DEF 14A of Full House Resorts Inc
Filed Apr 4, 2024 · FY20230000891482-24-000010
American Place
American Place American Place is quite different. Chamonix has relatively few people living within a half-hour drive, then over 1 million people living within a two-hour drive. American Place has approximately 1 million people living within a 30-minute drive, but well-established competing casinos that are 45 minutes to an hour away. Customers at Chamonix want the hotel, spa, and other amenities, making it worth the modest drive. Chamonix offers a mini version of the Las Vegas Strip experience, with views of the Rocky Mountains, amidst a genuinely historic town…a Rocky Mountain equivalent to Virginia’s Colonial Williamsburg. The American Place location is more akin to a locals’ casino in Las Vegas, such as Red Rock Casino, Green Valley Ranch, or the new Durango Casino. It offers a convenient place to gamble to a large number of people. It does not draw very many people from downtown Chicago or downtown Milwaukee; they have their own casinos that are reasonable in quality and more convenient. Our customers are primarily the 709,000 people who live in Lake County and the 300,000 people who live just past the county lines. A limited number of casinos were approved in Illinois many years ago, with the first ones opening in 1991. In 2019, the state legislature approved several new locations for casinos, one of which was the Lake Michigan port city of Waukegan. We were then chosen for this opportunity in December 2021, pursuant to a competitive process outlined in the law, involving the City of Waukegan and the Illinois Gaming Board (IGB). The legislation permitted construction of a temporary casino, creating jobs and tax revenues sooner as well as generating profits that can help fund the permanent structure. Soon after being chosen, we bought 10 acres of land that improved the size of and access to the City-owned casino site, then negotiated a long-term lease with a purchase option for the main parcel. We moved quickly to build storm sewers, bring in utilities, install fencing, and build surface parking lots and roadways that would be used for both the temporary and permanent casinos. We chose to put our temporary casino in a “sprung structure” at one end of the site, leaving the other end for construction of the permanent casino. The sprung structure itself was quickly erected, but then we had to build bathrooms, a cage, surveillance offices and other structures within the sprung structure, as well as installing heating, air conditioning, sprinkler systems, lighting, emergency power, surveillance cameras, and a foundation and raised floor, allowing for the substantial cabling needed for its 937 slot machines. We leased two kitchens, designed to be temporary and mobile, which arrived in large shipping containers. We also leased office space, similar to that commonly used for large construction projects. To provide coffee and quick bites on the casino floor, we bought two classic Airstream trailers that were converted to food truck-style outlets and placed them on the casino floor. For our high-end restaurant, which opened recently, we contracted with a diner company to build a modular restaurant with the finishes of a steakhouse. The diner and Airstream trailers can be repurposed after the life of the temporary casino. We then assembled and trained a staff of several hundred employees. We satisfied the IGB’s standards as to our capabilities, integrity, and internal control procedures, plus paid the $50 million up-front licensing fee, allowing us to open on February 17, 2023. Finally, we had to tell the community that we exist and that the inside of the sprung structure is much more exciting than the outside. Our Players’ Club, for example, started with zero names. Today, we have more than 65,000 people enrolled, many of whom are active customers. Business has built gradually since we opened. The temporary casino earned $18.4 million of Adjusted Property EBITDA in its 10-1/2 months of operation in 2023, making it our largest profit producer during the year. We just lapped the opening date, but it seems apparent that revenues in March and the months ahead will be substantially above the revenues of the prior-year period. Much of that increment should fall to the bottom line. There is no firm deadline for us to open the permanent casino, although the IGB certainly expects us and the other casino operators to proceed diligently to fulfill the commitments we made. However, the legislation allows the temporary casino to operate for only two years, with an additional year upon approval by the IGB to help facilitate construction. We sought and received an additional year in June 2023. We subsequently sought and received even more time to operate our temporary casino. One of the unsuccessful bidders for the Waukegan license filed a lawsuit asking the State to reverse the IGB’s licensing decision. To allow that lawsuit time to work its way through the Illinois Supreme Court, the state legislature, governor, and IGB approved a specific change in the law that now allows us to operate our temporary casino until August 2027. To open the permanent casino before that date, we will need to begin construction in earnest approximately two years in advance. As construction funding tends to start slowly, we believe the initial year of construction can probably be funded from internally generated cash flow. As a result, we likely have a window extending into 2026 in which to fund the permanent American Place. We believe that our internally generated cash flows between now and August 2027 can potentially fund up to half of the estimated $325 million cost to build the permanent casino. Much of the $175 million investment we’ve made to date, including the up-front license fee of $50 million, approximately $16 million of slot machines, the surface parking lots, and tens of millions to hire and train employees and to build market recognition for American Place, will also benefit the permanent casino. Our Airstream trailers, which have proven popular on our casino floor, might even find a place in the new facility.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS ________________________________________ Our Amended and Restated By-laws (the “By-laws”) provide that the number of directors constituting our Board shall be fixed from time to time by our Board. Our Board currently consists of nine directors. Kenneth R. Adams, who has reached our mandatory retirement age, is retiring from the Board at the annual meeting and will not stand for re-election. Upon the retirement of Mr. Adams, the size of the Board will be reduced to eight directors. The eight nominees to be voted on by stockholders at this meeting are Carl G. Braunlich, Lewis A. Fanger, Eric J. Green, Lynn M. Handler, Michael A. Hartmeier, Daniel R. Lee, Kathleen M. Marshall and Michael P. Shaunnessy. Directors are elected by a majority of the votes cast, assuming a quorum is present. The term of office of each director ends at the next annual meeting of stockholders or when his or her successor is elected and qualified. All nominees have consented to be named and have indicated their intent to serve if elected. We have no reason to believe that any of these nominees are unavailable for election. However, if any of the nominees become unavailable for any reason, the persons named as proxies may vote for the election of such person or persons for such office as our Board may recommend in the place of such nominee or nominees. It is intended that proxies, unless marked to the contrary, will be voted in favor of the election of each of the nominees.
Director Nominees
Director Nominees We believe that each nominee possesses the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. In addition, each nominee is being nominated because they each possess high standards of personal integrity, are accomplished in their field, have an understanding of the interests and issues that are important to our stockholders and are able to dedicate sufficient time to fulfilling their obligations as a director. Each nominee’s biography containing information regarding the individual’s service as a director, business experience, director positions held currently or within the last five years and other pertinent information about the particular experience, qualifications, attributes and skills that led our Board to conclude that such person should serve as a director appears on the following pages.
