RIDENOW GROUP, INC.
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by a Party
other than the Registrant ☐
Check the
appropriate box:
☐ Preliminary
Proxy Statement
☐
Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
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RumbleOn,
Inc.
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(Name of Registrant as Specified In Its Charter)
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|
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing
Fee (Check the appropriate box):
☒ No
fee required
☐ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction
applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
☐ Fee
paid previously with preliminary materials.
☐ Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
RumbleOn,
Inc.
901 W.
Walnut Hill Lane
Irving,
Texas 75038
July
29, 2020
Dear
Fellow RumbleOn Stockholder:
We are
pleased to invite you to join us at the 2020 Annual Meeting of
Stockholders of RumbleOn, Inc. to be held at 9:00 a.m. Eastern Time
on Tuesday, August 25, 2020 at our offices in North Carolina at
4521 Sharon Road, Suite 370, Charlotte, North Carolina
28211.
The
accompanying Notice of Annual Meeting and Proxy Statement describes
the specific matters to be voted upon at the Annual Meeting. We
also will report on our business and provide an opportunity for you
to ask questions of general interest.
Whether
you own a few or many shares of RumbleOn stock and whether or not
you plan to attend the Annual Meeting in person, it is important
that your shares be represented at the Annual Meeting. Your vote is
important and we ask that you please cast your vote as soon as
possible.
The
Board of Directors recommends that you vote
FOR
the election of all the director
nominees,
FOR
approval of an
amendment to the RumbleOn, Inc. 2017 Stock Incentive Plan to
increase the number of shares of Class B Common Stock authorized
for issuance under the plan and ratify awards previously granted
under the plan, and
FOR
the
non-binding advisory approval of the compensation of our named
executive officers (Say on Pay). Please refer to the accompanying
Proxy Statement for detailed information on each of the proposals
and the Annual Meeting.
We look
forward to seeing you on August 25, 2020 in North
Carolina.
Sincerely,
Marshall
Chesrown
Chairman
of the Board and
Chief
Executive Officer
RumbleOn,
Inc.
901 W.
Walnut Hill Lane
Irving,
Texas 75038
NOTICE OF THE 2020 ANNUAL MEETING OF STOCKHOLDERS
To
Stockholders of RumbleOn, Inc.:
The
2020 Annual Meeting of Stockholders of RumbleOn, Inc. will be held
at 9:00 a.m. Eastern Time on Tuesday, August 25, 2020 at our
offices in North Carolina at 4521 Sharon Road, Suite 370,
Charlotte, North Carolina 28211 for the following purposes, as more
fully described in the accompanying proxy statement:
(1)
To elect seven
directors, each for a term expiring at the next Annual Meeting or
until their successors are duly elected and qualified;
(2)
To approve an
amendment to the RumbleOn, Inc. 2017 Stock Incentive Plan (the
"Plan") to increase the number of shares of Class B Common Stock
authorized for issuance under the Plan and ratify awards previously
granted under the Plan;
(3)
To obtain
non-binding advisory approval of the compensation of our named
executive officers ("Say on Pay"); and
(4)
To transact any
other business that is properly presented at the Annual Meeting or
any adjournments or postponements of the Annual
Meeting.
Only
stockholders of record as of 5:00 p.m. Eastern Time on July 17,
2020, the record date, are entitled to receive notice of the Annual
Meeting and to vote at the Annual Meeting or any adjournments or
postponements of the Annual Meeting.
We
cordially invite you to attend the Annual Meeting in person. Even
if you plan to attend the Annual Meeting, we ask that you please
cast your vote as soon as possible. As more fully described in the
accompanying proxy statement, you may revoke your proxy and reclaim
your right to vote at any time prior to its use.
Sincerely,
Thomas
Aucamp
Corporate
Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 25,
2020
The accompanying proxy statement and the 2019 Annual Report on Form
10-K are available at
http://www.rumbleon.com
.
PROXY
STATEMENT
TABLE
OF CONTENTS
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PROXY
STATEMENT
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1
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QUESTIONS
AND ANSWERS ABOUT OUR ANNUAL MEETING
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1
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PROPOSAL
1: DIRECTOR ELECTION PROPOSAL
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5
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CORPORATE
GOVERNANCE
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8
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EXECUTIVE
COMPENSATION
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11
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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15
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PROPOSAL
2: STOCK INCENTIVE PLAN AMENDMENT PROPOSAL
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16
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PROPOSAL
3: SAY ON PAY PROPOSAL
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24
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REPORT
OF THE AUDIT COMMITTEE
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25
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AUDITORS
FEES AND SERVICES
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26
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POLICY
FOR APPROVAL OF AUDIT AND PERMITTED NON-AUDIT SERVICES
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26
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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27
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OTHER
MATTERS
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29
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AMENDMENT
TO THE RUMBLEON, INC. 2017 STOCK INCENTIVE PLAN
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A-1
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PROXY STATEMENT
This
Proxy Statement contains information relating to the solicitation
of proxies by the Board of Directors (the "Board") of RumbleOn,
Inc. ("RumbleOn" or the "Company") for use at our 2020 Annual
Meeting of Stockholders ("Annual Meeting"). Our Annual Meeting will
be held at 9:00 a.m. Eastern Time on Tuesday, August 25, 2020 at
our offices in North Carolina at 4521 Sharon Road, Suite 370,
Charlotte, North Carolina 28211. If you will need directions to the
Annual Meeting, or if you require special assistance at the Annual
Meeting because of a disability, please contact Thomas Aucamp at
(214) 771-9952.
Only
stockholders of record as of 5:00 p.m. Eastern Time on July 17,
2020 (the "Record Date") are entitled to receive notice of the
Annual Meeting and to vote at the Annual Meeting or any
adjournments or postponements of the Annual Meeting. As of the
Record Date, there were 50,000 shares of Class A common stock and
2,179,907 shares of Class B common stock issued and outstanding and
entitled to vote at the Annual Meeting. This proxy statement and
form of proxy are first being mailed to stockholders on or about
July 30, 2020.
What is the purpose of our 2020 Annual Meeting?
Our
2020 Annual Meeting will be held for the following
purposes:
(1)
To elect seven
directors, each for a term expiring at the next Annual Meeting or
until their successors are duly elected and qualified. We refer to
this as the "Director Election Proposal."
(2)
To approve an
amendment to the RumbleOn, Inc. 2017 Stock Incentive Plan (the
"Plan") to increase the number of shares of Class B Common Stock
authorized for issuance under the Plan and ratify awards previously
granted under the Plan. We refer to this as the "Stock Incentive
Plan Amendment Proposal."
(3)
To obtain
non-binding advisory approval of the compensation of our named
executive officers. We refer to this as the "Say on Pay
Proposal."
(4)
To transact any
other business that is properly presented at the Annual Meeting or
any adjournments or postponements of the Annual
Meeting.
In
addition, senior management will report on our business and respond
to your questions of general interest regarding the
Company.
How can I attend the Annual Meeting?
You are
entitled to attend the Annual Meeting only if you were a RumbleOn
stockholder as of the Record Date or you hold a valid proxy for the
Annual Meeting. You should be prepared to present photo
identification for admittance. If your shares are held by a
brokerage firm, bank, or a trustee, you should provide proof of
beneficial ownership as of the Record Date, such as a bank or
brokerage account statement or other similar evidence of ownership.
Even if you plan to attend the Annual Meeting, please cast your
vote as soon as possible.
What are the voting rights of RumbleOn stockholders?
Each
stockholder of Class A common stock is entitled to ten votes per
share on each of the seven director nominees and ten votes per
share on each other matter properly presented at the Annual Meeting
for each share of Class A common stock owned by that stockholder on
the Record Date.
1
Each
stockholder of Class B common stock is entitled to one vote per
share on each of the seven director nominees and one vote per share
on each other matter properly presented at the Annual Meeting for
each share of Class B common stock owned by that stockholder on the
Record Date.
What constitutes a quorum?
The
presence in person or by proxy of the holders of one-third (33%) of
the shares issued and outstanding and entitled to vote at the
Annual Meeting constitutes a quorum with respect to all matters
presented. If you submit a properly executed proxy or voting
instruction card or properly cast your vote via the Internet, your
shares will be considered part of the quorum, even if you abstain
from voting or withhold authority to vote as to a particular
proposal. Under Nevada law, we also will consider as present for
purposes of determining whether a quorum exists any shares
represented by "broker non-votes."
What are "broker non-votes?"
"Broker
non-votes" occur when shares held by a brokerage firm are not voted
with respect to a proposal because the firm has not received voting
instructions from the stockholder and the firm does not have the
authority to vote the shares in its discretion. Under New York
Stock Exchange rules, all proposals to be presented at the Annual
Meeting are non-routine and as such a broker does not have the
discretion to vote on any of the Director Election Proposal, Stock
Incentive Plan Amendment Proposal, and Say on Pay Proposal, if such
broker has not received instructions from the beneficial owner of
the shares represented.
Will my shares be voted if I do not provide my proxy?
If your
shares are held by a brokerage firm and you do not provide the firm
specific voting instructions, such firm will not have the authority
to vote your shares, and your shares will not be voted, and will be
considered "broker non-votes," with respect to all proposals to be
presented at the Annual Meeting. Therefore, we urge you to provide
voting instructions so that your shares will be voted. If you hold
your shares directly in your own name, your shares will not be
voted unless you provide a proxy or fill out a written ballot in
person at the Annual Meeting.
How do I vote?
You can
vote in any of the following ways. Please check your proxy card or
contact your broker for voting instructions.
To vote
by mail:
●
Mark, sign and date
your proxy card or voting instruction card; and
●
If you are a
registered holder, return the proxy card to West Coast Stock
Transfer, Inc., 721 N. Vulcan Ave. Ste 205, Encinitas, California
92024 by 11:59 p.m. Eastern Time on August 24, 2020;
or
●
If you hold your
shares in street name, return the voting instruction card to the
address indicated thereon. To vote using the Internet:
●
Have your proxy
card or voting instruction card in hand; and
2
●
If you are a
registered holder, log on to the Internet and visit
www.westcoaststocktransfer.com/proxy-rmbl by 11:59 p.m. Eastern
Time on August 24, 2020 and follow the instructions provided;
or
●
If you hold your
shares in street name, log on to the website provided on the voting
instruction card and follow the instructions provided.
●
To vote in
person:
●
If you are a
registered holder, attend our Annual Meeting, bring valid photo
identification, and deliver your completed proxy card or ballot in
person; or
●
If you hold your
shares in "street name," attend our Annual Meeting, bring valid
photo identification, and obtain a legal proxy from your bank or
broker to vote the shares that are held for your benefit, attach it
to your completed proxy card and deliver it in person.
Can I change my vote after I have voted?
You may
revoke your proxy and change your vote at any time before the final
vote at the meeting. You may vote again on a later date via the
Internet, by signing and mailing a new proxy card with a later
date, or by attending the meeting and voting in person (only your
latest proxy submitted prior to the meeting will be counted).
However, your attendance at the Annual Meeting will not
automatically revoke your proxy unless you vote again at the
meeting or specifically request in writing that your prior proxy be
revoked.
What vote is required to approve each proposal at the Annual
Meeting?
Proposal 1- Director Election Proposal.
The
vote required to elect our seven directors, each for a term
expiring at the next Annual Meeting or until their successors are
duly elected and qualified, is a majority of the stock having
voting power present in person or represented by proxy at the
Annual Meeting. Withheld votes and broker non-votes will have the
same effect as a vote against a director.
Proposal 2 - Stock Incentive Plan Amendment Proposal.
The
vote required to approve the Stock Incentive Plan Amendment
Proposal and ratify awards previously granted under the Plan is a
majority of the stock having voting power present in person or
represented by proxy at the Annual Meeting. Abstentions and broker
non-votes will have the same effect as a vote against this
proposal.
Proposal 3 - Say on Pay Proposal.
The
vote required to approve the Say on Pay Proposal is a majority of
the stock having voting power present in person or represented by
proxy at the Annual Meeting. Abstentions and broker non-votes will
have the same effect as a vote against this proposal.
How does the Board recommend I vote on the proposals?
The
Board recommends that you vote:
●
FOR Proposal 1: the
Director Election Proposal;
●
FOR Proposal 2: the
Stock Incentive Plan Amendment Proposal; and
●
FOR Proposal 3: the
Say on Pay Proposal.
3
How will the persons named as proxies vote?
If you
complete and submit a proxy, the persons named as proxies will
follow your voting instructions. If you submit a proxy but do not
provide instructions or if your instructions are unclear, the
persons named as proxies will vote your shares in accordance with
the recommendations of the Board, as set forth above.
