WIDEPOINT CORP
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No.______)
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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
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting Material Pursuant to
§
240.14a-12
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WidePoint Corporation
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(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
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WIDEPOINT CORPORATION
11250 Waples Mill Road, South Tower, Suite 210
Fairfax, Virginia 22030
April 29, 2019
To Our Stockholders:
You are
cordially invited to attend the Annual Meeting of Stockholders of
WidePoint Corporation, which will be held at 10:00 a.m., EST, on
Tuesday, June 11, 2019 at the Washington, D.C. offices of Foley
& Lardner LLP, located at 3000 K Street N.W., Sixth Floor,
Washington, D.C. 20007.
The
accompanying notice of meeting and proxy statement describe the
matters to be voted on at the meeting.
YOUR VOTE IS IMPORTANT.
We invite you to attend the meeting in
person. If attending the meeting is not feasible, we encourage you
to read the proxy statement and vote your shares as soon as
possible. To ensure your shares will be represented, we ask that
you vote your shares via the Internet or by telephone, as
instructed on the Notice of Internet Availability of Proxy
Materials or as instructed on the accompanying proxy. If you
received or requested a copy of the proxy card by mail, you may
submit your vote by completing, signing, dating and returning the
proxy card by mail. You may also vote in person on the day of the
Annual Meeting by submitting your vote to the Secretary of the
Company. We encourage you to vote via the Internet or by telephone.
These methods save us significant postage and processing charges.
Please vote your shares as soon as possible. This is your Annual
Meeting and your participation is important.
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Sincerely,
Jin
Kang
Chief
Executive Officer
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WIDEPOINT CORPORATION
11250 Waples Mill Road, South Tower, Suite 210
Fairfax, Virginia 22030
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of WidePoint
Corporation will be held on
Tuesday
, June 11, 2019 at
10:00
a.m., EST, at the Washington, D.C. offices
of Foley & Lardner LLP, located at 3000 K Street, N.W., Sixth
Floor, Washington, D.C. 20007 to consider and vote on the following
matters described in the accompanying proxy
statement:
●
To elect the two
director nominees named in the attached proxy statement as Class I
directors to serve for a three-year period until the Annual Meeting
of Stockholders in the year 2022 and to elect the director nominee
named in the attached proxy statement as a Class III director to
serve until the Annual Meeting of Stockholders in the year
2021;
●
To approve an
advisory resolution on executive compensation;
●
To conduct an
advisory vote on the frequency of future advisory votes on
executive compensation;
●
To ratify the
selection of Moss Adams LLP as the Company’s independent
accountants; and
●
To transact such
other business as may properly come before the
meeting.
Stockholders of record at the close of business
on
April 22, 2019
are entitled
to receive notice of, and to vote in person or by proxy at, the
Annual Meeting.
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By order of the
Board of Directors,
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Jin
Kang
Chief
Executive Officer
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April 29, 2019
TABLE OF CONTENTS
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Notice of Electronic Availability of Proxy Materials
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1
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Voting Procedures and Securities
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1
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Proposal One – Election of Directors
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4
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Board Meetings – Committees of the Board
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9
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Director Independence
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11
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Identification and Evaluation of Director Candidates
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12
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Process for Communicating with Board Members
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13
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Director Attendance at Annual Meetings
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13
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Board
Leadership Structure and Role in Risk Oversight
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13
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Director
Compensation
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14
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Section
16(A) Beneficial Ownership Reporting Compliance
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15
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Executive
Officers
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16
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Principal
Stockholders
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17
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Executive
Compensation
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20
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Certain
Related Person Transactions
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27
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Proposal Two – Advisory Resolution on Executive
Compensation
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28
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Proposal Three – Advisory Vote on the Frequency of Future
Advisory Votes on Executive Compensation
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29
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Proposal
Four – Independent Accountants
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30
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Audit Committee Report
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31
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Independent Registered Certified Public Accounting Firm Fees and
Services
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31
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Other Information
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33
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Stockholder Proposals for 2019 Annual Meeting
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33
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Other Matters
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WIDEPOINT CORPORATION
11250 Waples Mill Road, South Tower, Suite 210
Fairfax, Virginia 22030
PROXY STATEMENT
This Proxy Statement is furnished in connection
with the solicitation by the Board of Directors of WidePoint
Corporation, a Delaware corporation (referred to herein as
“WidePoint,” the “Company,”
“we” or “our”), of proxies of stockholders
to be voted at the 2019 WidePoint Annual Meeting of Stockholders to
be held at the Washington, D.C. offices of Foley & Lardner LLP,
located at 3000 K Street, N.W., Sixth Floor, Washington, D.C. 20007
at
10:00
a.m.,
EST
, on
Tuesday
, June 11, 2019, and any
and all adjournments thereof.
Any
stockholder executing a proxy retains the right to revoke it at any
time prior to its being exercised by giving written notice to the
Secretary of the Company.
This Proxy Statement and the accompanying proxy
are first being sent to stockholders of the Company on or about
April 29, 2019.
NOTICE OF ELECTRONIC AVAILABILITY OF PROXY MATERIALS
In accordance with regulations adopted by the
Securities and Exchange Commission, instead of mailing a printed
copy of our proxy materials, including our annual report to
stockholders, to each stockholder of record, we may now furnish
these materials by mail or e-mail. On or about April 29, 2019, we
mailed to our stockholders who have not previously requested to
receive these materials by mail or e-mail a Notice of Internet
Availability of Proxy Materials containing instructions on how to
access this proxy statement and our annual report and to vote
online. The Notice instructs you as to how you may access and
review all of the important information contained in the proxy
materials. The Notice also instructs you as to how you may submit
your proxy on the Internet or by telephone. If you received the
Notice by mail, you will not automatically receive a printed copy
of our proxy materials or annual report unless you follow the
instructions for requesting these materials included in the Notice.
For directions to the Annual Meeting, please contact
Robert
Scorso at (703) 349-2577
.
VOTING PROCEDURES AND SECURITIES
Your Vote is Very Important
Whether
or not you plan to attend the meeting, please take the time to vote
your shares as soon as possible. You may submit your vote by
completing, signing, dating and returning the proxy card by mail.
We encourage you to vote via the Internet or by telephone. These
methods save us significant postage and processing
charges.
1
Vote Required, Abstentions and Broker Non-Votes
Shares
of WidePoint common stock represented by proxy will be voted
according to the instructions, if any, given in the proxy. Unless
otherwise instructed, the person or persons named in the proxy will
vote (1) FOR the election of the nominees for director listed
herein (or a substitute in the event a nominee is unavailable for
election); (2) FOR approval of the advisory resolution on executive
compensation; (3) FOR THREE YEARS with respect to the frequency of
future advisory votes on executive compensation; (4) FOR the
ratification of the selection of Moss Adams LLP as the independent
accountants for the Company for the current fiscal year; and (5) in
their discretion, with respect to such other business as may
properly come before the meeting. The Board of Directors has
designated Jin Kang and Jason Holloway, and each or any of them, as
proxies to vote the shares of common stock solicited on its
behalf.
Votes
cast by proxy or in person at the Annual Meeting will be tabulated
by an inspector of election appointed by the Company for the
meeting. A quorum of stockholders is necessary to hold a valid
meeting. A quorum will be present if at least a majority of the
outstanding shares of common stock of the Company entitled to vote
are present at the Annual Meeting in person or by proxy. A director
is elected by a plurality of the votes cast at the Annual Meeting,
which means that the nominee who receives the highest number of
properly executed votes will be elected as a director, even if the
nominee did not receive a majority of the votes cast. The approval
of the advisory resolution on executive compensation and the
ratification of the appointment of Moss Adams LLP as the
Company’s independent accountants require the affirmative
vote of the majority of the votes present, in person or by proxy,
and voting at the Annual Meeting.
The
advisory resolution on executive compensation, commonly referred to
as a "say-on-pay" resolution, is non-binding on the Board of
Directors. Although the vote is non-binding, the Board of Directors
and the Compensation Committee will review the voting results in
connection with their ongoing evaluation of the Company's
compensation program. The advisory vote on the frequency of future
advisory votes on executive compensation is also non-binding on the
Board of Directors. Stockholders will be able to specify one of
four choices for this proposal on the proxy card: one year, two
years, three years or abstain. The choice receiving the most number
of votes will be the stockholders’ selection. Notwithstanding
the Board's recommendation and the outcome of the stockholder vote,
the Board may in the future decide to conduct advisory votes on a
more or less frequent basis and may vary its practice based on
factors such as discussions with stockholders and the adoption of
material changes to compensation programs.
The inspector of election will treat abstentions
as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes
of determining the approval of any matter submitted to the
stockholders for a vote. Your broker, bank or other nominee is
permitted to vote your shares on the ratification of the
appointment of
Moss Adams LLP
as our independent auditor without receiving
voting instructions from you. All other items are
"non-discretionary" items. This means brokerage firms that have not
received voting instructions from their clients on any proposal
other than the appointment of Moss Adams LLP will not be permitted
to vote such shares for any other matters at the Annual Meeting.
These "broker non-votes" will be included in the calculation of the
number of votes considered to be present at the Annual Meeting for
purposes of determining a quorum, but will not be considered in
determining the number of votes necessary for approval and will
have no effect on the outcome of any of the proposals because in
tabulating the voting results, shares that constitute broker
non-votes are not considered votes cast on that
proposal.
2
The
cost of soliciting proxies will be borne by the Company. Certain of
our officers and other employees may, without compensation other
than their regular compensation, solicit proxies by further mailing
or personal conversations, or by telephone, facsimile or other
electronic means. We will also, upon request, reimburse brokers and
other persons holding stock in their names, or in the names of
nominees, for their reasonable out-of-pocket expenses for
forwarding proxy materials to the beneficial owners of our stock
and to obtain proxies.
