LIGHTPATH TECHNOLOGIES INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant
☒
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
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☐
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Preliminary
Proxy Statement
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Confidential,
For use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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☒
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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LIGHTPATH TECHNOLOGIES, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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☒
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No fee
required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid
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Fee
paid previously with preliminary materials:
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
previously paid:
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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Date
Filed:
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LightPath Technologies, Inc.
Annual Meeting of Stockholders
November 12, 2020
Notice and Proxy Statement
NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Thursday, November 12, 2020
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Dear Fellow
LightPath Stockholders:
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October 1,
2020
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It is our pleasure
to invite you to this year’s Annual Meeting of the
Stockholders of LightPath Technologies, Inc. (the “Annual
Meeting”). Due to the public health impact of the coronavirus
(“COVID-19”) pandemic, and out of concern for the
health and safety of our stockholders, directors, and members of
management, the Annual Meeting will be held on Thursday, November
12, 2020 at 11:00 a.m. EDT in a virtual meeting format only. There
will be no physical location for stockholders to attend the Annual
Meeting. Stockholders will be able to listen, vote, and submit
questions, regardless of their physical location, via the internet
at
http://www.viewproxy.com/LightPath
/2020/vm
by using the
virtual control number included in your notice regarding the
availability of proxy materials, proxy card (printed in the box and
marked by the arrow) and the instructions that accompanied your
proxy materials. If you plan to participate in the virtual Annual
Meeting, please see the Instructions for the Virtual Annual Meeting
section in the attached Proxy Statement. The purpose of the Annual
Meeting is to vote on the following:
1.
To elect Class III
directors to our Company’s Board of Directors;
2.
To hold a
stockholder advisory vote on the compensation of our named
executive officers disclosed in this Proxy Statement under the
section titled “Executive Compensation,” including the
compensation tables and other narrative executive compensation
disclosures therein, required by Item 402 of Securities and
Exchange Commission Regulation S-K (the “say-on-pay
vote”);
3.
To ratify the
selection of MSL, P.A. (formerly known as Moore Stephens Lovelace,
P.A., and hereinafter referred to as “MSL”), as our
independent registered public accounting firm; and
4.
To transact such
other business as may properly come before the Annual Meeting or
any postponement or adjournment thereof.
You
will also have the opportunity to hear what has happened in our
business in the past year and to ask questions.
Only
stockholders of record at the close of business on September 16,
2020 will be entitled to receive notice of and to vote at the
Annual Meeting or any postponement or adjournment thereof. The
enclosed Notice and Proxy Statement contain details concerning the
foregoing items and any other business to be conducted at the
Annual Meeting, as well as information on how to vote your shares.
Other detailed information about us and our operations, including
our audited financial statements, are included in our Annual Report
on Form 10-K (the “Annual Report”), a copy of which is
enclosed. We urge you to read and consider these documents
carefully.
Your
vote is very important. Whether or not you expect to participate in
the Annual Meeting, we urge you to cast your vote and submit your
proxy in advance of the Annual Meeting. You can vote by internet,
telephone, or mail as follows:
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By Internet
Visit
www.AALvote.com/LPTH
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By Phone
Call
the telephone number on your proxy card, voting instruction form,
or notice
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By Mail
Sign,
date, and return the enclosed proxy card or voting instruction
form
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/s/ Shmuel Rubin
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/s/ Robert Ripp
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Shmuel
Rubin
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Robert
Ripp
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President
& Chief Executive Officer, Director
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Chairman
of the Board
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2603 Challenger Tech Court, Suite 100 * Orlando, Florida USA 32826
* 407-382-4003
1
LIGHTPATH TECHNOLOGIES, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held November 12, 2020
This
Proxy Statement, and the enclosed proxy card, is solicited by the
Board of Directors (the “Board”) of LightPath
Technologies, Inc., a Delaware corporation, for use at the Annual
Meeting of Stockholders (the “Annual Meeting”) to be
held Thursday, November 12, 2020 at 11:00 a.m. EDT, or at any
adjournments or postponements thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at 11:00 a.m. EDT. The Annual Meeting
will be a completely virtual meeting of stockholders conducted via
live audio webcast to enable our stockholders to participate from
anywhere. You will be able to virtually attend the Annual Meeting
by registering at
http://viewproxy.com/LightPath/2020/vm
by 11:59 p.m. Eastern Time on November 10, 2020.
References in this
Proxy Statement to “LightPath,” “we,”
“us,” “our,” or the “Company”
refers to LightPath Technologies, Inc.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 12,
2020
.
This
Proxy Statement, the enclosed proxy card, and the Annual Report for
the fiscal year ended on June 30, 2020 are all available on our
website at
www.lightpath.com
.
With respect to the Annual Meeting and all of our future
stockholder meetings, please contact Donald Retreage at
1-800-472-3486 ext. 329, or
dretreage@lightpath.com
,
to request a copy of the proxy statement, annual report, or proxy
card, or to obtain information regarding such meeting.
What is a proxy?
A proxy
is your legal designation of another person to vote the stock you
own and are entitled to vote. The person you designate is your
“proxy,” and, by submitting a proxy card, you give the
proxy the authority to vote your shares. We have designated Robert
Ripp, Chairman of the Board, as proxy for the Annual
Meeting.
Why am I receiving these materials?
You are
receiving this Proxy Statement and the enclosed proxy card because
our Board is soliciting your proxy to vote at the Annual Meeting
for the purposes set forth herein. This Proxy Statement provides
you with information on the matters to be voted on at the Annual
Meeting as well as instructions on how to vote.
We
intend to mail this Proxy Statement and accompanying proxy card on
or about October 1, 2020 to all stockholders of record entitled to
vote at the Annual Meeting.
Who can vote at the Annual Meeting?
You can
vote if, as of the close of business on September 16, 2020 (the
“Record Date”), you were a stockholder of record of the
Company’s Class A common stock, par value $0.01 per share
(the “Class A common stock”), our only class of common
stock issued and outstanding. On the Record Date, there were
26,012,831 shares of Class A common stock issued and
outstanding.
2
Stockholder of Record: Shares Registered in Your Name
If on
the Record Date, your shares were registered directly in your name
with our transfer agent, Computershare Trust Company, N.A., then
you are a stockholder of record. As a stockholder of record, you
may vote virtually at the Annual Meeting or vote by proxy. Whether
or not you plan to participate in the virtual Annual Meeting, we
urge you to vote by written proxy, telephone, or the Internet prior
to the Annual Meeting to ensure your vote is counted. Even if you
vote by proxy, you may still vote at the virtual Annual Meeting. In
order to virtually attend the Annual Meeting you must register at
http://viewproxy.com/LightPath/2020/vm
by 11:59 p.m. (Eastern Time) on November 10, 2020, using the
virtual control number included on your proxy card,
Beneficial Owner: Shares Registered in the Name of a Broker or
Bank
If on
the Record Date, your shares were held in an account at a brokerage
firm, bank, dealer, or other similar organization, then you are the
beneficial owner of shares held in “street name” and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is considered
the stockholder of record for purposes of voting at the Annual
Meeting. As a beneficial owner, you have the right to direct your
broker or other agent on how to vote the shares in your account. If
you do not direct your broker how to vote your shares, the broker
will be entitled to vote the shares with respect to
“discretionary” items but will not be permitted to vote
the shares with respect to “non-discretionary” items
(resulting in a “broker non-vote”). The ratification of
the appointment of our independent registered public accounting
firm under Proposal 3 is a “discretionary” matter. The
election of directors under Proposal 1, and the advisory say-on-pay
vote under Proposal 2 are “non-discretionary”
items.
You are
also invited to virtually participate in the Annual M
eeting. However, since you are not the stockholder
of record, you must provide a legal proxy from your bank or broker
during registration and you will be assigned a virtual control
number in order to vote your shares during the Annual Meeting. If
you are unable to obtain a legal proxy to vote your shares, you
will still be able to attend the Annual Meeting (but will not be
able to vote your shares during the meeting) so long as you
demonstrate proof of stock ownership. Instructions on how to
connect and participate via the Internet, including how to
demonstrate proof of stock ownership, are posted at
http://www.viewproxy.com/LightPath/2020
.
How many votes do I have?
On each
matter to be voted upon, you have one vote for each share of Class
A common stock you owned as of the Record Date.
What am I voting on?
The
following matters are scheduled for the Annual Meeting: (i) the
election of three Class III directors to our Board; (ii) an
advisory say-on-pay vote; and (iii) the ratification of the
selection of MSL as our independent registered public accounting
firm. A vote may also be held on any other business as may properly
come before the Annual Meeting or any postponement or adjournment
thereof, although there is no other business anticipated to come
before the Annual Meeting.
What are my voting choices for each of the items to be voted on at
the Annual Meeting?
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Proposal
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Board Recommendation
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Voting Choices
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Vote Required for Adoption
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Effect of Abstentions
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Effect of Broker Non-Votes
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1 – Election of Director Nominees
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FOR
each nominee
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●
Vote
“For” any or all of the nominees listed
●
Vote
“Withhold” to withhold your vote for any or all of the
nominees listed
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Plurality
of the votes of the shares present in person or by proxy and
entitled to vote at the Annual Meeting
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No
effect
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No
effect
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2 – Approval of the compensation of our named executive
officers
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FOR
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●
Vote
“For” the approval of the compensation of our named
executive officers
●
Vote
“Against” the approval of the compensation of our named
executive officers
●
Abstain from voting
on this proposal
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Approved,
on a non-binding advisory basis, if a majority of the shares
present in person or represented by proxy and entitled to vote
support the proposal
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Treated
as votes against proposal
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No
effect
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3 – Ratification of the appointment of MSL as our independent
registered public accounting firm
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FOR
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●
Vote
“For” the ratification of the appointment
●
Vote
“Against” the ratification of the
appointment
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Abstain from voting
on this proposal
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Approved,
on a non-binding advisory basis, if a majority of the shares
present in person or represented by proxy and entitled to vote
support the proposal
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Treated
as votes against proposal
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Brokers
have discretion to vote
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3
Instructions for the Virtual Annual Meeting
Participating in the Virtual Annual Meeting
Due to
the public health impact of the coronavirus
(“COVID-19”) pandemic, this year’s annual
stockholder meeting will be a virtual annual meeting. There will be
no physical meeting location. A virtual meeting format offers the
same participation opportunities as those opportunities available
to stockholders at in-person meetings. Stockholders will be able to
listen, vote, and submit questions. To participate in the Annual
Meeting, you must register at
http://www.viewproxy.com/LightPath/2020/vm
by 11:59 p.m. (Eastern Time) on November 10, 2020 using your
desktop or mobile device and entering the virtual control number on
your proxy card.
If you
hold your shares beneficially through a bank or broker, you must
provide a legal proxy from your bank or broker during registration
and you will be assigned a virtual control number in order to vote
your shares during the Annual Meeting. If you are unable to obtain
a legal proxy to vote your shares, you will still be able to attend
the Annual Meeting (but will not be able to vote your shares during
the meeting) so long as you demonstrate proof of stock ownership.
Instructions on how to connect and participate via the Internet,
including how to demonstrate proof of stock ownership, are posted
at
http://www.viewproxy.com/LightPath/2020
.
On the
day of the Annual Meeting, if you have properly registered, you may
enter the Annual Meeting by logging in using the event password you
received via email in your registration confirmation at
http://www.viewproxy.com/LightPath/2020/vm
.
The
Annual Meeting will begin promptly at 11 a.m. EDT on November 12,
2020. We encourage you to access the virtual meeting website prior
to the start time. Online check-in will begin 30 minutes prior to
the start of the Annual Meeting. You should allow ample time to
ensure your ability to access the meeting.
We will
hold our question and answer session with management immediately
following the conclusion of the Annual Meeting. You may submit a
question in advance of the Annual Meeting during the registration
process by visiting
http://viewproxy.com/LightPath/2020
.
You may also submit a question at any time during the Annual
Meeting by typing the questions into the questions box on the
screen once the virtual meeting starts. The Chairman of the Annual
Meeting has broad authority to conduct the meeting in an orderly
manner.
What if I have technical difficulties or trouble accessing the
virtual Annual Meeting website during the check-in time or during
the Annual Meeting?
Technicians
will be available to assist you if you experience technical
difficulties accessing the virtual meeting website. If you
encounter any difficulties accessing the virtual meeting during the
check-in or meeting time, send an email to
VirtualMeeting@viewproxy.com
or call (866) 612-8937 for assistance.
How do I vote?
Stockholder of Record: Shares Registered in Your Name
If you
are a stockholder of record, you may vote using the following
methods:
●
By Internet or Telephone.
To vote by
proxy via the Internet, simply follow the instructions described on
the notice or proxy card. To vote by proxy via the telephone within
the United States and Canada, use the toll-free number on the
notice or proxy card.
●
By Mail.
To vote by mail using the proxy
card, simply complete, sign, and date the enclosed proxy card and
return it promptly in the envelope provided. If you return your
signed proxy card to us before the Annual Meeting, we will vote
your shares as you direct.
Whether
or not you plan to participate in the virtual Annual Meeting, we
urge you to vote by proxy to ensure your vote is counted. You may
still participate in the virtual Annual Meeting and vote
electronically if you have already voted by proxy.
4
Beneficial Owner: Shares Registered in the Name of Broker or
Bank
If you
are a beneficial owner of shares registered in the name of your
broker, bank, or other agent, you can vote as follows:
●
By Internet or Telephone.
You may vote
through the Internet or by telephone only if your broker, bank, or
other agent makes these methods available, in which case the
instructions will be included with the proxy materials. If you want
to vote electronically at the virtual Annual Meeting, you must
obtain a valid proxy from your broker, bank, or other agent, follow
the instructions from your broker, bank, or agent included with
these proxy materials, or contact your broker, bank, or other agent
to request a proxy form.
●
By Mail.
You should have received a
proxy card and voting instructions with these proxy materials from
the broker, bank, or other agent holding your shares rather than
from us. To vote by mail, simply complete and mail the proxy card
or voting instruction form to ensure that your vote is
counted.
What if I am a stockholder of record and return a proxy card but do
not make specific choices?
You
should specify your choice for each matter on the proxy card. If
you return a signed and dated proxy card without marking any voting
selections, your shares will be voted:
●
FOR the nominees
listed under Proposal 1;
●
FOR the
compensation of our named executive officers under Proposal 2;
and
●
FOR the
ratification of MSL as our independent registered public accounting
firm under Proposal 3.
If any
other matter is properly presented at the meeting, your proxy (the
individual named on your proxy card) will vote your shares using
his or her best judgment.
What if I am a beneficial owner and do not give voting instructions
to my broker?
If you
fail to complete a proxy card or provide your broker with voting
instructions at least ten days before the meeting, your broker will
be unable to vote on the non-discretionary matters. Your broker may
use his or her discretion to cast a vote on any other routine or
discretionary matter.
Who is paying for this proxy solicitation?
We will
pay for the entire cost of soliciting proxies. In addition to these
mailed proxy materials, our directors, officers, and employees may
also solicit proxies by mail, in person, by telephone, or by other
means of communication. Directors, officers, and employees will not
be paid any additional compensation for soliciting proxies. We will
also reimburse brokerage firms, banks, and other agents for the
cost of forwarding proxy materials to beneficial
owners.
What does it mean if I receive more than one proxy
card?
If you
receive more than one proxy card, your shares are registered in
more than one name or are registered in different accounts. Please
complete, sign, and return
each
proxy card to ensure that all of
your shares are voted.
What is “householding”?
The
Securities and Exchange Commission (the “SEC”) has
adopted rules that permit companies and intermediaries such as
brokers to satisfy the delivery requirements for proxy statements
with respect to two or more security holders sharing the same
address by delivering a single proxy statement addressed to those
security holders. This process, which is commonly referred to as
“householding,” potentially means convenience for
security holders and cost savings for companies.