With
respect to any other proposal that properly comes before the Annual
Meeting, the persons named as proxies will vote as recommended by
our Board or, if no recommendation is given, in their own
discretion.
Who will pay for the cost of soliciting proxies?
We will
pay for the cost of soliciting proxies. Our directors, officers,
and other employees, without additional compensation, may also
solicit proxies personally or in writing, by telephone, e-mail, or
otherwise. As is customary, we will reimburse brokerage firms,
fiduciaries, voting trustees, and other nominees for forwarding our
proxy materials to each beneficial owner of common stock held of
record by them.
4
PROPOSAL 1: DIRECTOR ELECTION PROPOSAL
Our
Board currently consists of seven members. Except for Adam
Alexander and Michael Marchlik, all of the nominees for directors
listed below were elected by our stockholders at our 2019 annual
meeting of stockholders. Peter Levy, the Chief Operating Officer of
the Company, identified Mr. Marchlik and Mr. Alexander as director
nominees and presented such nominations to the Nominating and
Corporate Governance Committee as highly qualified candidates who
bring relevant experience to our Board. Mr. Marchlik was appointed
to our Board on May 6, 2020 and Mr. Alexander was appointed to our
Board on July 15, 2020. Upon the recommendation of our Nominating
and Corporate Governance Committee, our Board has nominated the
seven persons listed below to stand for a term expiring at the next
Annual Meeting of Stockholders or until their successors are duly
elected and qualified. Each nominee listed below is currently
serving as a director and is willing and able to serve as a
director of RumbleOn.
Directors and Executive Officers
Below
are the names of and certain information regarding our executive
officers and directors:
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Name
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Age
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Position
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Marshall
Chesrown
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62
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Chief
Executive Officer and Chairman
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Steven
R. Berrard
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66
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Chief
Financial Officer and Director
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Adam
Alexander
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49
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Director
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Denmar
Dixon
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58
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Director
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Richard
A. Gray, Jr.
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72
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Director
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Peter
Levy
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50
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Chief
Operating Officer
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Michael
Marchlik
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47
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Director
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Kevin
Westfall
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64
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Director
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Marshall Chesrown
has served as our
Chief Executive Officer and Chairman since October 24, 2016. Mr.
Chesrown has over 35 years of leadership experience in the
automotive retail sector. From December 2014 to September 2016, Mr.
Chesrown served as Chief Operating Officer and as a director of
Vroom.com, an online direct car retailer ("Vroom"). Mr. Chesrown
served as Chief Operating Officer of AutoAmerica, an automotive
retail company, from May 2013 to November 2014. Previously, Mr.
Chesrown served as the President of Chesrown Automotive Group from
January 1985 to May 2013, which was acquired by AutoNation, Inc., a
leading automotive retail company, in 1997. Mr. Chesrown served as
Senior Vice President of Retail Operations for AutoNation from 1997
to 1999. From 1999 to 2013, Mr. Chesrown served as the Chairman and
Chief Executive Officer of Blackrock Development, a real estate
development company widely known for development of the nationally
recognized Golf Club at Black Rock. Mr. Chesrown filed for personal
bankruptcy in May 2013, which petition was discharged in January
2017.
We
believe that Mr. Chesrown possesses attributes that qualify him to
serve as a member of our Board, including his extensive experience
in the automotive retail sector.
Steven R. Berrard
has served as our
Chief Financial Officer since January 9, 2017 and served as Interim
Chief Financial Officer from July 13, 2016 through January 9, 2017
and as Chief Executive Officer from July 13, 2016 through October
24, 2016. Mr. Berrard served as Secretary from July 13, 2016
through June 30, 2017 and has served on our Board since July 13,
2016. Mr. Berrard served as a director of Walter Investment
Management Corp. ("Walter Investment") from 2010 until May 2017.
Mr. Berrard served on the Board of Directors of Swisher Hygiene
Inc., a publicly traded industry leader in hygiene solutions and
products, from 2004 until May 2014. Mr. Berrard is the Managing
Partner of New River Capital Partners, a private equity fund he
co-founded in 1997. Mr. Berrard was the co-founder and Co-Chief
Executive Officer of AutoNation from 1996 to 1999. Prior to joining
AutoNation, Mr. Berrard served as President and Chief Executive
Officer of the Blockbuster Entertainment Group, at the time the
world's largest video store operator. Mr. Berrard served as
President of Huizenga Holdings, Inc., a real estate management and
development company, and served in various positions with
subsidiaries of Huizenga Holdings, Inc. from 1981 to 1987. Mr.
Berrard was employed by Coopers & Lybrand (now
PricewaterhouseCoopers LLP ("PwC")) from 1976 to 1981. Mr. Berrard
currently serves on the Board of Directors of Pivotal Fitness,
Inc., a chain of fitness centers operating in a number of markets
in the United States. He has previously served on the Boards of
Directors of Jamba, Inc., (2005 – 2009), Viacom, Inc., (1987
– 1996), Birmingham Steel (1999 – 2002), HealthSouth
(2004 – 2006), and Boca Resorts, Inc. (1996 – 2004).
Mr. Berrard earned his B.S. in Accounting from Florida Atlantic
University.
5
We
believe that Mr. Berrard's management experience and financial
expertise is beneficial in guiding our strategic direction. He has
served in senior management and on the Board of several prominent,
publicly traded companies. In several instances, he has led
significant growth of the businesses he has managed. In addition,
Mr. Berrard has served as the Chairman of the audit committee of
several boards of directors.
Adam Alexander
has served on our Board
since July 15, 2020. Mr. Alexander co-founded CA Global Partners, a
full-service auction and liquidation company in 1997. Since 2010,
CA Global Partners has expanded globally managing hundreds of
auction and liquidation projects in UK, Europe, Asia, Australia,
Africa as well as all across North America. Mr. Alexander attended
Pepperdine University where he received a BS in Business
Management, and subsequently received an MBA in Global Business
which was jointly conferred by NYU Stern, HEC School of Management
in Paris, and the London School of Economics and Political
Science.
We
believe that Mr. Alexander possesses attributes that qualify him to
serve as a member of our Board, including his extensive
understanding of auction projects and business
operations.
Denmar Dixon
has served on our Board
since January 9, 2017. Mr. Dixon served as a director of Walter
Investment from April 2009 (and for its predecessor since December
2008) until June 2016. Effective October 2015, Mr. Dixon was
appointed Chief Executive Officer and President of Walter
Investment and served until his resignation effective June 2016.
Mr. Dixon previously served as Vice Chairman of the Board of
Directors and Executive Vice President of Walter Investment since
January 2010 and Chief Investment Officer of Walter Investment
since August 2013. Before becoming an executive officer of Walter
Investment, Mr. Dixon also served as a member of Walter
Investment's Audit Committee and Nominating and Corporate
Governance Committee and as Chairman of the Compensation and Human
Resources Committee. Before serving on the Board of Walter
Investment, Mr. Dixon was elected to the board of managers of JWH
Holding Company, LLC, a wholly-owned subsidiary of Walter
Industries, Inc., in anticipation of the spin-off of Walter
Investment Management, LLC from Walter Industries, Inc. (now known
as Walter Energy, Inc.). In 2008, Mr. Dixon founded Blue Flame
Capital, LLC, a consulting, financial advisory and investment firm.
Before forming Blue Flame, Mr. Dixon spent 23 years with Banc of
America Securities, LLC and its predecessors. At the time of his
retirement, Mr. Dixon was a Managing Director in the Corporate and
Investment Banking group and held the position of Global Head of
the Basic Industries Group of Banc of America
Securities.
We
believe that Mr. Dixon possesses attributes that qualify him to
serve as a member of our Board, including his extensive business
development, mergers and acquisitions and capital
markets/investment banking experience within the financial services
industry. As a director, he provides significant input into, and is
actively involved in, leading our business activities and strategic
planning efforts. Mr. Dixon has significant experience in the
general industrial, consumer and business services
industries.
Richard A. Gray, Jr.
, has served on our
Board since October 1, 2017. Mr. Gray has served as President of
Gray & Co. Realtors, Inc., a licensed real estate service
provider he founded, since 1987. Gray & Co. Realtors has been
involved in the development, liquidation, the joint venture, and
management of commercial real estate, representing both U.S.
investors and foreign investors, and since 1998, has also been
involved in raising venture capital for startup and additional
round funding for public companies in the technology sector. Before
Gray & Co. Realtors, he served as a broker at Wiggins Gray
Interests, a company focused on development of retail and office
properties in Dallas Fort Worth Metroplex, as well as office,
industrial, land and retail brokerage from 1985 to 1987. Before
Wiggins Gray Interests, he served at Hudson & Hudson Realtors
from 1973 to 1985, Murray Investment Company from 1971 to 1973, and
Borden Chemical Company from 1969 to 1971. Mr. Gray has also served
as a director of the Cystic Fibrosis Foundation, Migra Tech, and
Equitable Bank. Mr. Gray received his BBA from Texas Tech
University.
We
believe that Mr. Gray possesses attributes that qualify him to
serve as a member of our Board, including his extensive experience
in funding technology sector public companies.
6
Peter Levy
has served as our Chief
Operating Officer since May 20, 2019. From November 2017 to
present, Mr. Levy served as our Senior Vice President of Operations
overseeing the day-to-day inventory logistics, auctions, dealer
networks, and managing the teams responsible for driving sales
within the Company. Mr. Levy is a seasoned and highly respected
operating executive who has been involved in the automotive
industry for over 25 years. Mr. Levy previously served as a
Business Development Partner of AWG Remarketing Whann
Technology/Integrated Auction Solutions, LLC from January 2011 to
November 2017. Also, Mr. Levy's distinguished career includes
multiple executive and management level positions within the
industry at companies such as AutoNation and Automotive Remarketing
Services, all focusing on business development and creative uses of
technology to gain market share. Mr. Levy graduated from Indiana
University with a B.S. in Marketing and Finance.
Michael Marchlik
has served on our
Board since May 6, 2020. Mr. Marchlik has served as the Chief
Executive Officer of the Advisory & Valuations division of
Great American Group ("GA") since April 2017 and is responsible for
overseeing the operations and client service efforts for lenders,
sponsors and borrowers. Prior to that, he served as a Partner and
National Sales and Marketing Director of GA from January 2010 to
April 2017, as Executive Vice President, Western Region of GA from
January 2004 to December 2009, as Senior Vice President of Sales,
Western Region of GA from June 2001 to December 2003, and as
Director of Operations at GA from July 1996 to May 2001. With
nearly two and a half decades of experience in all segments of the
asset disposition and valuation industries, he has extensive
understanding of corporate transactional services, credit structure
and asset-based valuation, lending solutions and business
operations. Mr. Marchlik attended Northeastern University in Boston
where he received a Bachelor of Science in
Finance.
We
believe that Mr. Marchlik possesses attributes that qualify him to
serve as a member of our Board, including his extensive
understanding of corporate transactional services, credit structure
and asset-based valuation, lending solutions and business
operations.
Kevin Westfall
has served on our Board
since January 9, 2017. Mr. Westfall was a co-founder and served as
Chief Executive Officer of Vroom from January 2012 through November
2015. Previously, from March 1997 through November 2011, Mr.
Westfall served as Senior Vice President of Sales and Senior Vice
President of Automotive Finance at AutoNation. Mr. Westfall was a
founder of BMW Financial Services in 1990 and served as its
President until March 1997. Mr. Westfall also served as Retail
Lease Manager of Chrysler Credit Corporation from 1987 until 1990
and as President of World Automotive Imports and Leasing from 1980
until 1987.
We
believe that Mr. Westfall possesses attributes that qualify him to
serve as a member of our Board, including his more than 30 years of
executive experience in automotive retail and finance
operations.
Vote Required and Board Recommendation
The
vote required to elect our seven directors, each for a term
expiring at the next Annual Meeting or until their successors are
duly elected and qualified, is a majority of the stock having
voting power present in person or represented by proxy at the
Annual Meeting. The Board recommends that you vote
"FOR
" the election of each of the
director nominees.
7
CORPORATE GOVERNANCE
Corporate Governance Principles and Code of Ethics
Our Board is
committed to sound corporate governance principles and practices.
