USIO, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (As Permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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Usio, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Filing Party:
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(4)
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Date Filed:
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Notice of 2020 Annual Shareholders’ Meeting
and Proxy Statement
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Tuesday, June 9, 2020
at 10 a.m. CDT
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TABLE OF CONTENTS
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Letter to our Shareholders from our Board of Directors
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Notice of Annual Meeting of Shareholders
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Proxy Summary
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General Voting and Meeting Information
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Voting at the Annual Meeting
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Questions and Answers
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Governance
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Proposal 1 – Election of Director
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Director Biographies and Qualifications
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Committees of the Board of Directors
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Director Independence, Related Person Transactions and Other Legal Information
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Information about Corporate Governance
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Director Compensation
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Executive Officers
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Executive Compensation
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Outstanding Equity Awards at Fiscal-Year End
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Proposal 2 – Advisory Vote to Approve Executive Compensation
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Share Ownership
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Equity Compensation Plan Information
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Security Ownership of Certain Beneficial Owners
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Delinquent Section 16(a) Reports
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Audit Matters
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Report of the Audit Committee
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Proposal 3 – Ratification of the Appointment of Independent Registered Public Accounting Firm
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Principal Accountant Fees and Services
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Audit Committee Pre-Approval Policies and Procedures
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General Information
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Shareholder Proposals
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Householding
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Other Matters
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Appendix A – Proxy Card
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3611 Paesanos Parkway, Suite 300
San Antonio, TX 78231
(210) 249-4100
April 29, 2020
Dear Fellow Shareholder:
You are cordially invited to attend the 2020 Annual Meeting of Shareholders of Usio, Inc. The meeting will be held at 10 a.m. local time on Tuesday, June 9, 2020. In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our people, including our stockholders, and taking into account recent federal, state and local guidance, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. Details regarding attending the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement which has been made a part if this invitation.
At this year’s meeting, we will vote on the election of Miguel A. Chapa and Bradley Rollins as Class III directors and the ratification of the selection of Akin, Doherty, Klein & Feuge P.C. as our independent registered public accounting firm. We will also conduct a non-binding advisory vote to approve the compensation of our named executive officers. Finally, we will transact such other business as may properly come before the meeting.
Whether or not you attend the Annual Meeting, it is important that your shares are represented and voted at the Annual Meeting. You may vote over the Internet or by telephone or, if you requested printed copies of the proxy materials, by mailing a proxy or voting instruction card. Voting over the Internet, by telephone or by written proxy will ensure your representation at the Annual Meeting regardless of whether you attend the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Shareholder Meeting to Be Held on June 9, 2020
: The proxy statement, form of proxy, Annual Report on Form 10-K for the year ended December 31, 2019 and related materials are available at www.proxyvote.com, by using the QR codes at the end of this document, or by contacting our Investor Relations department through email at ir@usio.com.
The Board of Directors and our Company management look forward to seeing you at the Annual Meeting.
Thank you.
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Louis A. Hoch Michael R. Long Miguel A. Chapa Blaise C. Bender Bradley Rollins
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NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS
Tuesday, June 9, 2020, 10:00 a.m., Central Daylight Time
Meeting live via the Internet
We are pleased to invite you to join our Board of Directors, senior leadership and other shareholders for our 2020 Annual Meeting of Usio, Inc. shareholders. The meeting will be held at 10:00 a.m. CDT on Tuesday, June 9, 2019. Our Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. Shareholders will be able to participate in the virtual meeting online, vote shares electronically and submit questions during the meeting. In order to participate in the virtual Annual Meeting, shareholders must register by sending an email to ir@usio.com or by calling (210) 249-4050 by 10 a.m. CDT on June 8, 2020 and provide certain documentation to indicate that you are a shareholder. Only shareholders who are pre-registered will receive the virtual meeting webcast details. The purposes of the meeting are:
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To elect two Class III Directors, Miguel A. Chapa and Bradley Rollins, nominated by our Board of Directors, to serve until the 2023 Annual Meeting of Shareholders;
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To consider and vote on whether to approve, on an advisory basis, the compensation paid to our Named Executive Officers for the year ended December 31, 2019;
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To ratify the appointment of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020; and
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To transact such other business as may properly come before the meeting and at any adjournments or postponements of the meeting.
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The Board of Directors has set April 15, 2020 as the record date for the Annual Meeting. This means that only shareholders of record of Usio as of the close of business on that date are entitled to:
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Receive notice of the meeting; and
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Vote at the meeting and any adjournment or postponement of the meeting.
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For ten days prior to the Annual Meeting, a complete list of shareholders entitled to vote at the Annual Meeting will be available at the Secretary’s office, 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231.
This proxy statement, form of proxy and our Annual Report for the year ended December 31, 2019 are available online at www.proxyvote.com. You will be asked to enter the control number located on your Notice or proxy card. You can also access these materials by contacting our Investor Relations Department by email at ir@usio.com.
By Order of the Board of Directors,
Louis A. Hoch
President and Chief Executive Officer
San Antonio, Texas
Your Vote is Important to us
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Regardless of whether you plan to attend, we urge all shareholders to vote on the matters described in the accompanying proxy statement we hope that you will promptly vote and submit your proxy by dating, signing and returning the enclosed proxy card. This will not limit your rights to attend or vote at the Annual Meeting.
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PROXY SUMMARY
General Voting and Meeting Information
On or about April 30, 2020, we expect to mail to our shareholders a Notice of Internet Availability of Proxy Materials, or the Notice, containing instructions on how to access our proxy statement and our annual report. The Notice provides instructions on how to vote via the Internet, mobile devices or by mail, and includes instructions on how to receive a paper copy of our proxy materials by mail. All proxy materials will be made available via www.proxyvote.com. It is important that you carefully review the proxy materials and follow the instructions below to cast your vote on all voting matters.
Voting Methods
Even if you plan to attend the Annual Meeting in person on June 9, 2020, please vote as soon as possible by using one of the following advance voting methods. Make sure to have your
notice card
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proxy card
or
voting instruction form
in hand and to follow the instructions.
You can
vote in advance
through one of three ways:
Via the Internet
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Visit the website listed on your notice card, proxy card or voting instruction form.
By Telephone
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Call the telephone number listed on your notice card, proxy card or voting instruction form.
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By Mail –
If you are a shareholder of record and have received a notice regarding the availability of proxy materials, you may request a written proxy card by following the instructions in the notice. Then sign, date, and return your proxy card/voting instruction form in the enclosed envelope
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If you are a beneficial owner you may vote via the Telephone or Internet, if your bank, broker, or other nominee makes those methods available, in which case they will include the instructions with the proxy materials. If you are a shareholder of record, Payment Data will include instructions on how to vote via Internet or Telephone directly on your notice or proxy voting card.
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Voting at the Annual Meeting
Shareholders of record may vote at the Annual Meeting. Beneficial owners may vote in person if they have a legal proxy.
Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions or vote by Telephone, Mail or the Internet so that your vote will be counted, if you later decide not to attend the Annual Meeting.
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Voting Matters and Board Recommendations
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Shareholders are being asked to vote on the following matters at the 2020 Annual Meeting:
Proposal
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Recommendation
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PROPOSAL 1 - Election of Directors
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FOR
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Election of two Class III director nominees, Miguel A. Chapa and Bradley Rollins. The Board believes that the nominees’ knowledge, skills, and abilities will positively contribute to the function of the Board as a whole. Accordingly, your proxy holder will vote your shares FOR the election of the Board’s nominee unless you instruct otherwise.
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PROPOSAL 2 - Advisory Vote to Approve Executive Compensation
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FOR
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The Say-on-Pay Proposal, to approve, on an advisory basis, the compensation paid to our Named Executive Officers for the year ended December 31, 2019. The Company has designed its compensation programs to reward and motivate employees to continue to grow the Company. The Board of Directors takes shareholder views seriously and will take into account the advisory vote in future executive compensation decisions. Accordingly, your proxy holder will vote your shares FOR the approval of the executive compensation paid to our Named Executive Officers unless you instruct otherwise.
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PROPOSAL 3 - Ratification of Independent Registered Public Accounting Firm
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FOR
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Akin, Doherty, Klein & Feuge, P.C. has been appointed as the Company’s independent registered public accounting firm for the year ending December 31, 2020. The Audit Committee and the Board believe that retention of the firm is in the best interests of the Company and its shareholders. Accordingly, your proxy holder will vote your shares FOR the ratification of the appointment of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm unless you instruct otherwise.
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Questions and Answers
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What is a proxy statement, what is a proxy and how does it work?
A proxy statement is a document that the U.S. Securities and Exchange Commission requires us to give you when we ask you to sign a proxy card designating someone other than you to vote the stock you own. The written document you sign indicating who may vote your shares of common stock is called a proxy card and the person you designate to vote your shares is called a proxy. The Board of Directors is asking to act as your proxy. By signing and returning to us the proxy card you are designating us as your proxy to cast your votes at the Annual Meeting. We will cast your votes as you indicate on the proxy card.
Our employees, officers and directors may solicit proxies. We will bear the cost of soliciting proxies and will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to the owners of our common stock.
2. How do I attend the virtual Annual Meeting?
In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our people, including our shareholders, and taking into account recent federal, state and local guidance, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. Shareholders will be able to participate in the virtual meeting online, vote shares electronically and submit questions during the meeting. In order to participate, shareholders must register by sending an email to ir@usio.com or by calling (210) 249-4050 by 10 a.m. CDT on June 8, 2020 and provide certain documentation to indicate you are a shareholder. Only shareholders who are pre-registered will receive the virtual meeting webcast details.