Shares Outstanding
As of April 22, 2019, the record date for
determining stockholders entitled to vote at the Annual Meeting, a
total of 84,112,446 shares of common stock of the Company, par
value $.001 per share, which is the only class of voting securities
of the Company, were issued and outstanding. All holders of record
of the common stock as of the close of business on April 22, 2019
are entitled to one vote for each share held when voting at the
Annual Meeting, or any adjournment thereof, upon the matters listed
in the Notice of Annual Meeting. Cumulative voting is not
permitted.
Other Business
The
Board knows of no other matters to be presented for stockholder
action at the meeting. If other matters are properly brought before
the meeting, the persons named as proxies in the accompanying proxy
card intend to vote the shares represented by them in accordance
with their best judgment.
3
PROPOSAL ONE – ELECTION OF DIRECTORS
The Company’s Board is classified into three
classes of directors, with one class of directors being elected at
each annual meeting of stockholders of the Company to serve for a
term of three years or until the earlier expiration of the term of
their class of directors or until their successors are elected and
take office as provided below. To maintain the staggered terms of
election of directors, stockholders of the Company are voting upon
the election of
two
director nominees as Class I directors to serve for a three-year
period until the Annual Meeting of Stockholders in the year 2022
and one director nominee named in the attached proxy statement as a
Class III director to serve until the Annual Meeting of
Stockholders in the year 2021
.
The
Bylaws of the Company provide that the Board will determine the
number of directors to serve on the Board. The Company’s
Board presently consists of six members (three Class III directors,
two Class I directors and one Class II director) with no vacancies.
The Board did not re-nominate Morton Taubman for director as a
result of his desire to retire from the Board. Accordingly, Mr.
Taubman’s term will expire at the Annual Meeting of
Stockholders. Mr. Taubman has been a valuable member of the
Company’s Board of Directors and the Company wishes him the
best in his future endeavors. Each of the director nominees are
currently serving as a member of the Board. Assuming the election
of each of the director nominees, the Board will consist of five
members (two Class I and Class III directors and one Class II
director) with no vacancies.
On
July 3, 2018, we entered into an appointment and standstill
agreement with our significant stockholder, Nokomis Capital, L.L.C.
(“Nokomis”). The appointment and standstill agreement,
among other things, provided that (i) Nokomis shall be entitled to
appoint one qualified independent individual as a director and we
shall nominate such appointee for election at the 2019 Annual
Meeting of Stockholders and (ii) we and Nokomis shall mutually
select a qualified independent individual to serve as a director
and we shall nominate such appointee for election at the 2019
Annual Meeting of Stockholders. On February 7, 2019 and in
accordance with the terms of the appointment and standstill
agreement, the Board appointed Richard L. Todaro and Julia A. Bowen
as directors of the Company, with Mr. Todaro as the appointee by
Nokomis and Ms. Bowen as the mutual appointee. As part of the
agreement, Nokomis, among other things, agreed to customary
standstill commitments during the term of the Agreement and to vote
its shares in favor of the Board's recommendations regarding
director elections and other matters to be submitted to a vote at
the 2018 and 2019 Annual Meetings of Stockholders. The term of the
agreement expires on the date that is thirty days prior to the
deadline related to nominations by stockholders of directors for
election at the Company’s 2020 Annual Meeting of
Stockholders.
Previously,
on July 20, 2017, the Company entered into a prior appointment and
standstill agreement with Nokomis pursuant to which, among other
things, the Company agreed to appoint Alan Howe (a former director)
and Philip Richter as Class II directors of the
Company.
4
Proxies
will be voted at the Annual Meeting, unless authority is withheld,
FOR the election of the persons named below. The Company does not
contemplate that the persons named below will be unable or will
decline to serve; however, if any nominee is unable or declines to
serve, the persons named in the accompanying proxy will vote for a
substitute, or substitutes, in their discretion.
Class I Director Nominees For a Term That Will Expire at the 2021
Annual Meeting of Stockholders:
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Name
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Age
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Position
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Jin Kang
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54
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Director and Chief Executive Officer
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Julia A. Bowen
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52
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Director
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Jin Kang
has served as a director and as our Chief
Executive Officer and President since his appointment on July 31,
2017. Prior to his appointment as Chief Executive Officer and
President of the Company, Mr. Kang served as Executive Vice
President and Chief Operations Officer of WidePoint since June 30,
2012. Mr. Kang has also served as the Chief Executive Officer and
President of WidePoint Integrated Solutions Corp., a wholly-owned
subsidiary of the Company, since our acquisition of WidePoint
Integrated Solutions Corp. formerly, iSYS, LLC on January 4, 2008.
Mr. Kang founded WidePoint Integrated Solutions Corp. in 1999 and
has managed the company since its inception. Mr. Kang has over 32
years of professional experience in both public and private
sectors. Prior to founding, iSYS, LLC (now WidePoint Integrated
Solutions Corp.), Mr. Kang held various senior management positions
at large technology companies to include, Northrop Grumman, Science
Applications International Corporation (SAIC), ManTech, and
Atlantic Research Corporation. Mr Kang managed marquee programs for
the federal government contracts such as the Combined DNA Index
System (CODIS) for the Federal Bureau of Investigation and Defense
Medical Information Systems/Systems Integration, Design
Development, Operations and Maintenance Services (D/SIDDOMS) Mr.
Kang received a Bachelor and Master’s Degrees in Computer
Science and Computer Systems Management from the University of
Maryland.
Mr. Kang brings to the Board years of experience in the Federal
Government Information Technology Services field. This experience,
as well as his experience with the Company, led the Board to
conclude that he should serve as a director of the
Company.
Julia A. Bowen
has served as a
director since her appointment on February 9, 2019 pursuant to an
appointment and standstill agreement with Nokomis. Ms. Bowen is
currently senior vice president, general counsel and corporate
secretary of The MITRE Corporation, where she advises on all legal
matters, including cybersecurity, contracting, international and
global presence, intellectual property, HR, and national security.
Previously, Bowen held several senior positions in the private
sector, including chief legal counsel of DHL Global Mail, vice
president, general counsel and secretary of QuadraMed Corporation,
and vice president, general counsel and secretary of TREEV. Bowen
is an active member of industry, academic and professional groups,
including the Executive Circle Advisory Board of the Northern
Virginia Technology Council, the Board of Visitors of The Catholic
University of America’s Columbus School of Law and the
Association of Corporate Counsel. Bowen graduated from The Catholic
University of America, where she received her bachelor’s and
law degrees. She is admitted to the bars of Maryland, the District
of Columbia and Virginia.
Ms. Bowen brings to the Board extensive knowledge of legal and
corporate governance experience. This experience, as well as her
independence from the Company, led the Board to conclude that she
should serve as a director of the Company.
5
Class III Director Nominee For a Term That Will Expire at the 2021
Annual Meeting of Stockholders:
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Name
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Age
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Position
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Richard
L. Todaro
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46
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Director
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Richard L. Todaro
has served as
a director since his appointment on February 9, 2019 pursuant to an
appointment and standstill agreement with Nokomis. Mr. Todaro spent
20 years at Kennedy Capital Management, a St. Louis-based, boutique
investment firm with more than $5 billion of assets under
management, where he held several positions, including portfolio
manager and a member of its board of directors. Prior to Kennedy
Capital Management, Todaro served as an advisory board member of
the University of Missouri – St. Louis Finance Department as
well as Gateway Greening. He has also served as a director on
public company boards, including Telenav (Nasdaq: TNAV) from 2015
to 2016 and B. Riley Financial (Nasdaq: RILY) from 2014 to 2018.
Todaro served in the Air National Guard as a staff sergeant from
1992 to 1998. Todaro received a BSBA in Finance from the University
of Missouri – St. Louis and a Master of Finance from Saint
Louis University. Todaro is a Chartered Financial Analyst (CFA),
and passed the Uniform Investment Advisor Law
examination.
6
Mr. Todaro brings to the board financial and capital market
expertise. This experience, as well as his independence from the
Company, led the Board to conclude that he should continue to serve
as a director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF THE ABOVE NOMINEES AS
DIRECTORS OF THE COMPANY.
Directors Not Being Elected in 2019:
The
directors whose terms are not expiring this year are listed below.
They will continue to serve as directors for the remainder of their
terms or until their respective successors are elected and
qualified, or until their earlier death, resignation or removal.
Information regarding each of such directors is provided
below.
Class II Director With Term That Will Expire at the 2020 Annual
Meeting of Stockholders:
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Name
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Age
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Position
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Philip
Richter
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48
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Director
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7
Philip Richter
has served as a
director since his appointment on July 20, 2017 pursuant to an
appointment and standstill agreement with Nokomis. Mr. Richter is
President and co-founder of New York City based Hollow Brook Wealth
Management, LLC, which was formed in 1999. Hollow Brook is an SEC
registered independent wealth management firm that manages and
advises capital on behalf of families, foundations, endowments,
pension plans, and individuals. Prior to Hollow Brook, Mr. Richter
was an equity research analyst at Ingalls & Snyder, LLC, an
employee owned investment manager, from 2004-2007, and a managing
director of Knickerbocker, LLC, a private investment management
family office, from 1998-2003, where he advised an alternative
investment portfolio in private equity, venture capital and
alternative investments. Earlier he was director of strategic
planning for Beneficial Technology Corporation from 1996 to 1998
and a branch manager of consumer finance for Beneficial Management
Corporation from 1994 to 1996. Mr. Richter has served as a trustee
of the Pray Family Foundation since August 2013. He has also been
the Treasurer of the United States Equestrian Team Foundation since
January 2012 and has been on the Board of Directors of the Lake
Placid Horse Show since January 2008, the Hampton Classic Horse
Show since May 2009, and the United States Equestrian Federation
since June 2016. Mr. Richter received a B.A. in History at Boston
College and holds an MBA from New York University’s Stern
School of Business.
