Deferred
Compensation Plan.
C
ERTAIN
RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
The SEC has
specific disclosure requirements covering certain types of
transactions that we engage in with our directors, executive
officers or other specified parties. The Company receives an
informational questionnaire from each director, nominee for
director, executive officer, and greater than five percent
shareholder which contains information about related-party
transactions between them and the Company. The Company’s
Audit Committee Charter assigns to the Audit Committee the
responsibility to review and approve all related-party
transactions. The Audit Committee reviews each related-party
transaction to determine that it is fair and reasonable to the
Company, and that the price and other terms included in any
transaction are comparable to the terms that would be included in
an arms-length transaction between the Company and an unrelated
third party.
The Company is
party to the Cooperation Agreement dated May 17, 2018, with
the Shareholder Group. To the Company’s knowledge, as of the
record date, the Shareholder Group collectively beneficially owned
approximately 32.2% of the Company’s common stock. Prior to
the execution of the Cooperation Agreement, on March 23, 2018,
the Company received a letter from Air T containing proposals for
certain governance changes, including changes to the composition of
the Board. In response, members of the Board, on behalf of the
Company, commenced increased engagement with representatives of Air
T, including Mr. Swenson and its legal counsel. On April 6,
2018, the Company received from the Shareholder Group written
notice of the nomination of five director candidates, including Ms.
Clarridge and Mr. Unterseher, for election at the 2018 Annual
Meeting. After substantial and continuous engagement among
representatives of the Company and representatives of the
Shareholder Group, the Company entered into the Cooperation
Agreement on May 17, 2018, to, among other things, minimize
reputational damage to the Company as a result of a distracting and
expensive potential contested proxy solicitation and to ensure that
the majority of the Board is representative of all
shareholders.
As disclosed
previously and described elsewhere in this Proxy Statement,
pursuant to the terms of the Cooperation Agreement, the Company
promptly (i) increased the size of the Board to six and
(ii) appointed Ms. Clarridge and Mr. Unterseher to serve as
additional directors. The Cooperation Agreement resulted in Air
T’s withdrawal of its prior nomination of five director
candidates. It also requires the Company to include Ms. Clarridge
and Mr. Unterseher in its slate of nominees for election at the
Company’s 2018 and 2019 Annual Meetings of Shareholders and
to solicit proxies with a recommendation that shareholders vote in
favor of their election at each such meeting. Also pursuant to the
Cooperation Agreement, our former director, Peter Zaballos retired
from the Board and all committees. Mr. Zenz also announced his
retirement from the Board to be effective as of the Annual
Meeting.
With respect to the
Annual Meeting, the Shareholder Group has agreed to, among other
things, vote in favor of the Company’s director nominees and
in accordance with the Board’s recommendation on all other
proposals. The Shareholder Group has agreed to certain customary
standstill provisions, effective as of the date of the Cooperation
Agreement through 60 days prior to the expiration of the applicable
notice period specified in the Company’s Bylaws related to
the nominations of directors at its 2020 annual meeting of
shareholders.
During fiscal years
2017 and 2018, the Company did not engage in any other transaction,
or series of similar transactions, to which it was a party, in
which the amount involved exceeded the lesser of $120,000 or one
percent of the average of our total assets at year-end for the last
two completed fiscal years in which any of our directors, executive
officers, nominees for election as a director, beneficial owners of
more than 5% of our common stock or members of their immediate
family had a direct or indirect material interest. We do not have
any currently proposed transaction or series of similar
transactions.
O
THER
MATTERS
Management of the
Company knows of no matters other than the foregoing to be properly
brought before the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment or
postponement thereof, then the shares represented by the proxies
solicited by the Board may be voted by the persons named therein at
their discretion.
S
UBMISSION OF SHAREHOLDER PROPOSALS AND
NOMINATIONS
Proposals by
shareholders (other than director nominations) that are submitted
for inclusion in the Company’s proxy statement for its 2020
Annual Meeting of Shareholders must follow the procedures provided
in Rule 14a-8 under the Securities Exchange Act of 1934 and the
Company’s Bylaws. To be timely, such proposals must be given,
either by personal delivery or by United States mail, postage
prepaid, to the Company’s Secretary on or before December 24,
2019. If the date of the 2020 Annual Meeting of Shareholders is
more than 30 days before or after the anniversary of the 2019
Annual Meeting of Shareholders, then such notice will instead be
timely only if delivered within a reasonable time before the
Company begins to print and send its proxy materials.
If a shareholder
intends to propose an item of business to be considered at an
annual meeting of shareholders, but not have it included in the
Company’s proxy statement, or if the shareholder intends to
nominate a person for election as a director at an annual meeting
of shareholders, then the shareholder must provide timely written
notice of such proposal or nomination to the Company’s
Secretary. To be timely under our Bylaws, such notice must be
given, either by personal delivery or by United States mail,
postage prepaid, to the Company’s Secretary not less than
sixty days nor more than ninety days prior to a meeting date
corresponding to the previous year’s annual meeting of
shareholders. For the Company’s 2019 Annual Meeting of
Shareholders, such notice must be given between March 8, 2020
and April 7, 2020, and must comply with all applicable
statutes and regulations, as well as provide all information
required pursuant to the Company’s Bylaws.
H
OUSEHOLDING
We have adopted a
procedure approved by the SEC called “householding,” by
which certain shareholders who do not participate in electronic
delivery of proxy materials but who have the same address and
appear to be members of the same family receive only one copy of
our annual report and proxy statement. Each shareholder
participating in householding continues to receive a separate proxy
card. Householding reduces both the environmental impact of our
annual meetings and our mailing and printing expenses.
If you would like
to change your householding election, request that a single copy of
the proxy materials be sent to your address, or request a separate
copy of the proxy materials, please contact Broadridge Financial
Solutions, Inc., by calling (866) 540-7095 or by writing to
Broadridge Householding Department, 51 Mercedes Way, Edgewood, New
York 11717. We will promptly deliver the notice of internet
availability or proxy materials to you upon receipt of your
request. If you hold your shares in street name, please contact
your bank, broker, or other record holder to request information
about householding.
A
DDITIONAL
INFORMATION
The Company’s
Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, accompanies the delivery of this proxy
statement and a copy of such annual report, as filed with the SEC,
is also available on the SEC’s website, www.sec.gov, and our
corporate website, www.insigniasystems.com. In addition, a copy of
the Annual Report on Form 10-K, may be sent to any shareholder
without charge (except for exhibits, if requested, for which a
reasonable fee will be charged), upon written request to Insignia
Systems, Inc., 8799 Brooklyn Blvd., Minneapolis, MN
55445.
|
|
By Order of the
Board of Directors
Kristine
Glancy
President, Chief
Executive Officer and Secretary
|
Whether
or not you plan to attend the meeting, vote your shares over the
Internet or by telephone by following the instructions on the proxy
notice, or, if the proxy materials were mailed to you, by
completing, signing, dating and mailing the enclosed proxy card
promptly in the envelope provided with the proxy card.
21
TABLE OF CONTENTS
GENERAL INFORMATIONCORPORATE GOVERNANCE AND BOARD MATTERSPROPOSAL ONE ELECTION OF DIRECTORSEXECUTIVE COMPENSATIONPROPOSAL TWO NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATIONPROPOSAL THREE RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERD PUBLIC ACCOUNTING FIRMAUDIT COMMITTEE REPORTEQUITY COMPENSATION PLAN INFORMATIONSECURITIY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCECERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONSOTHER MATTERSSUBMISSION OF SHAREHOLDERS PROPOSALS AND NOMINATIONSHOUSEHOLDINGADDITIONAL INFORMATION