LENDWAY, INC.
10-Ks and 10-Qs
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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 the Registrant ☑
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For Use of the Commission Only
(As Permitted by Rule 14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule
14a-12
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Insignia Systems,
Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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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.
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of each class of securities to which transaction
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number of securities to which transaction applies:
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fee paid:
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materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
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(4) Date
Filed:
8799
Brooklyn Blvd., Minneapolis, MN 55445
TO BE HELD JULY 30, 2020
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, July 30, 2020, at 8:30 a.m., Central
Time, at the Company’s offices, located at 8799 Brooklyn
Blvd., Minneapolis, Minnesota for the following
purposes:
1.
To elect four
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, 2020; 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 June 2,
2020
as the record date
for the determination of shareholders entitled to notice of and to
vote at the meeting.
All shareholders are eligible to attend the meeting in person.
However, to ensure your representation at the meeting and your
safety, 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.
Important Notice Regarding Availability of Proxy Materials for the
Annual Meeting to be held on July 30, 2020:
The Proxy Statement and the Annual Report are available free of
charge at:
https://materials.proxyvote.com/45765Y
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By
Order of the Board of Directors
Kristine
Glancy
President and Chief
Executive Officer
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Important
Information Regarding Meeting Attendance and Location:
We intend to hold
our annual meeting in person. However, we are sensitive to the
public health and travel concerns our shareholders may have and
recommendations that public health officials may issue in light of
the evolving coronavirus (COVID-19) situation. As a result, we may
impose additional procedures or limitations on meeting attendees or
may decide to hold the meeting in a different location or solely by
means of remote communication (e.g., a virtual-only meeting). We
plan to announce any such updates on our Investor Relations website
at www.insigniasystems.com/Investors, and we encourage you to check
this website prior to the meeting if you plan to
attend.
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PROXY
STATEMENT
FOR
2020 ANNUAL MEETING OF SHAREHOLDERS
TABLE OF CONTENTS
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Page
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GENERAL
INFORMATION
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1
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CORPORATE
GOVERNANCE AND BOARD MATTERS
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4
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PROPOSAL
ONE – ELECTION OF DIRECTORS
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8
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THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR” EACH OF THE FOUR NOMINEES.
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10
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EXECUTIVE
COMPENSATION
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11
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PROPOSAL
TWO – NON-BINDING ADVISORY VOTE ON EXECUTIVE
COMPENSATION
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17
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PROPOSAL
THREE – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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18
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AUDIT
COMMITTEE REPORT
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18
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EQUITY
COMPENSATION PLAN INFORMATION
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19
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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20
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DELINQUENT
SECTION 16(a) REPORTS
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CERTAIN
RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
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OTHER
MATTERS
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SUBMISSION
OF SHAREHOLDER PROPOSALS AND NOMINATIONS
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HOUSEHOLDING
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22
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ADDITIONAL
INFORMATION
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i
Annual Meeting of Shareholders
July 30, 2020
PROXY STATEMENT
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 July
30, 2020, and at any adjournment of the meeting.
Important Notice Regarding the Internet Availability of Proxy
Materials
for the Annual Meeting to be Held on July 30, 2020
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, 2019 and any amendments or
updates to these documents. The mailing of proxy material and a
proxy card, or a Notice Regarding the Availability of Proxy
Materials (“Notice of Internet Availability”) will
commence on or about June 12, 2020. 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:
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Item of Business
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Board Recommendation
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1.
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Election
of four directors
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FOR
each nominee
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2.
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Advisory,
non-binding vote, to approve the Company’s executive
compensation
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FOR
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3.
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Ratification
of Independent Registered Public Accounting Firm
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FOR
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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 may attend the Annual Meeting:
The
Annual Meeting is open to holders of our common stock who held such
shares as of the meeting’s record date, June 2, 2020. We
intend to hold our annual meeting in person. However, we are
sensitive to the public health and travel concerns our shareholders
may have and recommendations that public health officials may issue
in light of the evolving coronavirus (COVID-19) situation. As a
result, we may impose additional procedures or limitations on
meeting attendees or may decide to hold the meeting in a different
location or solely by means of remote communication (e.g., a
virtual-only meeting). We plan to announce any such updates on our
Investor Relations website at www.insigniasystems.com/Investors,
and we encourage you to check this website prior to the meeting if
you plan to attend.