Mr. Richter brings to the Board extensive experience in capital
management, venture capital and the equity markets. This
experience, as well as his independence from the Company, led the
Board to conclude that he should serve as a director of the
Company.
Class III Director With a Term That Will Expire at the 2021 Annual
Meeting of Stockholders:
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Name
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Age
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Position
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Otto
Guenther
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77
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Chairman
of the Board of Directors
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Lieutenant General (Ret.) Otto J. Guenther
has served as a director since his appointment on
August 15, 2007 and is currently the Chairman of the Board of
Directors. He joined the Board after a distinguished 34-year
military career, including serving as the Army’s first chief
information officer, followed by nearly a decade of exceptional
leadership within the federal information technology industry. His
key assignments included the following: commanding general for Fort
Monmouth, NJ, and the Communications Electronics Command; program
executive officer for the Army’s tactical communications
equipment; project manager for the Tactical Automated Data
Distribution System; and director for the Defense Federal
Acquisition Regulatory Council. General Guenther retired from
Northrop Grumman Mission Systems, where he served as the Sector
Vice President and General Manager of Tactical Systems Division.
While there, he oversaw battlefield digitization, command and
control, and system engineering activities for the U.S. Army. Under
his leadership, the division grew to approximately 1,650 employees
across several locations and completed over $700 million in
acquisitions. Previously General Guenther was general manager of
Computer Associates International’s Federal Systems Group, a
$300 million operation providing IT products and services to the
federal market area. General Guenther was awarded several honors by
the U.S. Army, including the Distinguished Service Medal, Legion of
Merit (Oak Leaf Cluster), Defense Superior Service Medal (Oak Leaf
Cluster), Joint Service Medal, and Army Commendation Medal.
Recognized for his work within the industry, he also received
several Armed Forces Communications and Electronics Association
awards and was inducted into the Government Computer News Hall of
Fame. Currently, General Guenther sits on two educational
foundations, AFCEA Education Foundation and Aurora Foundation, and
since 2006 has been an active trustee at McDaniel College. General
Guenther received a Bachelor of Science Degree in Economics from
Western Maryland College, now called McDaniel College, and a
Master’s Degree in Procurement and Contracting from the
Florida Institute of Technology.
General Guenther brings to the Board extensive knowledge of the
federal marketplace as a result of a career that has spanned both
military and informational technology industries, as well as over
30 years of acquisition and procurement experience. In addition,
General Guenther’s knowledge of federal infrastructure as
well as experience in successful business development and board
service is particularly valuable to the Company. This experience,
as well as his independence from the Company and his prior
performance as a Board member, led the Board to conclude that he
should continue to serve as a director of the Company.
8
BOARD MEETINGS – COMMITTEES OF THE BOARD
The
Board of Directors held nine (9) meetings during 2018. During this
period, all of the directors attended or participated in more than
75% of the aggregate of the total number of meetings of the Board
of Directors and the total number of meetings held by all
Committees of the Board of Directors on which each such director
served.
The
Board currently has the following standing Committees: Audit;
Corporate Governance and Nominating, Mergers and Acquisitions; and
Compensation. The current composition of the Board of directors and
standing committees of the Board of Directors is summarized
below:
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Name
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Board Class
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Term
End
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Board of Directors
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Audit Committee
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Corporate Governance and Nominating Committee
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Mergers and Acquisitions Committee
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Compensation Committee
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Otto J. Guenther
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III
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2021
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X*
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X
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X
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X
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X
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Julia A. Bowen
|
III
|
2021
|
X
|
X
|
X
|
X
|
X
|
|
Richard L. Todaro
|
III
|
2021
|
X
|
X
|
X
|
|
|
|
Philip Richter
|
II
|
2020
|
X
|
|
|
X
|
X
|
|
Morton S. Taubman
|
I
|
2019
|
X
|
X
|
|
X
|
|
|
Jin H. Kang
|
I
|
2019
|
X**
|
|
|
|
|
*Individual holds the chairman position.
**Individual is not an independent member of the board of
director.
The
Audit, Corporate Governance and Nominating, and Compensation
Committees consist entirely of independent, non-employee directors
in accordance with the listing standards of the NYSE American.
Membership and principal responsibilities of the Board’s
Committees are described below. Each Committee of the Board has
adopted a charter and each such charter is available free of charge
on our website, www.widepoint.com, or by writing to WidePoint
Corporation, 11250 Waples Mill Road, South Tower, Suite 210,
Fairfax, Virginia 22030, c/o Corporate Secretary.
9
Audit
Committee
The
Audit Committee met four (4) times in 2018. The Audit Committee has
been established in accordance with Section 3(a)(58)(A) of the
Securities and Exchange Act of 1934. The primary functions of the
Audit Committee are to: appoint (subject to stockholder approval),
and be directly responsible for the compensation, retention and
oversight of, the firm that will serve as the Company’s
independent accountants to audit our financial statements and to
perform services related to the audit (including the resolution of
disagreements between management and the independent accountants
regarding financial reporting); review the scope and results of the
audit with the independent accountants; review with management and
the independent accountants, prior to the filing thereof, the
annual and interim financial results (including Management’s
Discussion and Analysis) to be included in our Forms 10-K and 10-Q,
respectively; consider the adequacy and effectiveness of our
internal accounting controls and auditing procedures; review,
approve and thereby establish procedures for the receipt, retention
and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and
for the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; review and
approve related person transactions in accordance with the policies
and procedures of the Company; and consider the accountants’
independence and establish policies and procedures for pre-approval
of all audit and non-audit services provided to WidePoint by the
independent accountants who audit its financial statements. At each
meeting, Audit Committee members may meet privately with
representatives of Moss Adams LLP, our independent accountants, and
with the Company’s Executive Vice President and Chief
Financial Officer.
The
Board has determined that each member of the Audit Committee meet
the definition of "independent director" for purposes of serving on
an audit committee under applicable rules of the Securities and
Exchange Commission and the listing standards of the NYSE American.
In addition, the Board has determined that Mr. Taubman and Mr.
Todaro each satisfies the “financially sophisticated”
requirements set forth in the NYSE American Company Guide, and has
designated each of Mr. Taubman and Mr. Todaro as the “audit
committee financial expert,” as such term is defined in the
rules and regulations of the SEC.
Corporate Governance and Nominating
Committee
The
Corporate Governance and Nominating Committee met one (1) time in
2018. The primary functions of this Committee are to: identify
individuals qualified to become Board members and recommend to the
Board the nominees for election to the Board at the next Annual
Meeting of Stockholders; review annually and recommend changes to
the Compan
y’s Corporate Governance Guidelines; lead
the Board in its annual review of the performance of the Board and
its committees; review policies and make recommendations to the
Board concerning the size and composition of the Board, the
qualifications and criteria for election to the Board, retirement
from the Board, compensation and benefits of non-employee
directors, the conduct of business between WidePoint and any person
or entity affiliated with a director, and the structure and
composition of the Board’s Committees; review the
Company’s policies and programs relating to compliance with
its Code of Business Conduct and such other matters as may be
brought to the attention of the Committee regarding
WidePoint’s role as a responsible corporate citizen. See
“Identification and Evaluation of Director Candidates”
and “Director Compensation” in this proxy
statement.
10
Compensation Committee
The
Compensation Committee met two (2) times in 2018. The primary
functions of the Compensation Committee are to: evaluate and
approve executive compensation plans, policies and programs,
including review of relevant corporate and individual goals and
objectives, as submitted by the Chief Executive Officer; evaluate
the Chief Executive Officer’s performance relative to
established goals and objectives and, together with the other
independent directors, determine and approve the Chief Executive
Officer’s compensation level based on this evaluation; review
and approve the annual salary and other remuneration of all other
officers; review the management development program, including
executive succession plans; review with management, prior to the
filing thereof, the executive compensation disclosure included in
this proxy statement; recommend individuals for election as
officers; and review or take such other action as may be required
in connection with the bonus, stock and other benefit plans of
WidePoint and its subsidiaries.
Mergers and Acquisitions Committee
The
Mergers and Acquisitions Committee met two (2) times in 2018. The
primary functions of this Committee are to: review and analyze
transaction opportunities brought to its attention by executive
senior management or other sources including industry
experts.
DIRECTOR INDEPENDENCE
The
listing standards of the NYSE American require that our Board be
comprised of a majority of "independent directors" and that the
Audit Committee, Compensation Committee and Corporate Governance
and Nominating Committee each be comprised solely of "independent
directors," as defined under
the
listing standards of the NYSE American
.
The
Company’s Corporate Governance and Nominating Committee
conducts an annual review of the independence of the members of the
Board and its Committees and reports its findings to the full Board
of Directors. Based on the report and recommendation of the
Corporate Governance Committee, the Board has determined that each
of the Company’s non-employee directors satisfy the
independence criteria set forth in
the
listing standards of the NYSE American
and Securities and
Exchange Commission rules.
11
IDENTIFICATION AND EVALUATION OF DIRECTOR CANDIDATES
The
Corporate Governance and Nominating Committee is charged with
seeking individuals qualified to become directors and recommending
candidates for all directorships to the full Board of Directors.
The Committee considers director candidates in anticipation of
upcoming director elections and other potential or expected Board
vacancies.
The
Committee considers director candidates suggested by members of the
Committee, other directors, senior management and
stockholders.
Director candidates
are reviewed by the Committee based on the needs of the Board and
the Company’s various constituencies, their relative skills,
characteristics and age, and against the following qualities and
skills that are considered desirable for Board membership:
exemplification of the highest standards of personal and
professional integrity; independence from management under
applicable securities laws, listing standards, and the
Company’s Corporate Governance Principles; experience and
industry and educational background; potential contribution to the
composition, diversity and culture of the Board; and ability and
willingness to constructively challenge management through active
participation in Board and committee meetings and to otherwise
devote sufficient time to Board duties.