If you plan to attend the Annual Meeting, you must be a holder of Company shares as of the Record Date that has registered to attend the meeting and provided certain documentation to indicate you are a shareholder. On the day of the Annual Meeting, shareholders that have registered accordingly may attend, vote and submit questions virtually at our Annual Meeting by logging in to the virtual meeting that will be sent to your email address once you register.
3. Who is entitled to vote at the Annual Meeting?
Only shareholders who were Usio shareholders of record at the close of business on April 15, 2020, or the Record Date, may vote at the Annual Meeting. As of the close of business on the Record Date, there were 18,607,449 shares of our common stock outstanding (which
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excludes 1,134,850 treasury shares). Each shareholder is entitled to one vote for each share of our common stock held as of the Record Date.
4. What is the difference between a shareholder of record and a beneficial owner?
If your shares are registered directly in your name with Usio’s transfer agent, American Stock Transfer and Trust Company, LLC, you are considered, with respect to those shares, a
shareholder of record
. As a shareholder of record, we will send you the Notice.
If your shares are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of your shares of common stock. The Notice has been forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares by using the voting instruction form included in the proxy materials.
5. What does it mean if I receive more than one proxy card?
If you hold your shares in multiple registrations, or in both registered and street name, you will receive a notice card, proxy card or voting instruction form for each account. Please vote each proxy card or voting instruction form you receive using one of the voting methods outlined elsewhere in this proxy statement.
6. What proposals will be voted on at the 2020 Annual Meeting?
The following proposals will be voted on at the Annual Meeting:
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Election of two Class III directors, Miguel A. Chapa and Bradley Rollins, nominated by the Board of Directors, to serve until the 2023 Annual Meeting or until a successor is duly elected and qualified;
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Approval on an advisory basis, of the compensation paid to our Named Executive Officers, or the Say-on-Pay Proposal; and
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Ratification of the appointment of Akin, Doherty, Klein & Feuge, P.C. as our independent public accounting firm for the year ending December 31, 2020.
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7. What are the Board’s recommendations?
Our Board recommends that you vote:
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“FOR” Proposal No. 1 to elect two Class III director nominees, Miguel A. Chapa and Bradley Rollins;
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“FOR” Proposal No. 2, the Say-on-Pay Proposal, to approve on an advisory basis, the compensation paid to our Named Executive Officers; and
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“FOR” Proposal No. 3 to ratify the appointment of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020.
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8. Will there be any other items of business on the agenda?
We do not expect any other items of business because the deadline for shareholder proposals and nominations has already passed. Nonetheless, in case there is an unforeseen need, the accompanying proxy gives discretionary authority to the persons named on the proxy with respect to any other matters that might be brought before the Annual Meeting. Those persons intend to vote that proxy in accordance with their best judgment.
9. How will my shares be voted?
To designate how you would like to vote, fill out the proxy card or voting instruction form indicating how you would like your votes cast. If you sign and return the proxy card, but do not specify how to vote, we will vote your shares as follows:
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“FOR” Proposal No. 1 to elect two Class III director nominees, Miguel A. Chapa and Bradley Rollins;
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“FOR” Proposal No. 2, the Say-on-Pay Proposal, to approve on an advisory basis, the compensation paid to our Named Executive Officers; and
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“FOR” Proposal No. 3 to ratify the appointment of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020.
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10. Can I change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time prior to the vote at the Annual Meeting. If you submitted your proxy by mail, you must file with our Secretary, at Usio, Inc., 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231, a written notice of revocation or deliver a valid, later-dated proxy. If you submitted your proxy by telephone or the Internet, you may change your vote or revoke your proxy with a later telephone or Internet proxy, as the case may be.
Attendance at the virtual Annual Meeting will not
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have the effect of revoking a proxy unless you give written notice of revocation to the Secretary before the proxy is exercised or you vote by written ballot at the Annual Meeting.
11. What is a broker non-vote and what is the impact of not voting?
A broker “non-vote” occurs when a nominee holding shares of common stock for a beneficial owner, such as a bank or broker, does not vote on one or more proposals because the nominee does not have discretionary voting power on that matter, which is also referred to as holding shares in street name. Your bank or broker does not have discretion to vote uninstructed shares on the proposals in this proxy statement, except for Proposal No. 3 to ratify the appointment of our independent registered public accounting firm. As a result, if you hold your shares in street name it is critical that you provide instructions to your bank or broker, if you want your vote to count in the election of directors and the advisory vote related to executive compensation.
12. What constitutes a quorum?
A quorum is the minimum number of shareholders necessary to conduct the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of common stock outstanding on the Record Date will constitute a quorum. As of the close of business on the Record Date, there were 18,607,449 shares of our common stock outstanding (which excludes 1,134,850 treasury shares). Votes withheld from any nominee, abstentions and broker “non-votes” are counted as present or represented for the purpose of determining the presence of a quorum.
13. Is cumulative voting permitted for the election of directors?
No. Shareholders may not cumulate votes in the election of directors, which means that each shareholder may vote only the number of shares he or she owns for a single director candidate.
14. What is the vote required for a proposal to pass?
Proposal No. 1—Election of Directors:
The affirmative vote of a plurality of the shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting, in person or by proxy, is required for the election of the nominees. Thus, assuming a quorum is present at the Annual Meeting, the two nominees who receive the most affirmative votes will be elected as Class III directors. Abstentions and broker “non-votes” will have no effect on the voting outcome with respect to the election of directors.
Proposal No. 2—Say-on-Pay:
Because this proposal asks for a non-binding, advisory vote, there is no required vote that would constitute approval. We value the opinions expressed by our shareholders in this advisory vote, and our Compensation Committee, which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and making future compensation decisions for our Named Executive Officers. Abstentions and broker “non-votes,” if any, will not have any impact on this advisory vote.
Proposal No. 3—Ratification of the Selection of our Independent Registered Public Accounting Firm:
The affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting, is required to ratify our selection of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020. A properly executed proxy marked “ABSTAIN” with respect to this proposal will not be voted, although it will be counted for purposes of determining the number of shares of common stock entitled to vote. Accordingly, an abstention will have the effect of a negative vote. Because Proposal No. 3 is a routine proposal on which a broker or other nominee is generally empowered to vote, broker “non-votes” likely will not result from this proposal. Thus, if you are a beneficial owner holding shares through a broker, bank or other holder of record and you do not vote on this proposal, your broker may cast a vote on your behalf for this proposal.
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GOVERNANCE
Proposal No. 1 – Election of Directors
Election of two Class III director nominees. The Board believes that the nominees' knowledge, skills, and abilities would positively contribute to the function of the Board as a whole. Accordingly, your proxy holder will vote your shares
FOR
the election of the Board’s nominees named below unless you instruct otherwise.
Directors and Nominees
As established by our Bylaws, our Directors are divided into three classes serving staggered three-year terms. Our Board currently consists of five directors:
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Name
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Position with our Company
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Director Since
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Term Expires
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Class I
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Louis A. Hoch
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President, CEO, and Class I Director
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1998
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2021
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Blaise C. Bender
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Class I Director
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2019
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2021
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Class II
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Michael R. Long
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Chairman of the Board, and Class II Director
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1998
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2022
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Class III
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Miguel A. Chapa
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Class III Director
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2015
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2023
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Bradley Rollins
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Class III Director
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2017
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2023
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With regard to the election of directors, votes may be cast “FOR” or “WITHHOLD.” Provided that a quorum is present, the affirmative vote by the holders of a plurality of the shares of common stock present and voting at the Annual Meeting is required to elect the nominees for director.
What am I voting on?
Shareholders are being asked to elect two Class III director nominees for a three-year term. The following sections include information about all Directors, including Miguel A. Chapa and Bradley Rollins, this year’s nominees.
Required Vote
The affirmative vote of a plurality of the shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting, in person or by proxy, is required for the election of the nominee. Thus, assuming a quorum is present at the 2020 Annual Meeting, the two nominees who receive the most affirmative votes will be elected as Class III directors. Abstentions and broker “non-votes” will have no effect on the voting outcome with respect to the election of directors.
Voting Recommendation
The Board of Directors recommends a vote
FOR
the election of Class III Directors, Miguel A. Chapa and Bradley Rollins.
Director Biographies and Qualifications
The biographies of our directors and certain information regarding each director’s experience, attributes, skills and/or qualifications that led to the conclusion that the director should be serving as a Director of Usio, Inc. are stated below.
Class I Directors with a Three-Year Term Ending with the 2021 Annual Meeting of Shareholders
Louis A. Hoch, age 54 – President, Chief Executive and Operating Officer and Vice Chairman of the Board
Mr. Hoch has served as our Chief Executive Officer since August 4, 2016, and as our President, Chief Operating Officer, and a director of our Company since July 1998. He also serves as Vice Chairman of our Board of Directors and as Chief Executive Officer of our wholly-owned subsidiary FiCentive, Inc. Mr. Hoch is a valuable member of our Board as he has over twenty-five years of management experience, twenty years of which were at a senior executive level, and he is an expert in payment processing, large systems development,
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call center operations and service bureau operations. He holds inventor status on U.S. Patent No. 7,021,530 (“System and method for managing and processing stored-value cards and bill payment therefrom”). Mr. Hoch has held various key management positions with U.S. Long Distance, Billing Concepts, Inc. and Andersen Consulting. Mr. Hoch holds a BBA in Computer Information Systems and an MBA in International Business Management, both from Our Lady of the Lake University Business School. He holds the industry certification CCP, or Certified Payments Professional.