1
Who is entitled to vote at the meeting?
As of
the record date, June 2, 2020, there were 12,098,017 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 attend and 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.
Due to space constraints and potential limitations to ensure the
health of attendees and compliance with applicable laws and
regulations, attendance will be limited to shareholders only.
Admission to the premises for the Annual Meeting will be on a
first-come, first-served basis. A valid government-issued
picture identification and proof of stock ownership as of the
record date may be required in order to attend the meeting. If
you hold shares of our common stock through a broker, bank, trust
or other nominee, you must present a copy of a statement reflecting
your stock ownership as of the record date. If you plan to
attend as the proxy of a shareholder or to vote in person, you must
present a legal proxy. Cameras, recording devices and other
electronic devices will not be permitted.
What is the difference between a “shareholder of
record” and a shareholder who holds 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. 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
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Vote in Person
: You can vote in person
at the meeting.
If you
are a
shareholder who
holds our 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. If you choose to vote
your shares in person at the meeting, you must request a
“legal proxy” and present it at the
meeting.
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.
2
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”).
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Item of Business
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Vote Requirement
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1.
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Election
of four directors
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Plurality Vote
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2.
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Advisory,
non-binding vote, to approve the Company’s executive
compensation
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More FOR than AGAINST
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3.
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Ratification
of Independent Registered Public Accounting Firm
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Majority Vote
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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. Broker Non-votes will have no effect on this
proposal.
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.
3
CORPORATE 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 its
Governance, Compensation and Nominating Committee, the Board has
set the size of the Board to be elected at the Annual Meeting at
four.
Majority Independent Board
The
listing rules of the Nasdaq Stock Market (“Nasdaq
Rules”) require that a majority of our Board be
“independent directors” as that term is defined in the
Nasdaq Rules. Our Board has determined that each of our
non-employee directors, namely Jacob Berning, Chad Johnson,
Rachael Vegas and Loren Unterseher, are “independent
directors.”
Meetings of the Board of Directors and Director
Attendance
The
Board held 10 meetings during 2019. 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, Suzanne
Clarridge, Kristine Glancy, Mr. Unterseher and Ms. Vegas attended
the annual meeting of shareholders held in 2019. 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.
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Director
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Audit
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Governance, Compensation and Nominating
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Independent Director
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Jacob
J. Berning
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Member
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Member
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✓
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Kristine
A. Glancy
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Chad B.
Johnson
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Member
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✓
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Loren
A. Unterseher
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Chair
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✓
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Rachael
B. Vegas
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Chair
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✓
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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 has 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.
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.
4
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 five meetings during 2019. 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
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 2019 compensation,
the committee did not retain a compensation consultant. The
committee referenced materials prepared by Willis Towers Watson in
2018 for compensation matters.
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
on which the Company’s proxy statement for the previous
year’s annual meeting became available to the shareholders.
Submittals should be in writing and addressed to the committee at
the Company’s headquarters. Candidates recommended by
shareholders will be evaluated using the same criteria applicable
to other candidates.
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 GCN Committee
held three meetings in 2019.
5
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.
6
Compensation of Non-Employee Directors
The
following table summarizes the compensation paid to our
non-employee directors for 2019.
|
Name
|
Fees
Earned or
Paid
Cash
(1)
|
Stock
Awards
(2)
|
Total
|
|
Jacob J.
Berning
|
$
22,000
|
$
30,000
|
$
52,000
|
|
Suzanne L.
Clarridge
|
$
17,000
|
$
15,000
|
$
32,000
|
|
Loren A.
Unterseher
|
$
19,917
|
$
15,000
|
$
34,917
|
|
Rachael B.
Vegas
|
$
22,000
|
$
15,000
|
$
37,000
|
|
Steven R.
Zenz
(3)
|
$
9,167
|
$
–
|
$
9,167
|
(1)
Reflects annual
board retainer and fees for attending Board, committee and
conference call meetings earned during 2019 inclusive of amounts
related to the Deferred Compensation Plan for Director. As of
December 31, 2019, the following director held shares under the
plan: Mr. Berning held 34,382 shares, Ms. Vegas held 11,053 shares
and Mr. Unterseher held 20,434 shares.