The
Committee’s charter includes diversity as one of the criteria
used to evaluate director candidates. The Corporate Governance and
Nominating Committee may consider diversity in its broadest sense
when evaluating candidates. Though we do not have a formal policy
regarding how diversity will be considered in identifying potential
director nominees, our Corporate Governance Guidelines direct that
the evaluation of nominees should include (but not be limited to)
an assessment of whether a nominee would provide the Board with a
diversity of viewpoints, backgrounds, experiences, and other
demographics.
In
evaluating the needs of the Board, the Committee considers the
qualifications of sitting directors and consults with other members
of the Board, the Chief Executive Officer and other members of
senior management. All recommended candidates must possess the
requisite personal and professional integrity, meet any required
independence standards, and be willing and able to constructively
participate in, and contribute to, Board and committee meetings.
Additionally, the Committee conducts regular reviews of current
directors whose terms are nearing expiration, but who may be
proposed for re-election, in light of the considerations described
above and their past contributions to the Board.
The
Corporate Governance and Nominating Committee has adopted a policy
pursuant to which a stockholder or a group of stockholders that
beneficially owned at least 5% of the Company’s outstanding
shares of common stock for at least two years as of the date of
recommendation may recommend a director candidate that the
Committee will consider when there is a vacancy on the Board either
as a result of a director resignation or an increase in the size of
the Board. Such recommendation must be made in writing addressed to
the Chairman of the Corporate Governance and Nominating Committee
at the Company’s principal executive offices and must be
received by the Chairman at least 120 days prior to the anniversary
date of the release of the prior year’s proxy
statement.
12
Although the
Committee has not formulated any specific minimum qualifications
that the Committee believes must be met by a nominee that the
Committee recommends to the Board, the factors it will take into
account will include strength of character, mature judgment, career
specialization, relevant technical skills or financial acumen,
diversity of viewpoint and industry knowledge. There will be no
differences between the manner in which the Committee evaluates a
nominee recommended by a stockholder and the manner in which the
Committee evaluates nominees recommended by other
persons.
The
Company did not receive in a timely manner, in accordance with the
Securities and Exchange Commission’s requirements, any
recommendation of a director candidate from a stockholder, or group
of stockholders that beneficially owned at least 5% of the
Company’s outstanding shares of common stock for at least two
years as of the date of recommendation other than the appointment
and standstill agreements with Nokomis.
PROCESS FOR COMMUNICATING WITH BOARD MEMBERS
Interested parties
may communicate directly with the Board, or the presiding director
for an upcoming meeting or the non-employee directors as a group,
by writing to WidePoint Corporation, 11250 Waples Mill Road, South
Tower, Suite 210, Fairfax, Virginia 22030, c/o Corporate Secretary.
Communications may also be sent to individual directors at the
above address.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
The
Company has adopted a policy that each director should attempt to
attend and/or be available via online access or phone for each
Annual Meeting of Stockholders. All members of the Board attended
last year’s Annual Meeting of Stockholders.
BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT
Our
Board of Directors does not have a policy on whether or not the
roles of Chief Executive Officer and Chairman should be separate.
Our board reserves the right to assign the responsibilities of the
Chief Executive Officer and Chairman in different individuals or in
the same individual if, in the Board’s judgment, a combined
Chief Executive Officer and Chairman position is determined to be
in the best interest of our Company. In the circumstance where the
responsibilities of the Chief Executive Officer and Chairman are
vested in the same individual or in other circumstances when deemed
appropriate, the Board will designate a lead independent director
from among the independent directors to preside at the meetings of
the non-employee director executive sessions.
The
positions of Chief Executive Officer and Chairman have been
separate since Steve L. Komar retired as our Chief Executive
Officer in January 2017. In connection with the retirement of Steve
L. Komar from our Board of Directors, the Board selected Otto J.
Guenther as the non-executive Chairman of the Board in October
2017. Our Board retains the authority to modify this structure to
best address our Company’s unique circumstances as and when
appropriate.
13
Non-management
members of the Board of Directors conduct at least two regularly
scheduled meetings per year without members of management being
present. Following an executive session of non-employee directors,
the Presiding Independent Director may act as a liaison between the
non-employee directors and the Chairman, provide the Chairman with
input regarding agenda items for Board of Directors and Committee
meetings, and coordinate with the Chairman regarding information to
be provided to the non-employee directors in performing their
duties.
The
Board oversees the management of the risks inherent in the
operation of the Company’s business. This is accomplished
principally through the Audit Committee. Additionally, the
Compensation Committee is responsible for overseeing the assessment
of risks associated with the Company’s compensation policies
and programs. Each of these committees receives and discusses
reports regularly with members of management who are responsible
for applicable day-to-day risk management functions of the Company,
and reports regularly to the Board. The Board’s, the Audit
Committee’s and the Compensation Committee’s respective
roles in our risk oversight process have not affected our Board
leadership structure.
DIRECTOR COMPENSATION
In
December 2017, the Compensation Committee of the Board of Directors
authorized a board member compensation study by Compensia, an
independent compensation consultant, to evaluate whether the
current annual retainer reflects market compensation for directors
of similarly-sized organizations. In order to attract and retain
qualified directors, the Compensation Committee of the Board of
Directors recommended, and the full Board of Directors approved, an
increase in the annual retainer per board member to include $20,000
in cash and $50,000 in restricted stock that vests at the annual
meeting of stockholders in 2018. The following table sets forth
director compensation for the year ended December 31,
2018:
|
Director Name
|
Fees Earned or Paid
|
Stock Awards
($) (1)
|
All Other Compensation ($)
|
Total
Annual Board Retainer
|
|
Otto
J. Guenther
|
$
18,750
|
$
50,000
|
$
-
|
$
68,750
|
|
James
Ritter
|
18,750
|
50,000
|
-
|
68,750
|
|
George
Norwood
|
18,750
|
50,000
|
-
|
68,750
|
|
Philip
Richter
|
18,750
|
50,000
|
-
|
68,750
|
|
Alan
B. Howe*
|
18,750
|
50,000
|
-
|
68,750
|
|
Morton
S. Taubman
|
18,750
|
50,000
|
-
|
68,750
|
(1)
Amount represents the grant date fair value calculated pursuant to
ASC Topic 718. Additional information about the assumptions used
when valuing equity awards is set forth in the notes the
consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2018, filed with the SEC
on March 22, 2019.
*
Former member of the Board of Directors.
14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company’s officers and directors, and persons who own
more than 10% of a registered class of the Company’s equity
securities, to file reports of securities ownership and changes in
such ownership with the Securities and Exchange Commission.
Statements of Changes in Beneficial Ownership of Securities on Form
4 are generally required to be filed before the end of the second
business day following the day on which the change in beneficial
ownership occurred. Based on the Company's review of Forms 3 and 4
filed during 2018, all such Forms 3 and Forms 4 were filed on a
timely basis except for one late Form 4 filed by Jin Kang reporting
the purchase of shares of common stock.
15
EXECUTIVE OFFICERS
The
Company’s executive officers as of April 22, 2019 are as
follows:
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
Jin
Kang
|
|
54
|
|
Chief
Executive Officer, President and Director
|
|
|
|
|
|
|
|
Jason
Holloway
|
|
50
|
|
Executive
Vice President, Chief Sales and Marketing Officer, and President of
WidePoint Cybersecurity Solutions Corporation
|
|
|
|
|
|
|
|
Kito
Mussa
|
|
42
|
|
Executive
Vice President and Chief Financial Officer (until May 15,
2019)
|
|
|
|
|
|
|
|
Ian
Sparling
|
|
53
|
|
Interim
Chief Financial Officer (effective May 15, 2019) and CEO of Softex
Communications Ltd.
|
For information with respect to
Jin
Kang
, please see the information about
the members of our Board of Directors on the preceding pages. There
are no family relationships among any of our executive officers or
directors.
Jason Holloway
has
served as the Chief Executive Officer and President of
WidePoint’s wholly-owned subsidiary, WidePoint Cybersecurity
Solutions Corporation, since July 1, 2017 and has served as the
Company’s Executive Vice President and Chief Sales and
Marketing Officer since May 2016. Mr. Holloway has been in the IT
industry for more than 25 years, holding senior executive positions
in multiple IT organizations, with a primary focus on business
development, sales, and management to profitability. Mr. Holloway
has industry vertical experience in Government, Technology,
Finance, Transportation, Health Care, Entertainment, and
Manufacturing. Mr. Holloway co-founded Nexcentri, an IT provider
for the Credit Union industry, in 2001 and served as president and
CEO until 2013. At Nexcentri, working with key vendor partners
including Microsoft, First Data, and HP, he developed and
implemented three successful financial services software products
and was recognized as the first Credit Union service organization
to successfully conduct business internationally. Prior to
Nexcentri, he was president and CEO of Networked Knowledge Systems
(NKS), a global Linux security managed service company where he
increased annual revenue more than 800% in five years, servicing
clients such as IBM and PwC, and making NKS an Open Source Managed
Security industry leader. In addition, Mr. Holloway has held
several key executive roles within technology start-up companies
that were being positioned for an IPO.