5
A
number of brokers with account holders who are LightPath
stockholders will be “householding” our proxy
materials. A single proxy statement will be delivered to multiple
stockholders sharing an address unless contrary instructions have
been received from the affected stockholders. Once you have
received notice from your broker or us that they will be
“householding” communications to your address,
“householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in “householding” and would
prefer to receive a separate proxy statement, please notify your
broker and also notify us by sending your written request to
Investor Relations, LightPath Technologies, Inc., 2603 Challenger
Tech Court, Suite 100, Orlando, Florida USA 32826 or by calling
Investor Relations at 407-382-4003, ext. 314. Stockholders who
currently receive multiple copies of the proxy statement at their
address and would like to request “householding” of
their communications should also contact their broker and notify us
in writing or by telephone.
Can I revoke or change my vote after submitting my
proxy?
Yes.
You can revoke your proxy at any time before the final vote at the
Annual Meeting. You may revoke your proxy by:
●
submitting a new
proxy with a later date;
●
sending written
notice of revocation to our Corporate Secretary at 2603 Challenger
Tech Court, Suite 100, Orlando, Florida USA 32826 in time for her
to receive it before the Annual Meeting; or
●
voting
electronically at the Annual Meeting. Simply participating
virtually at the Annual Meeting will not, by itself, revoke your
proxy.
Who will count votes?
Votes
will be counted by the inspector of elections appointed for the
Annual Meeting. The inspector of elections will also determine the
number of shares outstanding, the voting power of each, the number
of shares represented at the Annual Meeting, the existence of a
quorum, and whether or not the proxies and ballots are valid and
effective.
What is the quorum requirement?
A
majority of the issued and outstanding shares of Class A common
stock entitled to vote must be present at the Annual Meeting (in
person or represented by proxy) in order for us to hold the Annual
Meeting and conduct business. This is called a quorum. On the
record date, there were 26,012,831 outstanding shares of Class A
common stock (including all restricted stock awards at such date)
entitled to vote. Thus, 13,006,416 shares must be present at the
Annual Meeting (in person or represented by proxy) to have a
quorum.
Your
shares will be counted towards the quorum only if you submit a
valid proxy or vote electronically at the Annual Meeting.
Abstentions and broker non-votes will be counted towards the quorum
requirement. If there is no quorum, a majority of the shares
entitled to vote and present at the Annual Meeting (virtually or
represented by proxy) may adjourn the meeting to another
date.
How can I find out the results of the voting at the Annual
Meeting?
We will
announce preliminary voting results at the Annual Meeting. We will
report the final voting results in a Current Report on Form 8-K
filed with the SEC within four business days following such results
becoming final.
When are stockholder proposals for the Fiscal 2022 Annual Meeting
due?
Stockholders
interested in presenting a proposal to be considered for inclusion
in next year’s proxy statement and form of proxy may do so by
following the procedures prescribed in Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”), and our Bylaws. To be considered for
inclusion, stockholder proposals must be submitted in writing to
the Corporate Secretary, LightPath Technologies, Inc., 2603
Challenger Tech Court, Suite 100, Orlando, Florida USA 32826 before
June 3, 2021, which is 120 calendar days prior to the anniversary
of the mailing date of this Proxy Statement, and must be in
compliance with all applicable laws and regulations.
6
If a
stockholder wishes to present a proposal at the fiscal 2022 annual
meeting, but the proposal is not intended to be included in the
Company’s proxy statement relating to the meeting, or
nominate a director for election at the fiscal 2022 annual meeting,
the stockholder must give advance notice to the Company prior to
the deadline for such meeting determined in accordance with our
Bylaws (the “Bylaw Deadline”). Under our Bylaws, in
order for a proposal to be timely, it must be received by us no
earlier than 120 days prior to the anniversary of the fiscal 2021
Annual Meeting, or July 15, 2021, and no later than 90 days prior
to the anniversary date of the fiscal 2021 Annual Meeting, or
August 14, 2021. If a stockholder gives notice of such a proposal
after the Bylaw Deadline, the stockholder will not be permitted to
present the proposal to the stockholders for a vote at the meeting
or nominate a director for election at the meeting.
If a
stockholder fails to meet these deadlines or fails to satisfy the
requirements of SEC Rule 14a-4, the persons named as proxies will
be allowed to use their discretionary voting authority to vote on
any such proposal or nomination as they determine appropriate if
and when the matter is raised at the fiscal 2022 annual
meeting.
How do I get a copy of the exhibits filed with our Annual
Report?
A copy
of our Annual Report for the fiscal year ended June 30, 2020, and
consolidated financial statements, were provided to you with this
Proxy Statement. We will provide copies of the exhibits filed with
our Annual Report upon written request if you are a stockholder as
of the Record Date. Requests for such copies should be directed to
Investor Relations at 2603 Challenger Tech Court, Suite 100,
Orlando, Florida USA 32826. In addition, copies of all of our
electronically filed exhibits may be reviewed and printed from the
SEC website at
http://www.sec.gov
.
PROPOSAL 1 – ELECTION OF DIRECTORS
What Am I Voting On?
Stockholders are
being asked to elect three Class III directors: Louis Leeburg,
Craig Dunham, and Shmuel Rubin to serve for a term ending at the
third successive annual meeting of stockholders following this
Annual Meeting, or until their successors have been duly elected
and qualified. Mr. Leeburg, Mr. Dunham and Mr. Rubin are current
members of the Board.
If any
of the nominees becomes unable or unwilling to serve as a director
before the Annual Meeting, an event which is not presently
anticipated, the individual named as proxy on the proxy card may
exercise discretionary authority to vote for substitute nominees
proposed by the Board, or, if no substitute is selected by the
Board prior to or at the Annual Meeting, for a motion to reduce the
present membership of the Board to the number of nominees
available.
Voting Recommendation
FOR
the election of each Class III
director nominee.
Board and Committee Composition
Currently, we have
nine directors with each director serving until his or her
successor is elected and qualified. Our Board is divided into three
classes, denoted as Class I, Class II, and Class III, serving
staggered three-year terms with one class elected at the annual
meeting of stockholders. The Class II directors’ term expires
at the annual meeting of stockholders proposed to be held in fiscal
2022. The Class I directors’ term expires at the annual
meeting of stockholders proposed to be held in fiscal 2023. The
Class III directors’ term expires at this Annual
Meeting.
7
The
table below lists each current director, each such director’s
committee memberships, the chairman of each Board committee, and
each such director’s class.
|
Name
|
Audit
|
Compensation
|
Finance
|
Nominating & Corporate Governance
|
Class
|
|
Robert Ripp
|
|
☑
|
☑
|
☑
|
I
|
|
Darcie Peck
|
☑
|
|
|
|
I
|
|
Dr. Joseph Menaker
|
|
|
☑
|
|
I
|
|
Sohail Khan
|
|
☑
|
☑
|
☑
|
II
|
|
Dr. Steven Brueck
|
☑
|
|
|
|
II
|
|
M. Scott Faris
|
☑
|
|
☑
|
|
II
|
|
Louis Leeburg
|
☑
|
☑
|
|
☑
|
III
|
|
Craig Dunham
|
☑
|
|
|
|
III
|
|
Shmuel Rubin
|
|
|
|
|
III
|
|
Committee Chairman:
|
Leeburg
|
Ripp
|
Khan
|
Ripp
|
|
Biographical and Related Information – Director Nominees,
Continuing Directors, and Executive Officers
The
following is an overview of the biographical information for each
of our director nominees, continuing directors, and executive
officers, including their age, the year they became directors or
officers, their principal occupations or employment for at least
the past five years, and certain of their other
directorships.
8
|
Nominees for Class III Directors
|
|
|
Louis
Leeburg, 66
Director
|
Mr.
Leeburg has served as one of our directors since May 1996. Mr.
Leeburg is currently a self-employed business consultant. Since
1993, Mr. Leeburg has served as the senior financial advisor of The
Fetzer Institute, and before that, he served as the Vice President
for Finance. Mr. Leeburg was an audit manager for Price Waterhouse
& Co. until 1980. He is a member of the Financial Foundation
Officers Group and the chairman and trustee for the John E. Fetzer
Memorial Trust Fund. Mr. Leeburg received a Bachelor of Science
degree in Accounting from Arizona State University.
Mr. Leeburg has a broad range of experience in accounting and
financial matters. His expertise gained in various roles in
financial management and investment oversight for over thirty
years, coupled with his knowledge gained as a certified public
accountant, add invaluable knowledge to our Board and qualify him
for service as one of our directors.
|
|
Craig
Dunham, 64
Director
|
Mr.
Dunham has served as one of our directors since April 2016, and
prior to his appointment to the Board, he served as a consultant to
the Board beginning in March 2014. Since April 2015, he provides
business and M&A consulting to companies. From May 2011 until
March 2015, Mr. Dunham served as the Chief Executive Officer of
Applied Pulsed Power Inc. (“APP”), a pulsed power
components and systems company near Ithaca, New York. Mr. Dunham
currently serves as a director of APP. From 2004 until 2011, Mr.
Dunham was President, Chief Executive Officer and director of
Dynasil Corporation of America (“Dynasil”), a company
which was previously listed on the Nasdaq Capital Market until
August 2019, and now is quoted on the OTC Markets Group,
Inc.’s Pink Open Market. He continues to be a director at
Dynasil and is a member of their audit committee. Prior to joining
Dynasil, Mr. Dunham spent approximately one year partnering with a
private equity group to pursue acquisitions of mid-market
manufacturing companies. From 2000 to 2003, he was Vice
President/General Manager of the Tubular Division at Kimble Glass
Corporation. From 1979 to 2000, he held progressively increasing
leadership responsibilities at Corning Incorporated
(“Corning”) in manufacturing, engineering, commercial,
and general management positions. At Corning, Mr. Dunham delivered
results in various glass and ceramics businesses including optics
and photonics businesses. Mr. Dunham earned a Bachelor of Science
degree in Mechanical Engineering and a Master’s degree in
Business Administration from Cornell University. Mr. Dunham’s
expertise in executive leadership, financial, strategic planning,
operations and management, business acumen, optics/photonics market
knowledge, and knowledge of the acquisitions process, qualifies him
for service as one of our directors.
|
|
|
|
|
Shmuel
Rubin, 46
President
& Chief Executive Officer, Director
|
Mr.
Rubin has served as our President, Chief Executive Officer, and as
a Director since March 2020. Mr. Rubin is also a director of
LightPath Optical Instrumentation (Shanghai) Co., Ltd.
(“LPOI”), our wholly-owned subsidiary, located in
Jiading, People’s Republic of China, LightPath Optical
Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”), our
wholly-owned subsidiary, located in the New City District, of the
Jiangsu province of the People’s Republic of China, ISP, our
wholly-owned subsidiary, previously located in Irvington, New York,
and ISP Latvia, our wholly-owned subsidiary located in Riga,
Latvia.
Prior
to joining us, Mr. Rubin was formerly General Manager at Thorlabs
Inc. (“Thorlabs”). In Mr. Rubin’s prior senior
executive role at Thorlabs, he was responsible for Thorlabs’
Imaging Systems Division, a standalone organization with its own
sales and marketing, as well as global responsibility for all of
Thorlabs’ Life Science activities. Among the positions he
held at Thorlabs, Mr. Rubin founded and grew Thorlabs’s fast
growing operation in China, and spearheaded Thorlabs’ entry
and significant growth in the Life Sciences market. As a member of
the senior executive team, Mr. Rubin led new strategic initiatives
for Thorlabs, including new product lines, acquisitions and growth
into new markets. Prior to joining Thorlabs, Mr. Rubin co-founded
XLight Photonics, an optical communication startup, which was later
sold to a telecommunications private equity firm. Mr. Rubin holds a
Bachelor of Science degree in Electronic Engineering from Ben
Gurion University, a Master of Business Administration degree from
New York University, Stern School of Business, and is a graduate of
the Executive Education, Program for Leadership Development at
Harvard Business School. Mr. Rubin’s significant management
experience in the optical industry qualifies him to lead us and our
business and service as one of our directors.
|
9
10
Class II Directors
|
Sohail
Khan, 66
Director
|
Mr.
Khan has served as one of our directors since February 2005. Since
September 2017, he has served as the managing partner of K5
Innovations, a technology consulting venture. He also served in
such role from July 2011 to April 2013. He served as the President
and Chief Executive Officer of ViSX Systems Inc., a pioneer and
leader in media processing semiconductor solutions for video over
IP streaming solutions from September 2015 until the company was
acquired by Pixelworks in August 2017. From May 2013 to July 2014,
he served as the Chief Executive Officer and a director of
Lilliputian Systems, a developer of portable power products for
consumer electronics. He was the President and Chief Executive
Officer and a member of the board of directors of SiGe
Semiconductor (“SiGe”), a leader in silicon-based radio
frequency front-end solutions from April 2007 until it was acquired
by Skyworks Solutions Inc. in June 2011. Prior to SiGe, Mr. Khan
was Entrepreneur in Residence and Operating Partner of Bessemer
Venture Partners, a venture capital group focused on technology
investments. Mr. Khan received a Bachelor of Science in Electrical
Engineering from the University of Engineering and Technology in
Pakistan. Additionally, he received a Master’s of Business
Administration from the University of California at Berkeley. Mr.
Khan previously served on the board of directors and audit
committee of Intersil Corporation, a public company, from October
2014 to March 2017, and the board of directors of VIXS Systems,
Inc., a public company, until the acquisition by Renesas &
Pixelworks in August 2017. Mr. Khan’s experience in venture
financing, specifically technology investments, is an invaluable
asset Mr. Khan contributes to the Board composition. In addition,
Mr. Khan’s significant 35 years of experience in executive
management, particularly with respect to technology businesses,
profit and loss management, mergers and acquisitions, and capital
raising, as well as his background in engineering qualifies him for
service as one of our directors.
|
|
|
|
|
Dr.
Steven Brueck, 76
Director
|
Dr.
Brueck has served as one of our directors since July 2001. Since
July 2017, he has served as Vice President and Chief Scientific
Officer at Armonica Technologies, Inc., a venture capital-backed
company formed to commercialize his University of New Mexico
patents in nanofluidics and long-read DNA sequencing. He is a
Distinguished Professor, Emeritus of Electrical and Computer
Engineering and of Physics at the University of New Mexico in
Albuquerque, New Mexico, which he joined in 1985. Although he
retired in 2014, he remains active as a University of New Mexico
Research Professor. From 1986 to 2013, he served as Director of the
Center for High Technology Materials. Since 2016, he has served on
the Scientific Advisory Committee for the Center for Integrated
Nanotechnologies of Sandia National Laboratories. He is a graduate
of Columbia University with a Bachelor of Science degree in
Electrical Engineering and a graduate of the Massachusetts
Institute of Technology where he received his Master’s and
Doctorate of Science degrees in Electrical Engineering. Dr. Brueck
is a fellow of The Optical Society of America, the Institute of
Electrical and Electronics Engineers, the American Association for
the Advancement of Science, and the National Academy of Inventors.
Dr. Brueck’s expertise in optics and optics applications, as
well as his extensive fifty years of research experience in optics,
lasers, detectors, lithography, nonlinear optics, and related
fields qualify him for service as one of our
directors.
|
11
|
|
|
|
M.
Scott Faris, 55
Director
|
Mr.
Faris has served as a director of the Company since December 2011.
Mr. Faris is an experienced entrepreneur with almost two decades of
operating, venture-financing, and commercialization experience,
involving more than 20 start-up and emerging-growth technology
companies. In September 2016, Mr. Faris was named the Chief
Business Officer of Luminar Technologies, Inc., a leading developer
of autonomous vehicle systems technologies including Lidar sensor
suites. In June 2013, Mr. Faris founded Aerosonix, Inc. (formerly
MicroVapor Devices, LLC), a privately held developer and
manufacturer of advanced medical devices, and served as its Chief
Executive Officer until August 2016 and has served as Chairman of
the board of directors since June 2013. In 2002, Mr. Faris also
founded the Astralis Group, a strategy advisor that provides
consulting to start-up companies and, since 2004, Mr. Faris has
served as its Chief Executive Officer. In August 2007, Mr. Faris
founded Planar Energy, a company that developed transformational
ceramic solid-state battery technology and products, and served as
its Chief Executive Officer until June 2013. Planar Energy is a
spin-out of the U.S. Department of Energy’s National
Renewable Energy Laboratory. From October 2004 to June 2007, Mr.