Our Board's core principles of corporate governance are set forth
in our Corporate Governance Principles. In order to clearly set
forth our commitment to conduct our operations in accordance with
our high standards of business ethics and applicable laws and
regulations, our Board also adopted a Code of Business Conduct and
Ethics, which is applicable to all directors, officers and
employees. A copy of the Code of Business Conduct and Ethics and
the Corporate Governance Principles are available on our corporate
website at www.rumbleon.com. You also may obtain without charge a
printed copy of the Code of Ethics and Corporate Governance
Principles by sending a written request to: Investor Relations,
RumbleOn, Inc., 901 W. Walnut Hill Lane, Irving, Texas 75038.
Amendments or waivers of the Code of Business Conduct and Ethics
will be provided on our website within four business days following
the date of the amendment or waiver.
Board of Directors
The
business and affairs of our company are managed by or under the
direction of the Board. The Board is currently composed of seven
members. The Board has not appointed a lead independent director;
instead the presiding director for each executive session is
rotated among the Chairs of the committees of our
Board.
The
Board held five meetings and took one action by unanimous written
consent during the year ended December 31, 2019. In 2019, each
person serving as a director attended at least 75% of the total
number of meetings of our Board and any Board committee on which he
served.
Our
directors are expected to attend our Annual Meeting of
Stockholders. Any director who is unable to attend our Annual
Meeting is expected to notify the Chairman of the Board in advance
of the Annual Meeting. All of our directors serving at the time of
the 2019 Annual Meeting of Stockholders were in
attendance.
Board Committees
Pursuant to our
bylaws, our Board may establish one or more committees of the Board
however designated, and delegate to any such committee the full
power of the Board, to the fullest extent permitted by
law.
Our
Board has established three separately designated standing
committees to assist the Board in discharging its responsibilities:
the Audit Committee, the Compensation Committee, and the Nominating
and Corporate Governance Committee. The charters for our Board
committees set forth the scope of the responsibilities of that
committee. The Board will assess the effectiveness and contribution
of each committee on an annual basis. The charters for our Board
committees were adopted by the Board in May 2017. These charters
are available at
www.rumbleon.com
, and you may
obtain a printed copy of any of these charters by sending a written
request to: Investor Relations, RumbleOn, Inc., 901 W. Walnut Hill
Lane, Irving, Texas 75038.
Audit Committee
. The current members of
the Audit Committee are Messrs. Dixon (chair), Alexander, Marchlik,
Gray, and Westfall. The Board has determined that Mr. Dixon is an
"audit committee financial expert," as defined in Item 407 of
Regulation S-K and is the Chairman of the Audit
Committee.
The
primary function of the Audit Committee is to assist the Board in
fulfilling its responsibilities by overseeing our accounting and
financial processes and the audits of our financial statements. The
independent auditor is ultimately accountable to the Audit
Committee, as representatives of the stockholders. The Audit
Committee has the ultimate authority and direct responsibility for
the selection, appointment, compensation, retention and oversight
of the work of our independent auditor that is engaged for the
purpose of preparing or issuing an audit report or performing other
audit, review or attest services for us (including the resolution
of disagreements between management and the independent auditors
regarding financial reporting), and the independent auditor must
report directly to the Audit Committee. The Audit Committee also is
responsible for the review of proposed transactions between us and
related parties. For a complete description of the Audit
Committee's responsibilities, you should refer to the Audit
Committee Charter. The Audit Committees held seven meetings and
took two actions by unanimous written consent during the year ended
December 31, 2019.
8
Compensation Committee
. The current
members of the Compensation Committee are Messrs. Westfall (chair),
Alexander, Dixon and Marchlik. The Compensation Committee was
established to, among other things, administer and approve all
elements of compensation and awards for our executive officers. The
Compensation Committee has the responsibility to review and approve
the business goals and objectives relevant to each executive
officer's compensation, evaluate individual performance of each
executive in light of those goals and objectives, and determine and
approve each executive's compensation based on this evaluation. For
a complete description of the Compensation Committee's
responsibilities, you should refer to the Compensation Committee
Charter. The Compensation Committee held three meetings and took
one actions by unanimous written consent during the year ended
December 31, 2019.
Nominating and Corporate Governance
Committee
. The current members of the Nominating and
Corporate Governance Committee are Messrs. Dixon (chair),
Alexander, Gray and Marchlik. The Nominating Committee is
responsible for identifying individuals qualified to become members
of the Board or any committee thereof; recommending nominees for
election as directors at each annual stockholder meeting;
recommending candidates to fill any vacancies on the Board or any
committee thereof; and overseeing the evaluation of the Board. For
a complete description of the Nominating and Corporate Governance
Committee's responsibilities, you should refer to the Nominating
and Corporate Governance Committee Charter. The Nominating and
Corporate Governance Committees took one action by unanimous
written consent during the year ended December 31,
2019.
The
Nominating and Corporate Governance Committee will consider all
qualified director candidates identified by various sources,
including members of the Board, management and stockholders.
Candidates for directors recommended by stockholders will be given
the same consideration as those identified from other sources. The
Nominating and Corporate Governance Committee is responsible for
reviewing each candidate's biographical information, meeting with
each candidate and assessing each candidate's independence, skills
and expertise based on a number of factors. While we do not have a
formal policy on diversity, when considering the selection of
director nominees, the Nominating and Corporate Governance
Committee considers individuals with diverse backgrounds,
viewpoints, accomplishments, cultural background and professional
expertise, among other factors.
Board Leadership
The
Board has no policy regarding the need to separate or combine the
offices of Chairman of the Board and Chief Executive Officer and
instead the Board remains free to make this determination from time
to time in a manner that seems most appropriate for the Company.
The positions of Chairman of the Board and Chief Executive Officer
are currently held by Marshall Chesrown. The Board believes the
Chief Executive Officer is in the best position to direct the
independent directors' attention on the issues of greatest
importance to the Company and its stockholders. As a result, the
Company does not have a lead independent director. Our overall
corporate governance policies and practices combined with the
strength of our independent directors and our internal controls
minimize any potential conflicts that may result from combining the
roles of Chairman and Chief Executive Officer.
Board Oversight of Enterprise Risk
The
Board is actively involved in the oversight and management of risks
that could affect the Company. This oversight and management is
conducted primarily through the committees of the Board identified
above but the full Board has retained responsibility for general
oversight of risks. The Audit Committee is primarily responsible
for overseeing the risk management function, specifically with
respect to management's assessment of risk exposures (including
risks related to liquidity, credit, operations and regulatory
compliance, among others), and the processes in place to monitor
and control such exposures. The other committees of the Board
consider the risks within their areas of responsibility. The Board
satisfies its oversight responsibility through full reports by each
committee chair regarding the committee's considerations and
actions, as well as through regular reports directly from officers
responsible for oversight of particular risks within the
Company.
9
Director Independence
Our
Board has determined that all of our directors, other than Messrs.
Chesrown and Berrard, qualify as "independent" directors in
accordance with the listing requirements of The NASDAQ Stock
Market. The NASDAQ independence definition includes a series of
objective tests regarding a director's independence and requires
that the Board make an affirmative determination that a director
has no relationship with us that would interfere with such
director's exercise of independent judgment in carrying out the
responsibilities of a director. There are no family relationships
among any of our directors or executive officers.
Communications with the Company and the Board
Stockholders may
communicate with the Company through its Investor Relations
Department by writing to Investor Relations, RumbleOn, Inc., 901 W.
Walnut Hill Lane, Irving, Texas 75038.
Stockholders
interested in communicating with our Board, any Board committee,
any individual director, or any group of directors (such as our
independent directors) should send written correspondence to
RumbleOn, Inc. Board of Directors, Attn: Secretary, 901 W. Walnut
Hill Lane, Irving, Texas 75038.
Stockholder Proposals for Next Year's Annual Meeting
Any
stockholder proposal to be considered at the 2021 Annual Meeting of
Stockholders, including nominations of persons for election to our
Board, must be properly submitted to us by April 1, 2021. Detailed
information for submitting stockholder proposals or nominations of
director candidates will be provided upon written request to the
Secretary of RumbleOn, Inc., 901 W. Walnut Hill Lane, Irving, Texas
75038.
Stockholder Director Nominations
The
Nominating and Corporate Governance Committee has established a
policy pursuant to which it considers director candidates
recommended by our stockholders. All director candidates
recommended by our stockholders are considered for selection to the
Board on the same basis as if such candidates were recommended by
one or more of our directors or other persons. To recommend a
director candidate for consideration by our Nominating and
Corporate Governance Committee, a stockholder must submit the
recommendation in writing to our Secretary not later than 120
calendar days prior to the anniversary date of our proxy statement
distributed to our stockholders in connection with our previous
year's annual meeting of stockholders, and the recommendation must
provide the following information: (i) the name of the stockholder
making the recommendation; (ii) the name of the candidate; (iii)
the candidate's resume or a listing of his or her qualifications to
be a director; (iv) the proposed candidate's written consent to
being named as a nominee and to serving as one of our directors if
elected; and (v) a description of all relationships, arrangements,
or understandings, if any, between the proposed candidate and the
recommending stockholder and between the proposed candidate and us
so that the candidate's independence may be assessed. The
stockholder or the director candidate also must provide any
additional information requested by our Nominating and Corporate
Governance Committee to assist the Committee in appropriately
evaluating the candidate.
10
EXECUTIVE COMPENSATION
Executive and Director Compensation
Summary Compensation Table
The
following table provides the compensation paid to our principal
executive officer and other executive officers whose total
compensation exceeded $100,000 for the years ended December 31,
2019 and December 31, 2018.
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Stock Awards
(1)
|
Total
|
|
Marshall
Chesrown
|
2019
|
$
360,000
|
200,000
|
-
|
$
560,000
|
|
Chief Executive
Officer
|
2018
|
240,000
|
150,000
(2)
|
-
|
$
390,000
|
|
Steven R.
Berrard
|
2019
|
$
360,000
|
200,000
|
-
|
$
560,000
|
|
Chief Financial
Officer
|
2018
|
240,000
|
150,000
(2)
|
-
|
$
390,000
|
|
Peter Levy
(3)
|
2019
|
$
280,273
|
50,500
|
204,000
(4)
|
$
534,773
|
|
Chief Operating
Officer
|
|
|
|
|
|
_______________
(1)
Does not include
the grant date fair value of performance and market based
restricted stock units granted to each of Mr. Chesrown and Mr.
Berrard in the amount of $838,000 and to Mr. Levy in the amount of
$204,250, each as determined pursuant to FASB ASC Topic 718, which
restricted stocks unit were terminated as described below under the
section titled Executive Employment Arrangement.
(2)
Represents a
discretionary bonus approved by the Company's Compensation
Committee (the "Committee") for service provided to the Company in
connection with the acquisitions of Wholesale, Inc. and Wholesale
Express, LLC in October 2018.
(3)
On May 20, 2019,
Peter Levy was promoted to Chief Operating Officer of the Company.
As a result, compensation for only 2019 is presented
above.
(4)
Does not reflect
compensation paid to Mr. Levy. Instead, the amount shown
reflects the grant date fair value of restricted stock units
granted to Mr. Levy determined pursuant to FASB ASC Topic
718.
Executive Employment Arrangements
Marshall Chesrown and Steven Berrard
On May
25, 2019, the Committee approved an increase in the annual base
salary for Marshall Chesrown and Steven Berrard from $240,000 to
$360,000, retroactive to January 1, 2019. The Committee also
approved a discretionary bonus of up to $500,000 for each of
Messrs. Chesrown and Berrard payable as follows: (i) $100,000
payable immediately in connection with the Company's performance
for the quarter ended March 31, 2019 and the launch of the
Company's finance business, (ii) $100,000 upon reaching the revenue
target approved by the Committee for the year ending December 31,
2019 and payable upon completion of the Company's audited financial
statements for the year ending December 31, 2019, (iii) $100,000
payable upon achieving powersports and automotive unit sales with a
target average gross margin per unit approved by the Committee at
any time through December 31, 2019, and (iv) $100,000 payable in
two equal installments upon achieving a certain percentage of
revenue and gross margin targets approved by the Committee for the
quarters ended June 30, 2019 and September 30, 2019. Messrs.
Chesrown and Berrard each achieved and were paid $200,000 under the
bonus plan.
11
The
Committee also approved grants of up to 20,000 restricted stock
units ("RSUs") for each of Messrs. Chesrown and Berrard, which vest
as follows: (i) 5,000 RSUs vest after two consecutive quarters of
$1.00 or greater operating income and trailing four quarter revenue
targets approved by the Committee at any time through September 30,
2020, (ii) 5,000 RSUs vest at such time as the shares of Class B
Common Stock trade at a minimum closing price of $200.00 per share
for 30 consecutive trading days at any time through September 30,
2020, and (iii) 10,000 RSUs vest at such time as the shares of
Class B Common Stock trade at a minimum closing price of $300.00
per share for thirty consecutive trading days at any time through
September 30, 2020. Messrs. Chesrown and Berrard received these
RSUs on June 3, 2019 (the "CEO and CFO RSUs").