Director Nominees
| 77 January 2007 ● ● | | | 67 May 2005 ● ● ● | | | Carl G. Braunlich Chairman Age: 71 Director Since: May 2005 Committees: ● Compensation ● Compliance ● Nominating and Corporate Governance | Dr. Braunlich was an Associate Professor at the University of Nevada, Las Vegas, from August 2006 until his retirement in June 2021. Prior to joining the faculty of University of Nevada, Las Vegas, Dr. Braunlich was a Professor of Hotel Management at Purdue University since 1990. Dr. Braunlich has held executive positions at the Golden Nugget Hotel and Casino in Atlantic City, New Jersey and at Paradise Island Hotel and Casino, Nassau, Bahamas. He has been a consultant to Wynn Las Vegas, Harrah’s Entertainment, Inc., Showboat Hotel and Casino, Bellagio Resort and Casino, International Game Technology, Inc., Atlantic Lottery Corporation, Nova Scotia Gaming Corporation and the Nevada Council on Problem Gambling. Dr. Braunlich was on the board of directors of the National Council on Problem Gambling, and he has served on several problem gambling committees, including those of the Nevada Resort Association and the American Gaming Association. He holds B.S. and M.S. degrees from the Cornell University School of Hotel Administration and a Doctor of Business Administration degree in International Business from United States International University, San Diego, California. |
Director Nominees
Our Board believes that Dr. Braunlich is qualified to serve as a Director due to his knowledge of and experience gained over 15 years in the casino resort industry, including as a consultant to the casino resort industry, as well as over 20 years as a faculty member of hotel management schools.
Director Nominees
| Chief Financial Officer and Treasurer 42 June 2019 | | | Lewis A. Fanger Director, Senior Vice President, Chief Financial Officer and Treasurer Age: 46 Director Since: June 2019 | Mr. Fanger was appointed as our Senior Vice President, Chief Financial Officer and Treasurer on January 30, 2015. Prior to joining the Company, Mr. Fanger served from June 2013 through February 2015 as a Vice President of Wynn Resorts, Limited, a leading owner and operator of resort casinos and a member of the S&P 500 and Nasdaq-100 indexes. At Wynn Resorts, Mr. Fanger oversaw the investor relations functions for both its Nasdaq and Hong Kong Stock Exchange-listed stocks and assisted with the company’s development efforts, including in Asia. From August 2011 to June 2013, Mr. Fanger was Senior Vice President and Chief Financial Officer of Creative Casinos, LLC, the original developer of the Golden Nugget resort casino in Lake Charles, Louisiana. Mr. Fanger also served from July 2003 to August 2011 at Pinnacle Entertainment, Inc. in various capacities, including as Vice President of Finance, where he oversaw the treasury and investor relations functions of the company. Prior to that, Mr. Fanger worked as an equity research associate in the gaming group at Bear, Stearns & Co. in New York. Mr. Fanger earned a bachelor’s degree in industrial engineering and a master’s degree in business administration, both from Stanford University. |
Director Nominees
Our Board believes that Mr. Fanger is qualified to serve as a Director due to his extensive experience in the financial services industry, his experience and knowledge in the gaming, lodging and securities industries, and his executive management experience as Chief Financial Officer of a public corporation.
Director Nominees
| 63 November 2014 ● | | | Eric J. Green Director Age: 53 Director Since: July 2020 Committees: ● Compensation (Chair) ● Nominating and Corporate Governance | Mr. Green brings more than 20 years of investment expertise to the Company’s board of directors. Since 1997, he has worked at Penn Capital, an investment firm with approximately $2 billion of assets under management. Mr. Green currently serves as Penn Capital’s Chief Investment Officer, where he is responsible for guiding the firm’s equity and credit strategies. Additionally, Mr. Green serves as a Senior Portfolio Manager for Penn Capital’s Small Cap, Small to Micro Cap, Small to Mid Cap, and Mid Cap equity strategies. He is currently a member of the firm’s executive team, which oversees the firm’s overall corporate strategy and management. Prior to joining Penn Capital, Mr. Green was with the Federal National Mortgage Association, the Royal Bank of Scotland, and the United States Securities and Exchange Commission, where he served as a financial analyst in the Division of Investment Management. Mr. Green currently serves on the Board of Directors of GAN, LTD, an online sports betting and gaming technology company. Mr. Green is also Vice Chairman of the Board of Directors for the Anti-Defamation League (ADL) Mid-Atlantic Region. Mr. Green earned a bachelor’s degree in business administration from American University and a master’s degree in business administration from the Yale School of Management. |
Director Nominees
Our Board believes that Mr. Green is qualified to serve as a Director due to his extensive experience in the financial services industry, his experience and knowledge in the securities industry and his executive management experience in asset management.
Director Nominees
| 63 November 2014 ● | | | Lynn M. Handler Director Nominee Age: 60 Committees: ● Compliance (Chair) ● Nominating and Corporate Governance | Ms. Handler currently serves as Chief Counsel Regional Operations North America for Catena Media Plc., a Maltese public limited liability company listed on Nasdaq Stockholm. Catena Media Plc. is an online lead generation company within iGaming and Financial Services. Ms. Handler has been employed by Catena Media since January 2021 and previously served in the role of Lead Counsel North America. From April 2017 to March 2020, Ms. Handler served as Head Legal Counsel for Companion Animal Practices, North America (CAPNA), which operated a network of free-standing animal hospitals. Ms. Handler has also held various legal positions with several gaming companies, including Vice President & General Counsel at Palms Casino Resort in Las Vegas, Nevada, Legal Counsel Nevada at William Hill US, and Vice President & Corporate Counsel at Pinnacle Entertainment. Ms. Handler is also a founding Board Member of the Responsible Gambling Affiliate Association, a trade association dedicated to promoting responsible gambling by online gambling affiliates. Ms. Handler holds a B.A. in Sociology from Adelphi University and a J.D. from Seton Hall University School of Law. |
Director Nominees
Our Board believes that Ms. Handler is qualified to serve as a Director due to her knowledge of and experience in the gaming industry, including her work as an attorney for various gaming companies.
Director Nominees
| 63 November 2014 ● |
Director Nominees
| Michael A. Hartmeier Director Age: 61 Director Since: December 2020 Committees: ● Compensation ● Nominating and Corporate Governance (Chair) | Mr. Hartmeier is the former Group Head of Lodging, Gaming and Leisure Investment Banking at Barclays, a multinational investment bank and financial services company. His prior roles include group head positions in hospitality and gaming for Lehman Brothers and Credit Suisse First Boston. During his 25 years as an investment banker, Mr. Hartmeier completed more than $125 billion in financing and advisory assignments. Since August 2020, Mr. Hartmeier has served on the board of directors of DiamondRock Hospitality (NYSE: DRH), a REIT that owns premium hotels and resorts throughout North America, and he is currently a member of DiamondRock Hospitality’s Audit, Compensation and Nominating and Corporate Governance committees. Mr. Hartmeier received his Master of Business Administration degree from Harvard Business School and a B.A. in Economics-Business from the University of California, Los Angeles (“UCLA”). While at UCLA, he was awarded the Pacific-10 Conference Medal. He is a Certified Public Accountant (non-practicing) and began his career as an auditor at Price Waterhouse. |
Director Nominees
Our Board believes that Mr. Hartmeier is qualified to serve as a Director due to his extensive experience in the financial services industry, his experience and knowledge in the gaming, lodging and securities industries, and his executive management experience in investment banking.