Blaise C. Bender, age 63 – Director
Blaise C. Bender is currently President and Managing Shareholder of Blaise C. Bender, P.C., a law firm that concentrates on business and non-profit development, mergers and acquisitions, contractual and transactional analysis, business and individual tax planning, representation on tax issues and controversies impacting individuals and businesses, corporate legal counsel assistance, real estate, strategic planning, health care analysis and estate and trust assessment. Mr. Bender is also currently a board member of Credit Human, FCU and an adjunct faculty member at Trinity University teaching in their Masters of Accounting program. Mr. Bender is a member of the state bar of Texas and is a licensed CPA. Earlier in his career, Mr. Bender was a full-time college professor for over twenty years. He has also worked for public accounting firms, such as Arthur Anderson & Co., Deloitte Touche and Ernest and Young. He received his B.B.A in Accounting and a Masters of Science in Finance from Texas A&M University. Mr. Bender also received an MPA in Taxation from UTSA and a Juris Doctor in Law from St. Mary’s University.
Class II Director with a Three-Year Term Ending with the 2022 Annual Meeting of Shareholders
Michael R. Long, age 75 – Chairman of the Board and Co-Founder
Mr. Long has served as our Chairman of our Board of Directors since July 1998. He has also held the position of our Chief Executive Officer from July 1998 to August 2016 and our Chief Financial Officer from September 2003 to March 2015, in addition to his other positions with us. Mr. Long has more than thirty years of senior executive management and systems development experience in six publicly traded companies, as well as experience operating a systems consulting business. Before assuming the highest position with our Company, Mr. Long was Vice President of Information Technology at Billing Concepts, Inc., the largest third-party billing clearinghouse for the telecommunications industry. Mr. Long’s career experience also includes financial services industry business development for Andersen Consulting and several executive positions in publicly traded telecommunications and financial services companies. Mr. Long is a valuable member of our Board due to his depth of operating, strategic, systems development, transactional, and senior management experience in our industry. Additionally, Mr. Long has held positions of increasing responsibility at our Company and holds intimate knowledge of our Company due to his longevity in the industry and with us. Currently, Mr. Long is also a director of Face Key, Inc.
Class III Directors with a Three-Year Term Ending with the 2023 Annual Meeting of Shareholders
Miguel A. Chapa, age 49 – Director
During the past 17 years, Mr. Chapa focused primarily on building a highly successful entrepreneurial career. His skills of business planning, financial analysis, strategic planning, management, negotiations and leadership has led him to build successful companies in the retail customer service industry, such as restaurants and entertainment venues. Mr. Chapa has served as the Chief Executive Officer of Rio Ventures Ltd., and Rio Club LLC since January 2012 and EFJM, Inc. since January 2014. Previously, he was the Chief Executive Officer for 6400 Beverage, LLC and Bar Rio Management of Houston, LLC from March 2005 to October 2009 and Casa Grande Holdings, LLC from June 2010 to December 2011. Mr. Chapa completed his education with a Bachelor of Arts in Finance in 1998 from the Monterrey Institute of Technology and Higher Education.
Bradley Rollins, age 48 – Director
Bradley Rollins is currently the President and CEO of Dahill Office Technology Corporation, a Xerox company, one of Texas’s largest office technology organizations specializing in complete office automation. Mr. Rollins began his career at Dahill by joining the company’s sales organization in 2000. Quickly advancing through several specialist and management positions, he assumed the role of President and CEO in January 2009. Earlier in his career, Mr. Rollins was a regional sales director for Tri-State Financial Group, a financial planning firm, for over eight years. Active in community development, Mr. Rollins is currently a board member of the United Way of San Antonio and serves as a regional fundraiser for the MS Society. From January 2014 to January 2015, Mr. Rollins served as a board member for the San Antonio Regional Development Foundation. From January 2013 to January 2014, he was the Chairman of the North San Antonio Chamber of Commerce, where he had been a member since 2008. Mr. Rollins obtained a business management and mathematics degree from Western Kentucky University.
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Board Meetings and Annual Meeting Attendance
Our Board of Directors held four meetings during 2019, and in addition, took action from time to time by unanimous written consent. Each director attended at least 75% of the aggregate number of meetings of the Board of Directors held during the period for which such Director served on our Board of Directors and of the Committees on which such director served.
We do not have a policy that requires the attendance of directors at our Annual Meetings of Shareholders. Mr. Hoch attended the 2019 Annual Meeting.
Committees of the Board of Directors
On May 19, 2015, our Board established our new committee structure by appointing an Audit Committee, a Compensation Committee, and a Nominations and Corporate Governance Committee. The Board of Directors has determined that each director who serves on these committees is “independent,” as that term is defined by the Nasdaq Listing Rules and rules of the SEC. The Board of Directors has adopted written charters for its Audit Committee, its Compensation Committee and its Nominations and Corporate Governance Committee. Copies of these charters are available on our website at www.usio.com/investors. In addition to the number of meetings referenced below, the Committees also took actions by unanimous written consent.
Information about each of our committees is stated below:
|
Name of Committee Member
|
Audit
|
Compensation
|
Nominations and Corporate Governance
|
|
Blaise Bender
|
«
|
«
|
«
|
|
Miguel Chapa
|
●
|
●
|
●
|
|
Bradley Rollins
|
●
|
●
|
●
|
«
Committee Chair
●
Committee member
Audit Committee
Effective April 1, 2019, our Board appointed Mr. Blaise Bender to serve as chair of our Audit Committee. Mr. Bender meets the standard of “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of Regulation S-K. Mr. Chapa serves as a member of our Audit Committee since May 19, 2015 and Mr. Rollins serves as member to the Audit Committee since May 5, 2017. Messrs. Bender, Chapa, and Rollins meet the independence standards for independent directors under the rules of the Nasdaq Stock Market published in the Nasdaq Listing Rules. The Audit Committee has a written charter. The Audit Committee met seven times in 2019.
The Audit Committee’s purpose is to assist the Board of Directors in its general oversight of our financial reporting, internal control and audit functions. Management is responsible for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles and internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Akin, Doherty, Klein & Feuge, P.C., our independent accounting firm, is responsible for performing an independent audit of the consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board.
While Mr. Bender meets the standard of an audit committee expert, the Audit Committee is not made up of professional accountants or auditors, and its function is not intended to duplicate or to certify the activities of management and the independent auditor, nor can the Audit Committee certify that the independent auditor is “independent” under applicable rules. The Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee’s members in business, financial and accounting matters.
Among other matters, the Audit Committee monitors the activities and performance of our external auditors, including the audit scope, external audit fees, auditor independence matters and the extent to which the independent auditor may be retained to perform non-audit services. The Audit Committee and the Board of Directors have ultimate authority and responsibility to select, evaluate and, when appropriate, replace our independent auditor. The Audit Committee also reviews the results of the internal and external audit work with regard to the adequacy and appropriateness of our financial, accounting and internal controls. Management and independent auditor presentations to and discussions with the Audit Committee also cover various topics and events that may have significant financial impact or are the subject of discussions between management and the independent auditor. In addition, the Audit Committee generally oversees our internal compliance programs.
In overseeing the preparation of our financial statements, the Audit Committee has had access to our management to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with U.S. generally accepted accounting principles. For the year ended December
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31, 2019, the Audit Committee received the independent auditor’s letter and written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
Compensation Committee
Effective April 1, 2019, our Board appointed Mr. Bender as chair of the Compensation Committee. Mr. Chapa serves as a member of our Compensation Committee since May 19, 2015. On May 5, 2017, our Board appointed Mr. Rollins as a member to the Compensation Committee. Messrs. Bender, Chapa, and Rollins meet the independence standards for independent directors under the rules of the Nasdaq Stock Market published in the Nasdaq Marketplace Rules. The Compensation Committee has a written charter. The Compensation Committee met one time in 2019.
The Compensation Committee’s primary function is to assist the Board of Directors in meeting its responsibilities in regards to oversight and determination of executive compensation and to review and make recommendations with respect to major compensation plans, policies and programs of our Company. Other specific duties and responsibilities of the Compensation Committee are to review and approve goals and objectives relevant to the recommendations for approval by the independent members of the Board of Directors regarding compensation of our Chief Executive Officer and other executive officers, establish and approve compensation levels for our Chief Executive Officer and other executive officers, and to administer our stock plans and other equity-based compensation plans.
Nominations and Corporate Governance Committee
Effective April 1, 2019, our Board appointed Mr. Bender as chair of the Governance Committee. Mr. Chapa serves as a member of our Governance Committee since May 19, 2015. On May 5, 2017, our Board appointed Mr. Rollins as a member to the Governance Committee. Messrs. Bender, Chapa and Rollins meet the independence standards for independent directors under the rules of the Nasdaq Stock Market published in the Nasdaq Listing Rules. The Governance Committee has a written charter. The Governance Committee met one time in 2019.
The Governance Committee’s primary function is to identify qualified individuals to become members of the Board of Directors, determine the composition of the Board and its Committees, and to monitor a process to assess Board effectiveness. Other specific duties and responsibilities of the Governance Committee are to recommend nominees to fill vacancies on the Board of Directors, review and make recommendations to the Board of Directors with respect to director candidates proposed by shareholders, and review, on an annual basis, the functioning and effectiveness of the Board and its Committees.
Director Independence, Related Person Transactions and Other Legal Information
Independent Directors
Standard for Independence
— We determine independence using the definitions set forth in the Nasdaq Listing Rules and the rules under the Securities Exchange Act of 1934. These definitions define independence based on whether the director or a family member of the director has been employed by the Company in the past three years, how much compensation the director or family member of a director received, how much stock the director or family member of the director owns in the Company and whether the director or family member of the director is associated with the Company’s independent auditor.