On May
27, 2020, the Committee terminated the CEO and CFO
RSUs.
On July
15, 2020, the Committee approved the 2020 cash bonus incentive
plan. The Committee established a target bonus ranging from
approximately 70% to 115% of base salary for each executive
officer, including Messrs. Chesrown and Berrard, with a payout
based on achievement of specific financial and operational
performance objectives.
Also,
on July 15, 2020, the Committee approved grants of RSUs pursuant to
the Plan for Messrs. Chesrown and Berrard as follows: Mr. Chesrown
– 19,544 RSUs and Mr. Berrard – 19,544 RSUs. These RSUs
vest (i) 20.0% on the thirteenth month after the grant date,
(ii) an additional 30.0% during the subsequent twelve months
of the initial vesting, and (iii) the final 50.0% during the
following twelve months.
Also,
on July 15, 2020, the Committee approved grants of RSUs pursuant to
the Plan for Messrs. Chesrown and Berrard as follows: Mr. Chesrown
– 66,668 RSUs and Mr. Berrard – 66, 666 RSUs. These
RSUs vest as follows: one third shall vest on the first trading day
after the Company’s Class B Common Stock closes at a stock
price of $50 per share or greater for 30 consecutive trading days;
one third shall vest on the first trading day after the
Company’s Class B Common Stock closes at a stock price of
$100 per share or greater for 30 consecutive trading days; and one
third shall vest on the first trading day after the Company’s
Class B Common stock closes at a stock price of $200 per share or
greater for 30 consecutive trading days. These RSUs have a term of
30 months.
The
RSUs granted on July 15, 2020 to Messrs. Chesrown and Berrard are
subject to stockholder approval at the Company’s 2020 Annual
Meeting of Stockholders.
The
Company has not entered into employment agreements or arrangements
with Messrs. Chesrown or Berrard. Accordingly, Messrs. Chesrown and
Berrard are employed as the Company's Chief Executive Officer and
Chief Financial Officer, respectively, on an at-will
basis.
Peter Levy
We have
not entered into an employment agreement or arrangement with Mr.
Levy. Accordingly, he is employed as our Chief Operating Officer on
an at-will basis. Mr. Levy currently receives an annual salary of
$300,000, which is paid weekly, in accordance with our standard
payroll practice. Mr. Levy is eligible for equity compensation
under our equity compensation plans, as determined from time to
time by the Committee of the Board.
On August 22, 2019, the Committee approved a grant of 2,500 RSUs to
Mr. Levy, which vest (1) 20% on the last day of the ninth month
following the grant date, (2) 7.5% every three months on the last
day of each three month period beginning on the last day of the
twelfth month following the grant date through the last of the
twenty-first month following the grant date and (3) 12.5% every
three months on the last day of each three month period beginning
on the last day of the twenty-fourth month following the grant date
through the last day of the thirty-first month following the grant
date.
12
Also, on August 22, 2019, the Committee approved a grant of up to
5,000 RSUs to Mr. Levy, which vest as follows: (i) 1,250 RSUs vest
after two consecutive quarters of $1.00 or greater operating income
and trailing four quarter revenue of $900,000,000 at any time
through June 30, 2020, (ii) 1,250 RSUs vest at such time as the
shares of Class B Common Stock trade at a minimum closing price of
$200.00 per share for 30 consecutive trading days at any time
through June 30, 2020, and (iii) 2,500 RSUs vest at such time as
the shares of Class B Common Stock trade at a minimum closing price
of $300.00 per share for 30 consecutive trading days at any time
through June 30, 2020 (the “COO RSUs, collectively with the
CEO and CFO RSUs, the "Executive RSUs").
On May 27, 2020, the Committee terminated the COO
RSUs.
On July
15, 2020, the Committee approved the 2020 cash bonus incentive
plan. The Committee established a target bonus ranging from
approximately 70% to 115% of base salary for each executive
officer, including Mr. Levy, with a payout based on achievement of
specific financial and operational performance
objectives.
Also,
on July 15, 2020, the Committee approved grants of 16,287 RSUs
pursuant to the Plan for Mr. Levy. These RSUs vest (i) 20.0%
on the thirteenth month after the grant date, (ii) an
additional 30.0% during the subsequent twelve months of the initial
vesting, and (iii) the final 50.0% during the following twelve
months.
Also,
on July 15, 2020, the Committee approved grants of 66,666 RSUs
pursuant to the Plan for Mr. Levy. These RSUs vest as follows: one
third shall vest on the first trading day after the Company’s
Class B Common Stock closes at a stock price of $50 per share or
greater for 30 consecutive trading days; one third shall vest on
the first trading day after the Company’s Class B Common
Stock closes at a stock price of $100 per share or greater for 30
consecutive trading days; and one third shall vest on the first
trading day after the Company’s Class B Common stock closes
at a stock price of $200 per share or greater for 30 consecutive
trading days. These RSUs have a term of 30 months.
The
RSUs granted on July 15, 2020 to Mr. Levy are subject to
stockholder approval at the Company’s 2020 Annual Meeting of
Stockholders.
Non-Employee Director Compensation
During
the year ended December 31, 2019, no compensation was paid to our
non-employee directors, except an award of 1,750 RSUs under the
Incentive Plan to Messrs. Dixon, Gray, Kakarala, Westfall and Reece
for their service to the Board.
Also,
on July 15, 2020, the Committee approved the annual compensation
for the Company’s non-employee directors of $150,000 of RSUs
to be granted upon a director’s initial appointment or
election to the Board of Directors and thereafter at the beginning
of each calendar year. These RSUs vest quarterly, and are subject
to prorata vesting if a director leaves the Board of Directors
before the end of each quarterly vesting period. On July 15, 2020,
the Committee approved the 2020 calendar year grants of RSUs for
each non-employee directors in the amount of $150,000, except
Messrs. Alexander and Marchlik received grants of RSUs in the
amount of $62,500 and $100,000, respectively. The RSUs granted on
July 15, 2020 to the non-employee directors are subject to
stockholder approval at the Company’s 2020 Annual Meeting of
Stockholders.
13
The
following table summarizes the compensation paid to our
non-employee directors for the year ended December 31,
2019.
|
Name
|
Stock
Awards(1)(2)
|
Total
|
|
Denmar
Dixon
|
$
160,300
|
$
160,300
|
|
Richard A. Gray,
Jr.
|
$
160,300
|
$
160,300
|
|
Kartik
Kakarala
|
$
160,300
|
$
160,300
|
|
Kevin
Westfall
|
$
160,300
|
$
160,300
|
|
Joseph
Reece(3)
|
$
160,300
|
$
160,300
|
_______________
(1)
Represents RSUs
granted under the Incentive Plan. Represents the aggregate grant
date fair value computed in accordance with FASB ASC Topic 718. In
determining the grant date fair value, we used $91.60 per share.
The RSUs vest one year from the grant date and are subject to pro
rata vesting if a director leaves the Board of Directors before the
one-year period.
(2)
As of December 31,
2019, each of Messrs. Dixon, Gray, Kakarala, and Westfall held RSUs
as follows: Mr. Dixon – 6,025; Mr. Gray – 4,550; Mr.
Kakarala – 3,150; and Mr. Westfall –
4,025.
(3)
Mr. Reece resigned
from the board on October 21, 2019, and forfeited all vested and
unvested RSUs.
Securities
Authorized for Issuance Under Equity Compensation
Plans
On
January 9, 2017, our Board approved the adoption of the Incentive
Plan subject to stockholder approval at our 2017 Annual Meeting of
Stockholders. On June 30, 2017, the Incentive Plan was approved by
our stockholders at the 2017 Annual Meeting of Stockholders. The
purposes of the Incentive Plan are to attract, retain, reward and
motivate talented, motivated and loyal employees and other service
providers, or the Eligible Individuals, by providing them with an
opportunity to acquire or increase a proprietary interest in our
company and to incentivize them to expend maximum effort for the
growth and success of our company, so as to strengthen the
mutuality of the interests between such persons and our
stockholders. The Incentive Plan allows us to grant a variety of
stock-based and cash-based awards to Eligible Individuals. On May
10, 2018, the Board approved, subject to stockholder approval, an
amendment to the Incentive Plan to increase the number of shares of
Class B Common Stock authorized for issuance under the Incentive
Plan from twelve percent (12%) of all issued and outstanding Class
B Common Stock from time to time to 100,000 shares of Class B
Common Stock (the "Plan Increase"). On June 25, 2018, the Plan
Increase was approved by our stockholders at the 2018 Annual
Meeting of Stockholders. On May 20, 2019, the Company's
stockholders approved another amendment to the Plan to increase the
number of shares authorized for issuance under the Plan from
100,000 shares of Class B Common Stock to 200,000 shares of Class B
Common Stock. We have not maintained any other equity compensation
plans since our inception.
The
following table provides information as of December 31, 2019, with
respect to all of our compensation plans under which equity
securities are authorized for issuance:
|
Plan
Category
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights
|
Number of
securities remaining available for future issuance
|
|
Equity compensation
plans approved by stockholders
|
136,076
(1)
|
41,299
(2)
|
|
Equity compensation
plans not approved by stockholders
|
-
|
-
|
_______________
(1)
Represents
restricted stock units outstanding under the Incentive
Plan.
(2)
Represents
securities remaining available for future issuance under the
Incentive Plan.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to
securities. In accordance with the SEC rules, shares of our common
stock that may be acquired upon exercise or vesting of equity
awards within 60 days of the date of the table below are deemed
beneficially owned by the holders of such options and are deemed
outstanding for the purpose of computing the percentage of
ownership of such person, but are not treated as outstanding for
the purpose of computing the percentage of ownership of any other
person.
As of
July 17, 2020, 50,000 shares of Class A Common Stock and 2,179,907
shares of Class B Common Stock were issued and outstanding. The
following table sets forth information with respect to the
beneficial ownership of our common stock as of July 17, 2020, by
(i) each of our directors and executive officers, (ii) all of our
directors and executive officers as a group, and (iii) each
stockholder known by us to be the beneficial owner of more than 5%
of our common stock. To the best of our knowledge, except as
otherwise indicated, each of the persons named in the table has
sole voting and investment power with respect to the shares of
common stock beneficially owned by such person, except to the
extent such power may be shared with a spouse. To our knowledge,
none of the shares listed below are held under a voting trust or
similar agreement, except as noted. To our knowledge, there is no
arrangement, including any pledge by any person of our securities
or any of our parents, the operation of which may at a subsequent
date result in a change in control of our company.
Unless
otherwise noted below, the address of each person listed on the
table is c/o RumbleOn, Inc., 901 W. Walnut Hill Lane, Irving, Texas
75038.
|
Beneficial
Owner
|
Class A Common
Stock Beneficially Owned
|
Percentage ofClass
A Common Stock Beneficially Owned (%)
(1)
|
Class B Common
Stock Beneficially Owned
|
Percentage of Class
B Common Stock Beneficially Owned (%)
(2)
|
|
Marshall
Chesrown
(3)
|
43,750
|
87.5
%
|
93,750
|
4.30
%
|
|
Steven
Berrard
(4)
|
6,250
|
12.5
%
|
108,500
|
4.98
%
|
|
Adam
Alexander
|
-
|
-
|
-
|
-
|
|
Denmar
Dixon
(5)
|
-
|
-
|
79,157
(6)
|
3.63
%
|
|
Richard
Gray
|
-
|
-
|
5,333
(7)
|
*
|
|
Peter
Levy
|
-
|
-
|
6,901
(8)
|
*
|
|
Michael
Marchlik
|
-
|
-
|
-
|
-
|
|
Kevin
Westfall
|
-
|
-
|
4,968
(9)
|
*
|
|
All executive
officers and directors as a group (8 persons)
(10)
|
50,000
|
100
%
|
298,609
(11)
|
13.70
%
|
_______________
*Represents
beneficial ownership of less than 1%.
_______________
(1)
Based on 50,000
shares of Class A Common Stock issued and outstanding as of July
17, 2020. The Class A Common Stock has ten votes for each share
outstanding compared to one vote for each share of Class B Common
Stock outstanding
(2)
Based on 2,179,907
shares of Class B Common Stock issued and outstanding as of July
17, 2020.