Director Nominees
| 63 November 2014 ● | | | Daniel R. Lee Director, President and Chief Executive Officer Age: 67 Director Since: November 2014 Committees: ● Compliance | Mr. Lee was appointed as our President and Chief Executive Officer in November 2014. Mr. Lee was the Managing Partner of Creative Casinos, LLC, a developer of casino resorts, from September 2010 through December 2014. He was previously Chairman and Chief Executive Officer of Pinnacle Entertainment, Inc., a casino operator and developer, from April 2002 to November 2009. In the 1990s, he was Chief Financial Officer, Treasurer and Senior Vice President of Finance and Development at Mirage Resorts. During the 1980s, Mr. Lee was a securities analyst for Drexel Burnham Lambert and CS First Boston, specializing in the lodging and gaming industries. He serves as an independent director of Associated Capital Group, Inc., a publicly traded investment management company, since November 2015, where he is a member of the governance committee. He previously served as a director of Myers Industries, Inc., a publicly traded diversified manufacturing company, from April 2016 to April 2018, where he was a member of the audit committee and the corporate governance and nominating committee. Mr. Lee also previously served as an independent director of LICT Corporation and of ICTC Group, Inc. While working as a securities analyst, he was a Chartered Financial Analyst. Mr. Lee earned his M.B.A. and a B.S. degree in Hotel Administration, both from Cornell University. |
Director Nominees
Our Board believes that Mr. Lee is qualified to serve as a Director due to his extensive experience in the financial services industry, his experience and knowledge in the gaming, lodging and securities industries and his executive management experience as Chief Executive Officer of a large public corporation.
Director Nominees
| 64 January 2007 ● ● ● |
Director Nominees
| Kathleen M. Marshall Director Age: 68 Director Since: January 2007 Committees: ● Audit ● Compliance | Ms. Marshall is a Certified Public Accountant who, since March 2017, has served as the Chief Financial Officer of Casino Reinvestment Development Authority (“CRDA”), a New Jersey State Authority. Previously, she served as the Controller of CRDA from June 2016 to March 2017, and provided consulting services to CRDA from January 2016 to June 2016. From October 2008 through January 2016, Ms. Marshall served as Director of Business Development of Global Connect LLC, a web-based voice messaging company. Prior to that, from July 2003 through August 2008, Ms. Marshall served as Vice President of Finance for Atlantic City Coin & Slot Service Co. Inc., which designs, manufactures and distributes gaming equipment. Ms. Marshall has also held various finance positions with the Atlantic City Convention Center and several Atlantic City casinos, including Atlantic City Showboat, Inc. and Caesars Atlantic City, Inc. In addition, Ms. Marshall has worked as a public accountant in the audit division of Price Waterhouse. Ms. Marshall earned her B.A. in Accounting from Rutgers University. |
Director Nominees
Our Board believes that Ms. Marshall is qualified to serve as a Director due to her knowledge of and experience in the casino industry and her background as a financial officer for casino and casino-related companies.
Director Nominees
| 50 November 2014 ● | | | Michael P. Shaunnessy Director Age: 70 Director Since: July 2020 Committees: ● Audit (Chair) ● Compensation | Mr. Shaunnessy brings 37 years of experience in the gaming and hospitality industries to the Company’s board of directors. Most recently, Mr. Shaunnessy was President and Chief Executive Officer of Nevada Gold & Casinos, Inc., which he led for more than six years until its sale in 2019. From 2005 to 2012, Mr. Shaunnessy was an Executive Vice President of Operations at MGM Resorts International. In that capacity, he was the chief operating and financial officer overseeing operations of MGM’s Railroad Pass and Gold Strike casino hotel properties, both in the Las Vegas, Nevada area. Before joining MGM, Mr. Shaunnessy served as Vice President of Administration of Monarch Casino & Resort, Inc. Additionally, from 1998 to 2004, he served as Executive Vice President and Chief Financial Officer of our company, Full House Resorts, as well as a member of its board of directors from 2001 to 2004. A certified public accountant, Mr. Shaunnessy earned a bachelor’s degree in business administration from Lewis University and a master’s degree in accountancy from Northern Illinois University. |
Director Nominees
Our Board believes that Mr. Shaunnessy is qualified to serve as a Director due to his knowledge of and experience in the casino industry and his executive management experience as a financial officer and Chief Executive Officer of casino companies.
Director Nominees
| OUR BOARD RECOMMENDS | | A VOTE “FOR” EACH OF THE NOMINEES. |
Prohibition on Short Sales, Derivatives Trading and Pledging and Hedging of Company Securities
| ● | trading in securities on a short-term basis, excluding transactions required to complete certain stock option exercises; |
Director Compensation
Director Compensation Each non-employee director’s compensation in 2023 consisted of: (1) cash compensation of $50,000, paid quarterly in arrears (pro-rated for directors that served for less than the full year), and (2) a grant of common stock in a number of shares equal to approximately $75,000 on the date of grant. The Chairman of the Board also receives additional annual cash compensation of $25,000, paid quarterly in arrears, and the Chair of each of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Compliance Committee receives additional annual cash compensation of $17,500, $12,000, $10,000 and $10,000, respectively, paid quarterly in arrears. The table below summarizes the compensation paid by us to our non-employee directors for services rendered for 2023. Mr. Lee and Mr. Fanger, who are employed by us, do not receive additional compensation for serving as directors.