(2)
On June 6, 2019,
each non-employee director received restricted stock unit 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)
Mr. Zenz ceased
service as a director on June 5, 2019.
In
2019, non-employee directors received 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
2019, each non-employee director received a restricted stock unit
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 June
6, 2019 pursuant to the 2018 Plan. Each non-employee director was
granted 14,151 restricted stock units, and the Board Chair was
granted 28,302 restricted stock units, each based on a closing
price of $1.06 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 2020 Annual Meeting of Shareholders.
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
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.
Composition
In
determining the nominees for election to serve as directors of the
Company, the Board first determined that the Board will consist of
four 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
All
directors of the Company hold office until the next annual meeting
of the shareholders or until their successors have been elected and
qualified. Our Bylaws, as amended, provide that our Board of
Directors (the “Board”) shall consist of between two
and no more than nine members, as designated by resolution of the
Board from time to time.
Cooperation Agreement
The
Company was party to a Cooperation Agreement, dated May 17, 2018
(the “Cooperation Agreement”), with Air T, Inc.
(“Air T”), Groveland Capital LLC
(“Groveland”), and Nicholas J. Swenson (collectively
the “Shareholder Group”), which required that the
Company include two designees, including Mr. Unterseher, in its
slate of nominees for election at the annual meeting held in 2019
and to solicit proxies with a recommendation that shareholders vote
in favor of the designees’ election at such meeting.
Additionally, on February 27, 2020, our Board appointed Chad B.
Johnson to serve as an additional director to fill a vacancy on the
Board pursuant to the nomination and evaluation procedures for
substitute nominees set forth in the Cooperation
Agreement.
The
Board has nominated four 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. Rachael Vegas is a
current director but is not standing for re-election. Her service
as a director will cease upon the expiration of her current term at
the Annual Meeting.
8
The
specific qualifications of each nominee and current director,
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
|
|
47
|
|
Director,
Chairman of the Board
|
|
June 2017
(1)
|
|
Kristine
A. Glancy
|
|
42
|
|
Director,
President, Chief Executive Officer & Secretary
|
|
June 2017
|
|
Chad B.
Johnson
|
|
49
|
|
Director
|
|
February
2020
|
|
Loren
A. Unterseher
|
|
55
|
|
Director
|
|
May 2018
|
|
Rachael
B. Vegas
|
|
44
|
|
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
Bachelor of Arts degree from the University of Minnesota and an MBA
from New York University.
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.
Chad B. Johnson
is the Director of Marketing of C.H.
Robinson Inc., a third-party logistics and supply chain management
provider, which position he has held since July 2018. Prior to that
role, Mr. Johnson was the Business Unit Director for General Mills
Inc. from July 2000 to July 2018. Mr. Johnson has extensive
marketing and leadership experience in the consumer-packaged goods
industry. These experiences provide knowledge and understanding of
the industry representing the majority of our customer base. He
holds a Bachelor of Arts degree in Economics and Chemistry from St.
Olaf College and an MBA – Marketing and Finance from the
University of Minnesota - Carlson School.
Loren A. Unterseher
is the Managing Partner 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), Town
& Country Fence, LLC (since 2017) and FactRight (since 2018),
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 Bachelor of Business Administration degree in Finance from
the University of Iowa and a J.D. from the University of North
Dakota.
Rachael B. Vegas
has
served as Senior Vice President of Merchandising at H-E-B, LP since
August 2019. Prior to that, she was the Chief Merchant at
Brandless, Inc. from March 2016 through July 2019. 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.
9
Required Vote
Directors
are elected by the affirmative vote of the holders of a plurality
of the shares present and entitled to vote.
“FOR” EACH OF THE FOUR NOMINEES.
10
Current Executive Officers
The
following individuals are our current executive
officers:
|
Name
|
|
Age
|
|
Position
|
|
Kristine
A. Glancy
|
|
42
|
|
Director,
President, Chief Executive Officer and Secretary
|
|
Jeffrey
A. Jagerson
|
|
53
|
|
Vice
President of Finance, Chief Financial Officer and
Treasurer
|
|
Adam D.
May
|
|
36
|
|
Chief
Growth Officer
|
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 30 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.