(3)
As of July 17,
2020, Mr. Chesrown had voting power representing approximately
19.83% of our outstanding common stock.
(4)
Shares are owned
directly through Berrard Holdings, a limited partnership controlled
by Steven R. Berrard. Mr. Berrard has the sole power to vote and
the sole power to dispose of each of the shares of common stock
which he may be deemed to beneficially own. As of July 17, 2020,
Mr. Berrard had voting power representing approximately 6.38% of
our outstanding common stock.
(5)
62,642 shares are
owned directly through Blue Flame Capital, LLC, an entity
controlled by Mr. Dixon, 638 shares are held by Mr. Dixon's spouse,
75 shares are held by Mr. Dixon's son and 14,350 shares are
directly held by Mr. Dixon. Mr. Dixon has the sole power to vote
and the sole power to dispose of each of the shares of common stock
which he may be deemed to beneficially own. As of July 17, 2020,
Mr. Dixon had voting power representing approximately 2.9% of our
outstanding common stock.
(6)
Includes 1,452
restricted stock units that have vested or will vest within 60
days.
(7)
Includes 1,108 restricted stock units that have vested or will vest
within 60 days.
(8)
Includes 2,458
restricted stock units that have vested or will vest within 60
days.
(9)
Includes 598
restricted stock units that have vested or will vest within 60
days.
(10)
As of July 17,
2020, all directors and executive officers as a group had voting
power representing approximately 29.60% of our outstanding common
stock.
(11)
Includes 5,616
restricted stock units that have vested or will vest within 60
days.
15
PROPOSAL 2: STOCK INCENTIVE PLAN AMENDMENT PROPOSAL
Overview
Upon
the recommendation of the Compensation Committee, the Board has
approved, subject to stockholder approval, an amendment to the Plan
to increase the number of shares of Class B Common Stock ("Common
Stock") authorized for issuance under the Plan from 200,000 shares
of Common Stock to 700,000 shares of Common Stock (the "Plan
Increase"). Currently, 151,776 shares of Common Stock are available
for issuance under the Plan, of which 98,054 shares are subject to
outstanding awards under the Plan and 53,772 shares remain
available for future issuance under the Plan. These share amounts
do not include 426,144 shares underlying RSUs granted pursuant to
the Plan, subject to stockholder approval at the Annual Meeting.
Approval of this proposal will result in an additional 500,000
shares of Common Stock available for issuance under the Plan and
ratify awards previously granted under the Plan. The Board
unanimously recommends that the stockholders approve the Stock
Incentive Plan Amendment Proposal. The primary purpose of the Plan
is to attract, retain, reward and motivate certain individuals by
providing them with an opportunity to acquire or increase a
proprietary interest in the Company and to incentivize them to
expend maximum effort for the growth and success of the Company, so
as to strengthen the mutuality of the interests between such
individuals and the stockholders of the Company.
The
following discussion summarizes the material terms of the Plan.
This discussion is not intended to be complete and is qualified in
its entirety by (i) reference to the full text of the Plan, which
is available as
Annex
A
to the Company's 2017 Proxy Statement for the 2017 Annual
Meeting of Stockholders, (ii) reference to the full text of the
first amendment to the Plan, previously approved by the
Stockholders at the Company's 2018 Annual Meeting of Stockholders,
which is available as Annex A to the Company's 2018 Proxy Statement
for the 2018 Annual Meeting of Stockholders, (iii) reference to the
full text of the second amendment to the Plan, previously approved
by the Stockholders at the Company's 2019 Annual Meeting of
Stockholders, which is available as Annex A to the Company's 2019
Proxy Statement for the 2019 Annual Meeting of Stockholders, and
(iv) the amendment to the Plan to effect the Plan Increase included
as Annex A to this proxy statement, each of which is incorporated
herein by reference.
Administration
The
Plan is administered by the Compensation Committee of the Board
(for purpose of this description of the Plan, the "Committee"). If
no Committee exists, the independent Board members will exercise
the functions of the Committee.
All
grants under the Plan will be evidenced by a grant agreement (an
"Award Agreement") that will incorporate the terms and conditions
as the Committee deems necessary or appropriate.
Coverage Eligibility and Annual Grant Limits
The
Plan provides for the issuance of awards (each, an "Award")
consisting of stock options ("Options"), stock appreciation rights
("SARs"), restricted stock ("Restricted Stock"), restricted stock
units ("RSUs"), performance shares ("Performance Shares") and
performance units ("Performance Units"). Incentive stock options
("ISOs") may be granted under the Plan only to our employees. Our
employees, consultants, directors, independent contractors and
certain prospective employees who have committed to become an
employee are eligible to receive all other types of awards under
the Plan (each an "Eligible Individual").
The
granting of Awards under the Plan shall be subject to the following
limitations, after giving effect to the Plan Increase: (i) a
maximum of 700,000 shares of Common Stock may be subject to grants
of ISOs; (ii) a maximum of 700,000 of shares may be subject to
grants of Options or SARs to any one Eligible Individual during any
one fiscal year; (iii) a maximum of 700,000 shares of Common Stock
may be subject to grants of Performance Shares, Restricted Stock,
RSUs, and awards of common stock to any one Eligible Individual
during any one fiscal year; and (iv) the maximum value on the date
of grant of Performance Units which may be granted to any one
Eligible Individual during any one fiscal year shall be
$1,000,000.
16
Shares Reserved for Issuance Under the Plan
Subject
to adjustment as described below and under the section titled
"Change in Control" and after giving effect to the Plan Increase, a
total of 700,000 shares of Common Stock may be issued pursuant to
Awards granted under the Plan. Notwithstanding the foregoing, if
any Award is cancelled, forfeited or terminated for any reason
prior to exercise, delivery or becoming vested in full, the shares
of Common Stock that were subject to such Award shall, to the
extent cancelled, forfeited or terminated, immediately become
available for future Awards granted under this Plan; provided,
however, that any shares of Common Stock subject to an Award which
is cancelled, forfeited or terminated in order to pay the exercise
price of a stock option, purchase price or any taxes or tax
withholdings on an award shall not be available for future Awards
granted under this Plan.
If the
outstanding shares of common stock are increased or decreased or
changed into or exchanged for a different number or kind of shares
or other securities by reason of any recapitalization,
reclassification, reorganization, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock of the Company or other
increase or decrease in such shares effected without receipt of
consideration by the Company, an appropriate and proportionate
adjustment shall be made by the Committee to: (i) the aggregate
number and kind of shares of common stock available under the Plan,
(ii) the calculation of the reduction of shares of common stock
available under the Plan, (iii) the number and kind of shares of
common stock issuable pursuant to outstanding Awards granted under
the Plan and/or (iv) the exercise price of outstanding Options or
SARs granted under the Plan. No fractional shares of common stock
or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the
nearest whole share or unit. Any adjustments made to any ISO shall
be made in accordance with Section 424 of the Internal Revenue Code
of 1986, as amended (the "Code").
Stock Options
The
Committee acting in its absolute discretion has the right to grant
Options to Eligible Individuals to purchase shares of common stock.
Each grant shall be evidenced by an option certificate setting
forth whether the Option is an ISO, which is intended to qualify
for special tax treatment under Section 422 of the Code, or a
non-qualified incentive stock option ("Non-ISO"). Each Option
granted under the Plan entitles the holder thereof to purchase the
number of shares of common stock specified in the grant at the
exercise price specified in the related option certificate. At the
discretion of the Committee, the option certificate can provide for
payment of the exercise price either in cash, by check, bank draft,
money order, in common stock and by any other method which the
Committee, in its sole and absolute discretion and to the extent
permitted by applicable law, may permit.
The
terms and conditions of each Option granted under the Plan will be
determined by the Committee, but no Option will be granted at an
exercise price which is less than the fair market value of the
common stock on the grant date (generally, the closing price for
the common stock on the principal securities exchange on which the
common stock is traded or listed on the date the Option is granted
or, if there was no closing price on that date, on the last
preceding date on which a closing price was reported). In addition,
if the Option is an ISO that is granted to a 10% stockholder of the
Company, the Option exercise price will be no less than 110% of the
fair market value of the shares of common stock on the grant date.
Except for adjustments as described under "Shares Reserved for
Issuance Under the Plan" above and "Change in Control" below,
without the approval of the Company's stockholders, the option
price shall not be reduced after the Option is granted, an Option
may not be cancelled in exchange for cash or another Award, and no
other action may be made with respect to an Option that would be
treated as a repricing under the rules and regulations of the
principal securities exchange on which the common stock is
traded.
17
No
Options may be exercised prior to the satisfaction of the
conditions and vesting schedule provided for in the Plan and in the
Award Agreement relating thereto. No Option may be exercisable more
than 10 years from the grant date, or, if the Option is an ISO
granted to a 10% stockholder of the Company, it may not be
exercisable more than 10 years from the grant date. Moreover, no
Option will be treated as an ISO to the extent that the aggregate
fair market value of the common stock subject to the Option
(determined as of the date the ISO was granted) which would first
become exercisable in any calendar year exceeds $100,000. The
Committee may not, as part of an Option grant, provide for an
Option reload feature whereby an additional Option is automatically
granted to pay all or a part of the Option exercise price or a part
of any related tax withholding requirement.
Restricted Stock and Restricted Stock Units
The
Committee may grant to such Eligible Individuals as the Committee
may determine, Restricted Stock and RSUs, in such amounts and on
such terms and conditions as the Committee shall determine in its
sole and absolute discretion. The Committee shall impose such
restrictions on any Restricted Stock and RSUs granted pursuant to
the Plan as it may deem advisable including, without limitation,
time-based vesting restrictions or the attainment of performance
goals ("Performance Goals"). With respect to a grant of Restricted
Stock, the Company may issue a certificate evidencing such
Restricted Stock to the Eligible Individual or issue and hold such
shares of Restricted Stock for the benefit of the Eligible
Individual until the applicable restrictions expire. The Company
may legend the certificate representing Restricted Stock to give
appropriate notice of such restrictions. Unless otherwise provided
in an Award Agreement, until the expiration of all applicable
restrictions, (i) the Restricted Stock shall be treated as
outstanding, (ii) the Eligible Individual holding shares of
Restricted Stock may exercise full voting rights with respect to
such shares, and (iii) the Eligible Individual holding shares of
Restricted Stock shall be entitled to receive all dividends and
other distributions paid with respect to such shares while they are
so held. If any such dividends or distributions are paid in shares
of common stock, such shares shall be subject to the same
restrictions on transferability and forfeitability as the shares of
Restricted Stock with respect to which they were paid.
Notwithstanding anything to the contrary, at the discretion of the
Committee, all such dividends and distributions may be held in
escrow by the Company (subject to the same restrictions on
forfeitability) until all restrictions on the respective Restricted
Stock have lapsed. Holders of the RSUs shall not have any of the
rights of a stockholder, including the right to vote or receive
dividends and other distributions, until common stock shall have
been issued in the Eligible Individual's name pursuant to the RSUs;
provided, however the Committee, in its sole and absolute
discretion, may provide for dividend equivalents on vested
RSUs.
Unless
otherwise provided in the Plan or Award Agreement, common stock
will be issued with respect to RSUs no later than March 15 of the
year immediately following the year in which the RSUs are first no
longer subject to a substantial risk of forfeiture as such term is
defined in Section 409A of the Code and the regulations issued
thereunder ("RSU Payment Date"). In the event that the Eligible
Individual has elected to defer the receipt of common stock
pursuant to an Award Agreement beyond the RSU Payment Date, then
the common stock will be issued at the time specified in the Award
Agreement or related deferral election form. In addition, unless
otherwise provided in the Award Agreement, if the receipt of common
stock is deferred past the RSU Payment Date, dividend equivalents
on the common stock covered by the RSUs shall be deferred until the
RSU Payment Date.
Stock Appreciation Rights
The
Committee has the right to grant SARs to Eligible Individuals in
such amounts and on such terms and conditions as the Committee
shall determine in its sole and absolute discretion. Unless
otherwise provided in an Award Agreement, the terms and conditions
(including, without limitation, the limitations on the exercise
price, exercise period, repricing and termination) of the SAR shall
be substantially identical to the terms and conditions that would
have been applicable were the grant of the SAR a grant of an
Option. Unless otherwise provided in an Award Agreement, upon
exercise of a SAR the Eligible Individual shall be entitled to
receive payment, in cash, in shares of common stock, or in a
combination thereof, as determined by the Committee in its sole and
absolute discretion. The amount of such payment shall be determined
by multiplying the excess, if any, of the fair market value of a
share of common stock on the date of exercise over the fair market
value of a share of common stock on the grant date, by the number
of shares of common stock with respect to which the SAR are then
being exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to a SAR by
including such limitation in the Award Agreement.