The Board has determined that Messrs. Bender, Chapa, and Rollins are independent as defined by Rule 5605(a)(2) of the Nasdaq Listing Rules.
Related Person Transactions
It is our policy that all employees, officers and directors must avoid any activity that is or has the appearance of conflicting with the interests of our Company. Our Audit Committee reviews all related party transactions for potential conflict of interest situations on an ongoing basis and all such transactions relating to executive officers and directors must be approved by the Audit Committee. In carrying out this responsibility, the Audit Committee has determined that we have the following related party transactions.
Directors and Officers
On January 6, 2020, we repurchased 11,860 shares of stock at a closing price of $1.74 per share from Tom Jewell, our Chief Financial Officer to cover taxes due.
On January 6, 2019, we repurchased 11,860 shares of common stock at the closing price on January 6, 2019 of $1.84 per share from Tom Jewell, our Chief Financial Officer to cover taxes due.
On January 8, 2018 and January 9, 2018, we repurchased 397,845 shares for $956,128 in a private transaction at the closing price on January 8 and 9, 2018 from directors, officers and employees to cover the respective officer or employee's share of taxes for shares that vested on that day, as approved by our Audit Committee and Board of Directors on the same day, with the respective directors recusing themselves. In particular we repurchased the following shares from our Named Executive Officers and directors:
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|
•
|
Michael R. Long (Chairman of the Board): 158,476 shares valued at $2.40 per share or total of $380,342;
|
|
•
|
Louis A. Hoch (Chief Executive Officer): 158,476 shares valued at $2.40 per share or total of $380,342; and
|
|
•
|
Tom Jewell (Chief Financial Officer): 13,060 shares valued at $2.50 per share of total of $32,650.
|
Louis Hoch
During the years ended December 31, 2019 and 2018, we purchased $13,831 and $9,476, respectively, of corporate imprinted sportswear, promotional items and caps from Angry Pug Sportswear. Louis Hoch, our President and Chief Executive Officer, is a 50% owner of Angry Pug Sportswear.
Miguel Chapa and Louis Hoch
During the years ended December 31, 2019 and 2018, we received $6,665 and $26,709, respectively, in revenue from Lush Rooftop. Miguel Chapa, a member of our Board of Directors, is an owner in Lush Rooftop. Louis Hoch, our President and Chief Executive Officer, is also a minority owner in Lush Rooftop.
T
he relationship with Lush Rooftop ended in September, 2019 when the business was sold.
During the years ended December 31, 2019 and 2018, we received $24,363 and $4,525 in revenue from BLVD. Miguel Chapa, a member of our Board of Directors, is an owner in BLVD. Louis Hoch, our President and Chief Executive Officer, is also an owner in BLVD.
Arrangements or Understandings between our Executive Officers or Directors and Others
There are no arrangements or understandings between our executive officers or directors and any other person pursuant to which he was or is to be selected as a director or officer.
Other Involvement in Certain Legal Proceedings
None of our directors have been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any of our directors during the last ten years that we consider material to the evaluation of the ability and integrity of any director.
Information about Corporate Governance
Board Leadership Structure
Mr. Long has served as our Chairman of our Board of Directors since July 1998. He has also held the position of our Chief Executive Officer until August 4, 2016, and as our Chief Financial Officer from September 2003 to March 2015. Since August 4, 2016, Mr. Hoch has been our Chief Executive Officer. Mr. Hoch manages the day-to-day affairs of our Company and leads the Board meetings. Mr. Hoch has also served as our President, Chief Operating Officer, and a director of our Company since July 1998, and also serves as Vice Chairman of our Board of Directors. Mr. Miguel Chapa served on our Board of Directors since April 24, 2015. Our Board appointed Mr. Rollins as independent director on May 5, 2017. Effective April 1, 2019, our Board appointed Mr. Blaise Bender as independent director. Our Board believes that having a majority of independent directors serves our Company well.
The Board believes that its structure should be informed by the needs and circumstances of our Company, the Board, and our shareholders. With this in mind, the Board believes that its structure is currently serving our Company well, and intends to maintain this where appropriate and practicable in the future.
Risk Oversight Management
The Board of Directors takes an active role, as a whole and at the committee level, in overseeing management regarding our Company’s risks. Our management keeps the Board of Directors apprised of significant risks facing our Company and the approach being taken to understand, manage and mitigate such risks. Specifically, strategic risks are overseen by the full Board of Directors; financial risks are overseen by the Audit Committee; risks relating to compensation plans and arrangements are overseen by the Compensation Committee; risks associated with director independence and potential conflicts of interest are overseen by the Audit Committee. Additional review or reporting on enterprise risks is conducted as needed or as requested by the full Board of Directors or the appropriate committee.
Director Nominations
The Board of Directors nominates directors for election at each annual meeting of shareholders and appoints new directors to fill vacancies when they arise. The Nominations and Corporate Governance Committee has the responsibility to identify, evaluate, recruit and recommend qualified candidates to the Board of Directors for nomination or election.
One of the Board of Directors’ objectives in evaluating director nominations is to ensure that its membership is composed of experienced and dedicated individuals with a diversity of backgrounds, perspectives and skills. The Nominations and Corporate Governance Committee selects nominees for director based on the nominee's character, judgment, diversity of experience, business acumen, and ability to act on behalf of all shareholders. We do not have a formal diversity policy; however, the Governance Committee endeavors to have a Board representing diverse viewpoints as well as diverse expertise at policy-making levels in many areas, including business, accounting and
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finance, manufacturing, marketing and sales, education, legal, government affairs, regulatory affairs, research and development, business development, technology and in other areas that are relevant to our activities.
The Governance Committee believes that nominees for director should have experience, such as those mentioned above, that may be useful to our Company and the Board of Directors, high personal and professional ethics and the willingness and ability to devote sufficient time to carry out effectively their duties as directors. The Governance Committee believes it is appropriate for at least one, and, preferably, multiple, members of the Board of Directors to meet the criteria for an “audit committee financial expert” as defined by rules of the SEC, and for a majority of the members of the Board of Directors to meet the definition of “independent director” as defined by the Nasdaq Listing Rules. The Governance Committee also believes it's appropriate for key members of our management to participate as members of the Board of Directors. Prior to each annual meeting of shareholders, the Governance Committee identifies nominees first by evaluating the current directors whose term will expire at the annual meeting and who are willing to continue in service. These candidates are evaluated based on the criteria described above, including as demonstrated by the candidate’s prior service as a director, and the needs of the Board of Directors with respect to the particular talents and experience of its directors. In the event that a director does not wish to continue in service, the Governance Committee determines not to re-nominate the director, a vacancy is created on the Board of Directors as a result of a resignation, an increase in the size of the Board or other event, the Committee will consider various candidates for Board membership, including those suggested by the Committee members, by other Board members, by any executive search firm engaged by the Committee or by shareholders. The Governance Committee recommended the nominees for election included in this proxy statement.
We consider recommendations for director candidates from our directors, officers, employees, shareholders, customers, and vendors. Shareholders wishing to nominate individuals to serve as directors may submit such nominations, along with a nominee’s qualifications, to our Board of Directors at Usio, Inc., 3611 Paesanos Parkway, Suite 300, San Antonio, Texas, 78231, and the Board of Directors will consider such nominee.
Shareholder Communications with the Board of Directors
If you wish to communicate with the Board of Directors, you may send your communication in writing to: Secretary, Usio, Inc., 3611 Paesanos Parkway, Suite 300, San Antonio, Texas, 78231. Please include your name and address in the written communication and indicate whether you are a shareholder of Usio. The Secretary will review any communication received from a shareholder, and all material communications from shareholders will be forwarded to the appropriate director or directors or Committee of the Board of Directors based on the subject matter.
Director Compensation
The following table sets forth information concerning the compensation provided to each person who served as a non-employee member of our Board of Directors during the year ended December 31, 2019. Compensation provided to Directors who are also employees is listed in the Summary Compensation Table for the years ended December 31, 2019 and 2018 in the section addressing Executive Compensation.
|
Name
|
Fees earned or paid in cash
($)
|
Stock Awards ($) (1)
|
All other compensation
($)
|
Total
($)
|
||
|
Michael R. Long (2)
|
255,000
|
|
--
|
25,114 (3)
|
280,114
|
|
|
Miguel A. Chapa (4)
|
4,000
|
|
--
|
--
|
4,000
|
|
|
Blaise C. Bender (5)
|
3,000
|
|
164,667
|
--
|
167,667
|
|
|
Bradley Rollins (6)
|
4,000
|
|
--
|
--
|
4,000
|
|
|
Steve Huffman (7)
|
16,000
|
|
--
|
--
|
16,000
|
|
|
(1)
|
Represents the aggregate grant date fair value of stock awards granted in the covered fiscal year as computed in accordance with FASB ASC Topic 718.
|
|
(2)
|
Michael Long is our Co-Founder and served as our Chief Executive Officer until August 4, 2016. He has served as our Chairman of the Board since July 1998. Mr. Long elected to receive a base salary of $255,000 per year in lieu of the base salary of $375,000 that would have been due to him for 2019 under the employment agreement effective February 27, 2007, as amended. No deferred compensation is owed to Mr. Long for 2019.
|
|
(3)
|
Mr. Long's other compensation consisted of 401(k) contributions and life insurance premiums.
|
|
(4)
|
Mr. Chapa received $4,000 in meeting fees. As of December 31, 2019, there were 11,112 shares of restricted stock outstanding for Mr. Chapa which vest on November 22, 2020.
|
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|
(5)
|
Mr. Bender was appointed by our Board on April 1, 2019. He received $3,000 in meeting fees. As of December 31, 2019, there were 44,444 restricted stock units convertible into 44,444 shares of common stock outstanding for Mr. Bender. 22,222 units vested on April 1, 2020 and 22,222 units vest on April 1, 2021.
|
|
(6)
|
Mr. Rollins received $4,000 in meeting fees. As of December 31, 2019, there were 22,222 restricted stock units convertible into 22,222 shares of common stock on May 1, 2020 outstanding for Mr. Rollins.
|
|
(7)
|
Mr. Huffman resigned from our board and committees effective April 1, 2019.
|
Narrative to Director Compensation Table
During 2019, Mr. Hoch received no compensation for serving on our Board due to his status as Chief Executive Officer of our Company. Mr. Hoch's compensation is detailed in the section "Executive Compensation" below.