Faris was a partner with Corporate IP Ventures (formerly known as
MetaTech Ventures), an early stage venture fund specializing in
defense technologies. Mr. Faris also previously served as the
Chairman and Chief Executive Officer of Waveguide Solutions, a
developer of planar optical light wave circuit and micro system
products, and as a director and Chief Operating Officer of Ocean
Optics, Inc., a precision-optical-component and
fiber-optic-instrument spin-out of the University of South Florida.
Mr. Faris was also the founder and Chief Executive Officer of
Enterprise Corporation, a technology accelerator, served as a
director of the Florida Seed Capital Fund and Technology
Commercialization at the Center for Microelectronics Research, and
the chairman of the Metro Orlando EDC. Mr. Faris received a
Bachelor of Science degree in Management Information Systems from
Penn State University in 1988. Mr. Faris is currently on the board
of directors of Aerosonix, Inc., a private company. Mr.
Faris’s significant experience in executive management
positions at various optical component companies, his experience in
the commercialization of optical and opto-electronic component
technology, and his background in optics, technology, and venture
capital qualify him for service as one of our
directors.
|
Executive Officers Who Do Not Serve as Directors
|
Donald
O. Retreage, Jr., 66
Chief
Financial Officer
|
Mr.
Retreage was appointed as our Chief Financial Officer on June 18,
2018. He most recently served as Senior Vice President of Houser
Logistics from April 2017 to June 2018, where he was responsible
for aligning strategic initiatives with corporate targets for
customer service, revenue, and cost control. Prior to that, during
a portion of 2017, Mr. Retreage was a Financial Specialist at
Robert Half / Accountemps, and from October 2016 to January 2017,
Mr. Retreage served as a Senior Business Consultant for
International Services Inc., during which he worked with business
owners to develop management processes, practices, and policies to
drive profitability and grow businesses. From 2008 to 2015, Mr.
Retreage served as Deputy Managing Director & Financial
Director at Seaboard Management Corporation, a division of Seaboard
Corporation. He received a Bachelor of Science in Business
Administration, Accounting and Finance from University of Louisiana
at Lafayette. Mr. Retreage is experienced in directing
international business operations and aligning strategic
initiatives with corporate targets for revenue, cost control, and
employee development and engagement.
|
|
|
|
Officer and Director Tribute
On
behalf of the Board of Directors, Mr. Ripp would like to recognize
J. James Gaynor, our former President and Chief Executive Officer,
as well as a former member of the Board, who retired effective June
30, 2020, after 13 years of service and contribution to the Company
and our stockholders. His dedication, commitment, and contributions
have significantly added to the success of the Company. We extend
our sincere appreciation for his exceptional service and
contributions and wish him all the best in his
retirement.
12
CORPORATE GOVERNANCE
Meetings of the Board and its Committees
The
Board has an Audit Committee (the “Audit Committee”), a
Compensation Committee (the “Compensation Committee”),
Nominating and Corporate Governance Committee (the
“Nominating Committee”), and a Finance Committee (the
“Finance Committee”). The entire Board met eight times,
including telephonic meetings, during fiscal 2020. Messrs. Ripp and
Dunham, Drs. Brueck and Menaker and Ms. Peck attended 100% of the
Board meetings. Messrs. Leeburg and Kahn attended 88% of the Board
meetings. Mr. Faris attended 75% of the Board meetings. Mr. Rubin
attended 100% of the Board meetings held following his appointment.
Messrs. Ripp, Khan, Leeburg, and Dunham, Dr. Menaker and Ms. Peck
attended 100% of the meetings held by committees of the Board on
which they served. Mr. Faris attended 80% of the meetings held by
the Audit Committee and none of the meetings held by the Finance
Committee. Dr. Brueck attended 80% of the meetings held by the
Audit Committee. All of the then-elected directors attended the
fiscal 2020 Annual Meeting of Stockholders on November 14,
2019.
It is
our policy that all of our directors are required to make a
concerted and conscientious effort to attend our annual
stockholders’ meeting in each year during which that director
serves as a member of the Board.
Audit Committee.
The
Audit Committee, which consists of Dr. Steven Brueck, M. Scott
Faris, Craig Dunham, Darcie Peck and Louis Leeburg (Chairman), met
five times during fiscal 2020. The meetings included discussions
with management and with our independent registered public
accounting firm to discuss our interim and annual financial
statements and our annual report, and the effectiveness of our
financial and accounting functions and organization.
The
Audit Committee acts pursuant to a written charter adopted by the
Board, a copy of which is available on our website at
www.lightpath.com
under the “Investor” tab. The Audit Committee’s
responsibilities include, among others, engaging and terminating
our independent registered public accounting firm, oversight of the
independent registered public accounting firm
,
and determining the compensation for
their engagement(s). The Board has determined that the Audit
Committee is comprised entirely of independent members as defined
under applicable listing standards set out by the SEC and The
Nasdaq Capital Market (the “NCM”). The Board has also
determined that four members of the Audit Committee, Messrs.
Leeburg, Faris, Dunham, and Ms. Peck, are “audit committee
financial experts” as defined by SEC rules and qualify as
independent in accordance with the NCM rules. Mr. Leeburg’s,
Mr. Faris’, Mr. Dunham’s, and Ms. Peck’s
respective business experience that qualifies each director to be
determined as “audit committee financial expert” is
described above.
Compensation
Committee.
The Compensation Committee, which consists of
Robert Ripp (Chairman), Sohail Khan, and Louis Leeburg, met four
times during fiscal 2020. The Compensation Committee acts pursuant
to a written charter adopted by the Board, a copy of which is
available on our website at
www.lightpath.com
under the “Investor” tab.
The
Compensation Committee is responsible for establishing,
implementing, and continually monitoring our compensation policies
and philosophy, including administering our 2018 Omnibus Incentive
Plan (the “Incentive Plan”), pursuant to which
incentive awards, including stock options, are granted to our
directors, executive officers, and key employees. The Compensation
Committee is responsible for determining executive compensation,
including approving recommendations regarding equity awards to all
of our executive officers. However, the Compensation Committee does
rely on the annual reviews made by the Chief Executive Officer with
respect to the performance of each of our other executive officers.
The conclusions reached, and recommendations made based on these
reviews, including with respect to salary adjustments and annual
award amounts, are presented to the Compensation Committee. The
Compensation Committee can exercise its discretion in modifying any
recommended adjustments or awards to executive officers. In the
case of the Chief Executive Officer, compensation is determined
solely based on the review conducted by the Compensation
Committee.
The
Compensation Committee also annually reviews director compensation
to ensure non-employee directors are adequately compensated for the
time expended in fulfilling their duties to us, as well as the
skill-level required by us of members of the Board. After the
Compensation Committee completes their annual review, they make
recommendations to the Board regarding director
compensation.
The
Compensation Committee regularly engages compensation consultants
to assist with the Compensation Committee’s responsibilities
related to our executive compensation program and the director
compensation program. The Compensation Committee plans to engage a
consultant every two years to review and make recommendations on
the Company’s executive compensation plans.
The
Compensation Committee engaged Meridian Consulting Partners, LLC
(“Meridian”), during fiscal 2020 for the purpose of
providing market data and analysis regarding the termination
treatment of and benefits for the executive officers and directors
of our ten peer companies (the “Peer Group”), which
consist of companies that are similar in size by either revenue or
market capitalization. The companies included in the Peer Group are
as follows: Digital Ally, Inc., LRAD Corp., CyberOptics
Corporation, CUI Global, Inc., Wireless Telecom Group, Inc., Luna
Innovations Incorporated, Frequency Electronics, Inc., Dynasil,
Nanophase Technologies Corporation, and Giga-tronics Incorporated.
The analysis included review of equity and cash compensation for
executive officers regarding change of control agreements,
severance plans, and the handling of equity for executive officers
and directors upon retirement, death, or disability. Meridian made
recommendations to the Compensation Committee regarding termination
treatment and benefits at the conclusion of their
work.
13
During
fiscal 2020, the Compensation Committee also engaged Compensation
Strategies, Inc. (“Compensation Strategies”) to review
the Company’s incentive compensation program design, equity
dilution, and annual share usage in comparison to the Peer Group.
After this work was completed, the Company engaged Compensation
Strategies for an additional project. The additional project
included reviewing the current Peer Group, suggesting additional
peer companies within the optical business industry with revenues
of a minimum of $50,000,000 and market capitalization of between
$75,000,000 and $150,000,000. Compensation Strategies suggested a
new peer group (the “New Peer Group”) comprised of the
following twenty-one companies: Photon Control, Inc., RADCOM Ltd.,
LRAD Corporation, Lantronix, Inc., Wireless Telecom Group, Inc.,
Frequency Electronics, Inc., GSI Technology, Inc., RF Industries,
Ltd., CyberOptics Corporation, inTEST Corporation, Luna Innovations
Incorporated, Perceptron, Inc., EMCORE Corporation, Mesa
Laboratories, Inc., Ultralife Corporation, Intevac, Inc., IEC
Electronics Corp., Gooch & Housego, PLC, nLIGHT, Inc., Applied
Optoelectronics, Inc., and EXPO Inc. Once the New Peer Group was
identified, Compensation Strategies provided (i) data on the
incentive compensation programs of the New Peer Group, (ii) how the
New Peer Group scales compensation for senior executives in
relation to the compensation of their chief executive officers,
(iii) provided information on the affordability of our incentive
compensation programs compared to the New Peer Group, and (iv)
reviewed the Board’s compensation relative to the New Peer
Group. Compensation Strategies suggested scaling our senior
executive compensation against the 25th percentile of the New Peer
Group based upon the Company’s size relative to the New Peer
Group.
The
Compensation Committee evaluated the independence of both Meridian
and Compensation Strategies at the time of engagement and
determined that the consultants were independent pursuant to the
factors set forth in Section 10C-1 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”).
Finance Committee.
The Finance Committee, which consists of Sohail Khan (Chairman),
Robert Ripp, M. Scott Faris, and Dr. Joseph Menaker met twice
during fiscal 2020. The Finance Committee acts pursuant to a
written charter adopted by the Board, a copy of which is available
on our website at
www.lightpath.com
under the “Investor” tab. The Finance Committee
oversees our financial management, including overseeing our
strategic and transactional planning and activities, global
financing, capital structure objectives and plans, insurance
programs, tax structure, and investment program and
policies.
Nominating and Corporate
Governance Committee.
The Nominating Committee, which
consists of Robert Ripp (Chairman), Sohail Khan, and Louis Leeburg,
met three times during fiscal 2020. The Nominating Committee acts
pursuant to a written charter adopted by the Board, a copy of which
is available on our website at
www.lightpath.com
under the “Investor” tab. The Nominating Committee
carries out the responsibilities delegated by the Board relating to
our director nominations process and procedures, and developing,
maintaining, and monitoring compliance with the Company’s
corporate governance policies, guidelines, and activities. During
fiscal 2020, the Nominating Committee began discussing whether it
should establish retirement guidelines for our executive officers
and directors.
All
current committee members are expected to be reappointed to the
same committees at the Board meeting to be held immediately
following the Annual Meeting.
CEO Search
Committee.
In August 2019, the Board also established a CEO
Search Committee, an ad hoc committee to assist the Board in
identifying and evaluating potential Chief Executive Officer
candidates. The CEO Search Committee was composed of Robert Ripp
(Chairman), Louis Leeburg, and Sohail Khan. The CEO Search
Committee was disbanded in March 2020 upon the engagement of a new
Chief Executive Officer.
Nominations Process and Criteria
The
Nominating Committee determines the qualifications, qualities,
skills, and other expertise required to be a director and to
develop, and recommend to the Board for its approval, criteria to
be considered in selecting nominees for director. The Nominating
Committee and the Board believe that at this time, it is
unnecessary to adopt criteria for the selection of directors.
Instead, the Nominating Committee and the Board believes that the
desirable background of a new individual member of the Board may
change over time and that a thoughtful, thorough selection process
is more important than adopting criteria for
directors.
They
will also identify, recruit, and screen candidates for the Board,
consistent with criteria approved by the Board. The Nominating
Committee and Board is fully open to utilizing whatever methodology
is efficient in identifying new, qualified directors when needed,
including industry contacts of our directors or professional search
firms. The Nominating Committee also considers any director
candidates recommended by our stockholders pursuant to the
procedures described in this Proxy Statement and any nominations of
director candidates validly made by stockholders in accordance with
applicable laws, rules, and regulations, and the provisions of our
charter documents.
Following the
announcement of our former Chief Executive Officer’s intended
retirement, we engaged a third-party to identify and evaluate
potential Chief Executive Officer candidates. This firm identified
Mr. Rubin, who we subsequently hired as our Chief Executive
Officer, and appointed as a director. Other than the foregoing,
t
here were no fees paid or due to third parties in fiscal
2020 to identify or evaluate, or to assist in evaluating or
identifying, potential director nominees.
Any
stockholder wishing to propose that a person be nominated for or
appointed to the Board may submit such a proposal, according to the
procedure described in the stockholder proposal section on page 6
of this Proxy Statement, to:
Corporate
Secretary
LightPath
Technologies, Inc.
2603
Challenger Tech Court, Suite 100
Orlando,
Florida 32826
The
Corporate Secretary will promptly forward any such correspondence
to the Chairman of the Nominating Committee for review and
consideration by the Nominating Committee in accordance with the
criteria described above.
14
Director Independence
In
accordance with NCM and SEC rules, the Board affirmatively
determines the independence of each director and director nominee
in accordance with guidelines it has adopted, which include all
elements of independence set forth in the NCM listing standards.
Based on these standards, the Board has determined that each of the
following non-employee directors serving during fiscal 2020 is
independent and has no relationship with us, except as one of our
directors and stockholders.
|
Robert
Ripp
|
Sohail
Khan
|
|
Steven
Brueck
|
Louis
Leeburg
|
|
M.
Scott Faris
|
Craig
Dunham
|
|
Darcie
Peck
|
|
Based
on these standards, the Board determined Shmuel Rubin, currently a
Class III director, and Dr. Joseph Menaker, currently a Class I
director, were not independent.
All of
the members of the Audit, Nominating, and Compensation Committees
are also independent.
The
Board approved an Amended and Restated Code of Business Conduct and
Ethics (the “Code”) on April 28, 2016. The Code applies
to all of our employees, officers, and directors, including our
principal executive officers, principal financial officers, and
principal accounting officer or controller, or persons performing
similar functions. The Board also approved an Amended and Restated
Code of Business Conduct and Ethics for Senior Financial Officers
(the “Senior Financial Officer Code”), which applies to
our Chief Executive Officer, Chief Financial Officer, principal
accounting officer, controller, accounting manager, and persons
performing similar functions. Copies of the Code and the Senior
Financial Officer Code are available on our website at
www.lightpath.com
,
under the “Investor” tab, or may be obtained free of
charge by writing to: Corporate Secretary, LightPath Technologies,
Inc., 2603 Challenger Tech Court, Suite 100, Orlando, Florida
32826.
Related Party Transactions
When
we are contemplating entering into any transaction in which any
executive officer, director, director nominee, or any family member
of the foregoing would have any direct or indirect interest,
regardless of the amount involved, the terms of such transaction
have to be presented to the Audit Committee (other than any
interested director) for approval or disapproval. Neither the Audit
Committee nor the Board have adopted a written policy for reviewing
related party transactions but when presented with such
transaction, the transaction is discussed by the Audit Committee
and documented in its meeting minutes.
The
Code also requires our employees, officers, and directors to
provide prompt and full disclosure of all potential conflicts of
interest to the appropriate person. These conflicts of interest may
be specific to the individual or may extend to his or her family
members. Any officer who has a conflict of interest with respect to
any matter is required to disclose the matter to our Chief
Executive Officer or, in the case of the Chief Executive Officer,
to the Chairman of the Audit Committee. All other employees are
required to make prompt and full disclosure of any conflict of
interest to his or her immediate supervisor, who will then make
prompt and full disclosure to our Chief Executive Officer.