Kito
Mussa
became the
Company’s Executive Vice President and Chief Financial
Officer since his appointment on January 2, 2018 after serving as
Interim Chief Financial Officer between October 2017 and December
2017. Prior to being appointed as the Chief Financial Officer, Mr.
Mussa served as the Vice President and Controller for more than
five years and played a key role driving changes in a number of
areas throughout the Company. Mr. Mussa has strong expertise in the
Company’s industry as well as deep expertise in other
industries such as information technology, healthcare, consumer
finance and professional services. Mr. Mussa has more than 19 years
of diverse experience overseeing a number of key business areas
including financial management, acquisition due diligence,
financial systems, financial and regulatory reporting, employee
development and human resource management. Prior to joining the
Company, Mr. Mussa spent many years as a CPA in public accounting
and provided audit, litigation support, forensic accounting,
business valuation and other management advisory services to
publicly-traded and privately held corporations. While in public
accounting, Mr. Mussa worked at both Moss Adams LLP and
PricewaterhouseCoopers LLP. Mr. Mussa also held the role of SEC
Director of Financial Reporting at American Express where he
implemented and oversaw internal control over financial reporting,
prepared SEC filings and registration statements and automated
preparation of financial statements and disclosures. Mr. Mussa is a
licensed certified public accountant in Washington and Virginia and
holds several globally recognized credentials in financial
management. Mr. Mussa holds Bachelor’s Degrees in Accounting
and Finance from Seattle University.
On April 12, 2019, we accepted
Mr. Mussa’s resignation as the Company’s Chief
Financial Officer and Executive Vice President to pursue other
opportunities effective May 15, 2019. Mr. Mussa’s resignation
was not a result of any disagreement with the Company. The Company
intends to conduct a search for a new Chief Financial
Officer.
Ian
Sparling
was appointed to the
position of interim Chief Financial Officer effective May 15, 2019
in connection with Mr. Mussa’s resignation. Mr. Sparling has
served as the President and CEO of the Company’s subsidiary,
Soft-ex Communications Ltd (“SCL”), since 2006. Prior
to his role as CEO of SCL, Mr. Sparling held the positions of Chief
Commercial Officer and CFO at SCL. He was also Group Financial
Controller at a large public quoted (LSE) European Industrial
Holding Company and worked in assurance for a number of years with
PricewaterhouseCoopers. In addition, Mr. Sparling has acted as a
Board Advisor to a number of internationally traded Irish
companies. Mr. Sparling is a Fellow of the Institute of Chartered
Accountants, holds a Bachelor of Commerce degree from University
College Dublin and a post graduate in Professional Finance from the
Smurfit Business School. He also holds a Diploma in International
Selling from Dublin Institute of Technology and is currently
studying for a Diploma in Corporate Governance with the Institute
of Directors (UK).
16
PRINCIPAL STOCKHOLDERS
Security Ownership of Directors and Executive
Officer
s
In
general, “beneficial ownership” includes those shares a
director or executive officer has the power to vote or transfer,
except as otherwise noted, and shares underlying stock options that
are exercisable currently or within 60 days. The calculation of the
percentage of outstanding shares is based on 84,112,446 shares
outstanding as of April 22, 2019. The mailing address for each of
our directors, director nominees and officers is 11250 Waples Mill
Road, South Tower, Suite 210, Fairfax, Virginia 22030.
The
following tables set forth the number of shares of our common stock
beneficially owned as of April 22, 2019 by each director, director
nominee, executive officer and beneficial owner of more than 5% of
the outstanding shares of the common stock:
|
Directors,
Nominees and Executive Officers
|
Direct Common Stock
Owned
|
Restricted Stock
Owned
|
Stock Options Exercisable
(1)
|
Number of Shares of Common Stock
(1)
|
Percent of Common Stock Outstanding
(1)
|
|
|
|
|
|
|
|
|
Otto Guenther (2)
|
208,936
|
-
|
50,000
|
258,936
|
*
|
|
Morton Taubman (2)
|
-
|
-
|
50,000
|
50,000
|
*
|
|
Philip Richter (2)
|
177,683
|
-
|
50,000
|
227,683
|
*
|
|
Jin Kang (3)
|
3,138,674
|
33,330
|
195,000
|
3,333,674
|
3.9
%
|
|
Jason Holloway (4)
|
867,665
|
16,665
|
-
|
867,665
|
1.0
%
|
|
Kito Mussa (5)
|
44,965
|
16,665
|
166,666
|
211,631
|
*
|
|
Julia Bowen (6)
|
-
|
-
|
-
|
-
|
*
|
|
Richard Todaro (6)
|
-
|
-
|
-
|
-
|
*
|
|
All directors and officers as a group (8 persons)
(7)
|
4,371,263
|
66,660
|
511,666
|
4,949,589
|
5.9
%
|
__________________________
*Indicates
ownership percentage is less than 1.0%.
(1) Assumes in the case of each stockholder listed
above that all options and/or restricted stock held by such
stockholder that are exercisable currently or vesting within 60
days of
April 22, 2019
were fully exercised or vested by such stockholder, without the
exercise or vesting of any shares of restricted stock or options
held by any other stockholders.
(2) Includes 50,000
earned and exercisable options to purchase shares from the Company
at a price $0.44 per share through June 23, 2022, pursuant to a
stock option granted on June 23, 2017.
(3) Includes (i)
170,000 earned and exercisable options to purchase shares from the
Company at a price of $0.76 per share until March 20, 2020,
pursuant to a stock option granted on March 20, 2013, and (iii)
25,000 earned and exercisable options to purchase shares from the
Company at a price of $1.38 per share until May 8, 2020, pursuant
to a stock option granted on May 8, 2015. Excludes 750,000 unvested
options to purchase shares from the Company at a price of $0.65 per
share until September 27, 2022, pursuant to a stock option granted
on September 27, 2017. Excludes 66,670 shares of unvested
restricted stock and a performance-based equity award of $62,500
earned in 2018 to be granted in 2019.
17
(4) Excludes (i) 500,000 unearned and unexercisable options to
purchase shares from the Company at a price of $0.70 per share
until April 27, 2019, pursuant to a stock option granted on April
26, 2016. Excludes 33,335 shares of unvested restricted stock and a
performance-based equity award of $62,500 earned in 2018 to be
granted in 2019.
(5)
Includes (i) 50,000 earned and exercisable options to purchase
shares from the Company at a price of $0.46 per share until January
31, 2020, pursuant to a stock option granted on January 31, 2015,
(ii) 50,000 earned and exercisable options to purchase shares from
the Company at a price of $0.68 per share until April 22, 2021,
pursuant to a stock option grant of 100,000 options awarded on
April 22, 2016, and (iii) 16,666 earned and exercisable options to
purchase shares from the Company at a price of $0.55 per share
until September 19, 2022, pursuant to a stock option grant of
25,000 options awarded on September 19, 2017. Excludes 33,335
shares of unvested restricted stock.
(6)
Excludes
___
shares
of unvested restricted stock.
(7) Includes the shares referred to as included in notes (2)
through (6) above.
18
Security Ownership of Certain Beneficial Owners (Greater than 5%
Holders)
The following table sets forth beneficial owners of more than 5%
based on 84,112,446 outstanding shares of Common Stock as of
April 22,
2019:
|
|
Number
of
Shares of Common
|
Percent
of
Common
Stock
|
|
|
Names
and Complete Mailing
Address
|
Stock
|
Outstanding
|
|
|
|
|
|
|
|
Nokomis
Capital, L.L.C., and
Brett
Hendrickson
2305 Cedar Springs Rd., Suite
420
Dallas, Texas
75201
|
12,774,251
|
15.2
|
%(1)
|
|
|
|
|
|
(1)
Based
on information provided in Amendment No. 3 Schedule 13D/A filed on
July 6, 2018, Nokomis Capital, L.L.C. is a Texas limited liability
company and Mr. Brett Hendrickson is the principal of Nokomis
Capital, L.L.C. The Schedule 13D relates to shares purchased by
Nokomis Capital through the accounts of certain private funds and
managed accounts (collectively, the “Nokomis
Accounts”). Nokomis Capital serves as the investment adviser
to the Nokomis Accounts and may direct the vote and dispose of the
shares held by the Nokomis Accounts. As the principal of Nokomis
Capital, Mr. Hendrickson may direct the vote and disposition of the
shares held by the Nokomis Accounts. Pursuant to Rule 16a-1, both
Nokomis Capital and Mr. Hendrickson disclaim such beneficial
ownership.
On
July 3, 2018, we entered into an appointment and standstill
agreement with Nokomis. The appointment and standstill agreement,
among other things, provided that (i) Nokomis shall be entitled to
appoint one qualified independent individual as a director and we
shall nominate such appointee for election at the 2019 Annual
Meeting of Stockholders and (ii) we and Nokomis shall mutually
select a qualified independent individual to serve as a director
and we shall nominate such appointee for election at the 2019
Annual Meeting of Stockholders. On February 7, 2019 and in
accordance with the terms of the appointment and standstill
agreement, the Board appointed Richard L. Todaro and Julia A. Bowen
as Class III directors of the Company, with Mr. Todaro as the
appointee by Nokomis and Ms. Bowen as the mutual appointee. Also,
on July 20, 2017, we previously entered into an appointment and
standstill agreement with Nokomis, pursuant to which, among other
things, the Company agreed to immediately appoint Alan Howe (a
former director) and Philip Richter as Class II
directors.
19
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This
compensation discussion and analysis describes the material
elements of compensation awarded to, earned by, or paid to each of
our named executive officers, whom we refer to as our
“NEOs,” during 2018 and describes our policies and
decisions made with respect to the information contained in the
following tables, related footnotes and narrative for 2018. The
NEOs are identified below in the table titled “Summary
Compensation Table.” In this compensation discussion and
analysis, we also describe various actions regarding NEO
compensation take before or after 2018 when we believe it enhances
the understanding of our executive compensation
program.