Mr. Michael Long is our Co-Founder and has served as our Chief Executive Officer and Chairman of the Board since 1998. On August 4, 2016, Mr. Long retired as our Chief Executive Officer but he continues to provide his extensive knowledge as our Chairman of the Board. Prior to Mr. Long’s retirement, we entered into an employment agreement effective February 27, 2007, as amended. In connection with Mr. Long’s retirement as our Chief Executive Officer, we agreed to continue paying his agreed-upon compensation, benefits and expense reimbursements. The agreement provides for an annual base salary of $375,000 per year, unless increased by us. In addition, Mr. Long will receive an annual bonus of $216,000 during the term of the agreement to be paid in cash or stock at our sole discretion. In 2019, Mr. Long elected to receive a base salary of $255,000 per year in lieu of the base salary of $375,000 that would have been due to him for 2019 under the employment agreement and no bonus compensation. No deferred compensation is owed to Mr. Long for 2019.
Also, pursuant to our employment agreement with Michael Long, as amended, in the event of change in control, termination without cause, or non-renewal of the employment agreement, we will be liable for separation payments, equaling an amount of (a) 2.95 times the respective base salary and bonus payments, plus (b) a pro rata portion of the respective annual bonus based on the number of days elapsed in the year prior, plus (c) 2.0 times the respective base salary for non-competition, and (d) one year of continuing other benefits. We will also accelerate vesting of stock incentive awards, which as of December 31, 2019 are approximately $710,250.
In the case of termination of the agreement due to the death of Mr. Long, we will be liable for separation payments, equaling an amount of 2.95 times the base salary. The deferred compensation does not include amounts paid or accrued to Mr. Long for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. No deferred compensation will be due as long as we and/or an insurance company continue to pay Mr. Long’s base salary, minus any monthly base salary already paid to him prior to his death pursuant to his disability, to Mr. Long's estate for a period of up to 36 months. If these continuing payments cease before 36 months, we will have to pay Mr. Long's estate the deferred compensation minus any base salary payments within 30 days of the cessation. Further, all stock options and restricted stock granted to Mr. Long will continue on their vesting schedules. In the case of termination of the agreement due to disability without death, we will be liable for separation payments, equaling an amount of disability benefits totaling his base salary for 36 months. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. Further, all stock options and restricted stock granted to Mr. Long shall continue on their vesting schedules. No further compensation will be due for compliance with the agreement's non-compete, non-solicitation and disparagement clauses.
We entered into independent director agreements with all of our independent directors. Per the agreements, we agreed to pay each director $1,000 per quarter for participating in board and committee meetings, including the annual shareholder meeting. As former chair of the Audit Committee, Mr. Huffman received $15,000 in additional annual compensation, but no additional compensation for ad hoc or preparatory meetings or for being the chair of another committee. Our directors do not receive any additional compensation for ad hoc or preparatory meetings or for being the chair of a committee, other than the chair of the Audit Committee who receives an additional $15,000 per annum upon the timely filing of the annual report with the Securities and Exchange Commission. In addition, an Audit Committee member who is not a chairperson but holds a valid CPA license will receive an additional $5,000 per annum.
Pursuant to the independent director agreements, the terms of their respective directorships terminate on the earliest of the following: (a) the death or disability of the director; (b) the termination of the director from membership on the Board by mutual agreement; (c) the removal of the respective director from the Board by the majority stockholders of the Company; and (d) the resignation by the director from the Board.
On April 24, 2015, in connection with his appointment to our Board, we granted Mr. Chapa 33,334 shares of common stock with a grant date fair value of $180,000 for his services on our Board. On April 11, 2017, Mr. Chapa returned 2,000 shares at the closing price of April 11, 2017 of $1.85 per share to cover taxes due. On November 22, 2017, we granted Mr. Chapa 33,334 shares which vest as follows: 11,111 shares vested on November 22, 2018, 11,111 shares vested on November 22, 2019, and 11,112 shares vest on November 22, 2020 or upon an earlier change of control.
On November 11, 2016, in connection with his appointment to our Board, we granted Mr. Huffman 66,667 restricted stock units convertible into 66,667 shares of our common stock. Such units vested as follows: 22,223 units vested on January 1, 2017, 22,222 units vested on January 1, 2018, and 22,222 units vested on January 1, 2019. On April 11, 2017, Mr. Huffman converted 22,223 units into 22,223 shares of common stock, on January 2, 2018, Mr. Huffman converted 22,222 units into 22,222 shares of common stock., and on January 2, 2019,
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Mr. Huffman converted the remaining units into 22,222 shares of common stock. Mr. Huffman resigned from our Board and Committees effective April 1, 2019.
On May 5, 2017, in connection with his appointment to our Board, we granted Mr. Brad Rollins 66,667 restricted stock units convertible into 66,667 shares of our common stock. Such units will vest as follows: 22,223 units vested on May 1, 2018, 22,222 units vested on May 1, 2019, and 22,222 units vest on May 1, 2020. Mr. Rollins converted 44,443 units into 44,443 shares of common stock.
On April 1, 2019, our Board of Directors appointed Blaise C. Bender as an independent member of our Board of Directors. Mr. Bender will serve as the chairman of our Audit, Compensation, and Nominations and Corporate Governance Committees. Mr. Bender received 66,667 restricted stock units convertible into our common stock, pursuant and subject to the terms of our 2015 Equity Incentive Plan. Such units will vest in three installments as follows: 22,223 units vested on April 1, 2019, 22,222 units vested on April 1, 2020, and the remaining 22,222 units vest on April 1, 2021.
Executive Officers
Executive Officers’ Biographies and Qualifications
The biographies of our executive officers and certain information regarding each officer’s experience, attributes, skills and/or qualifications that led to the conclusion that the officer should be serving as an officer of Payment Data are stated below.
Louis A. Hoch, age 54 – President, Chief Executive and Operating Officer and Vice Chairman of the Board
For Mr. Hoch’s biography, please refer to the section entitled “
Director Biographies and Qualifications
.”
Tom Jewell, age 63 – Chief Financial Officer
Mr. Jewell has served as our Senior Vice President and Chief Financial Officer since January 6, 2017. He was a member of our Board of Directors from November 11, 2016 to January 6, 2017. Mr. Jewell has over 35 years of business leadership experience focused on management, auditing, accounting, internal controls and finance. Previously, Mr. Jewell was the founder and owner of LTJ Financial Consulting, LLC. LTJ Financial Consulting which provided Chief Financial Officer and Controller advisory services for middle market companies in need of accounting process improvements or were looking to scale their business. Mr. Jewell performed this role from May 2009 to January 2017. His clients included start-ups seeking funding, clients in retail, staffing, construction and software industries and included serving as an FDIC approved consultant assisting the FDIC close failed banking institutions during the banking crisis. Prior to 2009, Mr. Jewell served as Chief Financial Officer for a multi-state photography studio chain from 2007 to 2009. Prior to 2007, Mr. Jewell provided financial leadership to divisional units of RadioShack, Verizon and Kentucky Fried Chicken. Mr. Jewell began his career at Touche Ross (Deloitte). Mr. Jewell was a member of the Dallas and Fort Worth chapters of Financial Executives International (FEI) and a founding member of the Dallas Chapter of the CFO Leadership Council until 2018. Mr. Jewell was a Certified Public Accountant until 2018.
Vaden Landers, age 50 – Chief Revenue Officer
Mr. Landers has over 30 years of experience in the payments industry. Most recently, he served as the Chairman and Managing Partner of Singular Payments, LLC since late 2010, leading Singular Payments, an independent sales organization whose portfolio comprised of largely healthcare clients processing more than 2.5 million transactions totaling roughly half a billion dollars annually in card volume. He also currently serves as Strategic Advisor for MAPP Advisors, a boutique consulting and M&A brokerage firm in the payments space. Mr. Landers has previously held executive and board positions in multiple companies, including as director for SparkBase from 2012 to 2015, as Chief Executive Officer for ProfitPoint, Inc. from 2003 to 2010, as Chief Marketing Officer for iPayment, Inc. from 2002 to 2004, as President for Global Payments from 2000 to 2002 and as President and Chief Executive Officer for Bancard Consulting Group from 1996 to 1998. Mr. Landers studied criminal justice and business management at Lincoln Memorial University.
Other Involvement in Certain Legal Proceedings
None of our executive officers have been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any of our executive officers during the last ten years that we consider material to the evaluation of the ability and integrity of any executive officer.
Executive Compensation
Named Executive Officers
This Proxy Statement contains information about the compensation paid to our Named Executive Officers, as defined by Item 402(m)(2) of Regulation S-K, during our fiscal year ended December 31, 2019. In accordance with the rules and regulations of the Securities
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and Exchange Commission for smaller reporting companies, we determined that the following officers were our Named Executive Officers:
|
•
|
Louis A. Hoch, Chief Executive and Operating Officer;
|
|
•
|
Tom Jewell, Chief Financial Officer; and
|
|
•
|
Vaden Landers, Chief Revenue Officer.
|
Compensation Overview
We qualify as a “smaller reporting company” under the rules promulgated by the Securities and Exchange Commission, and we have elected to comply with the disclosure requirements applicable to smaller reporting companies. Accordingly, this executive compensation summary is not intended to meet the “Compensation Discussion and Analysis” disclosure required of larger reporting companies.