Adam D. May
, has been our Chief
Growth Officer since December 2019. He served as our Senior Vice
President of Sales from July 2017 to December 2019. Prior to
joining the Company, Mr. May was the Associate Director of Sales at
The Kraft Heinz Company from September 2016 to July 2017. He held
several Customer Business Lead roles at The Kraft Heinz Company
from November 2012 to September 2016. Before joining The Kraft
Heinz Company, Mr. May held several Sales positions at Mars Petcare
from March 2008 to November 2012. His 10 plus years of CPG Sales
and business development experience provides necessary skills to
the Company in the areas of Sales, Sales Strategy and Business
Development. Mr. May holds a Bachelor of Science in Business
Administration and Management from Indiana
University.
11
Summary Compensation Table
The
following table sets forth information about all compensation (cash
and non-cash) awarded to, earned by or paid to our Chief Executive
Officer, Chief Financial Officer and Chief Growth Officer serving
at the end of fiscal 2019 (collectively, our “Named Executive
Officers”) for the fiscal years ended December 31, 2019
and 2018.
|
Name and Position
|
Year
|
Salary
|
Bonus
|
Stock Awards
(1)
|
Option Awards
(2)
|
Non-Equity Incentive Plan Compensation
(3)
|
All Other Compensation
|
Total
|
|
Kristine
A. Glancy
|
2019
|
$
314,600
|
$
–
|
$
–
|
$
–
|
$
–
|
$
–
|
$
314,600
|
|
President, Chief Executive Officer and Secretary
|
2018
|
$
306,350
|
$
–
|
$
193,771
(4)
|
$
56,090
(2)
|
$
258,601
|
$
–
|
$
814,812
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
A. Jagerson
|
2019
|
$
246,750
|
$
–
|
$
–
|
$
–
|
$
–
|
$
–
|
$
246,750
|
|
Vice President of Finance, Chief Financial Officer and
Treasurer
|
2018
|
$
243,361
|
$
–
|
$
65,402
(5)
|
$
14,099
(2)
|
$
202,830
|
$
–
|
$
525,692
|
|
|
|
|
|
|
|
|
|
|
|
Adam D. May
(6)
|
2019
|
$
182,631
|
$
47,394
|
$
–
|
$
–
|
$
–
|
$
14,282
(7)
|
$
244,307
|
|
Chief Growth Officer
|
|
|
|
|
|
|
|
|
______________________________
()
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 8 to the financial statements for the fiscal year
ended December 31, 2019 included in the Original
Filing.
(2)
The Option Awards
granted in 2018 were granted pursuant to the 2018 Equity Incentive
Plan (the “2018 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)
Topic 718, Compensation—Stock Compensation
(
“
ASC
718
”
)
pursuant to
the Black-Scholes option pricing model, which requires several
significant judgments and assumptions.
(3)
Represents
payments pursuant to the Executive Incentive Plan for the years
indicated, which were paid in the following year.
(4)
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).
(5)
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).
(6)
Mr.
May became an executive officer in December 2019.
(7)
Amount
represents annual car allowance and company 401K contribution
match.
Fiscal 2019 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 January 2019, the Board, as recommended by its Governance,
Compensation and Nominating Committee (the “GCN
Committee”), approved the 2019 Executive Cash Incentive Plan
(the “2019 Cash Plan”). Members of the Company’s
senior management, including all three of the Company’s
executive officers, Ms. Glancy, Mr. Jagerson and Mr. May
participated in the 2019 Cash Plan.
12
The 2019 Cash Plan provided that for each of the participants, (a)
100% of the bonus potential was allocated to the Company’s
performance against target operating income (loss), inclusive of
all compensation expenses. The total target bonuses under the 2019
Cash Plan was
equal
to 50% of each participant’s respective base salary and
payouts, if any, could have ranged from 25% to 180
%
of each participant’s base
salary. Similar to 2018, the 2019 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.
All bonus calculations under the 2019 Cash Plan were subject to
review and final approval by the GCN Committee prior to
payment.