Director Compensation
| | Fees Earned or | Stock | Option | | | Name | Paid in Cash | Awards(1) | Awards(1)(2) | Total | | Kenneth R. Adams | $53,817 | $74,999 | $— | $128,816 | | Carl G. Braunlich | 73,091 | 74,999 | — | 148,090 | | Eric J. Green | 62,000 | 74,999 | — | 136,999 | | Lynn M. Handler | 56,183 | 74,999 | — | 131,182 | | Michael A. Hartmeier | 60,000 | 74,999 | — | 134,999 | | Kathleen M. Marshall | 54,581 | 74,999 | — | 129,580 | | Michael P. Shaunnessy | 65,401 | 74,999 | — | 140,400 |
Director Compensation
__________
Director Compensation
| (1) The amounts shown in this column represent the aggregate grant date fair value of awards for the fiscal year ended December 31, 2023, calculated in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions used in the calculation of these amounts, please see Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Director Compensation
| (2) At December 31, 2023, (i) Dr. Braunlich had an aggregate of 41,808 unexercised stock options outstanding, (ii) Ms. Marshall had an aggregate of 39,008 unexercised stock options outstanding, (iii) Mr. Adams had an aggregate of 22,650 unexercised stock options outstanding, (iii) each of Mr. Green and Mr. Shaunnessy had an aggregate of 8,000 unexercised stock options outstanding, and (iv) Mr. Hartmeier had an aggregate of 2,000 unexercised stock options outstanding. |
EXECUTIVE COMPENSATION
| ● | Under the 2015 Equity Incentive Plan, as amended from time to time (the “2015 Plan”), a double-trigger is required for early vesting of equity and related grants in connection with a change in control. All unvested options that are currently outstanding were issued from the 2015 Plan. |
EXECUTIVE COMPENSATION
| ● | We use a formula-based, pay-for-performance approach to management bonuses. Since 2017, our bonus criteria have focused on achievement of a variety of performance goals, including return on invested capital, Adjusted EBITDA, discretionary free cash flow per share, growth rates in performance metrics, and individual goals. |
Annual Incentive Plan
Annual Incentive Plan Our compensation committee adopted the Full House Resorts, Inc. Annual Incentive Plan for Executives (the “Annual Incentive Plan”), effective as of January 1, 2017. The Annual Incentive Plan is a short-term incentive plan designed to reward our executives for achieving pre-established corporate performance goals during a given performance period. The purpose of the Annual Incentive Plan is to provide an incentive for superior performance, to motivate participating executives toward the highest levels of achievement and business results, to tie management’s goals and interests with our stockholders’ goals, and to enable us to attract and retain highly qualified executives. Any bonus awards under the Annual Incentive Plan are payable in cash or common stock (or any combination of cash or common stock), and any portion of such bonus award payable in the form of our common stock will be subject to the terms and conditions (including the applicable share limitations) of our 2015 Plan, or any other plan adopted by us pursuant to which shares of common stock may be granted. Participation in the Annual Incentive Plan includes our named executive officers (our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer), as well as any other individuals as determined by the compensation committee in its discretion.
Annual Incentive Awards
Annual Incentive Awards For 2023, the Compensation Committee approved two performance metrics for evaluating annual incentive bonus payouts under the Annual Incentive Plan: Adjusted EBITDA and individual qualitative goals. The total annual incentive bonus payout for those two metrics could not exceed, as a percentage of base salary: 175% for Mr. Lee, 125% for Mr. Fanger, and 100% for Mr. Ferrucci. Goal 1: Adjusted EBITDA. The criteria for Adjusted EBITDA in 2023 were:
Annual Incentive Awards
| Named Executive Officer | Threshold | Target | Maximum | | All NEOs | $50 Million | $60 Million | $70 Million |
Annual Incentive Awards
Award payout levels, as a percentage of base salary, for meeting Adjusted EBITDA goals were:
Annual Incentive Awards
| Named Executive Officer | Threshold | Target | Maximum | | Daniel R. Lee | 25% | 80% | 175% | | Lewis A. Fanger | 25% | 75% | 125% | | John Ferrucci | 25% | 75% | 100% |
Annual Incentive Awards
As previously stated, Adjusted EBITDA in 2023 was $48.6 million, a 51.1% increase from $32.1 million in 2022. Despite significant growth in Adjusted EBITDA, the Compensation Committee did not approve the payout of any bonus amounts to our named executive officers related to this metric, as Adjusted EBITDA did not exceed the threshold level for 2023. Goal 2: Individual Qualitative Goals. During 2023, we made significant progress in our efforts to advance our growth strategies. These included the development and opening of the temporary American Place facility in February 2023, the opening of Chamonix in December 2023, and our continued focus on overall liquidity. While recognized for these important contributions, management elected to forego any payouts related to qualitative goals while operations at American Place and Chamonix continue their expected ramp up. Award payout levels, as a percentage of base salary, for individual qualitative goals were:
Annual Incentive Awards
| Named Executive Officer | Threshold | Target | Maximum | | Daniel R. Lee | 10% | 40% | 40% | | Lewis A. Fanger | 10% | 20% | 30% | | John Ferrucci | 10% | 20% | 30% |
Independent Compensation Study
Independent Compensation Study In 2021, AETHOS provided recommended updates to our compensation peer group, reflecting our recent growth and future growth plans. The updated peer group consisted of: Accel Entertainment, Bally’s, Century Casinos, Everi Holdings, Golden Entertainment, Inspired Entertainment, Lindblad Expeditions, Monarch Casino and Resort, Playa Hotels & Resorts, PlayAGS, Red Rock Resorts, and Rush Street Interactive. We maintained this peer group in 2023.