Overview
of Our Executive Compensation Philosophy and Design
We
believe that a skilled, experienced and dedicated executive and
senior management team is essential to the future performance of
our Company and to building stockholder value. We have sought to
establish competitive compensation programs that enable us to
attract and retain executive officers with these qualities. The
other objectives of our compensation programs for our executive
officers are the following:
■
to motivate our
executive officers to achieve strong financial
performance;
■
to attract and
retain executive officers who we believe have the experience,
temperament, talents and convictions to contribute significantly to
our future success; and
■
to align the
economic interests of our executive officers with the interests of
our stockholders.
Setting
Executive Compensation
Our
compensation committee has primary responsibility for, among other
things, determining our compensation philosophy, evaluating the
performance of our NEOs, setting the compensation and other
benefits of our NEOs, overseeing the Company’s response to
the outcome of the advisory votes of stockholders on executive
compensation, assessing the relative enterprise risk of our
compensation program and administering our equity compensation
plans. The Company’s compensation planning is done annually
for cash based performance goals and in multi-year periods for
equity based performance goal setting.
It is
our Chief Executive Officer’s (CEO) responsibility to provide
recommendations to the Compensation Committee for most compensation
matters related to executive compensation. The recommendations are
based on a general analysis of market standards and trends and an
evaluation of the contribution of each executive officer to the
Company’s performance. Our Compensation Committee considers,
but retains the right to accept, reject or modify such
recommendations and has the right to obtain independent
compensation advice. Neither the Chief Executive Officer nor any
other members of management is present during executive sessions of
the Compensation Committee. The Chief Executive Officer is not
present when decisions with respect to his compensation are made.
Our Board of Directors appoints the members of our compensation
committee and delegates to the compensation committee the direct
responsibility for overseeing the design and administration of our
executive compensation program.
20
We have
not historically utilized a compensation consultant to set the
compensation of our NEOs.
Elements
of Executive Compensation
We
believe the most effective compensation package for our NEOs is one
designed to reward achievement of individual and corporate
objectives, provide for short-term, medium-term and long-term
financial and strategic goals and align the interest of management
with those of the stockholders by providing incentives for
improving stockholder value. Compensation for our NEOs consists of
base salary and an annual bonus opportunity, along with multi-year
accelerated vesting goals associated with either stock option
awards and or stock grant awards. Our annual bonus opportunity is
intended to incentivize the achievement of goals that drive annual
and multi-year performance, while our accelerated stock option and
or stock grant vesting goals are intended to incentivize the
achievement of goals that drive multi-year
performance.
Base Salary.
We pay our NEOs a base
salary to compensate them for services rendered and to provide them
with a steady source of income for living expenses throughout the
year. The fiscal 2018 and projected fiscal 2019 salaries of our
named executive officers and the percentage increases over their
base salaries, are as follows:
|
Name
|
Fiscal 2018
Base Salary
|
Percentage Increase Over Fiscal 2017 Base
Salary
|
Fiscal 2019 Base Salary
|
Percentage Increase Over Fiscal 2018 Base
Salary
|
|
Jin
Kang
|
$
300,000
|
13
%
|
$
325,000
|
8
%
|
|
Kito
Mussa
|
$
200,000
|
11
%
|
$
215,000
|
8
%
|
|
Jason
Holloway
|
$
265,000
|
n/a
|
$
265,000
|
n/a
|
Annual Performance-Based Bonus
Opportunity.
Our performance-based incentive compensation in
recent years has included targets for achieving various levels of
revenue, operating income, and other financial goals and metrics,
along with individual performance assessments that has included
goals in personal professional improvement, team building, and
other individual personal growth goals. The amount of the annual
discretionary performance-based bonus award is based on individual
performance assessments along with the financial performance of the
Company. In 2018, the annual performance-based bonus opportunity
was for up to 100% of a NEOs base salary. Earned awards are payable
50% in cash and 50% in stock awards. In 2018, our NEOs each earned
a $125,000 performance-based bonus due to the Company achieving
certain financial goals.
In
2019, each of our NEOs have a target bonus of 50% of their base
salary with the opportunity to earn a cash bonus of up to 100% of
their base annual salary if they achieve certain financial targets
of cash flows, revenue and adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted
EBITDA).
Equity Awards.
The Company has used
equity grants and awards linked to accelerated vesting goals to
reinforce the alignment of interest of our named executive officers
with those of our stockholders, as the value of the awards granted
thereunder is linked to the value of our Common Stock, which, in
turn, is indirectly attributable to the performance of our
executive officers. In January 2018, we awarded Mr. Kang, Mr.
Holloway, and Mr. Mussa, 100,000 shares, 50,000 shares and 50,000
shares of restricted common stock, respectively, subject to time
and accelerated vesting conditions, including the achievement of
certain financial targets of cash flows, revenue and adjusted
earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA). There were no stock option awards granted during
2018 to our NEOs.
21
The
acceleration of equity awards are generally tied to company
specific performance measures including but not limited to managed
services revenue, Adjusted EBITDA and other triggers that are
deemed to have a significant impact on the financial performance
goals of the Company.
We
believe these cash and equity-based award opportunities reinforce
the alignment of interests of our NEOs with those of our
stockholders as they indirectly influence the performance of the
Company’s common stock. We believe the compensation model
described above for our NEOs motivates our NEOs to expand their
expertise and expand the effectiveness of the Company’s staff
allowing for greater organization efficiencies while improving
Company performance, which drives short-term, medium-term, and
long-term organizational improvement and ultimately value for the
stockholders in the form of better financial and common stock
performance.
Retirement and Other Benefits.
We are
strongly committed to encouraging all employees to save for
retirement. To provide employees with the opportunity to save for
retirement on a tax-deferred basis, we sponsor a defined
contribution 401(k) savings plan. We also provide health, dental,
vision, short term disability insurance and basic life insurance to
our NEOs on the same basis offered to all of our
employees.
22
Summary Compensation Table
The
following table summarizes the compensation paid by us in each of
the last two recently completed fiscal years for our
NEOs:
|
Name
|
|
Year
|
Base
Salary (1)
|
Bonuses
|
Option
Awards (2)
|
Stock
Awards (2)
|
Other Compensation
|
Total Compensation
|
|
Jin
Kang
|
|
2018
|
$
300,000
|
$
62,500
(3)
|
$
-
|
$
130,500
(6)
|
$
-
|
$
493,000
|
|
Chief
Executive Officer,
|
|
2017
|
$
259,607
|
$
-
|
$
298,575
(4)
|
$
-
|
$
-
|
$
558,182
|
|
President and
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason
Holloway
|
|
2018
|
$
265,000
|
$
62,500
(3)
|
$
-
|
$
96,500
(7)
|
$
-
|
$
424,000
|
|
Executive Vice
President,
|
|
2017
|
$
207,920
|
$
-
|
$
-
|
$
-
|
$
-
|
$
207,920
|
|
Chief Sales
and Marketing
|
|
|
|
|
|
|
|
|
|
Officer and
President of
|
|
|
|
|
|
|
|
|
|
WidePoint
Cybersecurity
|
|
|
|
|
|
|
|
|
|
Solutions
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kito
Mussa
|
|
2018
|
$
200,000
|
$
-
|
$
-
|
$
34,000
(8)
|
$
-
|
$
234,000
|
|
Executive Vice
President
|
|
2017
|
$
180,000
|
$
-
|
$
8,407
(5)
|
$
-
|
$
-
|
$
188,407
|
|
and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
(1) Amount represents annual base salary paid to
executive.
(2) Amount represents the grant date fair value calculated pursuant
to ASC Topic 718. Additional information about the assumptions used
when valuing equity awards is set forth in the notes the
consolidated financial statements included
in our Annual
Report on Form 10-K for the year ended December 31, 2018, filed
with the SEC on March 22, 2019
.
(3) Performance-based discretionary award of $125,000, 50% of which
is paid in cash and 50% is paid in stock.
(4) During fiscal 2017 Mr. Kang was granted an equity award of
750,000 options on September 27, 2019 that vest in September 2021,
subject to acceleration if certain performance goals were met as
described in further detail below under the section
“Outstanding Equity Awards”.
(5) During fiscal 2017 Mr. Mussa was granted an equity award of
25,000 options on September 19, 2017.
(6) During fiscal year 2018 Mr. Kang was granted a restricted stock
award of 100,000 shares on January 2, 2018. Also, includes a stock
award of $62,500 earned as a performance-based discretionary award
(to be granted in 2019).
(7) During fiscal year 2018 Mr. Holloway was granted a restricted
stock award of 50,000 shares on January 2, 2018.
Also,
includes a stock award of $62,500 earned as a performance-based
discretionary award (to be granted in 2019).
(8) During fiscal year 2018 Mr. Mussa was granted a restricted
stock award of 50,000 shares on January 2, 2018.
23
Grant
of Plan Based Awards During 2018
During
the year ended December 31, 2018, NEOs were granted equity awards
as summarized below:
|
Name
|
|
Grant
Date
|
|
Date
of Committee Action
|
All Other Stock Awards: Number of Shares of Stock
(#)
|
Grant Date Fair Value of Stock and Option Awards
($)(1)
|
|
Jin
Kang
|
|
1/2/18
|
|
1/2/18
|
100,000
|
$
68,000
|
|
Chief
Executive Officer,
|
|
|
|
|
|
|
|
President and
Director
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Jason
Holloway
|
|
1/2/18
|
|
1/2/18
|
50,000
|
$
34,000
|
|
Executive Vice
President,
|
|
|
|
|
|
|
|
Chief Sales
and Marketing
|
|
|
|
|
|
|
|
Officer and
President of
|
|
|
|
|
|
|
|
WidePoint
Cybersecurity
|
|
|
|
|
|
|
|
Solutions
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Kito
Mussa
|
|
1/2/18
|
|
1/2/18
|
50,000
|
$
34,000
|
|
Executive Vice
President
|
|
|
|
|
|
|
|
and Chief
Financial Officer
|
|
|
|
|
|
|
(1)
Amount represents the grant date fair value calculated pursuant to
ASC Topic 718. Additional information about the assumptions used
when valuing equity awards is set forth in the notes the
consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2018, filed with the SEC
on March 22, 2019.