Company Performance-Based Payment
For
2019, the GCN Committee established a target operating income of
$1,000 and approved the following schedule of potential payments
under the Executive Incentive Plan:
|
Pre-Bonus Income Level
|
|
Operating Income (Loss)
|
|
Percent of Target Variable Compensation
|
|
<$307,246
|
|
<($0)
|
|
0%
|
|
$307,247
- $581,863
|
|
$1
|
|
25% -
49.99%
|
|
$581,864
- $1,021,251
|
|
$1
|
|
50% -
89.99%
|
|
$1,021,252
- $1,296,097
|
|
$1 -
$164,999
|
|
90% -
99.99%
|
|
$1,296,098
- $2,157,529
|
|
$165,000
- $429,999
|
|
100% -
139.99%
|
|
$2,157,530
- $2,554,680
|
|
$430,000
- $649,999
|
|
140% -
149.99%
|
|
≥
$2,554,681
|
|
≥
$650,000
|
|
150%
|
Based
on an actual operating loss of $5,629,000 for the year ended 2019,
as reported in Part II, Item 8, of the Company’s Annual
Report on Form 10-K, the GCN Committee determined that no
incentives were earned as part of the 2019 Cash Plan and no payouts
were made to the Named Executive Officers.
Actions Relating to Fiscal 2020 Executive Compensation
In
December 2019, the non-employee directors, as recommended by the
GCN Committee, appointed Mr. May as the Chief Growth Officer and
revised his annual base salaries to $220,000 and target annual cash
incentive of $126,000. Additionally, the non-employee directors, as
recommended by the GCN Committee, approved, the 2020 Executive Cash
Incentive Plan (the “2020 Cash Plan”). The only
employees currently eligible to participate in the 2020 Cash Plan
are the Company’s three executive officers: Ms. Glancy, Mr.
Jagerson and Mr. May. The 2020 Cash Plan provides that Ms. Glancy
and Mr. Jagerson are eligible to receive a potential payout based
solely on the Company’s performance against target operating
income/loss, inclusive of all compensation expenses. Mr. May is
eligible to receive a potential payout based 50% on the
Company’s performance against target operating income/loss
and 50% based on the Company’s performance against target net
revenue. The total target cash payments under the 2020 Cash Plan
for Ms. Glancy and Mr. Jagerson are equal to 50% of each
participant’s respective base salary and payouts, if any,
would range from 10% to 150% of each participant’s base
salary. The total target cash payments under the 2020 Cash Plan for
Mr. May based on his respective base salary and payouts, in any,
would range from 17% to 89% of his base pay. Similar to 2019, the
2020 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 2020 Cash Plan will be subject to review and
final approval by the GCN Committee prior to payment.
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. The GCN
Committee did not grant any long-term, Equity-Based Incentive
Compensation to the executive officers in 2019.
Severance and Change in Control Arrangements with Named Executive
Officers
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.
13
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.
The Company also entered into an Employment Agreement and a Change
in Control Agreement with Mr. May in connection with the
commencement of his appointment as Chief Growth Officer of the
Company, each effective as of December 20, 2019.
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; 50%
for Mr. May) 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 for Ms. Glancy and for three months
for Mr. Jagerson and Mr. May 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 and for Mr.
May) 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 and for Mr. May), (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 after demand for
substantial performance is delivered to the employee by the Board
which the demand specifically identifies the manner in which the
employee has not substantially performed such 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.
14
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. The GCN
Committee did not grant any long-term, Equity-Based Incentive
Compensation to the executive officers in 2019.
Actions Relating to Fiscal 2019 Executive Compensation
In
December 2019, the non-employee directors, as recommended by the
GCN Committee, appointed Mr. May as the Chief Growth Officer and
revised his annual base salaries to $220,000. Additionally, the
non-employee directors, as recommended by the GCN Committee,
approved, the 2020 Executive Cash Incentive Plan (the “2020
Cash Plan”). The only employees currently eligible to
participate in the 2019 Cash Plan are the Company’s three
executive officers: Ms. Glancy, Mr. May 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
2020 Cash Plan are equal to 50% of each participant’s
respective base salary and payouts, if any, would range from 10% to
150% of each participant’s base salary. Similar to 2019, the
2020 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 2020 Cash Plan will be subject to review and
final approval by the GCN Committee prior to payment.
The
following table sets forth summary information regarding the
outstanding equity awards held by our Named Executive Officers at
December 31, 2019. The market value of restricted stock units
that had not vested equals $0.7301, 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
|
|
|
|
|
40,000
(1)
|
$
29,204
|
|
|
6/13/2018
|
|
|
|
|
33,333
(1)
|
$
24,336
|
|
|
8/10/2018
|
|
|
|
|
53,985
(2)
|
$
39,414
|
|
|
8/10/2018
|
–
|
53,985
(2)
|
$
1.95
|
8/10/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey A.