Equity Awards
Equity Awards AETHOS also provided recommendations for compensation programs to the Compensation Committee. Among such recommendations was an increase in the usage of “at-risk” compensation for our officers. As a result, we began issuing performance-based shares in 2021. Recent performance-based awards include:
Equity Awards
| ● | In connection with his employment agreement dated December 31, 2020, Mr. Lee was issued 40,541 performance-based shares on January 3, 2023, with the vesting of such shares based on the compounded annual growth rate of the Company’s Adjusted EBITDA and Free Cash Flow Per Share, as defined, for the three-year periods ending December 31, 2023, December 31, 2024, and December 31, 2025. |
Equity Awards
| ● | Mr. Fanger was issued 35,895 performance-based shares on May 18, 2023, with vesting conditions similar to those of Mr. Lee’s January 2023 grant described above. |
Equity Awards
| ● | Mr. Ferrucci was issued 13,514 performance-based shares on May 18, 2023, with vesting conditions similar to those of Mr. Lee’s January 2023 grant described above. |
Equity Awards
| ● | Mr. Lee was issued 58,252 performance-based shares on January 2, 2024, with the vesting of such shares based on the compounded annual growth rate of the Company’s Adjusted EBITDA and Free Cash Flow Per Share, as defined, for the three-year periods ending December 31, 2024, December 31, 2025, and December 31, 2026. |
Equity Awards
In April 2024, the Compensation Committee approved the satisfaction of performance criteria related to our operations in 2023. Such performance measures involved multi-year growth rates for EBITDA and free cash flow per share. As a result, a total of 114,007 shares either vested, or will vest, on the anniversary date of their grant. This total includes 45,299 performance shares previously granted to Mr. Lee, 28,000 performance shares previously granted to Mr. Fanger, and 6,417 performance shares previously granted to Mr. Ferrucci. The Compensation Committee has historically also issued stock option awards, as it believes that a significant component of the compensation paid to our executives over the long-term should be equity-based compensation. It also believes that stock price appreciation and stock ownership in us are valuable incentives to our executives. Accordingly, our executives are granted equity awards to align their interests with those of our stockholders and to encourage them to manage us in our best long-term interests. We endeavor to make annual equity awards to its management team. Recent stock option awards include:
Equity Awards
| ● | In connection with his employment agreement dated December 31, 2020, on January 3, 2023, Mr. Lee received a non-qualified stock option to purchase 62,578 shares of common stock pursuant to the 2015 Plan at an exercise price per share of $7.40, the closing price of our stock on that day. This stock option grant will vest with respect to 1/3 of the total number of shares underlying the stock option on each anniversary of January 3, 2023. Also in connection with his employment agreement, on January 2, 2024, Mr. Lee received a non-qualified stock option to purchase 87,822 shares of common stock pursuant to the 2015 Plan at an exercise price per share of $5.15, the closing price of our stock on that day. This stock option grant will vest with respect to 1/3 of the total number of shares underlying the stock option on each anniversary of January 2, 2024. |
Equity Awards
| ● | On May 18, 2023, Mr. Fanger received a non-qualified stock option to purchase 55,397 shares of common stock and Mr. Ferrucci received a non-qualified stock option to purchase 20,855 shares of common stock pursuant to the 2015 Plan, all at an exercise price per share of $7.40, the closing price of our stock on that day. These stock option grants will vest with respect to 1/3 of the total number of shares underlying the stock options on each anniversary of May 18, 2023, subject to each executive’s continued service with us through the applicable vesting date. |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table summarizes the “total compensation” of: (i) our Chief Executive Officer, and (ii) our two most highly compensated executive officers that served in such capacities at the end of 2023.
SUMMARY COMPENSATION TABLE
| Name and | | | | | | Non-Equity | All | | | Principal | | | | Stock | Option | Incentive Plan | Other | | | Positions | Year | Salary | Bonus | Awards(1)(2) | Awards(2) | Compensation | Compensation(3) | Total | | Daniel R. Lee | 2023 | $600,000 | $— | $300,003 | $299,999 | $— | $48,008 | $1,248,010 | | Director, | 2022 | 600,000 | — | 300,003 | 299,998 | 240,000 | 46,528 | 1,486,529 | | President and | | | | | | | | | | Chief Executive | | | | | | | | | | Officer | | | | | | | | | | Lewis A. Fanger(4) | 2023 | 425,000 | — | 265,623 | 265,629 | — | 10,097 | 966,349 | | Director, Senior | 2022 | 387,115 | 100,000 | 265,626 | 267,457 | 127,500 | 9,569 | 1,157,267 | | Vice President, | | | | | | | | | | Chief Financial | | | | | | | | | | Officer and | | | | | | | | | | Treasurer | | | | | | | | | | John Ferrucci(5) | 2023 | 400,000 | — | 100,004 | 100,000 | — | — | 600,004 | | Senior Vice | 2022 | 379,864 | — | 50,000 | 397,794 | 120,000 | — | 947,658 | | President, | | | | | | | | | | and Chief | | | | | | | | | | Operating Officer | | | | | | | | |
SUMMARY COMPENSATION TABLE
__________
SUMMARY COMPENSATION TABLE
| (1) Amounts include grants that vest based on specified performance criteria and reflect 100% of the aggregate grant date fair value. |
SUMMARY COMPENSATION TABLE
| (2) Amounts reflect the grant date fair value of equity awards calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in calculation of these amounts, see Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for each of the years ended December 31, 2023 and 2022. |
SUMMARY COMPENSATION TABLE
| (3) For 2023, this amount includes $13,862 for life and disability insurance, $27,546 for health care and related costs, and $6,600 in 401(k) matching contributions, in each case paid on behalf of Mr. Lee; and $3,497 for life and disability insurance and $6,600 in 401(k) matching contributions, in each case paid on behalf of Mr. Fanger. |
SUMMARY COMPENSATION TABLE
| (4) Mr. Fanger’s base salary was increased from $325,000 to $425,000 in May 2022. |
SUMMARY COMPENSATION TABLE
| (5) Mr. Ferrucci’s base salary was increased from $278,250 to $400,000 upon his appointment as our Chief Operating Officer in February 2022. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table provides information regarding outstanding equity award grants held at December 31, 2023 by each named executive officer.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Option Awards (a) | | | | | Stock Awards (a) | | | | | | | | | | Equity | | | | | | | | | Incentive | | | | | | | | Equity | Plan | | | | | | | | Incentive | Awards: | | | | | | | | Plan | Market or | | | | | | | | Awards: | Payout | | | | | | | | Number of | Value of | | | | Number of | Number of | | | Unearned | Unearned | | | | Securities | Securities | | | Shares, | Shares, | | | | Underlying | Underlying | | | Units or | Units or | | | | Unexercised | Unexercised | Option | Option | Other Rights | Other Rights | | | Grant | Options (#) | Options (#) | Exercise | Expiration | That Have | That Have | | Name | Date | Exercisable | Not Exercisable | Price ($) | Date | Not Vested (#) | Not Vested ($) | | Daniel R. Lee | 11/28/2014 | 943,834 | ― | 1.25 | 11/28/2024 | ― | ― | | | 5/10/2016 | 100,000 | ― | 1.70 | 5/10/2026 | ― | ― | | | 5/24/2017 | 240,000 | ― | 2.32 | 5/24/2027 | ― | ― | | | 9/10/2019 | 100,000 | ― | 1.97 | 9/10/2029 | ― | ― | | | 6/11/2020 | 100,000 | ― | 1.73 | 6/11/2030 | ― | ― | | | 1/7/2021 | 82,746 | 41,374(b) | 3.93 | 1/7/2031 | 23,325(c) | 125,255(d) | | | 1/3/2022 | 13,980 | 27,959(e) | 11.82 | 1/3/2032 | 16,921(f) | 90,866(d) | | | 1/3/2023 | ― | 62,578(g) | 7.40 | 1/3/2033 | 40,541(h) | 217,705(d) | | Lewis A. Fanger | 1/30/2015 | 250,000 | ― | 1.37 | 1/30/2025 | ― | ― | | | 5/10/2016 | 50,000 | ― | 1.70 | 5/10/2026 | ― | ― | | | 5/22/2017 | 25,000 | ― | 2.32 | 5/22/2027 | ― | ― | | | 5/17/2019 | 100,000 | ― | 2.23 | 5/17/2029 | ― | ― | | | 6/11/2020 | 50,000 | ― | 1.73 | 6/11/2030 | ― | ― | | | 5/19/2021 | 11,000 | 5,500(i) | 9.52 | 5/19/2031 | 2,917(j) | 15,664(d) | | | 5/19/2022 | 20,863 | 41,725(k) | 6.75 | 5/19/2032 | 26,235(l) | 140,882(d) | | | 5/18/2023 | ― | 55,397(m) | 7.40 | 5/18/2033 | 35,895(n) | 192,756(d) | | John Ferrucci | 5/5/2015 | 20,000 | ― | 1.51 | 5/5/2025 | ― | ― | | | 9/10/2019 | 30,000 | ― | 1.97 | 9/10/2029 | ― | ― | | | 6/11/2020 | 30,000 | ― | 1.73 | 6/11/2030 | ― | ― | | | 5/19/2021 | 20,000 | 10,000(i) | 9.52 | 5/19/2031 | ― | ― | | | 3/14/2022 | 16,667 | 33,333(o) | 8.72 | 3/14/2032 | 3,823(p) | 20,530(d) | | | 5/19/2022 | 10,000 | 20,000(k) | 6.75 | 5/19/2032 | ― | ― | | | 5/18/2023 | ― | 20,855(m) | 7.40 | 5/18/2033 | 13,514(n) | 72,570(d) |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