24
Outstanding Equity Awards at December 31, 2018
The
following table sets forth information on outstanding equity awards
held by NEOs at December 31, 2018:
|
|
Option Awards
|
Stock Awards
|
||||||
|
Name
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option Exercise Price ($)
|
Option Grant Date
|
|
Option Expiration Date
|
Equity
Incentive Plan
Awards:
Unearned
Shares or
other Rights
that have not
Vested (#)
|
Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares or
Rights that
have not
Vested ($)
|
|
Jin
Kang
|
170,000
(1)
|
-
|
$
0.57
|
3/21/13
|
|
3/20/20
|
100,000
(5)
|
$
42,000
|
|
Chief
Executive Officer,
|
25,000
(1)
|
-
|
$
1.38
|
5/8/15
|
|
5/8/20
|
|
|
|
President and
Director
|
-
|
750,000
(2)
|
$
0.65
|
9/7/17
|
|
9/27/22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason
Holloway
|
-
|
500,000
(3)
|
$
0.70
|
4/26/16
|
|
4/26/21
|
50,000
(5)
|
$
21,000
|
|
Executive Vice
President,
|
|
|
|
|
|
|
|
|
|
Chief Sales
and Marketing
|
|
|
|
|
|
|
|
|
|
Officer and
President of
|
|
|
|
|
|
|
|
|
|
WidePoint
Cybersecurity
|
|
|
|
|
|
|
|
|
|
Solutions
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kito
Mussa
|
50,000
(1)
|
-
|
$
0.46
|
1/30/13
|
|
1/30/20
|
50,000
(5)
|
$
21,000
|
|
Executive Vice
President
|
100,000
(1)
|
-
|
$
0.68
|
4/22/16
|
|
4/22/21
|
|
|
|
and Chief
Financial Officer
|
16,667
(4)
|
8,333
|
$
0.55
|
9/19/17
|
|
9/19/22
|
|
|
(1) All
options are fully vested.
(2) All
options vest on September 27, 2021 provided that executive is
employed by the Company. Options are subject to accelerated vesting
of 250,000 options for each financial performance condition met.
Acceleration provisions will be considered achieved when executive:
i) achieves three consecutive quarters of positive earnings before
interest, taxes, depreciation and amortization; ii) thirty percent
revenue growth excluding carrier services; or iii) positive cash
flow for 12 successive months.
(3) All
options vest on April 27, 2019 provided that executive is employed
by the Company.
(4) All
options vest one-third per year over a term of three years, subject
to continued service.
(5)
Restricted stock vests one-third on January 2, 2019, one-third on
January 2, 2020 and one-third on January 2, 2021, subject to
continued service.
25
Option Exercises and Stock Vested for Fiscal 2018
There
were no stock option exercises or restricted stock vested for any
NEO’s in fiscal 2018.
Employment Agreements and Compensation Arrangements;
Termination and Change in Control Provisions
The
following describes the terms of employment agreements between the
Company and the named executive officers included in the above
Summary Compensation Table and sets forth information regarding
potential payments upon termination of employment or a change in
control of the Company.
Mr. Kang
. On
December 20, 2017, we entered into an employment agreement with Mr.
Kang for a three year employment agreement, effective January 1,
2018, providing the following: (i) an annual base salary of
$300,000 (increasing $25,000 annually); (ii) an annual target bonus
opportunity equal to 50% of the base salary (with a maximum of 100%
of base salary) based on the Company achieving performance goals
determined by the Compensation Committee of the Board of Directors
(payable one-half in cash and one-half in common stock of the
Company); (iii) a restricted stock grant of 100,000 shares of
common stock effective January 2, 2018 vesting only if certain
performance goals are met, (iv) participation in the
Company’s employee benefit plans and (v) four (4) weeks of
vacation. The employment agreement contains severance provisions
which provide that upon the termination of his employment without
Cause (as described below) or his voluntary resignation for a Good
Reason (as described in below), Mr. Kang will receive severance
compensation payable in a lump-sum of cash equal six (6)
month’s base salary (increasing to twelve (12) months of base
salary if terminated after the first year) and a pro rata bonus
amount. The employment agreement further provides that if within 90
days prior to or two years after a change in control of the Company
there occurs any termination of Mr. Kang for any reason other than
for Cause or a voluntary resignation without a Good Reason, then
the Company will be required to pay to Mr. Kang a one-time
severance payment equal twelve (12) months base salary and a pro
rata bonus.
Mr. Holloway
. On
December 20, 2017, we entered into an employment agreement with Mr.
Holloway. The employment agreement for Mr. Holloway is the same as
Mr. Kang’s, except that it provides for: (i) an annual base
salary of $265,000; (ii) a restricted stock grant of 50,000 shares
of common stock effective January 2, 2018 vesting only if certain
performance goals are met and (iii) the severance compensation
payable upon termination without Cause or For Good Reason is equal
six (6) month’s base salary (increasing to twelve (12) months
of base salary if terminated after the first year).
Mr.
Sparling.
We are party to
an employment agreement with Mr. Sparling to serve as the Chief
Executive Officer of SCL. The employment agreement provides for an
annual base salary of €200,000. In addition, Mr. Sparling
shall be eligible to receive bonus compensation of up to 100% of
his annual salary. Mr. Sparling will also receive an annual
automobile allowance in the amount €16,500 and SCL will
contribute up to €15,000 to SCL’s pension scheme. The
employment period will continue unless terminated earlier by (i)
Mr. Sparling upon not less than 3 months’ advance written
notice or SCL upon not less than 9 months’ advance written
notice, (ii) SCL or Mr. Sparling with Good Reason (as defined
therein), immediately, provided that the remuneration to which Mr.
Sparling is entitled under the Employment Agreement shall continue
for a period of 9 months following such termination (which shall be
increased to 12 months if within a specified period of a change in
control), or (iii) by SCL upon the occurrence of certain events or
actions by Mr. Sparling, including Mr. Sparling being declared
bankrupt or being found guilty of fraud, serious misconduct or
willful neglect to carry out his duties under the employment
agreement.
26
A
termination of an executive’s employment by the Company shall
be deemed for “Cause” if, and only if, it is based upon
the following: (i) executive's failure, neglect or refusal to
perform executive’s material duties (in each instance, other
than any such failure resulting from incapacity due to physical or
mental illness); (ii) executive's failure to comply with any valid,
material and legal directive of the Board of Directors; (iii)
executive's engagement in dishonesty, illegal or disloyal conduct,
or willful or grossly negligent misconduct, which is, in each case,
injurious to the interests, reputation or business of the Company
or its Affiliates as determined by the Compensation Committee of
the Board of Directors; (iv) executive's embezzlement,
misappropriation, or fraud, whether or not related to the
Executive's employment with the Company; (v) executive's conviction
of or plea of guilty or nolo contendere to a crime that constitutes
a felony (or state law equivalent) or a crime that constitutes a
misdemeanor involving moral turpitude; (vi) any material failure by
executive to comply with the Company's written policies or rules,
as they may be in effect from time to time during the employment
term; or (vii) executive's material breach of any material
obligation under the agreement or any other written agreement
between executive and the Company.
A
resignation by executive shall not be deemed to be voluntary and
shall be deemed to be a resignation with “Good Reason”
if it is based upon (i) a material diminution in executive’s
title, duties, responsibilities, authority or salary; (ii) a
material reduction in bonus target or benefits; (iii) a direction
by the Board of Directors that executive report to any person or
group other than the Board of Directors; (iv) a requirement that
the executive relocate; or (v) the Company’s material breach
of the agreement.
Compensation Committee Interlocks and Insider
Participation
During
the last fiscal year, no member of the Compensation Committee had a
relationship with us that required disclosure under Item 404 of
Regulation S-K. During the past fiscal year, none of our executive
officers served as a member of the board of directors or
compensation committee, or other committee serving an equivalent
function, of any entity that has one or more executive officers who
served as members of our Board of Directors or our Compensation
Committee. None of the members of our Compensation Committee is an
officer or employee of our Company, nor have they ever been an
officer or employee of our Company.
Compensation Committee Report
Our
Compensation Committee has reviewed and discussed the
“Compensation Discussion and Analysis” contained herein
with management. Based on our Compensation Committee’s review
and discussions with management, our Compensation Committee
recommended to our Board of Directors that the Compensation
Discussion and Analysis be included herein.
Bowen
(Chair)
Richter
Guenther
CERTAIN RELATED PERSON
TRANSACTIONS
A
related person transaction is a consummated or currently proposed
transaction in which the Company has been, is or will be a
participant and the amount involved exceeds $120,000, and in which
a related person (i.e., any director or executive officer or
nominee for director, or any member of the immediate family of such
person) has or will have a direct or indirect material
interest.
The
Company was not a participant in any related person transactions in
the past two fiscal years and no such transactions are currently
proposed.
Under
the Company’s corporate governance principles (the
“Corporate Governance Principles”), a majority of the
Company’s Board will consist of independent directors. An
“independent” director is a director who meets the NYSE
American definition of independence and other applicable
independence standards under SEC guidelines, as determined by the
Board. The Company’s Corporate Governance and Nominating
Committee conduct an annual review of the independence of the
members of the Board and its Committees and report its findings to
the full Board of Directors. Based on the report and recommendation
of the Corporate and Nominating Governance Committee, the Board has
determined that each of the Company’s non-employee directors
satisfies the independence criteria set forth in the applicable
NYSE American listing standards and SEC rules. Each standing Board
Committee consists entirely of independent, non-employee
directors.