Jagerson
|
6/13/2018
|
|
|
|
|
14,666
(1)
|
$
10,708
|
|
|
8/10/2018
|
|
|
|
|
13,570
(2)
|
$
18,586
|
|
|
8/10/2018
|
–
|
13,570
(2)
|
$
1.95
|
8/10/2028
|
|
|
|
|
|
|
|
|
|
|
|
|
Adam A.
May
|
6/13/2018
|
|
|
|
|
14,666
(1)
|
$
10,708
|
|
|
8/10/2018
|
|
|
|
|
13,570
(2)
|
$
18,586
|
|
|
8/10/2018
|
–
|
13,570
(2)
|
$
1.95
|
8/10/2028
|
|
|
(1)
Remainder scheduled
to vest in two equal annual installments on each of the next two
anniversaries of the grant date.
(2)
Scheduled to vest
in three equal installments on each of the next three years
starting on the 2
nd
anniversary of the
grant date.
15
Tax and Accounting Considerations
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.
16
NON-BINDING ADVISORY VOTE ON EXECUTIVE
COMPENSATION
At the
annual meeting held in 2019, 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 99.4% of
the votes cast “for” or “against” the
corresponding proposal at the annual meeting of shareholders held
in 2019. 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 2019.
Compensation Philosophy and Compensation of our Named Executive
Officers
Our
discussion of the authority and processes of 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 page 12 provides information
concerning the compensation philosophy, plans and policies under
which we paid the Named Executive Officers for 2019. As set forth
in the Summary Compensation Table on page 13 and the narrative
disclosure of Fiscal 2019 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.
17
PROPOSAL 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, 2020. 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 AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2020.
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, 2019 and 2018.
|
|
2019
|
2018
|
|
Audit
Fees
(1)
|
$
144,000
|
$
164,000
|
|
Audit-Related
Fees
(2)
|
–
|
6,000
|
|
Total
|
$
144,000
|
$
170,000
|
(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.
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 2019
and 2018 were pre-approved by the Company’s Audit
Committee.
AUDIT
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 with the Company’s independent
registered public 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 requirements of
the Public Company Oversight Board and the SEC; and
18
●
Received the
written disclosures and the letter from the Company’s
independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight
Board regarding such firm’s communications with the audit
committee concerning independence and discussed with
representatives of such firm its independence from management and
the Company.
Based
on the foregoing and 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, 2019, for filing with the
SEC.
Audit
Committee Members:
|
Jacob J.
Berning
|
Chad B.
Johnson
|
Loren A.
Unterseher, 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.
The
following table presents certain information regarding our equity
compensation plans, the 2003 Stock Plan (the “2003
Plan”), the
2013
Omnibus Stock and Incentive Plan (the “2013
Plan”),
the 2018 Plan and our Employee Stock Purchase
Plan, as of December 31, 2019.
|
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
|
612,561
(1)
|
$
2.38
|
1,069,466
(2)
|
|
Equity compensation
plans not approved by security holders
|
–
|
–
|
–
|
|
Total
|
612,561
|
$
2.38
|
1,069,466
|
(1)
Includes 282,645
awards under the 2018 Plan, 197,404 awards under the 2013 Plan and
132,512 awards under the 2003 Plan. We ceased issuing awards under
the 2003 Plan upon approval of the 2013 Plan in 2013, and we ceased
issuing awards under the 2013 Plan upon approval of the 2018 Plan
in 2018.
(2)
Includes 245,909
shares available for issuance under our Employee Stock Purchase
Plan and 823,557 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.
19
The
following table presents information provided to the Company as to
the beneficial ownership of common stock as of June 2, 2020, by:
(i) persons known to the Company to hold 5% or more of such stock;
(ii) each of the directors and nominees of the Company; (iii) each
of the Named Executive Officers; and (iv) by all directors,
nominees 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 June 2, 2020.