Directors are required to disclose any conflict of interests to the
Chairman of the Audit Committee and are prohibited from voting on
any matter(s) in which they have a conflict of interest. In
addition, directors and executive officers are required to disclose
in an annual questionnaire, any current or proposed conflict of
interests (including related party transactions).
From
the period beginning July 1, 2019 and ending September 30, 2020,
there were no current or proposed related party
transactions.
Board of Directors Leadership Structure and Role in Risk
Oversight
Board Leadership Structure
Our
Board has chosen to separate the positions of Chairman and Chief
Executive Officer, with Mr. Robert Ripp serving as Chairman
and Mr. Shmuel Rubin serving as President and Chief Executive
Officer. As President and Chief Executive Officer, Mr. Rubin
is responsible for our day-to-day leadership and performance, with
the Board being responsible for setting our strategic direction, as
well as overseeing and advising our management. The Board believes
that the current independent leadership of the Board by our
non-executive Chairman enhances the effectiveness of its oversight
of management and provides a perspective that is separate and
distinct from that of management.
15
Role of the Board in Risk Oversight
Our
Board is responsible for the oversight of our operational risk
management process. Our Board has delegated authority for
addressing certain risks, and accessing the steps management has
taken to monitor, control, and report such risks, to our Audit and
Finance Committees. Such risks include risks relating to execution
of our growth strategy, the effects of the contracting in the
global economy and general financial condition and outlook on
customer purchases, component inventory supply, or ability to
expand our partner network, communication with investors, certain
actions of our competitors, the protection of our intellectual
property, sufficiency of our capital, inventory investment and risk
of obsolescence, security of information systems and data,
integration of new information systems, credit risk, product
liability, and costs of reliance on external advisors. The Audit or
Finance Committee, as applicable, then reports such risks as
appropriate to the Board. The Board initiates discussions with
appropriate members of our senior management if, after discussion
of such risks, the Board determines that such risks raise questions
or concerns about the status of operational risks then facing
us.
Our
Board relies on our Compensation Committee to address significant
risk exposures we face with respect to compensation, including
risks relating to retention of key employees, protection of partner
relationships, management succession, and benefit costs, and, when
appropriate, reports these risks to the full Board.
Stockholder Communications with the Board
Stockholders and
other parties interested in communicating directly with the Board,
a committee of the Board, or any individual director, may do so by
sending a written communication to the attention of the intended
recipient(s) in care of the Corporate Secretary, LightPath
Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando,
Florida USA 32826. The Corporate Secretary will forward all
appropriate communications to the Chairman of the Audit
Committee.
16
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September
16, 2020, the number and percentage of outstanding shares of our
Class A common stock, owned by: (i) each of our directors (which
includes all nominees), (ii) each of the named executive officers,
(iii) our directors and executive officers as a group, and (iv)
each person known by us to be the beneficial owner of more than 5%
of our outstanding Class A common stock. The number of shares of
Class A common stock outstanding as of September 16, 2020
was
26,012,831
.
The
number of shares beneficially owned by each director, named
executive officer, and greater than 5% beneficial owner is
determined under SEC rules, and the information is not necessarily
indicative of the beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares to which the
individual has the sole or shared voting power or investment power
and also any shares which the individual has the right to acquire
within 60 days of September 16, 2020, through the exercise of any
stock option or other right to purchase, such as a warrant. Unless
otherwise indicated, each person has sole investment and voting
power (or shares such power with his or her spouse) with respect to
the shares set forth in the following table. In certain instances,
the number of shares listed may include, in addition to shares
owned directly, shares held by the spouse or children of the
person, or by a trust or estate of which the person is a trustee or
an executor or in which the person may have a beneficial interest.
The table that follows is based upon information supplied in a
questionnaire completed by each named executive officer and
director and stockholders beneficially owning greater than 5% of
our Class A common stock.
|
|
Securities
|
|
|
|||
|
|
Class A Common
Stock
|
|
|
|
|
|
|
Name
and Address (1)
|
Restricted
(2)
|
Unrestricted
|
Options
|
Amount of Shares
of Class A Common Stock Beneficially Owned
|
|
Percent
Owned
(%) |
|
Robert Ripp,
Director
|
396,954
|
775,000
|
—
|
1,171,954
|
(3
)
|
4.4
%
|
|
Louis Leeburg,
Director
|
396,954
|
102,691
|
—
|
499,645
|
(4
)
|
1.9
%
|
|
Sohail Khan,
Director
|
398,154
|
20,661
|
—
|
418,815
|
|
1.6
%
|
|
Dr. Steven Brueck,
Director
|
396,954
|
79,870
|
—
|
476,824
|
(5
)
|
1.8
%
|
|
M. Scott Faris,
Director
|
296,254
|
3,940
|
—
|
300,194
|
|
1.1
%
|
|
Craig Dunham,
Director
|
205,794
|
33,000
|
—
|
238,794
|
|
*
|
|
Dr. Joseph Menaker,
Director
|
80,787
|
—
|
—
|
80,787
|
|
*
|
|
Darcie Peck,
Director
|
48,000
|
—
|
—
|
48,000
|
|
*
|
|
Shmuel Rubin,
CEO
|
—
|
14,320
|
—
|
14,320
|
|
*
|
|
Donald Retreage,
Jr., CFO
|
—
|
3,750
|
5,886
|
9,636
|
(6
)
|
*
|
|
All
directors and executive officers as a group (10
persons)
|
2,219,851
|
1,033,232
|
5,886
|
3,258,969
|
|
11.5
%
|
|
|
|
|
|
|
|
|
|
J. James Gaynor,
Former CEO
|
—
|
216,978
|
406,606
|
623,584
|
(7
)
|
*
|
|
Alan Symmons,
Former COO
|
—
|
41,200
|
—
|
41,200
|
(8
)
|
*
|
|
Greater
than 5% beneficial owners:
|
|
|
|
|
|
|
|
Pudong Science and
Technology Investment (Cayman) Co., Ltd.
|
—
|
2,270,026
|
—
|
2,270,026
|
(9
)
|
8.7
%
|
|
Royce &
Associates, LP
|
—
|
1,350,084
|
—
|
1,350,084
|
|
5.2
%
|
*Less
than 1%
17
Notes:
(1)
Except as otherwise
noted, each of the parties listed above has sole voting and
investment power over the securities listed. The address for all
directors and officers is “in care of” LightPath
Technologies, Inc., 2603 Challenger Tech Court, Suite 100, Orlando,
Florida 32826. The address for Pudong Science and Technology
(Cayman) Co. Ltd., as filed on a Schedule 13G filed on November 28,
2017, is 46F, Building 1, Lujiazui Century Financial Plaza, No. 729
South Yanggao Road, Pudong, Shanghai 200127, People’s
Republic of China. The address for Royce Associates, LP, as filed
on a Schedule 13G filed on January 23, 2020, is 745 Fifth Avenue,
New York, New York 10151.
(2)
Restricted stock
units (“RSUs”) awarded to our directors vest over three
years. Except for Darcie Peck, all of our directors have elected to
defer receipt of the vested shares until after they leave the
Board, either by reason of resignation, termination, or otherwise.
Therefore, for these directors, these vested shares remain
unissued. All of the directors unvested RSUs will vest upon such
director’s resignation or termination from the Board. The
amounts of restricted stock set forth above reflects both vested
and unvested shares included in the RSU awards. The amounts of
vested shares for each director, other than Mr. Rubin, are as
follows: Mr. Ripp – 354,025, Mr. Leeburg – 354,025, Mr.
Khan – 355,225, Dr. Brueck – 354,025, Mr. Faris –
253,325, Mr. Dunham – 162,865, Dr. Menaker – 37,858,
and Ms. Peck – 16,000.
(3)
Does not include
7,812 shares of Class A common stock, which are owned by trusts for
Mr. Ripp's adult children and for which he disclaims beneficial
ownership.
(4)
Includes 92,691
shares of Class A common stock, which are held jointly with Mr.
Leeburg’s wife and for which he shares voting and investment
power.
(5)
Includes 70,870
shares of Class A common stock held by a family trust for which Dr.
Brueck shares voting and investment power.
(6)
Includes 5,886
shares of Class A common stock with respect to which Mr. Retreage
has the right to acquire. Specifically, Mr. Retreage holds options
that are currently exercisable for an aggregate of 5,886 shares of
Class A common stock. This amount does not include 9,271 shares of
Class A common stock underlying options that remain
unvested.
(7)
Mr. Gaynor, our
former Chief Executive Officer, retired as of June 30, 2020. Mr.
Gaynor is considered one of our named executive officers for fiscal
2020 since he served as Chief Executive Officer during fiscal 2020.
Mr. Gaynor’s ownership includes 406,606 shares of Class A
common stock with respect to which he has the right to acquire. Mr.
Gaynor holds options that are currently exercisable for an
aggregate of 406,606 shares of Class A common stock. Subsequent to
the Record Date, or September 16, 2020, Mr. Gaynor exercised
options to purchase 90,000 shares of Class A common stock. If the
remaining options are not exercised by September 30, 2020, they
will be forfeited.
(8)
Alan Symmons, our
former Chief Operating Officer, resigned in May 2020. Mr. Symmons
is considered one of our named executive officers for fiscal 2020
because, but for the fact that he was not serving as an executive
officer at the end of fiscal 2020, he would have qualified as one
of our two most highly compensated executive officers.
(9)
Pudong Science and
Technology Investment (Cayman) Co., Ltd. is wholly owned by
Shanghai Pudong Science and Technology Investment Co., Ltd., and
for purposes hereof is also deemed as a beneficial owner of the
shares.
Change-in-Control Arrangements
We do
not know of any arrangements, which may, at a subsequent date,
result in a change in control.
Delinquent Section 16(a) Reports
Section
16(a) of the Exchange Act, requires that our directors and
executive officers, and persons who beneficially own more than 10%
of our common stock (referred to herein as the “Reporting
Persons”) file with the SEC various reports as to their
ownership of and activities relating to our Class A common stock.
To the best of our knowledge, all Reporting Persons complied on a
timely basis with all filing requirements applicable to them with
respect to transactions during our most recent fiscal year. In
making these statements, we have relied solely on our review of
copies of the reports furnished to us, representations that no
other reports were required, and other knowledge relating to
transactions involving the Reporting Persons.
18
EXECUTIVE COMPENSATION
Named Executive Officers
During
fiscal 2020, our named executive officers were as
follows:
●
Shmuel Rubin, our
current President and Chief Executive Officer, and a
director;
●
Donald O. Retreage,
our current Chief Financial Officer;
●
J. James Gaynor,
our former President and Chief Executive Officer (through March 8,
2020); and
●
Alan Symmons, our
former Chief Operating Officer (through May 8, 2020).
Key Developments in Fiscal 2020
Throughout
fiscal 2020, our management team underwent a few key changes.
Following the announcement on June 3, 2019 regarding Mr.
Gaynor’s intention to retire on June 30, 2020, the Board
formed an ad hoc CEO Search Committee comprised of independent
directors and engaged a third-party search firm to assist in
identifying and evaluating candidates to succeed Mr. Gaynor.
Following such evaluation, on February 24, 2020, the CEO Search
Committee recommended, and the Board approved, the appointment of
Mr. Rubin as our new President and Chief Executive Officer
effective March 9, 2020. Mr. Rubin was also appointed to the Board
effective March 9, 2020. Beginning on March 9, 2020 through June
30, 2020, Mr. Gaynor served as an employee consultant. In addition,
Mr. Symmons, our former Chief Operating Officer, resigned from that
role effective May 8, 2020.
For
information regarding the employment agreements of our currently
serving named executive officers, and the agreements for our
departed named executive officers, if any, please see section
entitled “Potential Payments upon Termination or
Change-of-Control” below.
Compensation Philosophy and Objectives
Our
compensation policy is designed to attract and retain qualified key
executive officers critical to our achievement of reaching and
maintaining profitability and positive cash flow, and subsequently
our growth and long-term success. To attract, retain, and motivate
the executive officers to accomplish our business strategy, the
Compensation Committee establishes our executive compensation
policies and oversees our executive compensation
practices.
The
Compensation Committee believes that the most effective executive
compensation program is one that is designed to recognize the
achievement of our specific short-term and long-term goals, and
which aligns executives’ interests with those of the
stockholders by rewarding performance that meets or exceeds
established goals, with the ultimate objective of improving
stockholder value.
It is
the objective of the Compensation Committee to have a portion of
each named executive officer’s compensation contingent upon
our performance as well as upon the individual’s personal
performance. Accordingly, each named executive officer’s
compensation package is comprised of two elements: (i) base salary,
which reflects individual performance and expertise and (ii)
short-term and long-term incentive awards, which are tied to the
achievement of certain performance goals that the Compensation
Committee establishes from time to time. The Compensation Committee
has structured compensation of our named executive officers to
incentivize achievement of our business goals and reward our named
executive officers for achieving such goals.
The
Compensation Committee also evaluates our compensation program to
ensure that we maintain the ability to attract and retain superior
employees in key positions and that compensation provided to key
employees remains competitive relative to the compensation paid to
similarly situated executive officers.
In
accordance with the advisory “say-on-frequency” vote of
our stockholders at the fiscal 2017 annual meeting of stockholders,
held in January 2017, and as approved by the Board, we will include
an annual advisory “say-on-pay” vote in our proxy
statement, including this Proxy Statement for the fiscal 2021
Annual Meeting. Our next required stockholder advisory
“say-on-frequency” vote will occur at our fiscal 2023
annual stockholders’ meeting. The most recent
“say-on-pay” advisory vote occurred at the fiscal 2020
annual meeting, at which our stockholders approved, on an advisory
basis, the compensation of our named executive
officers.
Setting Executive Compensation
In
making compensation decisions, the Compensation Committee relies on
the following:
●
the annual reviews
made by the Chief Executive Officer with respect to the performance
of each of our other named executive officers;
●
the annual review
conducted by the Compensation Committee with respect to the
performance of the Chief Executive Officer;
●
compensation paid
to executive officers of other manufacturing companies similar in
size and scope as us and our competitors; and
●
our annual
performance with respect to our short-term and long-term strategic
plan.
19
There
is no pre-established policy or target for the allocation between
either cash and non-cash or short-term and long-term incentive
compensation. Rather, the Compensation Committee annually reviews
information to determine the appropriate level and mix of incentive
compensation when determining our executive compensation plan.
Based on these factors, the Compensation Committee makes
compensation decisions, including salary adjustments, annual
short-term cash incentive awards, and long-term equity incentive
awards for our named executive officers.
Retirement Benefits
We
offer a qualified 401(k) defined contribution plan. The ability of
named executive officers to participate fully in this plan is
limited under the requirements of the Internal Revenue Code of
1986, as amended, and the Employment Retirement Income Security Act
of 1974, as amended. We currently match 100% of the first 2% of
employee contributions.
Executive Compensation and Risk
Although a
substantial portion of the compensation paid to our named executive
officers is performance-based, we believe our executive
compensation programs do not encourage excessive and unnecessary
risk-taking by our named executive officers because these programs
are designed to encourage our named executive officers to remain
focused on both our short-term and long-term operation and
financial goals. We achieve this balance through a combination of
elements in our overall compensation plans, including: (i) elements
that reward different aspects of short-term and long-term
performance; (ii) incentive compensation that rewards performance
on a variety of different measures; and (iii) cash awards and stock
option awards, to encourage alignment with the interests of
stockholders.
Executive Officer Stock Ownership Requirements
Effective as of
January 1, 2016, our Board established certain guidelines requiring
that each of our executive officers acquire and maintain a minimum
level of ownership of our securities during the period in which he
or she is an executive officer. The Board modified the minimum
level of ownership in fiscal 2018. As modified, the guidelines set
the target ownership level at five times the annual base salary for
our Chief Executive Officer and three times the annual base salary
for each of our other executive officers, as measured at fiscal
year-end. The Board reviews the target ownership levels on an
annual basis to determine whether such target ownership levels
should be increased.