18
Performance Shares and Performance Units
Performance Shares
and Performance Units may be granted to Eligible Individuals under
the Plan. The applicable Award Agreement shall set forth (i) the
number of Performance Shares or the dollar value of Performance
Units granted to the participant; (ii) the performance period and
Performance Goals with respect to each such Award; (iii) the
threshold, target and maximum shares of common stock or dollar
values of each Performance Share or Performance Unit and
corresponding Performance Goals; and (iv) any other terms and
conditions as the Committee determines in its sole and absolute
discretion. Unless otherwise provided in an Award Agreement, the
Committee shall determine in its sole and absolute discretion
whether payment with respect to the Performance Share or
Performance Unit shall be made in cash, in shares of common stock,
or in a combination thereof.
Performance Goals
Performance Goals
will be based on one or more of the following criteria: (i) the
Company's enterprise value or value creation targets; (ii) the
Company's after-tax or pre-tax profits including, without
limitation, that attributable to Company's continuing and/or other
operations; (iii) the Company's operational cash flow or working
capital, or a component thereof; (iv) the Company's operational
costs, or a component thereof; (v) limiting the level of increase
in all or a portion of bank debt or other of the Company's
long-term or short-term public or private debt or other similar
financial obligations of the Company, which may be calculated net
of cash balances and/or other offsets and adjustments as may be
established by the Committee; (vi) earnings per share or earnings
per share from the Company's continuing operations; (vii) the
Company's net sales, revenues, net income or earnings before income
tax or other exclusions; (viii) the Company's return on capital
employed or return on invested capital; (ix) the Company's
after-tax or pre-tax return on stockholder equity; (x) the
attainment of certain target levels in the fair market value of the
Company's common stock; (xi) the growth in the value of an
investment in the common stock assuming the reinvestment of
dividends; and/or (xii) EBITDA (earnings before income tax,
depreciation and amortization). In addition, Performance Goals may
be based upon the attainment by a subsidiary, division or other
operational unit of the Company of specified levels of performance
under one or more of the measures described above. Further, the
Performance Goals may be based upon the attainment by the Company
(or a subsidiary, division, facility or other operational unit) of
specified levels of performance under one or more of the foregoing
measures relative to the performance of other corporations. To the
extent permitted under Section 162(m) of the Code (including,
without limitation, compliance with any requirements for
stockholder approval), the Committee may, in its sole and absolute
discretion: (i) designate additional business criteria upon which
the Performance Goals may be based; (ii) modify, amend or adjust
the business criteria described herein; or (iii) incorporate in the
Performance Goals provisions regarding changes in accounting
methods, corporate transactions (including, without limitation,
dispositions or acquisitions) and similar events or circumstances.
Performance Goals may include a threshold level of performance
below which no Award will be earned, levels of performance at which
an Award will become partially earned and a level at which an Award
will be fully earned.
Other Awards
Awards
of shares of Common Stock, phantom stock and other Awards that are
valued in whole or in part by reference to, or otherwise based on,
Common Stock, may also be made, from time to time, to Eligible
Individuals as may be selected by the Committee. Each such Award
shall be evidenced by an Award Agreement between the Eligible
Individual and the Company which shall specify the number of shares
of Common Stock subject to the Award, any consideration therefore,
any vesting or performance requirements, and such other terms and
conditions as the Committee shall determine in its sole and
absolute discretion.
19
Non-Transferability
No
Award will be transferable by an Eligible Individual other than by
will or the laws of descent and distribution, and any Option or SAR
will (absent the Committee's consent) be exercisable during an
Eligible Individual's lifetime only by the Eligible Individual,
except that the Committee may provide in an Award Agreement that an
Eligible Individual's may transfer an award to a "family member",
as such term is defined in the Form S-8 Registration Statement
under the Securities Act of 1933, as amended, under such terms and
conditions as specified by the Committee.
Amendments to the Plan
The
Plan may be amended by the Board to the extent that it deems
necessary or appropriate provided, however, that the approval of
the stockholders shall be required for any amendment: (i) that
changes the class of individuals eligible to receive Awards under
the Plan; (ii) that increases the maximum number of shares of
common stock in the aggregate that may be subject to Awards that
are granted under the Plan (except as otherwise permitted under the
Plan); (iii) the approval of which is necessary to comply with
federal or state law or with the rules of any stock exchange or
automated quotation system on which the common stock may be listed
or traded; or (iv) that proposed to eliminate a requirement
provided herein that the stockholders of the Company must approve
an action to be undertaken under the Plan. Except as expressly
provided in the Plan, no amendment, suspension or termination of
the Plan shall, without the consent of the holder of an Award,
alter or impair rights or obligations under any Award theretofore
granted under the Plan. Awards granted prior to the termination of
the Plan may extend beyond the date the Plan is terminated and
shall continue subject to the terms of the Plan as in effect on the
date the Plan is terminated.
Change in Control
Upon
the occurrence of a Change in Control (as defined in the Plan), the
Committee may, in its sole and absolute discretion, provide on a
case by case basis that (i) all Awards shall terminate, provided
that participants shall have the right, immediately prior to the
occurrence of such Change in Control and during such reasonable
period as the Committee in its sole discretion shall determine and
designate, to exercise any Award, (ii) all Awards shall terminate,
provided that participants shall be entitled to a cash payment
equal to the price per share of common stock paid in the Change in
Control transaction, with respect to shares subject to the vested
portion of the Award, net of the exercise price thereof, if
applicable, (iii) in connection with a liquidation or dissolution
of the Company, the Awards, to the extent vested, shall convert
into the right to receive liquidation proceeds net of the exercise
price (if applicable), (iv) accelerate the vesting of Awards and
(v) any combination of the foregoing. In the event that the
Committee does not terminate or convert an Award upon a Change in
Control of the Company, then the Award shall be assumed, or
substantially equivalent Awards shall be substituted, by the
acquiring, or succeeding corporation (or an affiliate
thereof).
Federal Income Tax Consequences
The
rules concerning the federal income tax consequences of Awards
under the Plan are technical, and reasonable persons may differ on
their proper interpretation. Moreover, the applicable statutory and
regulatory provisions are subject to change, as are their
interpretations and applications, which may vary in individual
circumstances. Therefore, the following discussion is designed to
provide only a brief, general summary description of the federal
income tax consequences associated with such grants, based on a
good faith interpretation of the current federal income tax laws,
regulations (including certain proposed regulations) and judicial
and administrative interpretations. The following discussion does
not set forth (1) any federal tax consequences other than income
tax consequences or (2) any state, local or foreign tax
consequences that may apply.
20
ISOs
. In general, an employee will not
recognize taxable income upon the grant or the exercise of an ISO.
For purposes of the alternative minimum tax, however, the employee
will be required to treat an amount equal to the difference between
the fair market value of the common stock on the date of exercise
over the option exercise price as an item of adjustment in
computing the employee's alternative minimum taxable income. If the
employee does not dispose of the common stock received pursuant to
the exercise of the ISO within either (1) two years after the date
of the grant of the ISO or (2) one year after the date of the
exercise of the ISO, a subsequent disposition of the common stock
generally will result in long-term capital gain or loss to such
individual with respect to the difference between the amount
realized on the disposition and exercise price. The Company will
not be entitled to any federal income tax deduction as a result of
such disposition. In addition, the Company normally will not be
entitled to take a federal income tax deduction on either the grant
date or upon the exercise of an ISO.
If the
employee disposes of the common stock acquired upon exercise of the
ISO within either of the above-mentioned time periods, then in the
year of such disposition, the employee generally will recognize
ordinary income, and the Company will be entitled to a federal
income tax deduction (provided the Company satisfies applicable
federal income tax reporting requirements), in an amount equal to
the lesser of (1) the excess of the fair market value of the common
stock on the date of exercise over the option exercise price or (2)
the amount realized upon disposition of the common stock over the
exercise price. Any gain in excess of such amount recognized by the
employee as ordinary income would be taxed to such individual as
short-term or long-term capital gain (depending on the applicable
holding period).
Non-ISOs
. An Eligible Individual will
not recognize any taxable income upon the grant of a Non-ISO, and
the Company will not be entitled to take an income tax deduction at
the time of such grant. Upon the exercise of a Non-ISO, the
Eligible Individual generally will recognize ordinary income and
the Company will be entitled to a federal income tax deduction
(provided the Company satisfies applicable federal income tax
reporting requirements) in an amount equal to the excess of the
fair market value of the common stock on the date of exercise over
the option exercise price. Upon a subsequent sale of the common
stock by the Eligible Individual, such individual will recognize
short-term or long-term capital gain or loss (depending on the
applicable holding period).
SARs
. An Eligible Individual will not
recognize any taxable income upon the grant of a SAR, and the
Company will not be entitled to take an income tax deduction at the
time of such grant. An Eligible Individual will recognize ordinary
income for federal income tax purposes upon the exercise of a SAR
under the Plan for cash, common stock or a combination of cash and
common stock, and the amount of income that the Eligible Individual
will recognize will depend on the amount of cash, if any, and the
fair market value of the common stock, if any, that the Eligible
Individual receives as a result of such exercise. The Company
generally will be entitled to a federal income tax deduction in an
amount equal to the ordinary income recognized by the Eligible
Individual in the same taxable year in which the Eligible
Individual recognizes such income, if the Company satisfies
applicable federal income tax reporting requirements.
Restricted Stock
. The Eligible
Individual who receives Restricted Stock generally will not be
subject to tax until the shares are no longer subject to forfeiture
or restrictions on transfer for purposes of Section 83 of the Code
(the "Restrictions"). At such time the Eligible Individual will be
subject to tax at ordinary income rates on the fair market value of
the Restricted Stock (reduced by any amount paid by the participant
for such Restricted Stock). However, an Eligible Individual who
makes an election under Section 83(b) of the Code within 30 days of
the date of transfer of the shares will have taxable ordinary
income on the date of transfer of the shares equal to the excess of
the fair market value of such shares (determined without regard to
the Restrictions) over the purchase price, if any, of such
restricted shares. Any appreciation (or depreciation) realized upon
a later disposition of such shares will be treated as long-term or
short-term capital gain (or loss) depending upon how long the
shares have been held. If a Section 83(b) election has not been
made, any dividends received with respect to restricted shares that
are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant
and not eligible for the reduced tax rate applicable to dividends.
The Company generally will be entitled to a federal income tax
deduction in an amount equal to the ordinary income recognized by
the Eligible Individual in the same taxable year in which the
Eligible Individual recognizes such income, if the Company
satisfies applicable federal income tax reporting
requirements.
21
Restricted Stock Units
. Generally, no
income will be recognized upon the award of RSUs. An Eligible
Individual who receives RSUs generally will be subject to tax at
ordinary income rates on any cash received and the fair market
value of any shares of common stock or other property on the date
that such amounts are transferred to the Eligible Individual under
the award (reduced by any amount paid by the Eligible Individual
for such RSU). The Company generally will be entitled to a federal
income tax deduction in an amount equal to the ordinary income
recognized by the Eligible Individual in the same taxable year in
which the Eligible Individual recognizes such income.
Performance Units and Performance
Shares
. No income generally will be recognized upon the
grant of a Performance Unit or Performance Share. Upon payment in
respect of a Performance Unit or Performance Share, the Eligible
Individual generally will be required to include as taxable
ordinary income in the year of receipt an amount equal to the
amount of cash received and the fair market value of any
nonrestricted shares of common stock or other property received.
The Company generally will be entitled to a federal income tax
deduction in an amount equal to the ordinary income recognized by
the Eligible Individual in the same taxable year in which the
Eligible Individual recognizes such income.
Code Section 162(m)
. In general,
Section 162(m) of the Code currently provides that if, in any year,
the compensation that is paid to any "covered employee" (as defined
under Section 162(m)) exceeds $1,000,000 per person, any amounts
that exceed the $1,000,000 threshold will not be deductible by us
for federal income tax purposes.