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
ofBeneficial Ownership
(1)
|
Percent ofShares
|
|
Shareholders / Shareholder Groups
|
|
|
|
Air
T, Inc., et al.
|
3,850,282
(2)
|
31.8
%
|
|
3524
Airport Road
|
|
|
|
Maiden,
NC 28650
|
|
|
|
|
|
|
|
Cable
Car Capital LLC
|
1,574,971
(3)
|
13.0
%
|
|
1449
Washington Street #6
|
|
|
|
San
Francisco, CA 94109
|
|
|
|
|
|
|
|
Renaissance
Technologies LLC
|
759,484
(4)
|
6.3
%
|
|
800
Third Avenue
|
|
|
|
New
York, NY 10022
|
|
|
|
|
|
|
|
Directors, Nominees and Executive Officers
|
|
|
|
Kristine
A. Glancy
|
236,151
|
2.0
%
|
|
Jeffrey
A. Jagerson
|
84,818
|
*
|
|
Adam
D. May
|
74,567
|
*
|
|
Jacob
J. Berning
|
63,428
|
*
|
|
Loren
A. Unterseher
|
41,303
|
*
|
|
Rachael
B. Vegas
|
36,266
|
*
|
|
Chad
B. Johnson
|
0
|
|
|
|
|
|
|
All
current directors, nominees and executive officers as a group (7
persons)
|
536,533
|
4.4
%
|
*
Less than one
percent.
(1)
Does not include
34,382, 20,434 and 11,053 common stock equivalents held by Mr.
Berning, Mr. Unterseher and Ms. Vegas, 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 June 2, 2020.
(2)
Based on Amendment
No. 12 to Schedule 13D filed with the SEC on May 22, 2018 by Air
T., Groveland, and Nicholas J. Swenson, reporting ownership as of
May 21, 2018. Mr. Swenson is the Chief Executive Officer and a
director of Air T, Inc. 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. 10 to Schedule 13D filed with the SEC on March 19, 2020 as
updated by Form 4 filed with the SEC on May 21, 2020 by The
Funicular Fund, LP and Cable Car Capital LLC. Cable Car
Capital LLC serves as investment
adviser with full discretionary authority for The Funicular Fund,
LP. Mr. Jacob Ma-Weaver is the Managing Member and investment
advisor of Cable Car Capital LLC. Cable Car Capital LLC owns 25,000
shares and The Funicular Fund, LP owns 1,549,971
shares.
(4)
Based on Amendment
No. 3 to Schedule 13G filed with the SEC on February 13, 2020 by
Renaissance Technologies LLC and Renaissance Technologies Holdings
Corporation, reporting ownership as of December 31, 2019.
Shares are beneficially owned by Renaissance Technologies Holdings
Corporation, which is a majority owner of Renaissance Technologies
LLC.
DELINQUENT SECTION 16(a) REPORTS
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 2019 except for one report by each of Mr.
Berning, Mr. Unterseher, Ms. Vegas and Mr. Zenz relating to common
stock equivalents issued pursuant to their participation in the
Director Deferred Compensation Plan.
20
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 entered into the Cooperation Agreement with the Shareholder
Group on May 17, 2018. To the Company’s knowledge, as of June
2, 2020, the Shareholder Group collectively beneficially owned
approximately 31.8% 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.
Pursuant
to the terms of the Cooperation Agreement, the Company promptly
(i) increased the size of the Board to six and
(ii) appointed Suzanne 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 required 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 retired from the Board
as of June 5, 2019.
With
respect to the annual meetings held in 2018 and 2019, the
Shareholder Group 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 also 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.
Additionally,
on February 27, 2020, our Board appointed Mr. Johnson to serve as
an additional director to fill a vacancy on the Board pursuant to
the nomination and evaluation procedures for substitute nominees
set forth in the Cooperation Agreement.
During
fiscal years 2018 and 2019, 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.
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.
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Proposals
by shareholders (other than director nominations) that are
submitted for inclusion in the Company’s proxy statement for
its 2021 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
February 12, 2021. If the date of the 2021 Annual Meeting of
Shareholders is more than 30 days before or after the anniversary
of the 2020 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 2021 Annual Meeting of
Shareholders, such notice must be given between May 1, 2021 and May
31, 2021 and must comply with all applicable statutes and
regulations, as well as provide all information required pursuant
to the Company’s Bylaws.
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.
The
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019, as amended on April 29, 2020,
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
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.
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