For
purposes of determining ownership levels, all forms of equity and
derivative securities, including stock, stock options, restricted
stock, and RSUs, count towards satisfaction of the ownership
guidelines; however, with respect to any stock option award, only
the number of shares equal to (i) the difference between the
closing price of the Class A common stock as reported on the NCM at
the end of the fiscal year and the exercise price of the stock
option multiplied by (ii) the number of shares underlying the stock
option, then (iii) divided by the closing price of the Class A
common stock as reported on the NCM at the end of the fiscal year,
are included for purposes of determining whether the stock
ownership target is met. For example, if an officer is awarded a
stock option of 100 shares of Class A common stock, with an
exercise price of $1.00 per share, and the closing price of the
Class A common stock as reported on the NCM on June 30, 2020 is
$2.00, the number of shares of Class A common stock included from
such stock option award for purposes of meeting the stock ownership
target is 50 shares.
The
Board may grant waivers of the guidelines in the event of financial
hardship or other good cause. Once an executive officer attains his
or her required stock ownership level, he or she will remain in
compliance with the guidelines despite future changes in the stock
price and base salary, as long as the executive officer’s
holdings do not decline below the number of shares owned at the
time the required stock ownership level was met. Each executive
officer will have until December 31, 2021, or five years after his
or her date of becoming an executive officer, whichever is later,
to meet the required ownership level.
Our
currently serving named executive officers did not meet their
respective ownership targets as of June 30, 2020. Mr. Rubin has
until February 24, 2025 to meet the target, and Mr. Retreage has
until June 18, 2023 to meet the target.
|
Name
(1)
|
Class A common
stock
|
Stock Options
(2)
|
Restricted Stock
Units
|
Total Amount of
Shares of Class A Common Stock Beneficially Owned
|
Stock Price at
June 30, 2020
|
Market Value at
June 30, 2020
|
Base
Salary
|
% of
Salary
|
|
Shmuel
Rubin
|
11,320
|
118,243
|
100,000
|
229,563
|
$
3.33
|
$
764,445
|
$
350,000
|
218
%
|
|
Donald O. Retreage,
Jr.
|
3,750
|
7,097
|
—
|
10,847
|
$
3.33
|
$
36,121
|
$
200,000
|
18
%
|
(1)
This table excludes
our departed named executive officers, Mr. Symmons and Mr. Gaynor,
as they separated from the Company effective May 8, 2020 and June
30, 2020, respectively. Neither Mr. Symmons nor Mr. Gaynor had met
their respective ownership targets as of their respective
separation dates.
(2)
Does not include
stock options with an exercise price that exceeds the closing stock
price as of June 30, 2020.
20
Hedging Policy and Pledging of Securities
Pursuant
to our Guide for Trading in Securities by Employees, Officers, and
Directors, our employees, officers, and directors cannot engage in
hedging transactions related to our securities, which includes our
Class A common stock, are prohibited. Employees, officers, and
directors are also prohibited from holding our securities, which
includes our Class A common stock, in a margin account or otherwise
pledging our securities as collateral for a loan.
2020 Incentive Program
Our
fiscal 2020 incentive program has two key components: (i) the
Short-Term Incentive (“STI”) program, and (ii) the
Long-Term Incentive (“LTI”) program. The STI program is
comprised of awards based on our achievement of specific fiscal
2020 financial objectives (the “2020 STI Award”). The
LTI program is comprised of (i) an individual discretionary stock
option award, based on an executive officer’s achievement of
individual goals evaluated over a one-year performance period (the
“2020 LTI Discretionary Award”), which goals were set
early in fiscal 2020, and (ii) a corporate performance-based equity
award based on the achievement of pre-established financial
performance metrics evaluated over a three-year performance period
(the “2020 LTI Multi-Year Award” and, together with the
2020 LTI Discretionary Award, the “2020 LTI Awards”).
The metrics for the 2020 LTI Multi-Year Award were set early in
fiscal 2020 for the three-year period beginning on July 1, 2019
through June 30, 2022.
Our
incentive program includes different levels of bonus opportunity
based on a participant’s position with the Company. For
fiscal 2020, Mr. Gaynor was the only “level one”
participant and Mr. Retreage and Mr. Symmons were “level
two” participants. Bonus opportunities for level one and
level two participants for fiscal 2020 were calculated by applying
designated portions of their respective bonus pool amounts, which
were set by the Compensation Committee, to formulas for each of the
components of the STI and LTI programs, as applicable. Since Mr.
Symmons separated from the Company prior to June 30, 2020, he was
not eligible to earn any awards with respect to either the STI or
LTI programs for fiscal 2020. Mr. Rubin was also not eligible to
participate in either the STI or LTI programs for fiscal 2020
because of his hire date; therefore, his bonus for fiscal 2020 was
subject to other metrics set forth in the Employment Agreement,
dated February 24, 2020, between Mr. Rubin and us (the “Rubin
Employment Agreement”). A summary of the compensation per the
Rubin Employment Agreement is included in the Summary Compensation
Table on page 26 and the related footnotes.
For
fiscal 2020, (i) Mr. Gaynor’s bonus pool amount for the 2020
STI Award was set at $215,000 and (ii) Mr. Retreage’s bonus
pool amount for the 2020 STI Award was set at $80,000 and his bonus
pool amount for the 2020 LTI Awards was set at
$50,000.
The
Compensation Committee determined that achievement of the 2020 STI
Award would be paid in cash; however, the Compensation Committee
retained the discretion to adjust the allocation of the 2020 STI
Award between cash and RSUs prior to payment.
STI Program
For
level one participants, the 2020 STI Award is based solely on the
achievement of corporate financial objectives. For level two
participants, the 2020 STI award is based on 60% corporate
financial objectives, and 40% personal objectives. The corporate
financial objectives are as follows: (i) revenue growth over that
of the prior fiscal year (the “Revenue Component”);
(ii) EBITDA margin (which is earnings before income, taxes,
depreciation, and amortization, as a percentage of revenue) (the
“EBITDA Component”); and (iii) book value per share
(the dollar value of stockholders’ equity as of the fiscal
year end, divided by the number of shares Class A common stock
outstanding as of the fiscal year end) (the “Book Value
Component”). The Revenue Component was weighted at 10%, the
EBITDA Component was weighted at 60%, and the Book Value Component
was weighted at 30%. Each component of the 2020 STI Award is
evaluated independently of the other components, and the 2020 LTI
Awards are evaluated independently of the 2020 STI
Award.
Revenue Component
The
maximum bonus pool amount with respect to the Revenue Component of
the 2020 STI Award, was $21,500, and $4,800 for Mr. Gaynor and Mr.
Retreage, respectively (for each participant, the “Revenue
Pool Amount”). Based on the 2020 STI Award, participants
would only earn the Revenue Component if we achieved the target of
7% year-over-year revenue growth in fiscal 2020. If we achieved
this year-over-year revenue growth target in fiscal 2020,
then participants would be entitled to a bonus award under the
Revenue Component equal to such participant’s Revenue Pool
Amount.
Our
revenue in fiscal 2020 increased by 4%, as compared to fiscal 2019,
which was below the target. Accordingly, the participants did not
earn any portion of the Revenue Component of the 2020 STI
Award.
EBITDA Component
In
order for our participants to earn a bonus with respect to the
EBITDA Component, we had to meet or exceed a minimum EBITDA margin
target established by the Compensation Committee for fiscal 2020.
The EBITDA margin was calculated by dividing the fiscal 2020
EBITDA, as adjusted for certain non-recurring costs associated with
the CEO transition as approved by the Compensation Committee, by
the fiscal 2020 revenues. Based on the 2020 STI Award, participants
would be entitled to the following amounts for each percentage
point above 15% of EBITDA margin: $43,000 and $9,600, for Mr.
Gaynor and Mr. Retreage, respectively. The maximum bonus pool
amount with respect to the EBITDA Component of the 2020 STI Award,
was $129,000 and $28,800 for Mr. Gaynor and Mr. Retreage,
respectively.
We
achieved an EBITDA margin of 16% for fiscal 2020. Accordingly, Mr.
Gaynor earned $43,000 and Mr. Retreage earned $9,600 with respect
to the EBITDA Component of the 2020 STI Award.
21
Book Value Component
The
maximum bonus pool amount with respect to the Book Value Component
of the 2020 STI Award, was $64,500 and $14,400 for Mr. Gaynor and
Mr. Retreage, respectively (for each participant, the “Book
Value Pool Amount”). Based on the 2020 STI Award,
participants would only earn the Book Value Component if we
achieved the book value per share target of $1.38 as of June 30,
2020. The book value per share was calculated by the dollar value
of stockholders’ equity as of June 30, 2020, divided by the
number of shares Class A common stock outstanding as of June 30,
2020. If we achieved the target, then participants would be
entitled to a bonus award under the Book Value component equal to
such participant’s Book Value Pool Amount.
Our
book value per share as of June 30, 2020 was $1.34, which was below
the target amount. Accordingly, the participants did not earn the
Book Value Component of the 2020 STI Award.
Personal Objectives Component
The
maximum bonus pool amount with respect to personal objectives was
$32,000 for Mr. Retreage, as a level two participant. The
Compensation Committee evaluated Mr. Retreage’s personal
objectives, which are subjective, along with the Company’s
achievement of the corporate financial objectives for fiscal
2020. Because we partly achieved our corporate financial
objectives the Compensation Committee limited the payout for the
personal objectives component to 60% of the maximum bonus pool
amount for this component. This adjusted maximum bonus pool
amount was then multiplied by the percentage of achievement of
personal objectives. Mr. Retreage earned $19,200 with respect to
the Personal Objectives Component of the 2020 STI
Award.
Based
on the achievement of the respective components, the total amounts
earned for the 2020 STI Award were $43,000 for Mr. Gaynor, and
$28,800 for Mr. Retreage.
LTI Program
The
2020 LTI Awards are comprised of two components: (i) the 2020 LTI
Discretionary Award and (ii) the 2020 LTI Multi-Year
Award.
2020 LTI Discretionary Award
The
2020 LTI Discretionary Award is an individual discretionary stock
option award made by our Compensation Committee that is based on
each executive officer’s achievement of certain individual
goals approved by the Compensation Committee for fiscal 2020. In
order to determine a participant’s 2020 LTI Discretionary
Award bonus opportunity, the portion of such participant’s
bonus pool amount applicable to the 2020 LTI Awards calculation
($125,000 in the case of Mr. Gaynor, and $50,000 in the case of Mr.
Retreage), was multiplied by 40%. Thus, the bonus opportunity for
the 2020 LTI Discretionary Award was $50,000 and $20,000 for Mr.
Gaynor and Mr. Retreage, respectively. Participants can earn any
portion of the bonus opportunity for the 2020 LTI Discretionary
Award. The Compensation Committee determined that if earned, the
2020 LTI Discretionary Award would be paid as a stock option, with
one-third of the shares of Class A common stock underlying the
stock option vesting on each of the first, second, and third
anniversaries of the grant date. The Compensation Committee
determined that if awarded, the exercise price would be set at the
greater of 115% of the closing bid price of our Class A common
stock on the grant date or the book value per share of our Class A
common stock as of June 30, 2020.
At the
end of fiscal 2020, an executive summary was presented to the
Compensation Committee, which summarized each executive
officer’s achievements with respect to their individual
goals, which were based on certain operational, strategic, and
business development objectives. After review and consideration,
the Compensation Committee determined that Mr. Retreage would be
eligible for a portion of the 2020 LTI Discretionary Award. Based
on this review and after considering Mr. Retreage’s
individual achievements during fiscal 2020, the Compensation
Committee determined that Mr. Retreage earned a portion of his 2020
LTI Discretionary Award in an amount equal to $6,000. The
Compensation Committee determined that Mr. Gaynor was not eligible
to receive any portion of his 2020 LTI Discretionary Award. We
expect to grant the stock options in November 2020.
2020 LTI Multi-Year Award
The
2020 LTI Multi-Year Award is a corporate performance-based equity
award based on the achievement of pre-established financial
performance metrics over a three-year performance period. In order
to determine a participant’s 2020 LTI Multi-Year Award bonus
opportunity, the portion of such participant’s bonus pool
amount applicable to the 2020 LTI Awards calculation ($125,000 in
the case of Mr. Gaynor and $50,000 in the case of Mr. Retreage),
was multiplied by 60%. Thus, the bonus opportunity for the 2020 LTI
Multi-Year Award was $75,000, and $30,000 for Mr. Gaynor and Mr.
Retreage, respectively.
The
performance metrics upon which the 2020 LTI Multi-Year Award was
based are as follows: (i) revenue (the “LT Revenue
Component”); (ii) book value per share of Class A common
stock (the “LT Book Value Component”); and (iii) EBITDA
margin (the “LT EBITDA Component”). The Compensation
Committee set a target for each component for each year during the
three-year period (July 1, 2019 through June 30, 2022). Each
performance component is valued at “one point” for each
year during the three-year period. For each performance component
for which the target is achieved, the participants each earn
“one point.” Thus, the LT Revenue Component is worth
one point per year during the three-year performance period, the LT
Book Value Component is worth one point per year during the
three-year performance period, and the LT EBITDA Component is worth
one point per year during the three-year performance
period.
22
The
payout opportunity based on the number of total points earned
during the three-year performance period is shown in the table
below.
|
Number of Points Earned
|
Percentage of Payout of the 2019 LT Multi-Year Award
|
|
0-3
|
0%
|
|
4
|
50%
|
|
5
|
60%
|
|
6
|
75%
|
|
7
|
100%
|
|
8
|
110%
|
|
9
|
125%
|
Each
component of the 2020 LTI Multi-Year Award is evaluated
independently of the other components during each year of the
performance. The Compensation Committee determined that if earned
at the end of the three-year performance period, the 2020 LTI
Multi-Year Award would be paid as RSUs.
LT Revenue Component – Fiscal 2020 (Year 1)
The
Compensation Committee set a target for the LT Revenue Component
for fiscal 2020 of $36.0 million, which represented year-over-year
revenue growth of 7%, compared to fiscal 2019. Our total revenue
for fiscal 2020 was less than the target; thus, the participants
did not earn a point for the LT Revenue Component in fiscal
2020.
LT Book Value Component – Fiscal 2020 (Year 1)
The
Compensation Committee set a target for the LT Book Value Component
for fiscal 2020 of $1.38 book value per share of our Class A common
stock. Our book value per share of our Class A common stock for
fiscal 2020 was less than the target; thus, the participants did
not earn a point for the LT Book Value Component in fiscal
2020.
LT EBITDA Component – Fiscal 2020 (Year 1)
The
Compensation Committee set the LT EBITDA Component for fiscal 2020
at a target EBITDA margin of 18%. Our EBITDA margin for fiscal 2020
was less than the target; thus, the participants did not earn a
point for the LT EBITDA Component in fiscal 2020.
2019 Incentive Program
Our
fiscal 2019 incentive program had two key components: (i) the STI
program, and (ii) the LTI program. The STI program was comprised of
awards based on our achievement of specific fiscal 2019 financial
objectives (the “2019 STI Award”). The LTI program was
comprised of (i) an individual discretionary stock option award,
based on an executive officer’s achievement of individual
goals evaluated over a one-year performance period (the “2019
LTI Discretionary Award”), which goals were set prior to the
beginning of fiscal 2019, and (ii) a corporate performance-based
equity award based on the achievement of pre-established financial
performance metrics evaluated over a three-year performance period
(the “2019 LTI Multi-Year Award” and, together with the
2019 LTI Discretionary Award, the “2019 LTI Awards”).
The metrics for the 2019 LTI Multi-Year Award were set prior to the
beginning of fiscal 2019 for the three-year period beginning on
July 1, 2018 through June 30, 2021.
Our
2019 incentive program included different levels of bonus
opportunity based on a participant’s position with the
Company. For fiscal 2019, Mr. Gaynor was the only “level
one” participant and Mr. Retreage and Mr. Symmons were
“level two” participants. Bonus opportunities for level
one and level two participants for fiscal 2019 were calculated by
applying designated portions of their respective bonus pool
amounts, which were set by the Compensation Committee, to formulas
for each of the components of the STI and LTI programs, as
applicable.
