WIDEPOINT CORP
10-Ks and 10-Qs
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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 the Registrant ☒
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Filed
by a Party other than the Registrant ☐
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Check
the appropriate box:
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☐
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Preliminary
Proxy Statement
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☐
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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☒
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Definitive
Proxy Statement
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☐
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Definitive
Additional Materials
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☐
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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)
Payment
of Filing Fee (Check the appropriate box):
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☒
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No fee
required.
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☐
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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☐ Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Party:
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(4)
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Filed:
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WIDEPOINT CORPORATION
11250 Waples Mill Road, South Tower, Suite 210
Fairfax, Virginia 22030
April
23, 2021
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
Friday, June 11, 2021. To support the health and well-being of our
stockholders and other stakeholders, we will have a completely
virtual meeting of stockholders, which will be conducted solely
online via live webcast. You will be able to participate in the
annual meeting online, vote your shares electronically and submit
your questions prior to and during the meeting by visiting:
www.virtualshareholdermeeting.com/WYY2021. You must enter the
control number found on your proxy card, voting instruction form or
notice you previously received. There is no physical location for
the annual meeting. As we have done in the past, we are taking
advantage of the Securities and Exchange Commission's rule that
allows companies to provide proxy materials for the annual meeting
via the Internet to registered stockholders. The accompanying
notice of meeting and proxy statement describe the matters to be
voted on at the meeting.
YOUR VOTE IS IMPORTANT.
We encourage you to read the proxy
statement and vote your shares as soon as possible. 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 participate in the annual meeting online and vote your
shares electronically. 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 2021 ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of WidePoint
Corporation will be held at 10:00 a.m., EST, on Friday, June 11,
2021. To support the health and well-being of our stockholders and
other stakeholders, we will have a completely virtual meeting of
stockholders, which will be conducted solely online via live
webcast. You will be able to participate in the annual meeting
online, vote your shares electronically and submit your questions
prior to and during the meeting by visiting:
www.virtualshareholdermeeting.com/WYY2021. You must enter the
control number found on your proxy card, voting instruction form or
notice you previously received.
There
is no physical location for the annual meeting. The accompanying
notice of meeting and proxy statement describe the following
matters described in the accompanying proxy
statement:
●
To
elect the two director nominees named in the attached proxy
statement as Class III directors to serve for a three-year period
until the Annual Meeting of Stockholders in the year
2024;
●
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 16, 2021
are entitled
to receive notice of, and to vote 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 23, 2021
TABLE OF CONTENTS
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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 2021 WidePoint Annual Meeting of Stockholders to
be held at 10:00 a.m., EST, on Friday, June 11, 2021 and any and
all adjournments thereof. This year's annual meeting will be a
completely virtual meeting of stockholders, which will be conducted
solely online via live webcast. You will be able to participate in
the annual meeting online, vote your shares electronically and
submit your questions prior to and during the meeting by
visiting:
www.virtualshareholdermeeting.com/WYY2021. You
must enter the control number found on your proxy card, voting
instruction form or notice you previously received.
There is no physical location for the annual
meeting. 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 23,
2021.
N
OTICE 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 23, 2021, 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.
V
OTING 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.
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 the ratification of the selection of Moss Adams
LLP as the independent accountants for the Company for the current
fiscal year; and (3) 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 nominees who receive 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 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 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.
Page 1
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 16, 2021, the record date for determining stockholders
entitled to vote at the Annual Meeting, a total of 9,071,351 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 16, 2021 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.
PROPOSAL
O
NE – 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 III directors to serve for a three-year period
until the Annual Meeting of Stockholders in the year
2024
.
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 five members (two Class I and III
directors and one Class II director) with no vacancies. The Board
did not re-nominate Otto Guenther and Richard L. Todaro for
director. Accordingly, their terms will expire at this Annual
Meeting of Stockholders. The Board thanks both Mr. Guenther and Mr.
Todaro for their service on the Board. Our Class III director
nominees, John J. Fitzgerald and J. Bernard Rice, are not
currently, and have never been members of the Board.