Role of the Compensation Committee
The Compensation Committee’s primary functions are to assist the Board of Directors in meeting its responsibilities in regards to oversight and determination of executive compensation and to review and make recommendations with respect to our major compensation plans, policies and programs. All compensation for our executive officers is determined by the Compensation Committee of our Board of Directors, which is composed only of independent directors. The Compensation Committee is charged with the responsibility of reviewing the performance and establishing the total compensation of our executive officers on an annual basis. The Compensation Committee often discusses compensation matters as part of regularly scheduled Board and committee meetings. The Compensation Committee administers our incentive plans, and is responsible for approving grants of equity awards under such plans. The Compensation Committee acts under the authority of a written charter, which is available on our website at paymentdata.com/invest.
Compensation Philosophy and Objectives
Due to the size of our Company, the performance of the Named Executive Officers directly affects all aspects of our results. Consequently, our compensation philosophy is to reward executive officers for the achievement of short- and long-term corporate and individual performance, as measured by the attainment of specific goals for the creation of long-term shareholder value. Also, to ensure that we are strategically and competitively positioned for the future, the Compensation Committee has the discretion to attribute significant weight to other factors in determining executive compensation, such as maintaining competitiveness, expanding markets, pursuing growth opportunities and achieving other long-range business and operating objectives. The level of compensation should also allow us to attract, motivate, and retain talented executive officers that contribute to our long-term success. The compensation of our Chief Executive Officer and other executive officers is comprised of cash compensation and long-term incentive compensation in the form of base salary, restricted stock awards and stock options with the possibility to earn bonuses.
Summary Compensation Table for the Years Ended December 31, 2019 and 2018
The following table sets forth the compensation for the years ended December 31, 2019 and 2018 awarded to, earned by, or paid to (i) all persons who served as our principal executive officers during the last fiscal year; (ii) our most highly compensated executive officer other than the principal executive officers; and (iii) one other person for whom disclosure would have been provided but for the fact that the person was not serving as an executive officer at the end of the last fiscal year. We refer to the individuals included in the Summary Compensation Table as our “named executive officers.”
|
Name and Principal Position
|
Fiscal Year Ended Dec. 31
|
Salary ($)
|
Bonus ($)
|
All Other Compensation ($)
|
Total ($)
|
||
|
Louis A. Hoch
Vice Chairman, President and Chief Executive Officer
|
2019
|
350,000
|
|
150,000 (1)
|
16,252 (2)
|
516,252
|
|
|
2018
|
350,000
|
|
--
|
15,926 (3)
|
365,926
|
|
|
|
Tom Jewell
Chief Financial Officer
|
2019
|
220,000
|
|
--
|
9,388 (4)
|
229,388
|
|
|
2018
|
192,308
|
|
--
|
8,280 (5)
|
200,588
|
|
|
|
Vaden Landers
Chief Revenue Officer
|
2019
|
300,000
|
|
--
|
588 (6)
|
300,588
|
|
|
2018
|
300,000
|
|
--
|
588 (6)
|
300,588
|
|
|
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|
(1)
|
Mr. Hoch’s 2019 bonus compensation consisted of a one-time cash bonus of $150,000 in connection with his services and the performance of the Company. All bonus compensation was granted pursuant to the terms of our employment agreement, as amended, with Mr. Hoch declining to receive the full allotted bonus of $216,000 in 2019 or 2018.
|
|
(2)
|
$11,200 of matching 401(k) contributions and $5,051 in life insurance premiums.
|
|
(3)
|
$11,000 of matching 401(k) contributions and $4,926 in life insurance premiums.
|
|
(4)
|
$8,800 of matching 401(k) contributions and $588 in life insurance premiums.
|
|
(5)
|
$7,692 of matching 401(k) contributions and $588 in life insurance premiums.
|
|
(6)
|
$588 in life insurance premiums.
|
Narrative to Summary Compensation Table
Named Executive Officer Employment Agreements
We entered into an employment agreement with Louis A. Hoch effective February 27, 2007, as amended. Under the agreement, Mr. Hoch agreed to serve as our Vice Chairman of the Board, President and Chief Executive and Operating Officer. Mr. Hoch assumed the Chief Executive Officer role in August 2016. The employment agreement provides for an annual base salary of $350,000 per year, unless increased by us. In addition, Mr. Hoch will receive an annual bonus of $216,000 during the term of the agreement to be paid in cash or stock at our sole discretion. Mr. Hoch declined to receive his full allotted bonus in 2019 and 2018, and received $150,000 in cash in 2019. No deferred compensation is owed to Mr. Hoch for 2019 or 2018.
In connection with Mr. Jewell’s appointment on January 6, 2017, we entered into an employment agreement with him. Pursuant to the employment agreement, we agreed to pay Mr. Jewell a base annual salary of $175,000, which was increased to $190,000 effective November 27, 2017, and then increased to $220,000 effective November 26, 2018. Mr. Jewell received a one-time signing bonus of $30,000 and reimbursement of actual relocation expenses of up to $10,000. In addition, Mr. Jewell will be entitled to receive performance stock grants or stock options as awarded by our management annually up to an amount not exceeding 50% of the highest salary received in any year of the agreement. Mr. Jewell also received 200,000 restricted stock units convertible into shares of our common stock, pursuant and subject to the terms of our 2015 Equity Incentive Plan. Such units will vest in five equal installments beginning on January 6, 2018, continuing yearly and becoming fully vested on January 6, 2022.
In connection with Mr. Landers’ appointment on September 1, 2017, we entered into an employment agreement with him. Pursuant to the employment agreement, we agreed to pay Mr. Landers a base annual salary of $300,000, and he may be able to receive bonus compensation during his period of employment, which cannot exceed 100% of the highest salary received in any year of the employment agreement. Mr. Landers also received 300,000 shares of restricted stock upon his appointment, which will vest on September 1, 2027 or earlier upon a change of control. Mr. Landers will also be entitled to receive stock grants and future stock options as authorized by our executive compensation committee and/or our Chief Executive Officer. Mr. Lander’s employment agreement is for a term of three years and may be extended for successive one-year periods.
Outstanding Equity Awards at Fiscal Year-End
The following table shows grants of unvested stock awards by grant date outstanding on December 31, 2019, the last day of our fiscal year, to each of the named executive officers included in the Summary Compensation Table.
Share numbers have been adjusted for 1-for-15 reverse stock split effective July 23, 2015.
|
Name
|
Stock awards
|
||
|
Grant date
|
Number of shares or units of stock that have not vested (#)
|
Market value of shares or units of stock that have not vested ($)(1)
|
|
|
Louis A. Hoch
|
|||
|
10/04/2012
|
66,667 (2)
|
104,000
|
|
|
12/29/2014
|
533,334 (3)
|
832,000
|
|
|
11/22/2017
|
300,000 (4)
|
468,000
|
|
|
Tom Jewell
|
|||
|
1/6/2017
|
120,000 (5)
|
187,200
|
|
|
11/22/2017
|
150,000 (4)
|
234,000
|
|
|
Vaden Landers
|
|||
|
9/1/2017
|
300,000 (6)
|
468,000
|
|
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16
|
(1)
|
Calculated using the Nasdaq Capital Market closing price of $1.56 per share of our common stock on the last trading day of our fiscal year, or December 31, 2019.
|
|
(2)
|
Vests on October 4, 2022.
|
|
(3)
|
Vests on December 29, 2024.
|
|
(4)
|
Vests on November 21, 2027 or earlier upon a change of control.
|
|
(5)
|
The grant consisted of 200,000 restricted stock units which vest in five equal tranches of 40,000 per year, beginning on January 6, 2018 and becoming fully vested on January 6, 2022.
|
|
(6)
|
Vests on September 1, 2027, or earlier upon a change of control.
|
Narrative to Outstanding Equity Awards at Fiscal Year-End Table
Retirement Benefits
We do not have any qualified or non-qualified defined benefit plans. We do have a tax-qualified defined contribution plan pursuant to Section 401(k) of the Internal Revenue Code. All of our eligible full and part-time employees who meet certain age requirements may participate in this 401(k) plan. Participants may contribute between 1% and 80% of their pre-tax compensation but may not contribute more than the maximum as mandated by law. The 401(k) plan allows for us to make discretionary and matching contributions. In 2019 and 2018, we matched 100% of employee contributions up to 3% and 50% of the employee contribution over 3% with a maximum employee contribution of 5%. We made matching contributions of $126,436 and $88,284 in 2019 and 2018, respectively.
Non-qualified Deferred Compensation
We do not have any non-qualified defined contribution plans or other deferred compensation plans.
Potential Payments Upon Termination or Change of Control
The employment agreements we entered into with Mr. Hoch, Mr. Jewell, and Mr. Landers respectively, provide for potential payments upon termination or a change of control.
Pursuant to our employment agreement with Louis Hoch, our President, Chief Executive Officer, and Chief Operating Officer, as amended, in the event of change in control, termination without cause, or non-renewal of the employment agreement, we will be liable for separation payments, equaling an amount of (a) 2.95 times the base salary and bonus payments, plus (b) a pro rata portion of the annual bonus based on the number of days elapsed in the year prior, plus (c) two times the base salary for non-competition, and (d) one year of continuing other benefits. We will also accelerate vesting of stock incentive awards, which as of December 31, 2019 are approximately $1,229,600.