The
Compensation Committee determined that achievement of the 2019 STI
Award could be paid 50% in cash and 50% in RSUs; however, the
Compensation Committee retained the discretion to adjust the
allocation of the 2019 STI Award between cash and RSUs prior to
payment.
23
STI Program
The
2019 STI Award was based on the following financial objectives: (i)
revenue growth over that of the prior fiscal year (the
“Revenue Component”); (ii) EBITDA growth (which is
earnings before income, taxes, depreciation, and amortization) (the
“EBITDA Component”); and (iii) return on assets
(adjusted to exclude the effect of goodwill) (the “ROA
Component”). The Revenue Component was weighted at 20%, the
EBITDA Component was weighted at 40%, and the ROA Component was
weighted at 40%. Each component of the 2019 STI Award was evaluated
independently of the other components, and the 2019 LTI Awards were
evaluated independently of the 2019 STI Award.
In
April 2019, based on our year-to-date financial performance as
compared to our fiscal 2019 projections, the Compensation Committee
revised the financial components of the 2019 STI Award, and the
respective targets, in order to incentivize the participants to
recover any portion of the then-anticipated shortfall of the
initial Revenue Component target, and the initial EBITDA Component
target. If the revised targets were met for the Revenue Component
and the EBITDA Component, the Compensation Committee would have
then considered the achievement of certain operational and business
development objectives set for each named executive in determining
the payout amount of the 2019 STI Award. Based on the revisions to
the financial components of the 2019 STI Award, participants were
not eligible to earn a portion of the 2019 STI Award based on the
ROA Component. The revisions to the 2019 STI Award also decreased
the overall bonus pool amount available for the 2019 STI Awards.
Based on our fiscal 2019 financial performance, the revised 2019
STI Award program targets were not met; thus, none of our named
executive officers earned the 2019 STI Award.
Revenue Component
The
maximum bonus pool amount with respect to the Revenue Component of
the 2019 STI Award, as revised, was $43,000, $16,000, and $17,000
for Mr. Gaynor, Mr. Retreage, and Mr. Symmons, respectively (for
each participant, the “Revenue Pool Amount”). Based on
the revisions to the 2019 STI Award, participants would only earn
the Revenue Component if we achieved the revised target of 8% of
year-over-year growth in fiscal 2019. If we achieved the revised
target of 8% of year-over-year revenue growth in fiscal 2019, then
participants would be entitled to a bonus award under the Revenue
Component equal to such participant’s Revenue Pool Amount
multiplied by the quotient of the actual revenue growth percentage
divided by the initial target of 15%.
Our
revenue in fiscal 2019 increased by 4%, as compared to fiscal 2018.
Accordingly, the target was not met, and the participants did not
earn any portion of the Revenue Component of the 2019 STI
Award.
EBITDA Component
In
order for our participants to earn a bonus with respect to the
EBITDA Component, we had to meet or exceed a minimum EBITDA margin
target established by the Compensation Committee for fiscal 2019.
The EBITDA margin was calculated by dividing the fiscal 2019 EBITDA
by the fiscal 2019 revenues. Based on the revisions to the 2019 STI
Award, participants would be entitled to the following amounts for
each percentage point above 15% of EBITDA margin: $14,664, $5,456
and $5,797, for Mr. Gaynor, Mr. Retreage, and Mr. Symmons,
respectively.
We did
not exceed an EBITDA margin of 15% for fiscal 2019. Accordingly,
the participants did not earn the EBITDA Component of the 2019 STI
Award.
LTI Program
The
2019 LTI Awards were comprised of two components: (i) the 2019 LTI
Discretionary Award and (ii) the 2019 LTI Multi-Year
Award.
2019 LTI Discretionary Award
The
2019 LTI Discretionary Award was an individual discretionary stock
option award made by our Compensation Committee that was based on
each executive officer’s achievement of certain individual
goals approved by the Compensation Committee for fiscal 2019. In
order to determine a participant’s 2019 LTI Discretionary
Award bonus opportunity, the portion of such participant’s
bonus pool amount applicable to the 2019 LTI Awards calculation
($125,000 in the case of Mr. Gaynor, $50,000 in the case of Mr.
Retreage, and $50,000 in the case of Mr. Symmons), was multiplied
by 40%. Thus, the bonus opportunity for the 2019 LTI Discretionary
Award was $50,000, $20,000, and $20,000 for Mr. Gaynor, Mr.
Retreage, and Mr. Symmons, respectively. Participants could earn
any portion of the bonus opportunity for the 2019 LTI Discretionary
Award. The Compensation Committee determined that if earned, the
2019 LTI Discretionary Award would be paid as a stock option, with
one-third of the shares of Class A common stock underlying the
stock option vesting on each of the first, second, and third
anniversaries of the grant date. The Compensation Committee
determined that if awarded, the exercise price would be set at the
greater of the then-current market price of our Class A common
stock, or the book value per share of our Class A common stock as
of June 30, 2019.
24
At the
end of fiscal 2019, our Chief Executive Officer provided an
executive summary to the Compensation Committee, which summarized
each executive officer’s achievements with respect to their
individual goals, which were based on certain operational,
strategic, and business development objectives. After review and
consideration, the Compensation Committee determined that Mr.
Retreage and Mr. Symmons would be eligible for a portion of the
2019 LTI Discretionary Award. Based on this review of our Chief
Executive Officer’s executive summary, and after considering
Mr. Retreage’s and Mr. Symmons’ individual achievements
during fiscal 2019, the Compensation Committee determined that Mr.
Retreage earned a portion of his 2019 LTI Discretionary Award in an
amount equal to $8,200 and Mr. Symmons earned a portion of his 2019
LTI Discretionary Award in an amount equal to $10,000. The
Compensation Committee determined that Mr. Gaynor was not eligible
to receive any portion of his 2019 LTI Discretionary Award. The
2019 LTI Discretionary Award was paid as a stock option grant,
which will vest in three equal annual installments beginning on the
first anniversary of the grant date and will have an exercise price
equal to the book value per share of our Class A common stock as of
June 30, 2019, which was $1.28. The dollar amount of the award will
be divided by the Black-Scholes-Merton value per share to determine
the number of shares underlying the stock options granted. The
stock options were granted in November 2019.
2019 LTI Multi-Year Award
The
2019 LTI Multi-Year Award is a corporate performance-based equity
award based on the achievement of pre-established financial
performance metrics over a three-year performance period. In order
to determine a participant’s 2019 LTI Multi-Year Award bonus
opportunity, the portion of such participant’s bonus pool
amount applicable to the 2019 LTI Awards calculation ($125,000 in
the case of Mr. Gaynor, $50,000 in the case of Mr. Retreage, and
$50,000 in the case of Mr. Symmons), was multiplied by 60%. Thus,
the bonus opportunity for the 2019 LTI Multi-Year Award was
$75,000, $30,000, and $30,000 for Mr. Gaynor, Mr. Retreage, and Mr.
Symmons, respectively. However, because Mr. Gaynor and Mr. Symmons
are no longer employed by us, neither are eligible to earn the 2019
LTI Multi-Year Award.
The
performance metrics upon which the 2019 LTI Multi-Year Award was
based are as follows: (i) revenue (the “LT Revenue
Component”); (ii) book value per share of Class A common
stock (the “LT Book Value Component”); and (iii) EBITDA
margin (the “LT EBITDA Component”). The Compensation
Committee set a target for each component for each year during the
three-year period (July 1, 2018 through June 30, 2021). Each
performance component is valued at “one point” for each
year during the three-year period. For each performance component
for which the target is achieved, the participants each earn
“one point.” Thus, the LT Revenue Component is worth
one point per year during the three-year performance period, the LT
Book Value Component is worth one point per year during the
three-year performance period, and the LT EBITDA Component is worth
one point per year during the three-year performance
period.
The
payout opportunity based on the number of total points earned
during the three-year performance period is shown in the table
below.
|
Number of Points Earned
|
Percentage of Payout of the 2019 LT Multi-Year Award
|
|
0-3
|
0%
|
|
4
|
50%
|
|
5
|
60%
|
|
6
|
75%
|
|
7
|
100%
|
|
8
|
110%
|
|
9
|
125%
|
Each
component of the 2019 LTI Multi-Year Award is evaluated
independently of the other components during each year of the
performance. The Compensation Committee determined that if earned
at the end of the three-year performance period, the 2019 LTI
Multi-Year Award would be paid as RSUs. As detailed below, no
points have been earned during the first two years of the
three-year period of the 2019 LT Multi-Year Award; thus, Mr.
Retreage, the sole remaining participant cannot earn a portion of
the 2019 LT Multi-Year Award in fiscal 2021.
LT Revenue Component – Fiscal 2019 (Year 1)
The
Compensation Committee set the LT Revenue Component for fiscal 2019
at $37.3 million, which represents year-over-year revenue growth of
15%, compared to fiscal 2018. Our total revenue for fiscal 2019 was
less than the target; thus, the participants did not earn a point
for the LT Revenue Component in fiscal 2019.
LT Revenue Component – Fiscal 2020 (Year 2)
The
Compensation Committee set the LT Revenue Component for fiscal 2020
at a target revenue level that was based on year-over-year revenue
growth compared to the fiscal 2019 target for this component. Our
total revenue for fiscal 2020 was less than the target; thus, Mr.
Retreage, the sole participant, did not earn a point for the LT
Revenue Component in fiscal 2020.
LT Book Value Component – Fiscal 2019 (Year 1)
The
Compensation Committee set the LT Book Value Component for fiscal
2019 at $1.50 book value per share of Class A common stock. Our
book value per share of Class A common stock for fiscal 2019 was
$1.30; thus, the participants did not earn a point for the LT Book
Value Component in fiscal 2019.
25
LT Book Value Component – Fiscal 2020 (Year 2)
The
Compensation Committee set the LT Book Value Component for fiscal
2020 at a target book value per share of Class A common stock that
was greater than the fiscal 2019 target for this component. Our
book value per share of Class A common stock for fiscal 2020 was
less than the target; thus, Mr. Retreage, the sole participant, did
not earn a point for the LT Book Value Component in fiscal
2020.
LT EBITDA Component – Fiscal 2019 (Year 1)
The
Compensation Committee set the LT EBITDA Component for fiscal 2019
at an EBITDA margin of 19%. Our EBITDA margin for fiscal 2019 was
less than the target; thus, the participants did not earn a point
for the LT EBITDA Component in fiscal 2019.
LT EBITDA Component – Fiscal 2020 (Year 2)
The
Compensation Committee set the LT EBITDA Component for fiscal 2020
at an EBITDA margin that was greater than the fiscal 2019 target
for this component. Our EBITDA margin for fiscal 2020 was less than
the target; thus, Mr. Retreage, the sole participant, did not earn
a point for the LT EBITDA Component in fiscal 2020.
Unearned 2018-2020 Multi-Year Award
In
fiscal 2018, the Compensation Committee granted an equity award
based on the achievement of pre-established financial performance
metrics evaluated over a three-year performance period beginning on
July 1, 2017 through June 30, 2020 (the “2018 LTI Multi-Year
Award”). Mr. Gaynor is the only named executive officer that
would have been eligible to earn this award. The 2018 LTI
Multi-Year Award would have been partially earned if participants
earned at least 4 points (50% payout) up to 9 points (125% payout).
Mr. Gaynor’s eligible bonus pool amount was $125,000.
However, the targets were not achieved during the three-year
period; thus, no payout will occur with respect to the 2018 LTI
Multi-Year Award.
Summary Compensation Table
The
following table sets forth certain compensation awarded to, earned
by or paid to (i) any individuals serving as our Chief Executive
Officer during fiscal 2020 (Mr. Gaynor and Mr. Rubin), (ii) our two
other most highly compensated executive officers serving as
executive officers at the end of fiscal 2020 (Mr. Retreage), and
(ii) any individuals for whom disclosure would have been required
but for the fact that the individual was not serving as an
executive officer as of the end of fiscal 2020 (Mr.
Symmons).
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
|
|
|
|
|
|
Fiscal
|
Salary
|
|
Stock
Awards
|
|
Option
Awards
|
|
Plan
Compensation
|
|
All
Other
Compensation
|
Total
|
|
Name and
Position
|
Year
|
($)
|
|
($) (1)
|
|
($) (2)
|
|
($)
|
|
($) (3)
|
($)
|
|
(a)
|
(b)
|
(c)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(i)
|
(j)
|
|
Shmuel
RubinPresident &
|
2020
|
105,464
|
(4
)
|
139,000
|
(4
)
|
197,987
|
(4
)
|
100,000
|
(4
)
|
48,075
|
590,526
|
|
Chief Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
J. James
Gaynor
|
2020
|
315,000
|
(5
)
|
—
|
|
—
|
|
43,000
|
(8
)
|
59,222
|
417,222
|
|
Former President
& Chief Executive Officer
|
2019
|
315,000
|
(5
)
|
—
|
|
—
|
|
—
|
|
18,771
|
333,771
|
|
Donald O. Retreage,
Jr.
|
2020
|
200,000
|
(6
)
|
—
|
|
5,200
|
(8
)
|
28,800
|
(8
)
|
10,694
|
244,694
|
|
Chief Financial
Officer
|
2019
|
200,000
|
(6
)
|
—
|
|
1,258
|
(9
)
|
—
|
|
33,052
|
241,252
|
|
Alan
Symmons
|
2020
|
209,288
|
(7
)
|
—
|
|
—
|
|
—
|
|
36,180
|
245,468
|
|
Former Chief
Operating Officer
|
2019
|
210,000
|
(7
)
|
—
|
|
1,534
|
(9
)
|
—
|
|
17,077
|
237,077
|
26
Notes:
(1)
For valuation
assumptions on stock awards refer to Note 10 to the Consolidated
Financial Statements of our Annual Report on Form 10-K for fiscal
2020. The disclosed amounts reflect the fair value of the RSU
awards that were earned during the fiscal years ended June 30,
2020 and 2019 in accordance with FASB ASC Topic 718.
(2)
For valuation
assumptions on stock option awards refer to Note 10 to the
Consolidated Financial Statements of our Annual Report on Form 10-K
for fiscal 2020. The disclosed amounts reflect the fair value of
the stock option awards that were earned during the fiscal years
ended June 30, 2020 and 2019 in accordance with FASB ASC Topic
718.
(3)
For fiscal 2020 and
2019, the nature of these compensatory items includes our
contribution toward the premium costs for employee and dependent
medical, life, and disability income insurances, benefits generally
available to our employees, vacation buyout, and the
Company’s match on contributions under the 401(k) plan. The
amounts for Mr. Rubin in fiscal 2020 include $36,346 for relocation
assistance. The amounts for Mr. Retreage in fiscal 2019 include
$22,488 for relocation assistance. The amounts for Mr. Gaynor and
Mr. Symmons for fiscal 2020 include the payout of their accrued
vacation balances upon separation from the Company.
(4)
Mr. Rubin was hired
by the Company on February 24, 2020 and appointed as Chief
Executive Officer effective March 9, 2020, therefore his
compensation for fiscal 2020 was pro-rated for the period from his
hire date to June 30, 2020. Mr. Rubin’s base salary was 18%
of his total compensation for fiscal 2020. Pursuant to his
employment agreement, Mr. Rubin received a stock option grant and
an RSU grant. The amounts in the table reflect the fair value of
these awards in accordance with FASB ASC Topic 718. For additional
information with respect to these grants, including the vesting
schedules, please see “Discussion of Summary Compensation
Table of Named Executive Officers” below. Also pursuant to
his employment agreement, Mr. Rubin was eligible for a one-time
bonus of up to $100,000 based on qualitative factors determined by
the Compensation Committee. This bonus was earned in fiscal 2020
and will be paid in fiscal 2021.
(5)
Mr. Gaynor’s
base salary was 75% of his total compensation for fiscal 2020 and
94% of his total compensation for fiscal 2019.
(6)
Mr.
Retreage’s base salary was 82% of his total compensation for
fiscal 2020 and 83% of his total compensation for fiscal
2019.