In
recognition of Otto Guenther’s long service as a Director and
Chairman of the Board of Directors, and to ensure that the Board
retains Mr. Guenther’s strategic viewpoints and perspectives
on key Board decisions, Mr. Guenther will be appointed by the Board
as a Director Emeritus and will be invited to attend future
meetings of the Board and its committees but, after the date of our
Annual Meeting, he will no longer be a member of the Board or
entitled to vote on Board or committee matters. Mr. 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. Mr. 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.
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 a 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 III Director Nominees For a Term That Will Expire at the 2024
Annual Meeting of Stockholders:
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Name
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Age
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Position
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John J.
Fitzgerald
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67
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Director
Nominee
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J.
Bernard Rice
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66
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Director
Nominee
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Page 2
John Fitzgerald
is a nominee for director. Mr.
Fitzgerald has had a successful 40-year career in various key
financial leadership roles in several industries, including advance
innovation technology businesses, manufacturing, and service
companies. Most recently, he was the Executive Vice President and
Chief Financial Officer for LGS Innovations, LLC from July 2014
until April 2018. Previously, Mr. Fitzgerald was ManTech
International Corporation’s Senior Vice President of Finance
and Principal Accounting Officer from 2004 to 2012. He was Vice
President and Chief Accounting Officer for DynCorp from 1997 to
2003. Prior to that, he was Vice President and Controller at
Litton/PRC Inc. from 1992 to 1997. Mr. Fitzgerald has also held
various senior financial positions including Chief Financial
Officer at other businesses. He has many years of financial
management experience in public and government contracting
companies. Mr. Fitzgerald has broad and deep experience in
financial reporting, mergers, acquisitions, divestitures,
reorganization, strategic planning, and others key areas. Mr.
Fitzgerald started his career at public accounting firm Ernst &
Young. He graduated from the University of Maryland in Business
Administration and Accounting.
He is an active certified public accountant in
Maryland.
Mr. Fitzgerald brings to the Board extensive knowledge of
accounting and financial management experience. 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.
J. Bernard Rice
is a nominee
for director.
Mr. Rice is an accomplished
business consultant and strategic advisor to technology innovation
players across multiple industries. He brings a wealth of
experiences including nineteen (19) years in Senior Management at
IBM, SVP of Marketing and Sales at Riverdeep, a leading K-12 Online
Education Company and over a dozen years as a full Partner with
Wesley Clark and Associates. Mr. Rice is currently Chairman of Hush
Aerospace, a bleeding edge tech driven flight vehicle company
focused on delivery the most cost effective, best designed, AI
enabled and quietest solution for Innovative transportation, first
responders, surveillance, and military applications. Mr. Rice is
the Managing Member for Rice Capital and heavily engaged in
consulting arrangements with early stage companies. Mr. Rice
received a Bachelor’s Degree in Economics for St. Anselm's
College
(Manchester, New
Hampshire)
, a
MBA from Georgia State University.
Mr. Rice also attended the IBM Presidents Program
(a special Executive MBA program) at Harvard
University.
Mr. Rice brings to the Board extensive knowledge of technology and
entrepreneurial experience. This experience, as well as his as his
independence from the Company, led the Board to conclude that he
should 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 2021:
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 I Directors With a Term That Will Expire at the 2022 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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56
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Director and Chief Executive Officer
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Julia A. Bowen
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55
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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 5,
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 34
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 contracts
for the federal government 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.
Page 3
Julia A. Bowen
has served
as a director since her appointment on February 9, 2019 pursuant to
our prior appointment and standstill agreement with Nokomis
Capital, L.L.C. (“Nokomis”), which has now expired. Ms.
Bowen is currently senior vice president of operations &
outreach, chief legal officer 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. She also serves on
the board of MITRE Engenuity Foundation and Advisory Board of
Manetu, Inc. Ms. 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.