New Stock Incentive Plan Benefits
The
following table sets forth information regarding awards that have
been made pursuant to the Plan on July 15, 2020 to the individuals
and groups listed. All of these awards are subject to stockholder
approval of the Plan and ratification of the awards. If stockholder
approval is not obtained then the recipients will not receive the
awards granted at this time.
|
Name
|
|
Position
|
|
Grant Date
Fair
Value of RSUs
(1)
|
|
Number of
RSUs
|
|
|
Marshall
Chesrown
|
|
Chairman
and Chief Executive Officer
|
|
$
|
179,805
|
|
19,544
|
|
|
|
|
$
|
(2)
|
|
66,668
|
|
|
Steven
Berrard
|
|
Director
and Chief Financial Officer
|
|
$
|
179,805
|
|
19,544
|
|
|
|
|
$
|
(2)
|
|
66,666
|
|
|
Peter
Levy
|
|
Chief
Operating Officer
|
|
$
|
149,841
|
|
16,287
|
|
|
|
|
$
|
(2)
|
|
66,666
|
|
|
Executive
Officer Group
|
|
|
|
$
|
2,349,453
|
|
255,375
|
|
Non-Executive
Director Group
|
|
|
|
$
|
762,500
|
|
82,881
|
|
Non-Executive
Employee Group
|
|
|
|
$
|
808,570
|
|
87,888
|
(1)
In determining the grant date fair value for RSUs for which vesting
is not subject to market conditions, the Company used the closing
price of the Company’s common stock on the day immediately
before the grant date.
(2) The date
and value of the executive awards not subject to market performance
is ultimately dependent on the price of the Company's stock, and as
such, the value realized by the executives upon achievement of each
of the $50, $100, and $200 closing price thresholds for
thirty (30) consecutive days are, for Mr. Chesrown $1,111,200,
$2,222,400 and $4,444,800, and for each of Mr. Berrard and Mr. Levy
$1,111,100, $2,222,200, and
$4,444,400.
On July
15, 2020, the Committee approved grants of RSUs pursuant to the
Plan for Messrs. Chesrown, Berrard and Levy as follows: Mr.
Chesrown – 19,544 RSUs, Mr. Berrard – 19,544 RSUs and
Mr. Levy - 16,287 RSUs. These RSUs vest (i) 20.0% on the
thirteenth month after the grant date, (ii) an additional
30.0% during the subsequent twelve months of the initial vesting,
and (iii) the final 50.0% during the following twelve
months.
Also,
on July 15, 2020, the Committee approved grants of RSUs pursuant to
the Plan for Messrs. Chesrown, Berrard and Levy as follows: Mr.
Chesrown – 66,668 RSUs, Mr. Berrard – 66,666 RSUs and
Mr. Levy - 66,666 RSUs. These RSUs vest as follows: one third shall
vest on the first trading day after the Company’s Class B
Common Stock closes at a stock price of $50 per share or greater
for 30 consecutive trading days; one third shall vest on the first
trading day after the Company’s Class B Common Stock closes
at a stock price of $100 per share or greater for 30 consecutive
trading days; and one third shall vest on the first trading day
after the Company’s Class B Common stock closes at a stock
price of $200 per share or greater for 30 consecutive trading days.
These RSUs have a term of 30 months.
22
Also,
on July 15, 2020, the Compensation Committee approved the annual
compensation for the Company’s non-employee directors of
$150,000 of RSUs to be granted upon a director’s initial
appointment or election to the Board of Directors and thereafter at
the beginning of each calendar year. These RSUs vest quarterly, and
are subject to prorata vesting if a director leaves the Board of
Directors before the end of each quarterly vesting period. On July
15, 2020, the Committee approved the 2020 calendar year grants of
RSUs for each non-employee directors in the amount of $150,000,
except Messrs. Alexander and Marchlik received grants of RSUs in
the amount of $62,500 and $100,000, respectively.
Also,
on July 15, 2020, the Compensation Committee approved grants of
87,888 RSUs pursuant to the Plan for certain non-executive
employees. These RSUs vest as follows: (i) 20.0% on the
thirteenth month after the grant date, (ii) an additional
30.0% during the subsequent twelve months of the initial vesting,
and (iii) the final 50.0% during the following twelve
months.
The
RSUs granted on July 15, 2020 to the executive officers,
non-employee (non-executive) directors and non-executive employees
are subject to stockholder approval at the Annual
Meeting.
Vote Required and Board Recommendation
Approval of the
Stock Incentive Plan Amendment requires the affirmative vote of the
holders of a majority of the shares of common stock represented in
person or by proxy at the Annual Meeting. The Board unanimously
recommends a vote "
FOR
" the
approval of the Stock Incentive Plan Amendment
Proposal.
23
PROPOSAL 3: SAY ON PAY PROPOSAL
Background of the Proposal
The
Dodd-Frank Act requires all public companies to hold a separate
non-binding advisory shareholder vote to approve the compensation
of executive officers as described in the executive compensation
tables and any related information in each such company's proxy
statement (commonly known as a "Say on Pay" proposal). Pursuant to
Section 14A of the Securities Exchange Act of 1934, as amended, we
are holding a separate non-binding advisory vote on Say on Pay at
the Annual Meeting.
Say on Pay Resolution
This
Say on Pay proposal is set forth in the following
resolution:
RESOLVED, that the
stockholders of RumbleOn, Inc. approve, on an advisory basis, the
compensation of its named executive officers, as disclosed in the
RumbleOn, Inc.'s Proxy Statement for the 2020 Annual Meeting of
Stockholders, pursuant to the compensation disclosure rules of the
Securities and Exchange Commission, including the compensation
tables, and any related information found in the proxy statement of
RumbleOn, Inc.
Because
your vote on this proposal is advisory, it will not be binding on
the Board, the Compensation Committee or the Company. However, the
Compensation Committee will take into account the outcome of the
vote when considering future executive compensation
arrangements.
Vote Required and Board Recommendation
The
vote required for the Say on Pay Proposal is a majority of the
stock having voting power present in person or represented by proxy
at the Annual Meeting. The Board recommends a vote "
FOR
" the Say on Pay
proposal.
24
REPORT OF THE AUDIT COMMITTEE
The
Audit Committee reviews the Company's financial reporting process
on behalf of the Board. Management has the primary responsibility
for establishing and maintaining adequate internal control over
financial reporting for preparing the financial statements and for
the report process. The Audit Committee members do not serve as
professional accountants or auditors, and their functions are not
intended to duplicate or to certify the activities of management or
the independent public accounting firm. We have engaged Grant
Thornton LLP ("Grant Thornton") as our independent public
accountants to report on the conformity of the Company's financial
statements to accounting principles generally accepted in the
United States. In this context, the Audit Committee hereby reports
as follows:
1.
The Audit Committee
has reviewed and discussed the audited financial statements with
management of the Company.
2.
The Audit Committee
has discussed with Grant Thornton the matters required to be
discussed under Public Company Accounting Oversight Board ("PCAOB")
and the Commission.
3.
The Audit Committee
has also received the written disclosures and the letter from Grant
Thornton required by applicable requirements of the PCAOB regarding
the independent accountant's communications with the Audit
Committee concerning independence and the Audit Committee has
discussed the independence of Grant Thornton with that
firm.
4.
Based on the review
and discussion referred to in paragraphs (1) through (3) above, the
Audit Committee recommended to the Board and the Board approved the
inclusion of the audited financial statements in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2019, for filing with the SEC.
The
foregoing has been furnished by the Audit Committee:
Denmar
Dixon, Chairman
Richard
A. Gray, Jr.
Michael
Marchlik
Kevin
Westfall
This "Audit Committee Report" is not "Soliciting Material," is not
deemed filed with the SEC and it not to be incorporated by
reference in any filing of the Company under the Securities Act of
1933, as amended or the Securities Exchange Act of 1934, whether
made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
25
AUDITORS FEES AND SERVICES
On
November 19, 2019, the Audit Committee of the “Company
engaged Grant Thornton LLP (“Grant Thornton”) as the
Company’s independent registered public accounting firm,
effective November 19, 2019. Also, effective November 19, 2019, the
Audit Committee of the Board of Directors of the Company dismissed
Scharf Pera & Co., PLLC (“Scharf Pera”) as the
Company’s independent registered public accounting
firm.
Scharf
Pera audited the Company’s financial statements as of and for
the years ended December 31, 2017 and December 31, 2018. Scharf
Pera's reports on the Company’s financial statements as of
and for the years ended December 31, 2017 and December 31, 2018 did
not contain any adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope, or
accounting principles.
In
connection with Scharf Pera's audits of the Company’s
financial statements as of and for the years ended December 31,
2017 and December 31, 2018 and the subsequent interim period
through November 19, 2019, there were (i) no
“disagreements” (as that term is defined in Item
304(a)(1)(iv) of Regulation S-K and the related instructions)
between the Company and Scharf Pera on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the
satisfaction of Scharf Pera, would have caused Scharf Pera to make
a reference to the subject matter thereof in connection with its
reports on the Company's financial statements for such years and
(ii) no “reportable events” (as that term is defined in
Item 304(a)(1)(v) of Regulation S-K and the related
instructions).
During
the years ended December 31, 2017 and December 31, 2018, and
through the subsequent interim period as of November 19, 2019,
neither the Company, nor any party on its behalf, consulted with
Grant Thornton regarding either (i) the application of accounting
principles to a specific transaction, either completed or proposed,
or the type of audit opinion that might be rendered with respect to
the Company’s financial statements, and no written reports or
oral advice was provided to the Company by Grant Thornton that was
an important factor considered by the Company in reaching a
decision as to any accounting, auditing or financial reporting
issue or (ii) any matter that was either the subject of a
disagreement (as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and related instructions) or a reportable event (as
that term is defined in Item 304(a)(1)(v) of Regulation
S-K).
The
following table sets forth Grant Thornton's and Scharf Pera’s
fees for the years ended December 31, 2019 and 2018.
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2019
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2018
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Audit
Fees(1)
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$
385,400
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$
80,294
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Tax
Fees
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$
-
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$
12,415
(2)
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All Other
Fees(2)
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$
-
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$
17,717
(3)
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Total
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$
385,400
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$
110,426
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_______________
(1)
These audit fees
include the fees billed by Grant Thornton of $385,400 for the audit
of the Company for the year ended December 31, 2019. The fees for
2018 are for amounts billed by Scharf Pera for (i) the audits of
the Company for the years ended December 31, 2018 and 2017 and (ii)
their review of the Company's unaudited 2018 Quarterly financial
statements.
(2)
These tax fees
consist of tax fees billed by Scharf Pera in 2018.
(3)
These other fees
consist of fees billed by Scharf Pera in 2018 for review of
Registration Statements.
POLICY FOR APPROVAL OF AUDIT AND PERMITTED NON-AUDIT
SERVICES
The
Audit Committee has adopted a policy and related procedures
requiring its pre-approval of all audit and non-audit services to
be rendered by its independent registered public accounting firm.
These policies and procedures are intended to ensure that the
provision of such services do not impair the independent registered
public accounting firm's independence. These services may include
audit services, audit related services, tax services and other
services. The policy provides for the annual establishment of fee
limits for various types of audit services, audit related services,
tax services and other services, within which the services are
deemed to be pre-approved by the Audit Committee. The independent
registered public accounting firm is required to provide to the
Audit Committee back up information with respect to the performance
of such services.
26
All
services provided by Grant Thornton and Scharf Pera during the
fiscal year ended December 31, 2019 and 2018 were approved by the
Audit Committee. The Audit Committee has delegated to its Chair the
authority to pre-approve services, up to a specified fee limit, to
be rendered by the independent registered public accounting firm
and requires that the Chair report to the Audit Committee any
pre-approved decisions made by the Chair at the next scheduled
meeting of the Audit Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have
been a party to the following transactions since January 1, 2018,
in which the amount involved exceeds $120,000 and in which any
director, executive officer, or holder of more than 5% of any class
of our voting stock, or any member of the immediate family of or
entities affiliated with any of them, had or will have a material
interest.
2016 Financing
On July 13,
2016, Berrard Holdings acquired 5,475,000 shares of our common
stock from our former sole director and executive officer. The
shares acquired by Berrard Holdings represented 99.5% of our issued
and outstanding common stock. The aggregate purchase price for the
shares was $148,141.75, which Berrard Holdings paid from cash on
hand. In addition, at the closing, Berrard Holdings loaned us, and
we and issued to Berrard Holdings the BHLP Note, pursuant to which
we were required to repay $191,858 on or before July 13, 2026 plus
interest at 6% per annum. The BHLP Note was convertible into common
stock at any time before maturity at the greater of $0.06 per share
or 50% of the price per share of the next “qualified
financing,” which was defined as an offering resulting in net
proceeds to us of $500,000 or greater. Effective August 31, 2016,
the principal amount of the BHLP Note was amended to include an
additional $5,500 loaned to us. On November 28, 2016, we completed
a qualified financing at $1.50 per share, which established the
conversion price per share for the BHLP Note of $0.75 per share. On
March 31, 2017, we issued 275,312 shares of common stock upon
conversion of the BHLP Note, which on such date had an aggregate
principal amount, including accrued interest, of $206,484. In
connection with the conversion of the BHLP Note, the remaining debt
discount of $196,076 was charged to interest expense in the
Consolidated Statements of Operations and the related deferred tax
liability was credited to Additional paid in capital in the
Consolidated Balance Sheets.