(7)
Mr. Symmons
separated from the Company on May 8, 2020, therefore, his
compensation for fiscal 2020 was pro-rated from the period from
July 1, 2019 to his separation date. Mr. Symmons’ base salary
was 85% of his total compensation for fiscal 2020 and 89% of his
total compensation for fiscal 2019.
(8)
Based on the
achievement of certain criteria set by the Compensation Committee,
Mr. Gaynor and Mr. Retreage each earned a portion of their
respective 2020 STI Awards during fiscal 2020. Mr. Retreage also
earned a portion of his respective LTI Discretionary Award, in the
amount of $6,000, which will be paid as a stock option award. Even
though the 2020 LTI Discretionary Awards were earned in fiscal
2020, the awards will not be granted until fiscal 2021. The
disclosed amount represents the estimated fair value of the stock
option award, in accordance with FASB Topic ASC 718. For additional
information, please see “Discussion of Summary Compensation
Table of Named Executive Officers” below.
(9)
Based on the
achievement of certain criteria set by the Compensation Committee,
the named executive officers did not earn their respective 2019 STI
Awards during fiscal 2019. However, certain named executive
officers partially earned their respective LTI Discretionary
Awards, in the amounts of $8,200 and $10,000 for Mr. Retreage and
Mr. Symmons, respectively, which were paid as stock options. Even
though the 2019 LTI Discretionary Awards were earned in fiscal
2019, the stock option awards were not granted until fiscal 2020.
The disclosed amounts represent the fair value of the stock option
awards, in accordance with FASB Topic ASC 718. For additional
information, please see “Discussion of Summary Compensation
Table of Named Executive Officers” below.
Narrative Discussion of Summary Compensation Table of Executive
Officers
The
following is a narrative discussion of the material information
that we believe is necessary to understand the information is
disclosed in the foregoing Summary Compensation Table. The
following narrative disclosure is separated into sections, with a
separate section for each of our named executive
officers.
With
respect to fiscal 2020, each named executive officer received a
base salary and certain named executive officers were eligible for
a 2020 STI Award, a 2020 LTI Discretionary Award, and a 2020 LTI
Multi-Year Award. Information on the specific components of
executive compensation for fiscal 2020 can be found above under the
heading “2020 Incentive Program.” With respect to
fiscal 2019, each named executive officer then serving as an
executive officer received a base salary and was eligible for a
2019 STI Award, a 2019 LTI Discretionary Award, and a 2019 LTI
Multi-Year Award. Information on the specific components of
executive compensation for fiscal 2019 can be found above under the
heading “2019 Incentive Program.”
27
Additional details
regarding the stock options granted to each named executive officer
is set forth below.
Shmuel
Rubin
|
Stock Option
Grants
|
|
Compensation
Expense (1)
|
||||||
|
|
|
|
|
Actual
|
Projected
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number
of
|
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
Fiscal
2024
|
|
Grant
Date
|
of
Shares
|
Vested
Shares
|
|
$
|
$
|
$
|
$
|
$
|
|
2/24/2020
|
225,000
|
44
|
(2
)
|
$
18,334
|
$
43,997
|
$
43,997
|
$
53,162
|
$
38,497
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
||
|
2/24/2020
|
100,000
|
-
|
(3
)
|
$
9,654
|
$
23,169
|
$
23,169
|
$
42,470
|
$
40,538
|
(1)
Compensation
expense for grants of stock options or RSUs is recognized or
expected to be recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
Represents the
number of shares vested as of June 30, 2020. On each of the first,
second, and third anniversaries of the grant date, 50,000 shares
underlying the stock option vests, with the remaining 75,000 shares
underlying the stock option vesting on the fourth anniversary of
the grant date.
(3)
Represents the
number of shares vested as of June 30, 2020. One-half of the RSUs
granted vest on each of the third and fourth anniversaries of the
grant date.
Donald
Retreage
|
Stock Option
Grants
|
|
Compensation
Expense (1)
|
||||||
|
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number
of
|
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant
Date
|
of
Shares
|
Vested
Shares
|
|
$
|
$
|
$
|
$
|
$
|
|
6/15/2018
|
10,000
|
5,000
|
(2
)
|
$
2,206
|
$
2,206
|
$
2,206
|
$
2,021
|
$
-
|
|
11/14/2019
|
6,407
|
-
|
(3
)
|
-
|
280
|
419
|
419
|
140
|
|
|
|
|
|
$
2,206
|
$
2,486
|
$
2,625
|
$
2,440
|
$
140
|
(1)
Compensation
expense for grants of stock options is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-fourth of the stock
option shares vests on each of the first, second, third and fourth
anniversaries of the grant date.
(3)
Represents the
number of shares vested as of June 30, 2020. Stock options granted
as part of the incentive bonus program vests on each of the first,
second and third anniversaries of the grant date.
28
Other Named Executive Officers
Mr.
Gaynor and Mr. Symmons separated from the Company effective May 8,
2020 and June 30, 2020, respectively. As of their respective dates
of separation, the balance of unvested stock options and RSU shares
were forfeited, and they had 90 days from their respective
separation dates to exercise their vested options. As their
respective separation dates, Mr. Gaynor had 406,606 shares of our
Class A common stock underlying stock options that were vested and
Mr. Symmons had 180,184 shares of our Class A common stock
underlying stock options that were vested. These grants are
detailed under “Outstanding Equity Awards at Fiscal
Year-End.”
Potential Payments Upon Termination or
Change-of-Control
Messrs. Rubin and Retreage
Neither
Mr. Rubin nor Mr. Retreage are entitled to any payments upon
termination or change-of-control.
Messrs. Gaynor and Symmons
We
entered into an Amendment to Employee Letter (the “Amended
Employee Letter”) with Mr. Gaynor in connection with his
retirement. The Amended Employee Letter clarified the
classification of Mr. Gaynor’s retirement for purposes of our
Incentive Plan and Mr. Gaynor’s Employee Letter dated June
10, 2008 (the “Employee Letter”). The Amended Employee
Letter also clarified that his retirement would not result in any
forfeiture of awards earned in connection with the 2020 incentive
program. Finally, the Amended Employee Letter clarified that
effective March 9, 2020, Mr. Gaynor was no longer entitled to any
termination or change-of-control payments as provided for in the
Employee Letter. Other than the foregoing, Mr. Gaynor was not
entitled to any severance payments or benefits in connection with
his retirement.
Mr.
Symmons was not entitled to any severance payments or benefits in
connection with his resignation.
29
Outstanding
Equity Awards at Fiscal Year-End
|
|
Option
Awards
|
RSU
Awards
|
||||||
|
|
|
|
|
|
|
|
|
(h)
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
(b)
|
(c)
|
|
|
|
|
(g)
|
Value of
|
|
|
Number
of
|
Number
of
|
|
|
|
|
Number of
|
Shares or
|
|
|
Securities
|
Securities
|
|
|
|
|
Shares
or
|
Units
of
|
|
|
Underlying
|
Underlying
|
(e)
|
|
|
(f)
|
Units
of
|
Stock
|
|
|
Unexercised
|
Unexercised
|
Option
|
|
|
Option
|
Stock That
|
That
|
|
(a)
|
Options
(#)
|
Options
(#)
|
Exercise
|
Vesting
|
|
Expiration
|
Have
Not
|
Have
Not
|
|
Name
|
Exercisable
|
Unexercisable
|
Price
($)
|
Schedule
|
|
Date
|
Vested
|
Vested
|
|
Shmuel Rubin (1)
|
—
|
225,000
|
$
1.58
|
50,000 shares/yr for 3 yrs;
75,000 shares on 4th anniversary
|
|
2/24/2030
|
100,000
|
$
333,000
|
|
Donald Retreage, Jr.
(2)
|
3,750
|
5,000
|
$
2.13
|
25%/yr for 4
yrs
|
|
6/18/2028
|
—
|
—
|
|
|
—
|
6,407
|
$
1.28
|
33%/yr for 3
yrs
|
|
11/14/2029
|
—
|
—
|
|
J. James Gaynor
(3)
|
40,000
|
—
|
$
1.39
|
25%/yr for 4
yrs
|
|
10/27/2021
|
—
|
—
|
|
|
50,000
|
—
|
$
1.41
|
25%/yr for 4
yrs
|
|
10/31/2023
|
—
|
—
|
|
|
50,000
|
—
|
$
1.37
|
25%/yr for 4
yrs
|
|
10/30/2024
|
—
|
—
|
|
|
23,000
|
—
|
$
1.48
|
25%/yr for 4
yrs
|
|
10/29/2025
|
—
|
—
|
|
|
55,556
|
—
|
$
1.48
|
immediate
|
|
10/29/2025
|
—
|
—
|
|
|
45,654
|
15,216
|
$
1.78
|
25%/yr for 4
yrs
|
|
10/27/2026
|
—
|
—
|
|
|
117,108
|
—
|
$
1.56
|
immediate
|
|
10/27/2026
|
—
|
—
|
|
|
19,196
|
9,599
|
$
4.24
|
33%/yr for 3
yrs
|
|
10/26/2027
|
—
|
—
|
|
|
6,092
|
—
|
$
2.10
|
immediate
|
|
11/15/2028
|
—
|
—
|
|
Alan Symmons (4)
|
7,000
|
—
|
$
2.69
|
25%/yr for 4
yrs
|
|
11/3/2020
|
—
|
—
|
|
|
12,500
|
—
|
$
1.39
|
25%/yr for 4
yrs
|
|
10/27/2021
|
—
|
—
|
|
|
12,500
|
—
|
$
0.98
|
25%/yr for 4
yrs
|
|
10/25/2022
|
—
|
—
|
|
|
4,000
|
—
|
$
0.87
|
25%/yr for 4
yrs
|
|
1/31/2023
|
—
|
—
|
|
|
15,000
|
—
|
$
1.41
|
25%/yr for 4
yrs
|
|
10/31/2023
|
—
|
—
|
|
|
15,000
|
—
|
$
1.37
|
25%/yr for 4
yrs
|
|
10/30/2024
|
—
|
—
|
|
|
10,000
|
—
|
$
1.27
|
25%/yr for 4
yrs
|
|
1/12/2025
|
—
|
—
|
|
|
29,762
|
—
|
$
1.48
|
immediate
|
|
10/29/2025
|
—
|
—
|
|
|
7,000
|
—
|
$
1.48
|
25%/yr for 4
yrs
|
|
10/29/2025
|
—
|
—
|
|
|
41,824
|
—
|
$
1.56
|
immediate
|
|
10/27/2026
|
—
|
—
|
|
|
16,305
|
5,434
|
$
1.78
|
25%/yr for 4
yrs
|
|
10/27/2026
|
—
|
—
|
|
|
6,856
|
3,428
|
$
4.24
|
33%/yr for 3
yrs
|
|
10/26/2027
|
—
|
—
|
|
|
2,437
|
—
|
$
2.10
|
immediate
|
|
11/15/2028
|
—
|
—
|
|
|
—
|
7,813
|
$
1.28
|
33%/yr for 3
yrs
|
|
11/14/2029
|
—
|
—
|
(1)
One half of this
RSU grant vests on each of the third and fourth anniversaries of
the grant.
(2)
This table does not
include the stock option award equal to $6,000 that Mr. Retreage
earned based on the achievement of certain performance goals in
fiscal 2020. The related option award will be granted in fiscal
2021.
(3)
This table does not
include the RSU award, representing 25,354 shares of Class A common
stock, which Mr. Gaynor earned based on the achievement of certain
performance goals in fiscal 2017. RSUs granted as part of the
incentive bonus program vest on each of the first, second, and
third anniversaries of the grant date. As of June 30, 2020, Mr.
Gaynor had unvested RSUs of 8,451 related to this grant, which were
forfeited upon separation from the Company. Mr. Gaynor’s
exercisable stock options remained exercisable until September 30,
2020 (90 days after his retirement date), and his unexercisable
stock options were forfeited as of his retirement date, as no
further vesting occurred after that date.
(4)
This table does not
include the RSU award, representing 9,055 shares of Class A common
stock, which Mr. Symmons earned based on the achievement of certain
performance goals in fiscal 2017. RSUs granted as part of the
incentive bonus program vest on each of the first, second, and
third anniversaries of the grant date. As of May 8, 2020, his date
of separation from the Company, Mr. Symmons had unvested RSUs of
3,019 related to this grant, which were forfeited upon separation
from the Company. Mr. Symmons’ exercisable stock options
remained exercisable until August 8, 2020 (90 days after his
separation date), and his unexercisable stock options were
forfeited as of his separation date, as no further vesting occurred
after that date.
The
stock options were issued pursuant to the Incentive Plan or the
Amended and Restated Omnibus Incentive Plan, as applicable, and
have a ten-year life. The options will terminate 90 days after
termination of employment, or in the case of termination due to
death or permanent disability, the options will terminate one year
after the date of termination.
30
DIRECTOR COMPENSATION
Director
Compensation
The
table below summarizes the compensation paid by us to non-employee
directors for fiscal 2020.
|
|
Fees Earned or
|
Stock
|
All
Other
|
Total
|
|
|
Paid in
Cash
|
Awards
|
Compensation
|
($)
|
|
Name
(1)
|
($)(2)
|
($)(3)
|
($)
|
|
|
(a)
|
(b)
|
(c)
|
(g)
|
(h)
|
|
Robert
Ripp
|
$
100,000
|
$
29,520
|
$
-
|
$
129,520
|
|
Sohail
Khan
|
$
40,000
|
$
29,520
|
$
-
|
$
69,520
|
|
Dr. Steven
Brueck
|
$
36,000
|
$
29,520
|
$
-
|
$
65,520
|
|
Louis
Leeburg
|
$
44,000
|
$
29,520
|
$
-
|
$
73,520
|
|
M. Scott
Faris
|
$
36,000
|
$
29,520
|
$
-
|
$
65,520
|
|
Craig
Dunham
|
$
36,000
|
$
29,520
|
$
-
|
$
65,520
|
|
Dr. Joseph
Menaker
|
$
36,000
|
$
29,520
|
$
-
|
$
65,520
|
|
Darcie
Peck
|
$
36,000
|
$
29,520
|
$
-
|
$
65,520
|
|
(1)
|
Shmuel
Rubin, our President and Chief Executive Officer during a portion
of fiscal 2020, is not included in this table as he was an employee
and, thus, received no compensation for his services as a director.
The compensation received by Mr. Rubin as an employee is disclosed
in the Summary Compensation Table on page 26.
|
|
(2)
|
Total
fees earned for fiscal 2020 includes all fees earned, including
earned but unpaid fees. The amounts of unpaid fees for each
director are as follows: Mr. Ripp - $25,000, Mr. Leeburg - $11,000,
Dr. Brueck - $9,000, Mr. Khan - $10,000, Mr. Faris - $9,000, Mr.
Dunham - $9,000, Dr. Menaker - $9,000 and Ms. Peck -
$9,000.
|
|
(3)
|
The
table reflects the fair value amount for RSUs granted for the
fiscal year ended June 30, 2020 in accordance with ASC Topic
718. The directors were entitled to a restricted stock award equal
to $60,000. The Company has a policy of granting
performance-related stock options and RSUs at the greater of the
closing bid price of our Class A common stock on the grant date or
the book value per share of our Class A common stock as of the end
of the most recent fiscal quarter. The fiscal 2020 director award
of 48,000 RSUs was based on the book value of $1.25 per share as of
September 30, 2019, the most recent quarter preceding the grant
date, whereas the closing bid price of our Class A common stock on
the grant date was $0.62.
|
Discussion of the Summary Compensation Table of
Directors
The
following is a discussion of the material information that we
believe is necessary to understand the information disclosed in the
Summary Compensation Table. We use a combination of cash and
stock-based incentive compensation to attract and retain qualified
candidates to serve on our Board. In setting director compensation,
we consider the significant amount of time that directors expend in
fulfilling their duties as a director as well as the skill-level
required by us of members of our Board. For fiscal 2020, the cash
and stock-based incentive compensation awarded to directors
remained essentially at the same levels set in fiscal 2019. The
annual cash portion of the directors’ compensation remained
at $36,000 and the annual value of restricted stock awards remained
at $60,000.