Class II Director With a Term That Will Expire at the 2023 Annual
Meeting of Stockholders:
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Name
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Age
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Position
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P
hil
Garfinkle
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60
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Director
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P
hil
Garfinkle
has served as a
director since his appointment on June 18, 2020. Mr. Garfinkle is a
successful technology visionary, bringing a wealth of experience as
an entrepreneur, inventor, CEO, and deal maker, with a focus on
emerging technologies. He is a five-time successful entrepreneur
and has been the senior operating manager in many successful
organizations. Mr. Garfinkle is currently Managing Director of
Navig8 USA, Senior Managing Partner at Planet Cotton, and President
and CEO of NewSight Reality. He also serves as an Economic
Evaluator for the MIPS program in the state of Maryland. He
possesses a unique blend of technological and business acumen to
guide business on a path to success. He was a co-founder of Yazam,
an Israeli / global Venture Capital / Merchant Banking
organization, which he sold to US Technologies. He also founded
PhotoNet Japan, which went public in 2002, PictureVision (Chairman,
CEO, and President), which he led the sale to Kodak, where he also
served as a Senior Executive. PictureVision pioneered online photo
processing, sharing, and printing services. He established
alliances with AOL for “You’ve Got Pictures,”
Sony’s ImageStation, Adobe, and many other major product
lines. PictureVision was known for its excellence in engineering
which he multi-located globally. Mr. Garfinkle has also served as
Chairman of Johns Hopkins Technology Advisory Board, focused on
technology transfer from academia to the commercial
sector.
Mr. Garfinkle brings to the Board extensive knowledge of technology
and entrepreneurial experience. 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.
B
OARD MEETINGS – COMMITTEES OF
THE BOARD
The
Board of Directors held nine (9) meetings during 2020. 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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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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Julia A. Bowen
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I
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2022
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X
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X
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X
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X
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Richard L. Todaro
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III
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2021
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X
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X
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Philip Garfinkle
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II
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2023
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X
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X
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X
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Jin Kang**
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I
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2022
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X
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*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.
Page 4
Audit Committee
The
Audit Committee met eight (8) times in 2020. 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 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
Richard L. Todaro and John J. Fitzgerald each satisfy the
“financially sophisticated” requirements set forth in
the NYSE American Company Guide, and has designated
Richard L. Todaro as the “audit committee
financial expert,” as such term is defined in the rules and
regulations of the SEC. It is expected that Mr. Fitzgerald will
serve as audit committee financial expert upon his appointment to
the Board.
Corporate Governance and Nominating
Committee
The
Corporate Governance and Nominating Committee met one (1) time in
2020. 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 Company’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.
Compensation Committee
The
Compensation Committee met one (1) time in 2020. 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.
D
IRECTOR 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 and each of the two
director nominees satisfy the independence criteria set forth in
the listing standards of the NYSE
American
and Securities and Exchange Commission
rules.
Page 5
I
DENTIFICATION 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 who has owned at least 5% of the
Company’s outstanding shares of common stock for at least two
years 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.
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 more than 5% of the
Company’s common stock for at least two years as of the date
of recommendation other than the previous appointment and
standstill agreements with Nokomis.
P
ROCESS 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.
D
IRECTOR 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
virtually.
B
OARD 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.
Page 6
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.
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.
D
IRECTOR 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 commencing in 2018
to include $20,000 in cash and $50,000 in restricted stock ($70,000
in restricted stock for Board Chairman) that vests at the annual
meeting of stockholders. The director compensation program is
unchanged since such time. The following table sets forth
non-employee director compensation for the year ended December 31,
2020:
|
Director Name
|
Fees Earned or
Paid
(1)
|
Stock Awards ($) (2)
|
All Other Compensation ($)
|
Total Annual Board Retainer
|
|
Otto
J. Guenther (3)
|
$
20,000
|
$
70,000
|
$
-
|
$
90,000
|
|
Julia
Bowen
|
20,000
|
50,000
|
-
|
70,000
|
|
Richard
Todaro
|
20,000
|
50,000
|
-
|
70,000
|
|
Phil
Garfinkle
|
20,000
|
50,000
|
-
|
70,000
|
(1)
Represents the meeting retainers and annual payments earned in
2020. Each director receives an annual payment of $20,000 paid in
arrears in quarterly installments.
(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, 2020, filed with the SEC
on March 23, 2021.
(3) As
Chairman, Mr. Guenther was entitled to receive a $70,000 restricted
stock award during 2020, but received $41,644. The difference was
paid in January 2021.