In the case of termination of the agreement due to the death of Mr. Hoch, we will be liable for separation payments, equaling an amount of 2.95 times the base salary. The deferred compensation does not include amounts paid or accrued to Mr. Hoch for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. No deferred compensation will be due as long as we and/or an insurance company continue to pay Mr. Hoch’s base salary, minus any monthly base salary already paid to Mr. Hoch prior to his death pursuant to his disability, to his estate for a period of up to 36 months. If these continuing payments cease before 36 months, we will have to pay his estate the deferred compensation minus any base salary payments within 30 days of the cessation. Further, all stock options issued to Mr. Hoch and all restricted stock granted to executive shall continue on their vesting schedule.
In the case of termination of the agreement due to disability without death by Mr. Hoch, we will be liable for separation payments, equaling an amount of disability benefits constituting base salary for 36 months. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited. Further, all stock options issued to Mr. Hoch and all restricted stock granted to him shall continue on their vesting schedules. No further compensation will be due for compliance with the agreement’s non-compete, non-solicitation and disparagement clauses.
Pursuant to our employment agreement with Mr. Jewell, our Chief Financial Officer, in the event of change in control, termination upon our default, for good reason or without cause we will be liable for separation payments. The deferred compensation shall be the amount which is calculated as the base salary payments Mr. Jewell would have received had his employment continued for the remaining term of the employment agreement (including yearly increases calculated at the maximum increase for the prior two years), plus all of the benefits remaining under the employment agreement and a pro rata portion of the bonus compensation for that year. In addition, all stock options and restricted stock granted to Mr. Jewell will become fully vested.
Pursuant to our employment agreement with Mr. Vanders, our Chief Revenue Officer, in the event of change in control, termination upon our default, for good reason or without cause we will be liable for separation payments. The deferred compensation shall be the amount which is calculated as the base salary payments Mr. Landers would have received had his employment continued for the remaining term of the employment agreement (including yearly increases calculated at the maximum increase for the prior two years), plus all of the
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17
benefits remaining under the employment agreement and a pro-rata portion of the bonus compensation for that year. In the event of a change of control, Mr. Landers will also receive an amount equal to twelve months of his base salary, which was in effect immediately prior to the change of control. In addition, all stock options and restricted stock granted to Mr. Landers will become fully vested.
Proposal No. 2 – Advisory Vote to Approve Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 14A to the Securities Exchange Act of 1934. As required pursuant to Section 14A of the Exchange Act, Proposal No. 2 is a non-binding, advisory proposal on the compensation that we paid to our Named Executive Officers for the year ended December 31, 2019. The Board of Directors is providing shareholders with the opportunity to cast an advisory vote on the compensation of our Named Executive Officers. This proposal, commonly known as a “say-on-pay” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse our executive compensation programs and policies and the compensation paid to our Named Executive Officers for the year ended December 31, 2019.
We believe in the power of open disclosure and know the only way to build and strengthen our reputation and our Company is through honesty and trust. In connection with that belief and as required by SEC rules, we are asking our shareholders to approve, on an advisory basis, the compensation that we paid to our Named Executive Officers.
As discussed under the heading “
Executive Compensation—Compensation Overview
” in this Proxy Statement, our compensation objectives are to: attract and retain highly qualified individuals with a demonstrated record of achievement; reward past performance; provide incentives for future performance; and align the interests of the Named Executive Officers with the interests of our shareholders. The Board is asking shareholders to support this proposal based on the disclosure set forth in these sections of this Proxy Statement, which, among other things, demonstrates:
|
•
|
our commitment to ensuring executive compensation is aligned with our corporate strategies and business objectives and competitive with those of other companies in our industry;
|
|
•
|
the design of our compensation programs is intended to reward our Named Executive Officers for the achievement of key strategic and financial performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable corporate and individual performance goals; and
|
|
•
|
our strong emphasis on the alignment of the incentives of our Named Executive Officers with the creation of increased shareholder value.
|
Required Vote
Because this proposal asks for a non-binding, advisory vote, there is no required vote that would constitute approval. We value the opinions expressed by our shareholders in this advisory vote, and our Compensation Committee, which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote when designing our compensation programs and making future compensation decisions for our Named Executive Officers. Abstentions and broker “non-votes,” if any, will not have any impact on this advisory vote.
Voting Recommendation
The Board of Directors is asking shareholders to cast a non-binding, advisory vote
FOR
the following resolution:
“RESOLVED, the shareholders of Usio, Inc. approve on an advisory basis, the compensation paid to our Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation tables and accompanying narrative disclosure under the heading “
Executive Compensation.
”
SHARE OWNERSHIP
Equity Compensation Plan Information
The following table provides information as of December 31, 2019 with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance:
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18
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options and rights
|
Weighted-average exercise price of outstanding options and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
Equity compensation plans approved by security holders
|
356,966
|
$2.16
|
5,017,598
|
|
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|
Total
|
356,966
|
$2.16
|
5,017,598
|
Our 2015 Equity Incentive Plan provides for the grant of incentive stock options as defined in Section 422 of the Internal Revenue Code and the grant of stock options, restricted stock, stock units, performance awards, or other awards to employees, non-employee directors, and consultants.
The Board of Directors authorized 5,000,000 shares (adjusted for the 1-for-15 reverse split effective on July 23, 2015) of our common stock for issuance under the 2015 Equity Incentive Plan, including automatic increases provided for in the 2015 Equity Incentive Plan through fiscal year 2025. The number of shares of our common stock reserved for issuance under the 2015 Equity Incentive Plan will automatically increase, with no further action by the shareholders, on the first business day of each fiscal year during the term of the Plan, beginning January 1, 2016, in an amount equal to 5% of the issued and outstanding shares of stock on the last day of the immediately preceding year, or such lesser amount if so determined by the Board or the Administrator. On January 1, 2017, 2018 and 2019, respectively, the number of authorized common shares under the plan increased by 589,797, 808,468 and 802,182, respectively, in accordance with the automatic increase provision described above.
Security Ownership of Certain Beneficial Owners
The following tables set forth, to our knowledge, certain information concerning the beneficial ownership of our common stock as of April 15, 2020 by: (i) each shareholder known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each of our Named Executive Officers, (iii) each of our current directors, and (iv) all of our directors and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days after April 15, 2020. However, we did not deem these shares outstanding for the purpose of computing the percentage ownership of any other person.
Shareholders Known by Us to Own 5% or More of Our Common Stock
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percentage of Shares Beneficially Owned (1)
|
|
National Services, Inc. (2)
750 E. Green St.
Pasadena, CA 91101
|
1,378,500
|
7.4%
|
|
(1)
|
On April 15, 2020, we had a total of 18,607,449 shares of common stock outstanding (which excludes 1,134,850 treasury shares).
|
|
(2)
|
We relied, in part, on the Schedule 13G filed by National Services, Inc. with the SEC on March 23, 2016 for this information.
|
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19
Officers and Directors
|
Amount of Beneficial Ownership
|
Percent of Shares Beneficially Owned (3)
|
||||||
|
Name and Address of Beneficial Owner (1)
|
Nature of Beneficial Ownership
|
Shares Owned
|
Shares – Rights to Acquire (2)
|
Total
|
|||
|
Michael Long
|
Chairman of the Board
|
2,196,782
|
--
|
|
2,196,782
|
|
11.8%
|
|
Louis Hoch
|
President, Chief Executive Officer, and Vice Chairman of the Board
|
2,592,778
|
--
|
|
2,592,778
|
|
13.9%
|
|
Vaden Landers
|
Chief Revenue Officer
|
1,965,152
|
--
|
|
1,965,152
|
|
10.6%
|
|
Tom Jewell
|
Chief Financial Officer
|
455,443
|
80,000
|
|
535,443
|
|
2.9%
|
|
Miguel Chapa
|
Director
|
64,668
|
30,000
|
|
94,668
|
|
*
|
|
Bradley Rollins
|
Director
|
44,445
|
52,222
|
|
96,667
|
|
*
|
|
Blaise Bender
|
Director
|
44,445
|
32,222
|
|
76,667
|
|
*
|
|
All directors and executive officers as a group
|
7,363,713
|
194,444
|
|
7,558,157
|
|
40.2%
|
|
* Indicates ownership of less than 1.0%.
|
(1)
|
Unless otherwise stated, the address of each beneficial owner listed on the table is c/o Usio, Inc., 3611 Paesanos Parkway, Suite 300, San Antonio, Texas 78231.
|
|
(2)
|
Represents shares subject to outstanding stock options and restricted stock units currently exercisable or which will be exercisable, or currently vested or that will vest within 60 days of April 15, 2020.
|
|
(3)
|
On April 15, 2020, we had a total of 18,607,449 shares of common stock outstanding (which excludes 1,134,850 treasury shares).
|
As of December 31, 2019, there are no arrangements among our beneficial owners, known to management, which may result in a change in control of our Company.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of a registered class of our securities to file reports of beneficial ownership and changes in beneficial ownership with the Securities and Exchange Commission on Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of copies of such reports, we believe that, during the fiscal year ended December 31, 2019, no person required to file reports under Section 16(a) of the Securities Exchange Act of 1934 failed to file such reports on a timely basis during such fiscal year, except for one Form 4 filed two days late for one transaction by Tom Jewell, our Chief Financial Officer.
AUDIT MATTERS
Report of the Audit Committee
In 2019, the Audit Committee was comprised of our independent directors Messrs. Chapa, Huffman (chair), and Rollins. Effective April 1, 2019, our Board appointed Mr. Blaise Bender to chair the Audit Committee to replace Mr. Huffman.