__________
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (a) The option and stock awards were granted pursuant to the 2015 Plan, except for certain option awards granted as inducement awards outside of the stockholder-approved plans to Messrs. Lee and Fanger upon their hiring (see the Equity Compensation Plan Information table below). |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (b) The vesting date of the remaining options is January 7, 2024. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (c) The vesting date of the remaining restricted stock is January 7, 2024, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (d) The market value reported reflects the number of unvested shares of restricted stock multiplied by $5.37 per share, the closing price of our common stock on Nasdaq on December 29, 2023, the last business day of fiscal 2023. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (e) The vesting dates of the remaining options are January 3, 2024 and January 3, 2025. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (f) The vesting dates of the remained restricted stock are January 3, 2024 and January 3, 2024, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (g) The options vest in three equal annual installments beginning on January 3, 2024. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (h) The restricted stock will vest in three equal annual amounts beginning on January 3, 2024, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (i) The vesting date of the remaining options is May 19, 2024. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (j) The vesting date of the remaining restricted stock is May 19, 2024, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (k) The vesting dates of the remaining options are May 19, 2024 and May 19, 2025. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (l) The vesting dates of the remaining restricted stock are May 19, 2024 and May 19, 2025, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (m) The options vest in three equal annual installments beginning on May 18, 2024. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (n) The restricted stock will vest in three equal annual amounts beginning on May 18, 2024, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (o) The vesting dates of the remaining options are March 14, 2024 and March 14, 2025. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (p) The vesting dates of the remaining restricted stock are March 14, 2024 and March 14, 2025, subject to the achievement of certain performance-based criteria, including annual growth rates of EBITDA and free cash flow per share. |
Payments Upon Termination
Payments Upon Termination Upon termination of the employment of Mr. Lee, Mr. Fanger or Mr. Ferrucci (each, an “Executive”) for any reason, he will be entitled to receive all earned but unpaid salary, accrued but unused vacation benefits and unpaid expenses through the termination date. In addition, the Lee Employment Agreement, the Fanger Employment Agreement and the Ferrucci Employment Agreement provide for the following payments and benefits in the event of termination of the Executive’s employment for the following reasons: Termination without Cause or by Executive for Good Reason
Payments Upon Termination
| ● | For Mr. Lee, (a) cash severance in an amount equal to one-year’s base salary plus his target bonus, payable in substantially equal installments in accordance with our normal payroll procedures; (b) a pro rata bonus for the year in which the termination occurs, to be paid immediately following the filing of our Annual Report on Form 10-K for that year on the basis of what would have been paid had Mr. Lee been employed for the entire year; and (c) continued health, life and disability insurance coverage for the period set forth therein. |
Payments Upon Termination
| ● | For Mr. Fanger and Mr. Ferrucci, cash severance in aggregate amount equal to (i) a pro-rata annual bonus equal to the average of the cash portion of any bonuses earned in the immediately preceding two years; and (ii) one year’s base salary payable in substantially equal installments for one year after the termination date in accordance with our normal payroll procedures or, if the termination occurs within six months following a Change in Control that constitutes a “change in control event” within the meaning of Section 409A, payable in a lump sum; |
Payments Upon Termination
| ● | For Mr. Fanger and Mr. Ferrucci, any unpaid annual bonus for the calendar year prior to the year of termination, payable in a lump sum on the same date that bonuses are paid to our other senior executives, but no later than March 15 of the year following termination; |
Payments Upon Termination
| ● | Company-paid health benefits coverage for the Executive and his or her dependents and life and disability insurance coverage for the Executive for one year after the termination date (in the case of Mr. Lee, until the later of December 31, 2025 and the first anniversary of the termination date), unless covered by another group health plan or group disability plan; and |
Payments Upon Termination
| ● | Full accelerated vesting of all outstanding stock options held by the Executive on the termination dates. |
Payments Upon Termination
Definitions “Cause” under the Lee Employment Agreement, the Fanger Employment Agreement and the Ferrucci Employment Agreement means:
Payments Upon Termination
| i. | Failure to Perform Duties. If the Executive neglects to perform the material duties of his or her employment in a professional and businesslike manner after having received written notice specifying such failure to perform and after the expiration of a period providing a reasonable opportunity to perform such duties. |
Payments Upon Termination
| ii. | Willful Breach. If the Executive willfully commits a material breach of the agreement or a material willful breach of his or her fiduciary duty to us. |
Payments Upon Termination
| iii. | Wrongful Acts. If the Executive is convicted of a felony involving acts of moral turpitude (for Mr. Lee, any felony or a plea of nolo contendere (or similar plea)) or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against us (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on us). |
Payments Upon Termination
| iv. | Disability. If the Executive is physically or mentally disabled from the performance of a major portion of his or her duties for a continuous period of 120 days or greater. |
Payments Upon Termination
| v. | Failure To Be Licensed. If the Executive fails to be licensed in all jurisdictions in which we or our subsidiaries have gaming facilities by the required date, or if any of such licenses are revoked or suspended. |
Payments Upon Termination
| vi. | Executive dies. |
Payments Upon Termination
“Good Reason” means:
Payments Upon Termination
| i. | Lee Employment Agreement. “Good Reason” means (a) a material breach of the agreement by us (including any material reduction in Mr. Lee’s authority or duties), or any relocation of Mr. Lee’s principal place of business outside the greater Las Vegas metropolitan areas (without his consent) and our failure to remedy such breach within thirty days after written notice; (b) a termination of employment by Mr. Lee for any reason within thirty (30) days following a Board Stalemate, where a “Board Stalemate” occurs if, during the term, (i) Mr. Lee nominates up to two existing Board members to serve as Chairman of the Board and the Board fails to appoint (determined in accordance with our Bylaws) either of Mr. Lee’s nominees and (ii) thereafter, Mr. Lee nominates himself to serve as Chairman of the Board and the Board fails to appoint (determined in accordance with our Bylaws) Mr. Lee as Chairman; (c) if insufficient shares are available under the 2015 Plan to be issued as equity incentive grants, the failure of us and Mr. Lee to agree in good faith to an equitable substitute compensation if our stockholders do not approve an amendment to the 2015 Plan to increase the authorized shares under the 2015 Plan; or (d) a requirement that Mr. Lee report to a corporate officer or employee of ours instead of reporting directly to the Board (or if we have a parent corporation, a requirement that Mr. Lee report to any individual or entity other than the board of our ultimate parent corporation). |