Page 7
E
XECUTIVE OFFICERS
The
Company’s executive officers as of April 20, 2021 are as
follows:
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
Jin
Kang
|
|
56
|
|
Chief
Executive Officer, President and Director
|
|
|
|
|
|
|
|
Jason
Holloway
|
|
53
|
|
Executive
Vice President, Chief Sales and Marketing Officer, and President of
WidePoint Cybersecurity Solutions Corporation
|
|
|
|
|
|
|
|
Kellie
H. Kim
|
|
57
|
|
Executive
Vice President and Chief Financial Officer
|
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 10, 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.
Kellie H. Kim
has
served as Executive Vice President and Chief Financial Officer
since her appointment effective January 2, 2020, replacing interim
Chief Financial Officer Ian Sparling (who remains with the
Company). Ms. Kim has more than 30 years of experience in financial
and business leadership supporting both public and private
companies that operate in a variety of industries, including
telecom, technology, and professional services with government
practice. Ms. Kim has helped organizations through their
transformation and reorganization, implementing best practices,
streamlining their technology and/or process and procedures, and
updating business systems or scaling organically or through
acquisitions. Most recently Ms. Kim served as the Principal of
Clarius Consultants LLC, a consulting firm providing outsourced CFO
services that was founded by Ms. Kim. Prior to that time, she
served as the CFO of various companies, including CFO of Witt
O’Brien’s LLC, a wholly-owned subsidiary of Seacor
Holdings, CFO of Opus Group, LLC and CFO of Astrium Services
Government, Inc., a subsidiary of Airbus Defense & Space. Kim
is an active member of professional groups, including American
Institute of Certified Public Accountants, Virginia Society of
CPAs, Maryland Association of Certified Public Accountants and
Washington Women’s Leadership Initiative. Kim is a Certified
Public Accountant and has a Bachelor of Science in Accounting from
the University of Maryland.
Page 8
P
RINCIPAL 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
9,071,351
shares outstanding as of April 9,
2021. The mailing address for each of our directors, director
nominees and officers is c/o WidePoint Corporation - 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 20, 2021 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) (5)
|
42,981
|
8,975
|
5,000
|
56,956
|
*
|
|
Jin
Kang (3)
|
375,960
|
24,325
|
50,000
|
450,285
|
5.0
%
|
|
Jason
Holloway (4)
|
95,076
|
16,825
|
-
|
111,901
|
1.2
%
|
|
Kellie
Kim (4)
|
11,467
|
16,825
|
-
|
28,292
|
*
|
|
Julia
Bowen (5)
|
8,797
|
6,410
|
-
|
15,207
|
*
|
|
Richard
Todaro (5)
|
-
|
6,410
|
-
|
6,410
|
*
|
|
Phil
Garfinkle (5)
|
11,372
|
6,410
|
-
|
17,783
|
*
|
|
John
J. Fitzgerald
|
-
|
-
|
-
|
-
|
-
|
|
J.
Bernard Rice
|
-
|
-
|
-
|
-
|
-
|
|
All
director nominees, directors and executive officers as a group nine
persons (6)
|
545,653
|
86,181
|
55,000
|
686,834
|
7.6
%
|
_________________________
*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 9, 2021 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 5,000 earned and exercisable options to purchase shares
from the Company at a price $4.40 per share to expire on June 23,
2024.
(3)
Includes 9,325 shares of unvested restricted stock and 15,000
unvested restricted stock granted as a part of employment
agreement. Also includes 50,000 earned and exercisable options to
purchase shares from the Company at a price $6.50 per share to
expire on September 27, 2022.
(4)
Includes 9,325 shares of unvested restricted stock and 7,500
unvested restricted stock granted as a part of employment
agreement.
(5) Includes 6,410 shares to be vested June 18, 2021 for directors
and 8,975 shares to be vested June 18, 2021 for chairman. These
shares were granted for one year service period ending June 18,
2021.
(6) Includes the shares referred to as included in notes (2)
through (5) above.