The Audit Committee’s purpose is to assist the Board of Directors in its general oversight of our financial reporting, internal control and audit functions. Management is responsible for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles and internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Akin, Doherty, Klein & Feuge, P.C., our independent registered accounting firm, is responsible for performing an independent audit of the consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board.
In overseeing the preparation of our financial statements, the Audit Committee has had access to our management to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee
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20
that all financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee has met with our independent auditors with regard to our audited financial statements for the year ended December 31, 2019. For the year ended December 31, 2019, the Audit Committee did receive the independent auditor’s letter and written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
In reliance on the reviews and discussion with management and the independent registered public accounting firm referred to above, the Audit Committee recommended to the Board of Directors, and the Board approved, the inclusion of the audited financial statements in Usio’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC. The Audit Committee recommended, and the Board appointed Akin, Doherty, Klein & Feuge, P.C. to serve as Payment Data Systems’ independent registered public accounting firm for the year ending December 31, 2020.
Audit Committee
|
Blaise Bender
|
Miguel Chapa Bradley Rollins
|
(Chairman)
Proposal No. 3 – Ratification of the Appointment of Akin, Doherty, Klein & Feuge, P.C.
The Audit Committee has recommended and the Board has appointed Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020. Representatives of Akin, Doherty, Klein & Feuge, P.C. are expected to be present at the 2020 Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions. Although shareholder ratification of our independent registered public accounting firm is not required by our Bylaws or otherwise, we are submitting the selection of Akin, Doherty, Klein & Feuge, P.C. to our shareholders for ratification to permit shareholders to participate in this important corporate decision.
Required Vote
Ratification of the appointment of Akin, Doherty, Klein & Feuge, P.C. requires the affirmative vote of a majority of the shares present and voting at the Annual Meeting in person or by proxy. Unless marked to the contrary, proxies received will be voted “FOR” ratification of the appointment. A properly executed proxy marked “ABSTAIN” with respect to this proposal will not be voted, although it will be counted for purposes of determining the number of shares of common stock entitled to vote. Accordingly, an abstention will have the effect of a negative vote. Because this Proposal is a routine proposal on which a broker or other nominee is generally empowered to vote, broker “non-votes” likely will not result from this Proposal. Thus, if you are a beneficial owner holding shares through a broker, bank or other holder of record and you do not vote on this Proposal, your broker may cast a vote on your behalf for this Proposal. In the event ratification is not obtained, the Audit Committee and the Board will review its future selection of our independent registered public accounting firm but will not be required to select a different independent registered public accounting firm.
Voting Recommendation
Your Board of Directors recommends a vote
FOR
the ratification of Akin, Doherty, Klein & Feuge, P.C. as our independent registered public accounting firm for the year ending December 31, 2020.
Principal Accountant Fees and Services
Akin, Doherty, Klein & Feuge, P.C. has audited our financial statements since 2003. The aggregate fees billed to us for professional accounting services, including the audit of our annual consolidated financial statements by our independent registered public accounting firm for the years ended December 31, 2019 and 2018, are set forth in the table below.
|
Year Ended December 31,
|
||||||
|
2019
|
2018
|
|||||
|
Audit fees
|
$
|
112,535
|
|
$
|
92,500
|
|
|
Tax fees
|
18,000
|
|
16,475
|
|
||
|
Other fees
|
0
|
|
1,480
|
|
||
|
Total fees
|
$
|
130,535
|
|
$
|
110,455
|
|
For purposes of the preceding table, the professional fees are classified as follows:
Audit Fees
. Audit fees include fees for professional services billed for the audit of the consolidated financial statements included in our annual report on Form 10-K filing, the review of consolidated financial statements included in our quarterly reports on Form 10-Q filings,
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21
comfort letters, consents and assistance with and review of documents filed with the SEC. The fees include amounts billed to us during each respective calendar year.
Tax Fees
. Tax fees include fees for professional services rendered by our independent registered public accounting firm for tax compliance, tax planning and tax advice. Tax compliance involves preparation of original and amended tax returns. Tax planning and tax advice encompass a diverse range of subjects, including assistance with tax audits and appeals, tax advice related to dispositions, and requests for rulings or technical advice from taxing authorities. The fees include amounts billed to us during each respective calendar year.
Other Fees
. Other fees include fees for professional services rendered by our independent registered public accounting firm for fees other than represented in Audit Fees and Tax Fees. For the year ended December 31, 2018, this included audit related consulting work performed above normal audit procedures related to warrants issued by the Company.
Audit Committee Pre-Approval Policies and Procedures
We may not engage our independent registered public accounting firm to render any audit or non-audit service unless our Audit Committee approves the service in advance. 100% of the services performed by our independent registered public accounting firm described above were approved in advance by our Audit Committee.
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22
General Information
Below you will find general information on Shareholder Proposals, “Householding” of Proxy Materials, and more specific instructions on how to vote, which can be found on your proxy voting card.
Shareholder Proposals
There are no shareholder proposals for the 2020 Annual Meeting. If you would like information on submitting a shareholder proposal to be included in the 2021 Proxy Statement and Annual Meeting, please refer to the information below.
|
How do I submit a Shareholder Proposal to be Included in the Proxy Statement?
You must submit your proposal to our Secretary no later than December 31, 2020 – 120 calendar days before the anniversary of this Proxy Statement release. This is to comply with Rule 14a-8 under the 1934 Act.
What if the date of the 2021 Annual Meeting is significantly different?
If the date of the Annual Meeting is changed by more than 30 days, the proposal must be submitted to our Secretary by the close of business on the later of:
•
90 days prior to the Annual Meeting, OR
•
7 days following the first public announcement of the Annual Meeting date
|
Who Presents the Proposal at the Meeting?
The Shareholder proponent, or a representative who is qualified under state law, must appear in person at the 2021 Annual Meeting of Shareholders to present the proposal.
How Should I Send my Proposal?
Please send your proposal to our Secretary at:
Usio, Inc.
Attn. Secretary 3611 Paesanos Parkway, Ste. 300 San Antonio, Texas 78231
We strongly suggest that proposals are sent by Certified Mail – Return Receipt Requested.
|
|
|
What Must be Included in My Notice that I send to the Secretary?
|
||
|
1. A brief description of the proposed business
2. The text of the proposal
3. Reasons for conducting the business at the meeting
4. Name and address (as they appear on our books) of the shareholder proposing such business
5. The beneficial owner (if any) on whose behalf the proposal is made
6. Any material interest of the shareholder in such business
7. Any other information required by proxy proposal submission rules of the SEC
|
||
“Householding” of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for us. Under this procedure, multiple shareholders who share the same last name and address will receive only one copy of the annual proxy materials, unless they notify us that they wish to continue receiving multiple copies. We have undertaken householding to reduce our printing costs and postage fees.
If you wish to opt-out of householding and continue to receive multiple copies of the proxy materials at the same address, you may do so at any time prior to thirty days before the mailing of proxy materials, which will typically be mailed in June of each year, by notifying us in writing at: Secretary, Usio, Inc., 3611 Paesanos Parkway, Ste. 300, San Antonio, TX 78231, or by contacting us at (210) 249-4100. You also may request additional copies of the proxy materials by notifying us in writing at the same address or contacting us at (210) 249-4100, and we will undertake to deliver such additional copies promptly. If you share an address with another shareholder and currently are receiving multiple copies of the proxy materials, you may request householding by notifying us at the above referenced address or telephone number.
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Other Matters
Your Board of Directors does not know of any other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, your proxy holders will vote on it as they think best unless you direct them otherwise in your proxy instructions.
Whether or not you intend to be present at the 2020 Annual Meeting, we urge you to vote your shares and submit your signed proxy promptly.
By Order of the Board of Directors.
________________
Louis A. Hoch
President and Chief Executive Officer
San Antonio, Texas
The Notice of Annual Meeting, Proxy Statement, form of proxy and our 2019 Annual Report on Form 10-K are available at www.proxyvote.com. We will provide copies of our Proxy Statement and our 2019 Annual Report free of charge upon request. We will also provide copies of exhibits to our 2019 Annual Report, but will charge a reasonable fee per page to any requesting shareholder. Shareholders may make such requests in writing to Secretary, Usio, Inc., 3611 Paesanos Parkway, Ste. 300, San Antonio, TX 78231. The request must include a representation by the shareholder that as of April 15, 2020, the shareholder was entitled to vote at the 2020 Annual Meeting.
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Thank You
Thank you for being a shareowner of Usio, Inc.
Learn more at
http://usio.com/
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25
Appendix A
Proxy Card
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26
TABLE OF CONTENTS
Letter to our Shareholders from our Board of DirectorsNotice of Annual Meeting of ShareholdersProxy SummaryGeneral Voting and Meeting InformationVoting at the Annual MeetingQuestions and AnswersGovernanceProposal 1 Election of DirectorDirector Biographies and QualificationsCommittees of the Board of DirectorsDirector Independence, Related Person Transactions and Other Legal InformationInformation about Corporate GovernanceDirector CompensationExecutive OfficersExecutive CompensationOutstanding Equity Awards at Fiscal-Year EndProposal 2 Advisory Vote to Approve Executive CompensationShare OwnershipEquity Compensation Plan InformationSecurity Ownership of Certain Beneficial OwnersDelinquent Section 16(a) ReportsAudit MattersReport of the Audit CommitteeProposal 3 Ratification of the Appointment of Independent Registered Public Accounting FirmPrincipal Accountant Fees and ServicesAudit Committee Pre-Approval Policies and ProceduresGeneral InformationShareholder ProposalsHouseholdingOther MattersAppendix A Proxy Card