31
Cash Compensation Paid to Board Members
During
fiscal 2020, directors received a monthly retainer of $3,000 per
month. There are no meeting attendance fees paid unless, by action
of the Board, such fees are deemed advisable due to a special
project or other effort requiring extra-normal commitment of time
and effort. Additionally, fees are paid to the Chairman of the
Board and Committee Chairmen for their additional responsibilities
in overseeing their respective functions. The following table sets
forth the annual fees paid to each director for fiscal
2020:
|
Name
|
Board Fee
|
Chairman Fee
|
Committee Chair Fee
|
Total Fees Earned for Fiscal Year 2020
|
|
Robert
Ripp
|
$
36,000
|
$
60,000
|
$
4,000
|
$
100,000
|
|
Sohail
Khan
|
$
36,000
|
|
$
4,000
|
$
40,000
|
|
Dr.
Steven Brueck
|
$
36,000
|
|
|
$
36,000
|
|
Louis
Leeburg
|
$
36,000
|
|
$
8,000
|
$
44,000
|
|
M.
Scott Faris
|
$
36,000
|
|
|
$
36,000
|
|
Craig
Dunham
|
$
36,000
|
|
|
$
36,000
|
|
Dr.
Joseph Menaker
|
$
36,000
|
|
|
$
36,000
|
|
Darcie
Peck
|
$
36,000
|
|
|
$
36,000
|
|
Shmuel
Rubin (1)
|
$
-
|
|
|
$
-
|
(1)
Mr. Rubin did not
receive any compensation for his service as a director because he
is also an employee.
Stock Option/Restricted Stock Program
All
directors are eligible to receive equity incentives under the
Incentive Plan, including stock options, restricted stock awards,
or RSUs. In fiscal 2020, the following directors received grants
under the Incentive Plan:
|
|
Restricted
Stock Units
|
||
|
Name of Director
(1)
|
Number of Units
Granted
|
Grant
Date
|
Fair Value Per
Share
|
|
Robert
Ripp
|
48,000
|
11/14/2019
|
$
0.62
|
|
Sohail
Khan
|
48,000
|
11/14/2019
|
$
0.62
|
|
Dr. Steven
Brueck
|
48,000
|
11/14/2019
|
$
0.62
|
|
Louis
Leeburg
|
48,000
|
11/14/2019
|
$
0.62
|
|
M. Scott
Faris
|
48,000
|
11/14/2019
|
$
0.62
|
|
Craig
Dunham
|
48,000
|
11/14/2019
|
$
0.62
|
|
Dr. Joseph
Menaker
|
48,000
|
11/14/2019
|
$
0.62
|
|
Darcie
Peck
|
48,000
|
11/14/2019
|
$
0.62
|
|
|
384,000
|
|
|
(1)
Mr. Rubin did not
receive any compensation for his service as a director because he
is also an employee.
32
Additional
details regarding the RSUs granted to each director, other than Mr.
Rubin, is set forth below.
Robert
Ripp
|
RSUs
|
Compensation
Expense (1)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal 2022
|
Fiscal
2023
|
|
Grant Date
|
of Shares
|
Vested Shares
(2)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
|
Positions:
|
Chairman of the
Board, Compensation Committee Chairman, Nominating & Corporate
Governance
|
|
Committees:
|
Committee
Chairman
Compensation,
Finance and Nominating & Corporate Governance
Committees
|
(1)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
Sohail
Khan
|
RSUs
|
Compensation
Expense (1)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant
Date
|
of Shares
|
Vested Shares
(2)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
|
Positions:
|
Finance Committee
Chairman
|
|
Committees:
|
Finance,
Compensation and Nominating & Corporate Governance
Committees
|
(1)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
Dr.
Steven Brueck
|
RSUs
|
Compensation
Expense (1)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant Date
|
of Shares
|
Vested Shares
(2)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
Committees:
Audit
Committee
(1)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
33
Louis
Leeburg
|
RSUs
|
Compensation
Expense (1)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant
Date
|
of Shares
|
Vested Shares
(2)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
|
Positions:
|
Audit Committee
Chairman
|
|
Committees:
|
Audit, Compensation
and Nominating & Corporate Governance Committees
|
(1)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
M.
Scott Faris
|
RSUs
|
Compensation
Expense (1)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant
Date
|
of Shares
|
Vested Shares
(2)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
Committees:
Audit and Finance
Committees
(1)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(2)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
Craig
Dunham (1)
|
RSUs
|
Compensation
Expense (2)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant Date
|
of Shares
|
Vested Shares
(3)
|
$
|
$
|
$
|
$
|
$
|
|
10/29/2015
|
33,785
|
33,785
|
$
4,165
|
$
-
|
$
-
|
$
-
|
$
-
|
|
10/27/2016
|
38,462
|
38,462
|
19,999
|
4,998
|
-
|
-
|
-
|
|
10/26/2017
|
16,260
|
10,840
|
20,000
|
19,992
|
4,996
|
-
|
-
|
|
11/15/2018
|
32,787
|
10,929
|
13,335
|
20,000
|
20,000
|
6,665
|
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
57,499
|
$
51,552
|
$
34,836
|
$
16,505
|
$
3,279
|
Committees:
Audit
Committee
(1)
Mr. Dunham served
as a consultant to the Board from March 2014 until April 2016. In
April 2016, he was appointed as a director. During the time period
Mr. Dunham served as a consultant to the Board, he earned
compensation equivalent to the compensation paid to the directors.
The amounts disclosed include the compensation he earned as a
consultant and director.
(2)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(3)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
34
Dr.
Joseph Menaker (1)
|
RSUs
|
Compensation
Expense (2)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant Date
|
of Shares
|
Vested Shares
(3)
|
$
|
$
|
$
|
$
|
$
|
|
11/15/2018
|
32,787
|
10,929
|
$
13,335
|
$
20,000
|
$
20,000
|
$
6,665
|
$
-
|
|
11/14/2019
|
48,000
|
-
|
-
|
6,561
|
9,840
|
9,840
|
3,279
|
|
|
|
|
$
13,335
|
$
26,561
|
$
29,840
|
$
16,505
|
$
3,279
|
Committees:
Finance
Committee
(1)
Dr. Menaker served
as a consultant to the Board from March 2018 until November 2018,
when he was appointed as a director. During the time period Dr.
Menaker served as a consultant to the Board, he earned compensation
equivalent to the compensation paid to the directors. The amounts
disclosed include the compensation he earned as a consultant and
director.
(2)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(3)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
Darcie
Peck (1)
|
RSUs
|
Compensation
Expense (2)
|
||||||
|
|
|
|
Actual
|
Actual
|
Projected
|
Projected
|
Projected
|
|
|
Number
|
Number of
|
Fiscal
2019
|
Fiscal
2020
|
Fiscal
2021
|
Fiscal
2022
|
Fiscal
2023
|
|
Grant
Date
|
of Shares
|
Vested Shares
(3)
|
$
|
$
|
$
|
$
|
$
|
|
11/14/2019
|
48,000
|
-
|
$
-
|
$
6,561
|
$
9,840
|
$
9,840
|
$
3,279
|
Committees:
Audit
Committee
(1)
Ms. Peck served as
a consultant to the Board from April 2019 until November 2019, when
she was appointed as a director. During the time period Ms. Peck
served as a consultant to the Board, she earned compensation
equivalent to the compensation paid to the directors. The amounts
disclosed include the compensation she earned as a consultant and
director.
(2)
Compensation
expense for grants of RSUs is recognized or expected to be
recognized in accordance with ASC Topic 718, Stock
Compensation.
(3)
The number of
shares vested are as of June 30, 2020. One-third of the RSU shares
vests on each of the first, second and third anniversaries of the
grant date.
35
EQUITY COMPENSATION PLAN INFORMATION
Equity Compensation Plan Information
The
following table sets forth as of June 30, 2020, the end of our
most recent fiscal year, information regarding (i) all
compensation plans previously approved by our stockholders and
(ii) all compensation plans not previously approved by our
stockholders:
|
Plan
category
|
Number of securities
to be issued upon exercise of outstanding options, warrants and
rights
|
Weighted average
exercise and grant price of outstanding options, warrants and
rights
|
Number of securities
remaining available for future issuance
|
|
Equity compensation
plans approved by security holders
|
3,262,426
(1)
|
$
2.09
(2)
|
930,326
|
|
Equity compensation
plans not approved by security holders
|
—
|
—
|
—
|
(1)
Represents the
number of underlying shares of Class A common stock associated with
outstanding stock options and outstanding RSUs that have been
granted, but not yet issued, pursuant to either the Amended and
Restated Omnibus Incentive Plan or the Incentive Plan, as
applicable.
(2)
Represents
weighted-average exercise price of stock options outstanding under
the Amended and Restated Omnibus Incentive Plan or the Incentive
Plan, as applicable. The weighted-average exercise price does not
include the RSU awards.
36
PROPOSAL 2 – ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION
What Am I Voting On?
Stockholders are
being asked to approve, on a non-binding, advisory basis, the
compensation of our named executive officers.
Voting Recommendation
FOR
the non-binding, advisory vote to
approve the executive compensation of our named executive officers
disclosed in this Proxy Statement under the section titled
“executive compensation,” including the compensation
tables and other narrative execution compensation disclosures
therein, required by Item 402 of SEC Regulation S-K.
Summary
We
believe executive compensation is an important matter for our
stockholders. A fundamental principle of our executive compensation
philosophy and practice continues to be to pay for performance. An
executive officer’s compensation package is comprised of two
components: (i) a base salary, which reflects individual
performance and expertise and (ii) short-term and long-term
incentive awards, tied to the achievement of certain performance
goals that the Compensation Committee establishes from time to time
for us. We believe that this type of compensation program is
consistent with our strategy, competitive practice, sound corporate
governance principles, and stockholder interests and concerns. We
urge you to read this Proxy Statement for additional details on our
executive compensation, including our compensation philosophy and
objectives and the fiscal 2020 compensation of the named executive
officers.
This
proposal, commonly known as a “say-on-pay” proposal,
gives you as a stockholder the opportunity to endorse or not
endorse our executive pay philosophy, policies, and procedures.
This vote is intended to provide an overall assessment of our
executive compensation program rather than focus on any specific
item of compensation. Given the information provided above and
elsewhere in this Proxy Statement, the Board asks you to approve
the following resolution:
“RESOLVED
, that the
Company’s stockholders approve the compensation of the
Company’s named executive officers described in the Proxy
Statement under the section titled “Executive
Compensation”, including the compensation tables and other
narrative executive compensation disclosures therein, required by
Item 402 of Regulation S-K.”
As an
advisory vote, this proposal is non-binding on us. However, the
Board and the Compensation Committee value the opinions of our
stockholders and will consider the outcome of the vote when making
future compensation decisions for our named executive
officers.
PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
What Am I Voting On?
It is
the responsibility of the Audit Committee to select and retain our
independent registered public accounting firms. Our Audit Committee
has appointed MSL, as our independent registered public accounting
firm for our fiscal year ending June 30, 2021. Although
stockholder ratification of the Audit Committee’s selection
of our independent registered public accounting firm is not
required by our Bylaws or otherwise, we are submitting the
selection of MSL to stockholder ratification so that our
stockholders may participate in this important corporate decision.
If not ratified, the Audit Committee will reconsider the selection,
although the Audit Committee will not be required to select
different independent registered public accounting firm for
us.
Representatives of
MSL will be present at the Annual Meeting and will have an
opportunity to make a statement and respond to questions from
stockholders present at the meeting.
Voting Recommendation
FOR
the ratification of the appointment
of MSL as our independent registered public accounting
firm.
37
Audit Fees
The
following table presents fees paid or to be paid for professional
audit services rendered by MSL for the audit of our annual
financial statements during the years ended June 30, 2020 and 2019,
review of financial statements included in our quarterly reports
during the years ended June 30, 2020 and 2019, and fees billed for
other services rendered:
|
|
Fiscal
2020
|
Fiscal
2019
|
|
Audit Fees
(1)
|
$
152,300
|
$
152,200
|
|
Tax Fees
(2)
|
22,500
|
20,000
|
|
All Other Fees
(3)
|
5,500
|
2,925
|
|
Total
All Fees
|
$
180,300
|
$
175,125
|
|
|
|
|
(1)
Audit Fees
consisted of fees billed for professional services rendered for the
audit of our annual financial statements and review of the interim
financial statements included in quarterly reports, and review of
other documents filed with the SEC within those fiscal
years.
(2)
Tax fees consisted
of fees billed for professional services rendered for the
preparation and filing of our annual tax returns.
(3)
All Other Fees
consist of fees billed for professional services rendered for
tax-related research.
The
Audit Committee has adopted policies and procedures to oversee the
external audit process including engagement letters, estimated fees
and solely pre-approving all permitted audit and non-audit work
performed by MSL, as applicable.
The Audit Committee has
pre-approved all fees for audit, audit-related and non-audit work
performed.
AUDIT COMMITTEE REPORT
The
Audit Committee is responsible for, among other things, reviewing
and discussing the Company’s audited financial statements
with management, discussing with our independent registered public
accounting firm information relating to its judgments about the
quality of our accounting principles, recommending to the Board
that we include the audited financial statements in our Annual
Report, and overseeing compliance with the SEC requirements for
disclosure of auditors’ services and activities.
Review of Audited Financial Statements
The
Audit Committee reviewed our financial statements for the fiscal
year ended June 30, 2020, as audited by MSL our independent
registered public accounting firm and discussed these financial
statements with management. In addition, the Audit Committee has
discussed with MSL the matters required to be discussed by the
applicable requirements of the Public Company Accounting Oversight
Board (“PCAOB”), as may be modified or supplemented.
Furthermore, the Audit Committee has received the written
disclosures and the letter from MSL required by the Independence
Standards Board Standard No. 1, as may be modified or supplemented,
and has discussed with MSL its independence.
Generally, the
members of the Audit Committee are not professionally engaged in
the practice of auditing or accounting and are not experts in the
fields of accounting or auditing, or in determining auditor
independence. However, the Board has determined that each member of
the Audit Committee meets the independence criteria set forth in
the applicable rules of the NCM and the SEC, and that four members
of the Audit Committee, Mr. Leeburg, Mr. Faris, Mr. Dunham and
Ms. Peck, qualify as “audit committee financial
experts” as defined by SEC rules. Members of the Audit
Committee rely, without independent verification, on the
information provided to them and on the representations made by
management. Accordingly, the Audit Committee's oversight does not
currently provide an independent basis to determine that management
has maintained procedures designed to assure compliance with
accounting standards and applicable laws and
regulations.
Recommendation
Based
upon the foregoing review and discussion, the Audit Committee
recommended to the Board that the audited financial statements for
the fiscal year ended June 30, 2020, be included in our Annual
Report for such fiscal year.
Audit Committee:
Louis
Leeburg, Chairman
Dr.
Steven Brueck
M.
Scott Faris
Craig
Dunham
Darcie
Peck
38
OTHER BUSINESS
The
Board is not aware of any other business to be considered or acted
upon at the Annual Meeting other than that for which notice is
provided in this Proxy Statement and the accompanying notice. In
the event any other matters properly come before the Annual
Meeting, it is expected that the shares represented by proxy will
be voted with respect thereto in accordance with the judgment of
the persons voting them.
2020 ANNUAL REPORT ON FORM 10-K
Copies
of our Annual Report for fiscal 2020, which contains our Form 10-K
for the fiscal year ended June 30, 2020, and consolidated financial
statements, as filed with the SEC, have been included in this
mailing. Additional copies may be obtained without charge to
stockholders upon written request to Investor Relations at 2603
Challenger Tech Court, Suite 100, Orlando, Florida USA 32826. In
addition, copies of this document, the Annual Report and all other
documents filed electronically by us may be reviewed and printed
from the SEC’s website at:
http://www.sec.gov
.
By
Order of the Board of Directors,
Robert Ripp
Chairman
Orlando,
Florida
October
1, 2020
39
TABLE OF CONTENTS