Security Ownership of Certain Beneficial Owners (Greater than 5%
Holders)
The following table sets forth beneficial owners of more than 5%
based on 9,071,351 outstanding shares of Common Stock as of April
9, 2021:
|
|
Number of
Shares of
|
Percent of
Common
Stock
|
|
Names and Complete Mailing Address
|
Common
Stock
|
Outstanding
|
|
|
|
|
|
The Vanguard Group, Inc.
100
Vanguard Blvd.
Malvern,
PA 19355
|
502,643
|
5.5%
(1)
|
|
|
|
|
(1)
Calculated
based on information provided in Schedule 13G filed on February 8,
2021. Vanguard Group is a Pennsylvania company and Ms. Christine M.
Buchanan is the principal of The Vanguard Group.
Page 9
E
XECUTIVE 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 2020 and describes our policies and
decisions made with respect to the information contained in the
following tables, related footnotes and narrative for 2020. 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 2020 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.
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.
Page
10
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 2020 and projected fiscal 2021 salaries of our
named executive officers and the percentage increases over their
2020 base salaries, are as follows:
|
Name
|
Fiscal
2020 Base Salary
|
Fiscal
2021 Base Salary
|
Percentage
Increase Over Fiscal 2020 Base Salary
|
|
Jin
Kang
|
$
350,000
|
$
350,000
|
0%
|
|
Kellie
Kim
|
$
250,000
|
$
250,000
|
0%
|
|
Jason
Holloway
|
$
265,000
|
$
265,000
|
0%
|
Annual Cash Based Bonus Opportunity.
Our performance-based cash 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 cash based bonus award is based on individual
performance assessments along with the financial performance of the
Company.
In
2020, each of our NEOs had 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 achieved certain financial targets
of cash flows, revenue and adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted EBITDA). Our NEOs
each earned in 2020 a $220,000 performance-based bonus due to the
Company achieving certain financial goals. One-half of the bonus
amount was paid in cash and one-half in restricted stock vesting
one year from the date of grant amounting to 9,325
shares.
In
2021, 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 earnings before interest, taxes,
depreciation
and
amortization (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 May 2020, we awarded Mr. Kang 20,000 shares
and Mr. Holloway and Ms. Kim 10,000 shares of restricted common
stock, 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). As of January 1,
2021 one-fourth of awarded shares became vested and were awarded.
In 2020, Mr. Kang and Mr. Holloway were issued 22,294 restricted
shares as one-half of bonus earned in 2019, subject to vesting.
There were no stock option awards granted during 2019 or 2020 to
our NEOs.
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.
Page
11
Summary Compensation Table
The
following table summarizes the compensation earned by us in each of
the last two recently completed fiscal years for our
NEOs:
|
Name
|
|
Year
|
Base Salary (1)
|
Bonuses
|
Stock Awards(2)
|
All Other Compensation
|
Total Compensation
|
|
Jin Kang
|
|
2020
|
$
350,000
|
$
110,000
(3)
|
$
198,000
(3)(6)
|
$
3,000
|
$
661,000
|
|
Chief Executive Officer, President and Director
|
|
2019
|
$
325,000
|
$
68,000
(4)
|
$
68,000
(4)
|
$
-
|
$
461,000
|
|
|
|
|
|
|
|
|
|
|
Kellie Kim (5)
|
|
2020
|
$
250,000
|
$
110,000
(3)
|
$
154,000
(3)(7)
|
$
-
|
$
514,000
|
|
Executive Vice President and Chief Financial Officer
|
|
2019
|
$
-
|
$
-
|
$
-
|
$
-
|
$
-
|
|
|
|
|
|
|
|
|
|
|
Jason Holloway
|
|
2020
|
$
265,000
|
$
110,000
(3)
|
$
154,000
(3)(8)
|
$
-
|
$
529,000
|
|
Executive Vice President, Chief Sales and Marketing Officer and
President of WidePoint Cybersecurity Solutions
Corporation
|
|
2019
|
$
265,000
|
$
68,000
(4)
|
$
68,000
(4)
|
$
-
|
$
401,000
|
(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, 2020, filed
with the SEC on March 23, 2021
.
(3) In 2020, our NEOs each earned a $220,000 performance-based
bonus due to the Company achieving certain financial goals.