Non-management
members of the Board of Directors conduct at least two
regularly-scheduled meetings per year without members of management
being present.
27
PROPOSAL TWO – ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION
We are
asking stockholders to approve an advisory resolution on the
Company's 2018 executive compensation as reported in this proxy
statement.
We urge
stockholders to read the "Executive Compensation" section beginning
on page 24 of this proxy statement, including the Summary
Compensation Table and other related compensation tables and
narrative included therein, which provide detailed information on
the compensation of our named executive officers.
In
accordance with recently adopted Section 14A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a
matter of good corporate governance, we are asking stockholders to
approve the following advisory resolution:
RESOLVED, that the
stockholders of Widepoint Corporation (the "Company") approve, on
an advisory basis, the 2018 compensation of the Company's named
executive officers disclosed in the Executive Compensation section
of the Company’s proxy statement.
This
advisory resolution, commonly referred to as a "say-on-pay"
resolution, is non-binding on the Board of Directors. Although
non-binding, the Board and the Compensation Committee will review
and consider the voting results when making future decisions
regarding our executive compensation program.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
28
PROPOSAL THREE – ADVISORY VOTE
ON THE FREQUENCY OF FUTURE
ADVISORY
VOTES ON EXECUTIVE COMPENSATION
Pursuant to Section
14A of the Exchange Act, we are asking stockholders to vote on
whether future advisory votes on executive compensation of the
nature reflected in Proposal No. 3 should occur every year, every
two years or every three years.
After
careful consideration, the Board of Directors has determined that
holding an advisory vote on executive compensation every three
years is the most appropriate policy for the Company at this time
and recommends that stockholders vote for future advisory votes on
executive compensation to occur every three years. Voting every
three years, rather than every one or two years, will provide
stockholders with the opportunity to conduct thoughtful analyses of
our compensation program over a period of time in relation to our
long-term performance as our compensation program does not change
significantly from year to year and is designed to induce
performance over a multi-year period. A triennial vote cycle will
provide stockholders with a more complete view of the amount and
mix of components of the compensation paid to our named executive
officers. A triennial vote will also provide us with sufficient
time to evaluate and respond effectively to stockholder input,
engage with stockholders to understand and respond to prior voting
results and implement any appropriate changes to our program. In
addition, a triennial vote will provide time for any implemented
changes to take effect and allow stockholders sufficient time to
evaluate the effectiveness of our compensation program and any
changes made to the program.
This
advisory vote on the frequency of future advisory votes on
executive compensation is non-binding on the Board of Directors.
Stockholders will be able to specify one of four choices for this
proposal on the proxy card: one year, two years, three years or
abstain. Stockholders are not voting to approve or disapprove the
Board’s recommendation. Although non-binding, the Board and
the Compensation Committee will carefully review the voting
results. Notwithstanding the Board’s recommendation and the
outcome of the stockholder vote, the Board may in the future decide
to conduct advisory votes on a more frequent basis and may vary its
practice based on factors such as discussions with stockholders and
the adoption of material changes to compensation
programs.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO CONDUCT
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY THREE
YEARS.
29
PROPOSAL FOUR – INDEPENDENT ACCOUNTANTS
The
Audit Committee is recommending that stockholders ratify its
appointment of Moss Adams LLP as independent accountants for
WidePoint to audit its consolidated financial statements for the
fiscal year ending December 31, 2019, to perform audit-related
services, including review of our quarterly interim financial
information, periodic reports and registration statements filed
with the Securities and Exchange Commission and consultation in
connection with various accounting and financial reporting matters.
The stockholder vote is not binding on the Audit Committee. If the
appointment of Moss Adams LLP is not ratified by stockholders, the
Audit Committee will evaluate the basis for the stockholders' vote
when determining whether to continue the firm's engagement, but may
ultimately determine to continue the engagement of the firm or
another audit firm without re-submitting the matter to
stockholders. Even if the appointment of Moss Adams LLP is
ratified, the Audit Committee may in its sole discretion terminate
the engagement of the firm and direct the appointment of another
independent auditor at any time during the year if it determines
that such an appointment would be in the best interests of our
Company and our stockholders.
A
resolution will be presented at the Annual Meeting to ratify the
appointment of Moss Adams LLP to serve as the Company’s
independent public accountants for the fiscal year ending December
31, 2019. A representative of Moss Adams LLP will be available
either via phone or in person at the Annual Meeting to answer
appropriate questions concerning the Company’s financial
statements and to make a statement if desired.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR
OF THE RATIFICATION OF THE COMPANY’S AUDITORS.
30
AUDIT COMMITTEE REPORT
The
Audit Committee has: (a) reviewed and discussed the audited
financial statements with the management of the Company; (b)
discussed with the Company’s independent auditors, Moss Adams
LLP, the matters required to be discussed by Public Company
Accounting Oversight Board Auditing Standard No. 16 and the
American Institute of Certificated Public Accountants’
Statement on Auditing Standards No. 114; (c) received from the
Company’s independent auditors the written disclosures and
the letter required by applicable requirements of the Public
Company Accounting Oversight Board, and discussed with the
Company’s independent auditors their independence; and (d)
based on the review and discussions referred to in clauses (a), (b)
and (c) above, recommended to the Board that the audited financial
statements be included in the Company’s Annual Report on Form
10-K for fiscal year 2018.
The
foregoing report is submitted by the members of the Audit
Committee:
Taubman
(Chair)
Todaro
Bowen
Guenther
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM FEES AND
SERVICES
The
following table sets forth fees paid to our principal accountants
in connection with audit and audit-related, tax and other non-audit
fees for the years ended December 31:
|
Service
Type
|
2018
|
2017
|
|
|
|
|
|
Audit and Quarterly
Review Fees (1)
|
$
158,900
|
$
152,400
|
|
|
|
|
|
Audit-Related
Fees
|
-
|
-
|
|
|
|
|
|
Total
|
$
158,900
|
$
152,400
|
(1)
Audit and quarterly review fees for the annual audit and review of
financial statements included in the Company’s quarterly
filings, including reimbursable expenses.
Audit Committee Policies and Procedures For Pre-Approval of
Independent Auditor Services
The
following describes the Audit Committee’s policies and
procedures regarding pre-approval of the engagement of the
Company’s independent auditor to perform audit as well as
permissible non-audit services for the Company.
31
For
audit services and audit-related fees, the independent auditor will
provide the Committee with an engagement letter during the
March-May quarter of each year outlining the scope of the audit
services proposed to be performed in connection with the audit of
the current fiscal year. If agreed to by the Committee, the
engagement letter will be formally accepted by the Committee at an
Audit Committee meeting held as soon as practicable following
receipt of the engagement letter. The independent auditor will
submit to the Committee for approval an audit services fee proposal
after acceptance of the engagement letter.
For
non-audit services and other fees, Company management may submit to
the Committee for approval (during May through September of each
fiscal year) the list of non-audit services that it recommends the
Committee engage the independent auditor to provide for the fiscal
year. The list of services must be detailed as to the particular
service and may not call for broad categorical approvals. Company
management and the independent auditor will each confirm to the
Audit Committee that each non-audit service on the list is
permissible under all applicable legal requirements. In addition to
the list of planned non-audit services, a budget estimating
non-audit service spending for the fiscal year may be provided. The
Committee will consider for approval both the list of permissible
non-audit services and the budget for such services. The Committee
will be informed routinely as to the non-audit services actually
provided by the independent auditor pursuant to this pre-approval
process.
To
ensure prompt handling of unexpected matters, the Audit Committee
delegates to its Chairman the authority to amend or modify the list
of approved permissible non-audit services and fees. The Chairman
will report any action taken pursuant to this delegation to the
Committee at its next meeting.
All
audit and non-audit services provided to the Company are required
to be pre-approved by the Committee. The Chief Financial Officer of
the Company will be responsible for tracking all independent
auditor fees against the budget for such services and report at
least annually to the Audit Committee.
32
OTHER INFORMATION
We
maintain an internet website at
http://www.widepoint.com
.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any amendment to those reports,
are available free of charge on our website immediately after they
are filed with or furnished to the Securities and Exchange
Commission. WidePoint’s Code of Business Conduct, Corporate
Governance Principles and Charters of the Committees of the Board
of Directors are also available free of charge on our website or by
writing to WidePoint Corporation, 11250 Waples Mill Road, South
Tower, Suite 210, Fairfax, Virginia 22030, c/o Corporate Secretary.
WidePoint’s Code of Business Conduct applies to all
directors, officers (including the Chief Executive Officer and
Chief Financial Officer) and employees. Amendments to or waivers of
the Code of Conduct granted to any of the Company’s directors
or executive officers will be published on our website within five
business days of such amendment or waiver.
STOCKHOLDER PROPOSALS FOR 2019 ANNUAL MEETING
Proposals of stockholders intended to be presented
at the 2020 Annual Meeting must be received by the Secretary of the
Company, 11250 Waples Mill Road, South Tower, Suite 210, Fairfax,
Virginia 22030, no later than
December 31, 2019 in order for them to be
considered for inclusion in the 2020 Proxy Statement.
Any
such proposal must comply with Rule 14a-8 of Regulation 14A of the
proxy rules of the Securities and Exchange Commission.
Based on our anticipated meeting date,
a
stockholder desiring to submit a proposal to be voted on at next
year’s Annual Meeting of Stockholders, but not desiring to
have such proposal included in next year’s proxy statement
relating to that meeting, should submit such proposal to the
Company
no later than
December 31, 2019
.
Failure to comply with that advance notice requirement will result
in the proposal not being placed on the agenda at the
meeting.
OTHER MATTERS
Management
is not aware of any other matters to be considered at the Annual
Meeting. If any other matters properly come before the Annual
Meeting, the persons named in the enclosed Proxy will vote said
Proxy in accordance with their discretion.
33
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