November 2016 Private Placement
On
November 28, 2016, we completed a private placement with certain
purchasers, with respect to the sale of an aggregate of 45,000
shares of common stock of the Company at a purchase price of $30.00
per share for total consideration of $1,350,000 (the "2016 Private
Placement"). In connection with the 2016 Private Placement, the
Company also entered into loan agreements with the investors
pursuant to which the investors would loan the Company their pro
rata share of up to $1,350,000 in the aggregate upon our request
any time on or after January 31, 2017 and before November 1, 2020,
pursuant to the terms of a convertible promissory note attached to
the loan agreements.
In
connection with the 2016 Private Placement, Blue Flame, an entity
controlled by Denmar Dixon, one of the Company's directors, paid
$250,000 for 45,000 shares of the Company's Class B Common
Stock.
On
March 31, 2017, we completed funding of the second tranche of the
2016 Private Placement, pursuant to which the investors each
received their pro rata share of (1) 58,096 shares of common stock
and (2) the Private Placement Notes, in the amount of $667,000, and
cancellation of loan agreements having an aggregate principal
amount committed by the purchasers of $1,350,000. The Private
Placement Notes were not convertible. As a result, Blue Flame
received 32,276 shares of Class B Common Stock and a promissory
note in the principal amount of $370,556. As of December 31, 2019
and 2018, the amount outstanding on the promissory notes due to
Blue Flame, including accrued interest was $394,287 and $378,495,
respectively. Interest expense on the promissory notes due to Blue
Flame for the year ended December 31, 2019 and 2018 was $183,286
and $143,987, respectively, which included debt discount
amortization of $144,109 and $114,404, respectively. The interest
was charged to interest expense in the Consolidated Statements of
Operations.
27
Test Dealer
In
connection with the development of the regional partner program,
the Company tested various aspects of the program by utilizing a
dealership to which Mr. Chesrown, the Company's Chief Executive
Officer has provided financing in the form of a $400,000
convertible promissory note (the "Dealer"). The note, which could
be converted into a 25.0% ownership interest in the Dealer at any
time, was to mature on May 1, 2019, with interest payable monthly
at 5.0% per annum This financing arrangement was terminated in
April 2018. Revenue recognized by the Company from the Dealer for
the year ended December 31, 2018 was $619,193 or .04% of 2018 total
revenue.
In
addition, the Company previously subleased warehouse space from the
Dealer that is separate and distinct from the location of the
dealership, on the same terms as paid by the Dealer. This subleased
facility serves as the northwestern regional distribution center
for the Company. The lease was terminated on June 30, 2018. For the
year ended December 31, 2018, the Company paid $90,000 in rent
under the sublease. Included in accounts receivable at December 31,
2018 was $40,176 owed to the Company by the Dealer.
Services Agreement
In connection
with the NextGen Acquisition, on February 8, 2017, we entered into
a Services Agreement with Halcyon, to provide development and
support services to us. Mr. Kakarala currently serves as the Chief
Executive Officer of Halcyon. Pursuant to the Services Agreement,
we paid Halcyon hourly fees for specific services, set forth in the
Services Agreement, and such fees could increase on an annual
basis, provided that the rates were not higher than 110.0% of the
immediately preceding year's rates. We also reimbursed Halcyon for
any reasonable travel and pre-approved out-of-pocket expenses
incurred in connection with its services to us. The Services
Agreement was terminated on March 31, 2018. During the year ended
December 31, 2018, we paid a total of $54,159 under the Services
Agreement.
October 2018 PIPE Transaction
On October
25, 2018, the Company entered into a Securities Purchase Agreement
with certain accredited investors (the "Investors") pursuant to
which the Company agreed to sell in a private placement (the "PIPE
Transaction") an aggregate of 151,500 shares of its Class B Common
Stock, at a purchase price of $142.00 per share for non-affiliates
of the Company.
Mr.
Dixon, who invested through Blue Flame, purchased 1,500 shares of
Class B Common Stock in the PIPE Transaction at a price of $162.00
per share (the per share price to affiliates of the Company) for an
aggregate purchase price of $243,000. Also, Mr. Reece, a Director
at the time, individually purchased 500 shares of Class B Common
Stock for an aggregate purchase price of $81,000. The Board of
Directors approved these purchases in accordance with Rule
16b-3(d)(1) of the Exchange Act. Messrs. Dixon and Reece abstained
from the Board of Directors' vote approving the PIPE
Transaction.
Nashville Leases
In
connection with the acquisition of Wholesale, we entered into
leases for two facilities in the greater Nashville area owned by
Mr. Brewster, a former 5% or greater holder of our Class B Common
Stock. Each location has a lease term expiring on October 30, 2021,
and for each property we have two (2) renewal options, each of
which provides for five (5) additional years with a ten percent
(10.0%) increase in the base rent. The aggregate rent for the two
locations is approximately $55,000 per month.
28
Related Party Transaction Policy
In May
2017, our Board adopted a formal policy that our executive
officers, directors, holders of more than 5.0% of any class of our
voting securities, and any member of the immediate family of and
any entity affiliated with any of the foregoing persons, are not
permitted to enter into a related party transaction with us without
the prior consent of the Audit Committee, or other independent
members of our Board if it is inappropriate for the Audit Committee
to review such transaction due to a conflict of interest. Any
request for us to enter into a transaction with an executive
officer, director, principal stockholder, or any of their immediate
family members or affiliates, in which the amount involved exceeds
$120,000 must first be presented to the Audit Committee for review,
consideration and approval. In approving or rejecting any such
proposal, the Audit Committee is to consider the relevant facts and
circumstances available and deemed relevant to the audit committee,
including, whether the transaction is on terms no less favorable
than terms generally available to an unaffiliated third party under
the same or similar circumstances and the extent of the related
party's interest in the transaction.
OTHER MATTERS
A copy
of our Form 10-K for the year ended December 31, 2019, without
exhibits, is being mailed with this proxy statement. Stockholders
are referred to the Form 10-K for financial and other information
about the Company.
Additional copies
of our Form 10-K for the year ended December 31, 2019 may be
obtained without charge by writing to Investor Relations, RumbleOn,
Inc., 901 W. Walnut Hill Lane, Irving, Texas 75038. Exhibits will
be furnished upon request. The SEC maintains a web site that
contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
SEC. The address of such site is
http://www.sec.gov
.
29
ANNEX A
AMENDMENT TO THE
RUMBLEON,
INC.
2017
STOCK INCENTIVE PLAN
WHEREAS
, RumbleOn, Inc., a Nevada
corporation (the "Company") currently maintains and sponsors the
RumbleOn, Inc. 2017 Stock Incentive Plan (the "Plan");
and
WHEREAS
, Section 14(k) of the Plan
provides that the Board of the Directors of the Company ("Board")
may amend the Plan from time to time; and
WHEREAS
, the Board has determined it to
be in its best interests to amend the Plan as set forth herein;
and
NOW, THEREFORE
, effective upon the
Company's Stockholders' approval as set forth in Section 14(k) of
the Plan, the following amendment to the Plan is hereby
adopted:
1. The
last sentence of Section 5(a) of the Plan shall be amended and
restated to read as follows: "The maximum number of shares of
Common Stock that may be issued pursuant to Awards granted under
the Plan shall be 700,000."
2. Section
5(b)(i) of the Plan shall be amended and restated to read as
follows:
"(i)
With respect to the shares of Common Stock issuable pursuant to
this Section, a maximum of 700,000 of such shares may be subject to
grants of Incentive Stock Options;"
3. Except
as modified by this Amendment, all of the terms and conditions of
the Plan shall remain valid and in full force and
effect.
IN WITNESS WHEREOF
, the undersigned, a
duly authorized officer of the Company, has executed this
instrument as of the ____ day of __________ 2020, on behalf of the
Company.
RUMBLEON,
INC.
By:
_________________________
Name:
_______________________
Title:
________________________
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
R
UMBLE
O
N
, I
NC.
ANNUAL MEETING OF STOCKHOLDERS – AUGUST 25, 2020 AT 9:00 AM
EASTERN TIME
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The undersigned appoints Marshall Chesrown and
Steven Berrard as proxies, with the power to appoint their
substitutes, and hereby authorizes them to represent and to vote,
as designated on the reverse side hereof, all of the shares of
common stock of RumbleOn, Inc., held of record by the undersigned
at the close of business on July 17, 2020 at the Annual Meeting of
Stockholders of RumbleOn, Inc. to be held on Tuesday, August 25,
2020 at 9:00
a.m.,
Eastern Time, at 4521 Sharon Road, Suite 370, Charlotte, North
Carolina 28211, or at any adjournment thereof.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED. IF NO
INDICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF ELECTING
ALL THE NOMINEES TO THE BOARD OF DIRECTORS LISTED IN PROPOSAL 1, IN
FAVOR OF PROPOSAL 2 AND PROPOSAL 3, AND IN ACCORDANCE WITH THE
JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R
UMBLE
O
N
,
INC.
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(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
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CONTROL NUMBER:
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VOTING
INSTRUCTIONS
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Read
our proxy statement before you vote by proxy. Then, to ensure
that
your
shares are represented at the Annual Meeting, we ask that you
appoint the Proxies
to
vote your shares for you in one of the following ways.
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MAIL:
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Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
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INTERNET:
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Please log on to the internet and
visit
www.westcoaststocktransfer.com/proxy-rmbl
,
by 11:59 p.m. Eastern Tine on August 24, 2020 and follow the
instructions provided. mark, sign, date, and return this Proxy Card
promptly using the enclosed envelope.
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IN
PERSON:
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If you are a registered holder, please attend our Annual Meeting,
bring valid photo identification, and delivery your completed proxy
card or ballot in person.
If you hold your shares in "street name", please attend our Annual
Meeting, bring valid photo identification, and obtain a legal proxy
from your bank or broker to vote the shares that are held for your
benefit, attach it to your completed proxy card and deliver it in
person.
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ANNUAL MEETING OF THE STOCKHOLDERS OF
RUMBLEON, INC.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED, OR IF NO
DIRECTION IS INDICATED, IT WILL BE VOTED “FOR” ALL THE
NOMINEES LISTED IN PROPOSAL 1, IN FAVOR OF PROPOSAL 2 AND PROPOSAL
3, AND IN THE PROXIES' DISCRETION ON ANY OTHER MATTER COMING BEFORE
THE MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”:
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ANNUAL MEETING OF THE STOCKHOLDERS OF
RUMBLEON, INC.
CONTROL
NUMBER:
PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PRO
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Proposal
1
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DIRECTOR ELECTION PROPOSAL
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FOR
ALL
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AGAINST
ALL
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FOR
ALL
EXCEPT
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Proposal
1
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Election
of the following director nominees to serve for a term expiring at
the next Annual Meeting or until their successors are duly elected
and qualified:
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☐
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☐
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☐
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MARSHALL
CHESROWN
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☐
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STEVEN
R. BERRARD
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☐
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ADAM
ALEXANDER
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☐
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DENMAR
DIXON
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☐
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RICHARD
A. GRAY, JR.
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☐
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MICHAEL MARCHLIK
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☐
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KEVIN
WESTFALL
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☐
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Proposal
2
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STOCK INCENTIVE PLAN AMENDMENT PROPOSAL
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FOR
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AGAINST
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ABSTAIN
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Proposal
2
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To approve an amendment to the
RumbleOn, Inc. 2017 Stock Incentive Plan (the “Plan”)
to increase the number of shares of Class B Common Stock authorized
for issuance under the Plan
and ratify awards previously
granted under the Plan.
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☐
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☐
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☐
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Proposal
3
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SAY ON PAY PROPOSAL
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FOR
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AGAINST
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ABSTAIN
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Proposal
3
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Non-binding
advisory approval of the compensation of our named executive
officers.
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
◻
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Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to be held August 25,
2020
The proxy statement and our 2019
Annual Report to Stockholders are available at
www.rumbleon.com
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MARK HERE FOR
ADDRESS CHANGE ◻ New Address (if
applicable):
____________________________
____________________________
____________________________
IMPORTANT:
Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2020
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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