One-half of the bonus amount was paid in cash and one-half in
restricted stock vesting one year from the date of issuance
amounting to 9,325 shares.
(4) Performance-based discretionary award of $136,000, 50% of which
is paid in cash and 50% is paid in restricted stock vesting one
year from the date of issuance
(5) Ms. Kim began serving as Chief Financial Officer on January 2,
2020.
(6) During fiscal year 2020 Mr. Kang was granted a restricted stock
award of 20,000 shares. One-fourth will be vested
annually.
(7) During fiscal year 2020 Ms. Kim was granted a restricted stock
award of 10,000 shares. One-fourth will be vested
annually.
(8) During fiscal year 2020 Mr. Holloway was granted a restricted
stock award of 10,000 shares. One-fourth will be vested
annually.
Page
12
Grant of Plan Based Awards During 2020
During
the year ended December 31, 2020, NEOs were granted equity awards
as summarized below:
|
Name
|
|
Grant
Date
|
|
Date
of Committee Action
|
All
Other Stock Awards: Number of Shares of Stock (#)
(1)
|
All
Other Option Awards: Number of Securities Underlying Option Awards
(#)
|
Exercise
Price of Option Awards ($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards
($)(2)
|
|
Jin
Kang
|
|
3/18/2020
|
|
3/16/2020
|
22,294
|
-
|
-
|
$
68,000
|
|
Chief
Executive Officer, President and Director
|
|
5/1/2020
|
|
4/29/2020
|
20,000
|
|
|
$
88,000
|
|
|
|
|
|
|
|
|||
|
Jason
Holloway
|
|
3/18/2020
|
|
3/16/2020
|
22,294
|
-
|
-
|
$
68,000
|
|
Executive
Vice President, Chief Sales and Marketing Officer and President of
WidePoint Cybersecurity Solutions Corporation
|
|
5/1/2020
|
|
4/29/2020
|
10,000
|
|
|
$
44,000
|
|
|
|
|
|
|
|
|||
|
Kellie
Kim
|
|
5/1/2020
|
|
4/29/2020
|
10,000
|
-
|
-
|
$
44,000
|
|
Chief
Financial Officer, Executive Vice President
|
|
|
|
|
|
|
|
|
(1)
Awards
have been adjusted with one-for-ten reverse stock split of the
shares of the Company’s common stock, effective on November
6, 2020.
(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, 2020, filed with the SEC on March 23,
2021.
Page
13
Outstanding Equity Awards at December 31, 2020
The
following table sets forth information on outstanding equity awards
held by NEOs at December 31, 2020:
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Grant Date
|
Option
Expiration Date
|
Equity
Incentive Plan Awards: Unearned Shares orother Rights that have not
Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares or
Rights that have not Vested ($)
|
|
|
|||||||
|
Jin
Kang
|
-
|
50,000
(1)
|
$6.50
|
9/7/2017
|
9/27/2022
|
42,294
(2)
|
$
156,000
|
|
Chief
Executive Officer, President and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason
Holloway
|
-
|
-
|
-
|
-
|
-
|
32,294
(3)
|
$
112,000
|
|
Executive
Vice President, Chief Sales and Marketing Officer and President of
WidePoint Cybersecurity Solutions Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kellie
Kim
|
|
|
|
|
|
|
|
|
Executive
Vice President and Chief Financial Officer
|
-
|
-
|
-
|
-
|
-
|
10,000
(4)
|
$
44,000
|
(1) All
options vest on September 27, 2021 provided that executive is
employed by the Company. Options are subject to accelerated vesting
of 25,000 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 (EBITDA); ii) thirty
percent revenue growth excluding carrier services; or iii) positive
cash flow for 12 successive months. Accelerator i) EBITDA was
achieved and exercised during 2020.
(2)
Includes restricted stock award of 22,294 shares granted March 18,
2020 to vest in one year from the grant date and 20,000 shares
granted May 1, 2020 to vest one-fourth of shares annually beginning
January 1, 2021.