Payments Upon Termination
| ii. | Fanger Employment Agreement. “Good Reason” means a material breach of the agreement by us (including any material reduction in the compensation, authority or duties of the Executive in which the Executive no longer holds his title of a publicly-held company), or in which he can no longer maintain an office at our principal place of business in the greater Las Vegas metropolitan areas (without his consent), and if we fail to remedy such breach within thirty days after written notice. |
Payments Upon Termination
| iii. | Ferrucci Employment Agreement. “Good Reason” means a material breach of the agreement by us (including any material reduction in the compensation, authority or duties of the Executive in which the Executive no longer holds his title of a publicly-held company) and if we fail to remedy such breach within thirty days after written notice. |
Payments Upon Termination
“Change in Control” under the Lee Agreement means:
Payments Upon Termination
| i. | the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by us or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, us) of beneficial ownership of securities possessing more than 50% of the total combined voting power of our outstanding securities pursuant to a tender or exchange offer made directly to our stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offer or do not recommend such stockholders accept; |
Payments Upon Termination
| ii. | a change in the composition of the Board over a period of twelve months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors; |
Payments Upon Termination
| iii. | the sale, transfer or other disposition of all or substantially all of our assets; |
Payments Upon Termination
| iv. | any merger, consolidation or other similar Change in Control (or series of related transactions) involving us unless the holders of the majority of the total combined voting power of our securities outstanding immediately prior to such merger, consolidation or other transaction possess more than 50% of the total combined voting power of the securities of the surviving entity that are outstanding immediately after such merger, consolidation or other Change in Control; or |
Payments Upon Termination
| v. | our dissolution or liquidation. |
Payments Upon Termination
Termination due to Death or Disability Upon termination of employment of Mr. Lee due to death or disability, in addition to benefits under the life and long-term disability insurance policies, as applicable, Mr. Lee or his estate shall receive an amount equal to one year’s salary at the then-current rate, to be paid at monthly intervals. Mr. Lee or his estate shall also be paid a pro rata bonus for the current year, to be paid not more than 15 days following the filing of our Annual Report on Form 10-K for the applicable year. In all cases, these amounts will be satisfied first through the payment of the insurance policies provided by us pursuant to the Lee Employment Agreement, and if the insurance policies are insufficient to satisfy the amounts owed, then we shall be liable for the remainder. Upon termination of employment of Mr. Fanger or Mr. Ferrucci due to death or disability, in addition to benefits under the life and long-term disability insurance policies, as applicable, they will be entitled to accelerated vesting of all outstanding stock options held on the termination date that would have vested over the one-year period immediately following the termination date had the stock option continued to vest in accordance with its terms. In the case of Mr. Lee, all vested and outstanding stock options held by him on the termination date may be exercised, however, the unvested portion of each stock option will terminate. Termination for Cause Upon termination for Cause, each Executive will be entitled to exercise any vested options. Each Executive’s right to receive the severance payments and benefits (either in connection with a Change in Control or outside the Change in Control context) described above is subject to the delivery of an effective mutual general release of claims. Each of the employment agreements with our Executives contains confidentiality, non-solicitation, non-hire and non-competition provisions. Subject to exceptions or conditions in the Lee Employment Agreement, (i) upon a termination of Mr. Lee’s employment for Cause or by Mr. Lee without Good Reason the non-competition covenant will continue to apply for one year, (ii) upon a termination of Mr. Lee’s employment without Cause or by Mr. Lee with Good Reason the non-competition covenant will continue to apply for six months; and (iii) upon termination of Mr. Lee’s employment for any reason, the non-hire covenant will continue to apply for one year. Upon a termination of the Mr. Fanger’s or Mr. Ferrucci’s employment for Cause or by them without Good Reason, the non-competition and non-hire covenants will continue to apply for one year, subject to exceptions or conditions in the Fanger Employment Agreement or the Ferrucci Employment Agreement, respectively. Upon a termination of Executive’s employment for any reason (or after the term of each Executive’s employment agreement), the non-solicitation covenant will continue to apply for one year.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K under the Exchange Act (“Regulation S-K”), we are providing the following information about the relationship of the annual total compensation of Mr. Lee, our President and Chief Executive Officer, and the annual total compensation of our median employee. Using the methodology described below, we determined that the total annual compensation of our median employee, excluding our Chief Executive Officer, was $26,796. The annual total compensation of our Chief Executive Officer was $1,248,010. Based upon the calculation of compensation for both our Chief Executive Officer and our median employee, the ratio of Chief Executive Officer pay to median employee pay for 2023 was 47-to-1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. To identify the annual total compensation of our median employee, we took the following steps:
CEO Pay Ratio Disclosure
| ● | We identified our median employee using payroll compensation consistent with what is reported on each employee’s W-2, Box 1 as of December 31, 2023 for all individuals, excluding our Chief Executive Officer, who were employed by us on such date. There were 1,799 total employees in such group, excluding our Chief Executive Officer. Total annual compensation was calculated using all pay periods between January 1, 2023 and December 31, 2023. |
CEO Pay Ratio Disclosure
| ● | We did not make any assumptions or estimates with respect to total annual compensation. |
CEO Pay Ratio Disclosure
| ● | In accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, we then calculated the total annual compensation for the median employee for 2023. We compared such amount to the annual total compensation of our Chief Executive Officer for 2023, as set forth in the “Total” column of the Summary Compensation Table included in this proxy statement. |
CEO Pay Ratio Disclosure
Because the SEC rules for identifying the median of the annual total compensation of a company’s employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have employees in other countries, have different employee populations and compensation practices, and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following information provides detail on the relationship between executive compensation actually paid and certain financial performance metrics. For additional information on how the Company aligns executive compensation with Company performance, see “Executive Compensation ─ Annual Incentive Awards.”