(3)
Includes restricted
stock award of 22,294 shares granted March 18, 2020 to vest in one
year from the grant date and 10,000 shares granted May 1, 2020 to
vest one-fourth of shares annually beginning January 1,
2021.
(4)
Includes restricted
stock award of 10,000 shares granted May 1, 2020 to vest one-fourth
of shares annually beginning January 1, 2021.
Page
14
Option Exercises and Stock Vested for Fiscal 2020
The
following table sets forth information about the exercise of
options by our NEOs and the vesting of their restricted stock
awards in fiscal 2020.
|
|
Option
Awards
|
Restricted
Stock Awards
|
||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting ($)(1)
|
|
|
|
|
|
|
|
Jin
Kang
|
25,000
|
$
70,000
|
10,938
|
$
66,809
|
|
|
|
|
|
|
|
Jason
Holloway
|
50,000
|
$
115,000
|
10,771
|
$
60,975
|
|
|
|
|
|
|
|
Kellie
Kim
|
—
|
—
|
—
|
—
|
(1) The
amounts in this column have been computed based on the closing
price of our common stock on the vesting date.
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 May 1,
2020, we entered into an employment agreement with Mr. Kang for a
four year employment agreement, effective January 1, 2020,
providing the following: (i) an annual base salary of $350,000;
(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 200,000 shares (pre-reverse stock split) of common stock
effective January 1, 2021 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 to twelve (12) months of base salary 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 May
1, 2020, 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 100,000 shares
(pre-reverse stock split) of common stock effective January 1, 2021
vesting only if certain performance goals are met.
Ms. Kim
. On May 1,
2020, we entered into an offer letter with Ms. Kim. The employment
agreement for Ms. Kim is the same as Mr. Kang’s, except that
it provides for: (i) an annual base salary of $250,000; (ii) a
restricted stock grant of 100,000 shares (pre-reverse stock split)
of common stock effective January 1, 2021 vesting only if certain
performance goals are met.
Page
15
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.
Otto J.
Guenther
Julia
Bowen
Phil
Garfinkle
C
ERTAIN 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
(and the director nominee) 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.
Page
16
PROPOSAL
T
WO – 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, 2021, 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, 2021. 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.
A
UDIT 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 2020.
The
foregoing report is submitted by the members of the Audit
Committee:
Otto
J. Guenther
Julia
Bowen
Richard
Todaro
I
NDEPENDENT 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
|
2020
|
2019
|
|
Audit
and Quarterly Review Fees (1)
|
$
181,000
|
$
161,500
|
|
|
|
|
|
Audit-Related
Fees (2)
|
$
52,500
|
-
|
|
|
|
|
|
Total
|
$
233,500
|
$
158,900
|
(1)
Audit and quarterly review fees for the annual audit and review of
financial statements included in the Company’s quarterly
filings. Excludes
a flat expense
charge, calculated as five percent (5%) of fees for administrative
expense or
reimbursable expenses, such as travel
expense.
(2)
Audit related fees include Audit related fees include consent for
S-3 and ATM comfort letter procedures.
Page
17
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.
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.
O
THER 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 four
business days of such amendment or waiver.
S
TOCKHOLDER PROPOSALS FOR 2022
ANNUAL MEETING
Proposals of stockholders intended to be presented
at the 2022 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 24, 2021 in order for them to be
considered for inclusion in the 2022 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 24,
2021
. Failure to comply with that advance notice requirement
will result in the proposal not being placed on the agenda at the
meeting.
OTHER
M
ATTERS
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.
Page
18
TABLE OF CONTENTS
Notice of Electronic Availability of Proxy MaterialsVoting Procedures and SecuritiesProposal One Election of DirectorsBoard Meetings Committees of the BoardDirector IndependenceIdentification and Evaluation of Director CandidatesProcess for Communicating with Board MemberDirector Attendance at Annual MeetingsBoard Leadership Structure and Role in Risk OversightDirector CompensationExecutive OfficersPrincipal StockholdersExecutive CompensationCertain Related Person TransactionsProposal Two Independent AccountantsAudit Committee ReportIndependent Registered Certified Public Accounting Firm Fees and ServicesOther InformationStockholder Proposals for 2022 Annual MeetingOther Matters