PAY VERSUS PERFORMANCE
| Pay Versus Performance | | | | | | | | | | | | | Value of | | | | | | | | $100 | | | | | | | | Initial | | | | | | | | Investment | | | | | | | | Based on: | | | | | | Average | | | | | | | | Summary | Average | | | | | | | Compensation | Compensation | | | | | | | Table Total | Actually Paid | | | | | Summary | | for Non-CEO | to Non-CEO | | Net | | | Compensation | Compensation | Named | Named | Total | (Loss) / | | | Table Total for | Actually Paid | Executive | Executive | Shareholder | Income | | Year | CEO | to CEO(1) | Officers(2) | Officers(3) | Return(4) | (in thousands) | | 2023 | $1,248,010 | $841,840 | $783,176 | $550,263 | $136.64 | $(24,904) | | 2022 | 1,486,529 | 61,781 | 1,052,463 | 743,139 | 191.35 | (14,804) | | 2021 | 2,571,232 | 4,736,519 | 864,653 | 1,516,150 | 308.14 | 11,706 |
PAY VERSUS PERFORMANCE
__________
PAY VERSUS PERFORMANCE
| (1) Compensation actually paid to Mr. Lee for each of the fiscal years reported is calculated as follows: |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | | Total compensation reported in Summary Compensation Table | $1,248,010 | $1,486,529 | $2,571,232 | | Less: Grant date fair value of equity awarded in current year(a) | (600,002) | (600,001) | (1,005,150) | | Plus: | | | | | Fair value as of December 31 of awards granted during and outstanding at the end of the fiscal year | 416,495 | 363,541 | 2,039,570 | | Change in fair value of outstanding awards granted in prior fiscal years(b) | (208,454) | (775,963) | 790,333 | | Vesting date fair value of equity awards granted and vested during the fiscal year | — | — | — | | Change in fair value of awards granted in prior fiscal years and vested during the covered fiscal year(c) | (14,209) | (412,325) | 340,534 | | Earnings paid on unvested awards for dividends or other earnings | — | — | — | | Less: Fair value as of December 31 of awards granted in prior fiscal years that did not meet vesting conditions | — | — | — | | Compensation actually paid(d) | $841,840 | $61,781 | $4,736,519 |
PAY VERSUS PERFORMANCE
| (a) Includes time-based options and performance-based restricted shares, which do not vest during the fiscal year awarded. |
PAY VERSUS PERFORMANCE
| (b) Change in fair value from December 31 of the covered fiscal year compared to December 31 of the prior fiscal year. Each performance share included as part of the calculation represents a contingent right to receive one share of common stock, subject to satisfaction of certain performance metrics and vesting requirement. Amounts reported assume the performance metrics will be achieved at the target performance level, which is the most probable outcome as of the end of the fiscal year, unless otherwise noted. Interim values based on assumption of the most probable outcome may not ultimately reflect actual payouts. |
PAY VERSUS PERFORMANCE
| (c) Change in fair value from vesting date compared to December 31 of the prior fiscal year. |
PAY VERSUS PERFORMANCE
| (d) The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
PAY VERSUS PERFORMANCE
| (2) Named Executive Officers in the calculation for each of the fiscal years reported are as follows: |
PAY VERSUS PERFORMANCE
| Year | Non-CEO NEOs | | 2022 & 2023 | Lewis A. Fanger and John Ferrucci | | 2021 | Lewis A. Fanger and Elaine L. Guidroz |
PAY VERSUS PERFORMANCE
| (3) Average compensation actually paid to non-CEO named executive officers reported on an average basis is calculated as follows: |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | | Total compensation reported in Summary Compensation Table | $783,176 | $1,052,463 | $864,653 | | Less: Grant date fair value of equity awarded in current year(a) | (365,628) | (490,439) | (158,765) | | Plus: | | | | | Fair value as of December 31 of awards granted during and outstanding at the end of the fiscal year | 254,590 | 515,450 | 211,705 | | Change in fair value of outstanding awards granted in prior fiscal years(b) | (129,760) | (128,828) | 380,648 | | Vesting date fair value of equity awards granted and vested during the fiscal year | — | — | — | | Change in fair value of awards granted in prior fiscal years and vested during the covered fiscal year(c) | 7,885 | (205,507) | 217,909 | | Earnings paid on unvested awards for dividends or other earnings | — | — | — | | Less: Fair value as of December 31 of awards granted in prior fiscal years that did not meet vesting conditions | — | — | — | | Compensation actually paid(d) | $550,263 | $743,139 | $1,516,150 |
PAY VERSUS PERFORMANCE
__________
PAY VERSUS PERFORMANCE
| (a) Includes time-based options and performance-based restricted shares, which do not vest during the fiscal year awarded. |
PAY VERSUS PERFORMANCE
| (b) Change in fair value from December 31 of the covered fiscal year compared to December 31 of the prior fiscal year. Each performance share included as part of the calculation represents a contingent right to receive one share of common stock, subject to satisfaction of certain performance metrics and vesting requirement. Amounts reported assume the performance metrics will be achieved at the target performance level, which is the most probable outcome as of the end of the fiscal year, unless otherwise noted. Interim values based on assumption of the most probable outcome may not ultimately reflect actual payouts. |
PAY VERSUS PERFORMANCE
| (c) Change in fair value from vesting date compared to December 31 of the prior fiscal year. |
PAY VERSUS PERFORMANCE
| (d) The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
PAY VERSUS PERFORMANCE
| (4) Assumes $100 was invested on December 31, 2020. |
Information Presented in the Pay versus Performance Table
Information Presented in the Pay versus Performance Table We seek to align executive interests with all stakeholders by setting performance measures that provide a clear path to achieving long-term value. Because the Company generally places emphasis on long-term performance, compensation actually paid as disclosed in the table above may not specifically align with achievement of performance measures for a particular year.
Compensation Actually Paid and Cumulative Total Shareholder Return (“TSR”)
Compensation Actually Paid and Cumulative Total Shareholder Return (“TSR”) As described in “Executive Compensation ─ Annual Incentive Awards,” equity awards comprise approximately 48% of our CEO’s compensation awarded during the fiscal year. These awards consist of performance-based restricted shares and time-based options, which do not vest during the year awarded. The following graph demonstrates the relationship between compensation actually paid and cumulative TSR considering the Company’s emphasis on long-term equity awards.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income The following table demonstrates the relationship between compensation actually paid and net income, which is not a performance metric used in our overall compensation program. Net income is, however, related to Adjusted EBITDA, which is included in our compensation program. PROPOSAL Two: