DEF 14A of Sachem Capital Corp.
Filed Aug 28, 2024 · FY20230001104659-24-093977
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Five (5) directors are to be elected at the Annual Meeting. All directors hold office until the next annual meeting of shareholders and until their respective successors are duly elected and qualified. It is intended that votes pursuant to the enclosed Proxy will be cast for the election of the five (5) director nominees named below. If any such nominee should become unable or unwilling to serve as a director, the Proxyholder will vote for the election of an alternate candidate, if any, as shall be designated by the Board. The Board has no reason to believe that any of these nominees will be unable to serve if elected. Each nominee has consented to being named in this Proxy Statement and to serve if elected. All five (5) nominees are currently members of the Board. There are no family relationships among any of the executive officers or directors of the Company. Our director nominees and their respective ages as of the Record Date are as follows:
ELECTION OF DIRECTORS
| Name | Age | Position | | John L. Villano | 64 | Chairman of the Board, Chief Executive Officer and President | | Leslie Bernhard (1)(4) | 80 | Director | | Arthur L. Goldberg (2)(4) | 85 | Director | | Brian A. Prinz (3)(4) | 71 | Director | | Jeffery C. Walraven | 55 | Director |
ELECTION OF DIRECTORS
| (1) Chair of the Compensation Committee (“Compensation Committee”). | | (2) Chair of the Audit Committee (“Audit Committee”). | | (3) Chair of the Nominating and Corporate Governance Committee (“Nominating and Corporate Governance Committee Committee”). | | (4) Member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. |
ELECTION OF DIRECTORS
Set forth below is a brief description of the background and business experience of our director nominees: John L. Villano is Chairman of the Board, Chief Executive Officer and President. Mr. Villano is one of our founders. Mr. Villano was appointed as a director and Chairman of the Board, Co-Chief Executive Officer, Chief Financial Officer and Secretary in February 2017, immediately prior to our initial public offering. In November 2019, upon the resignation of his brother, Jeffrey C. Villano, he became our sole Chief Executive Officer and was appointed Treasurer in addition to his then current positions with the Company and resigned as Secretary. Mr. Villano served as our Chief Financial Officer until August 2022, when we hired John E. Warch, and as our Treasurer until July 2022. He was appointed as our Interim Chief Financial Officer in May 2023 upon the departure of Mr. Warch, our then Chief Financial Officer. He served as our Interim Chief Financial Officer until June 2024, when we promoted Nicholas M. Marcello, our then Vice President of Finance & Operations, to Interim Chief Financial Officer. Mr. Villano has been designated as our principal executive officer. Mr. Villano is a certified public accountant and was engaged in the private practice of accounting and auditing for almost 30 years. His responsibilities include overseeing all aspects of our business operations, including loan origination and servicing, investor relations, brand development and business development. He is also responsible for all our accounting and financial matters. Mr. Villano holds a bachelor’s degree in Accounting from the University of Rhode Island in 1982. We believe that Mr. Villano’s experience in managing our business since its inception and his professional background as a certified public accountant make him an important part of our management team and make him a worthy candidate to serve on the Board and to lead the Board as Chairman. Leslie Bernhard was appointed as a director in February 2017. In 1986, Ms. Bernhard co-founded AdStar, Inc., an electronic ad intake service to the newspaper industry, and served as its president, chief executive officer and executive director until 2012. She also served as interim chief executive officer of Milestone from October 2017 to December 2017. In February 2024, she joined the board of directors of Sharplink Gaming Inc. (NASDAQ: SBET), an online technology company, as a director. In addition, since November 2023, she has been serving as the Chair of the board of Nexalin Technology, Inc. (NASDAQ: NXL), a company that designs and develops medical devices that utilizes bioelectronic medical technology. Prior to that, she served as an independent director of Milestone Scientific Inc. (NYSE American: MLSS), a developer and manufacturer of medical and dental devices, from May 2003 until January 4, 2023 and as the non-executive chairman of the Milestone board of directors from October 2009 through January 4, 2023. From 2007 through September 2018, Ms. Bernhard served as an independent director of Universal Power Group, Inc., a global supplier of power solutions (“UPG”), and as a consultant to UPG from September 2018 to December 2020. Ms. Bernhard holds a BS Degree in Education from St. John’s University. We believe that Ms. Bernhard’s experience as an entrepreneur and her service as a director of other public corporations enable her to make important contributions to the Board. Arthur L. Goldberg was appointed as a director in February 2017. He has been a private accounting and business consultant since April 2012. From March 2011 through June 2015, he served as a director of Sport Haley Holdings, Inc., a manufacturer and distributor of sportswear and furniture. From January 2008 through March 2013, he served as a member of the board of directors of SED International Holdings, Inc. (OTC: SEDN), a distributor of consumer electronics. From January 2008 through March 2012, he served as the chief financial officer of Clear Skies Solar, Inc., an installer of solar panels. Mr. Goldberg has held senior executive positions, including chief financial officer and chief operating officer, and served as a director of several public companies. From January 2008 through June 2008, he served as the chief financial officer of Milestone Scientific, Inc. (NYSE American: MLSS), a developer and manufacturer of medical and dental devices. From June 1999 through April 2005, Mr. Goldberg was a partner with Tatum CFO Partners, LLP, which provided interim CFO staffing services for public and private companies. Mr. Goldberg is an attorney and a certified public accountant and holds a B.B.A. degree from the City College of New York, an M.B.A. from the University of Chicago and J.D. and LLM degrees from the New York University School of Law. Mr. Goldberg was selected as a director because of his experience as the senior executive, operations and financial officer of several public companies and because of his background in accounting and law. We believe that his background and experience provide the Board with a perspective on corporate finance matters. Given his financial experience, the Board has also determined that Mr. Goldberg qualifies as the Audit Committee financial expert, pursuant to Item 407(d)(5) of Regulation S-K promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Brian A. Prinz was appointed as a director in February 2017. He is currently retired and, since 2016, has been a member of the board of directors of Current, Inc., a leading manufacturer of laminated products including sheeting, tubes, rods, spacers and standoffs, as well as electrical grade laminates, a variety of carbon fiber products and other industrial products, which are used in various industries including construction, recreation, energy exploration and defense. From September 2022 to September 2023, Mr. Prinz served as a consultant to Current, Inc. Prior to that, from September 2001 to September 2022, he was the president and chief financial officer of Current, Inc., with which he was employed since 1976. Mr. Prinz graduated from Bryant College with a B.A. in 1976. We believe that his background and experience make him well qualified to serve as a member of the Board. Jeffery C. Walraven was appointed as a director in August 2024. Mr. Walraven brings to the Board experience in public company accounting, corporate capital markets and background in the real estate industry. Mr. Walraven is a co-founder and chief operating officer of Freehold Properties, Inc., a real estate investment trust (REIT) focused on specialty industrial and retail real estate, since its formation in May 2019. In addition, he has served as an independent director and member of the audit committee of Broad Street Realty, Inc. (OTCQX: BRST), a real estate company that owns, operates, develops, and redevelops primarily essential grocery-anchored shopping centers and mixed-use properties, since September 2023. From January 2014 to May 2019, Mr. Walraven served as executive vice president and chief financial officer of MedEquities Realty Trust, Inc. (formerly NYSE: MRT), a REIT specializing in healthcare properties. From July 2007 to June 2014, Mr. Walraven served as an assurance partner of BDO USA, LLP, an international accounting firm, and was appointed managing partner of BDO USA’s Memphis office in January 2013. Mr. Walraven is formerly a certified public accountant and graduated from Bob Jones University with a B.S. in Financial Management and from Clemson University with an M.P.A. in professional accountancy. We believe Mr. Walraven’s experience in public company accounting, corporate capital markets and background in the real estate industry make him well qualified to serve as a member of the Board. The Board recommends a vote FOR the election of each director nominee, and Proxies that are signed and returned will be so voted, unless otherwise instructed. * * * * *
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS Our non-employee director compensation plan, as amended in September 2023 (the “Director Plan”), provides as follows:
COMPENSATION OF DIRECTORS
| • | each non-employee director receives cash compensation at a rate of $90,000 per year, effective on January 1, 2024, which amount shall be paid in equal quarterly installments of $22,500 on the first day of each calendar quarter (i.e., January 1, April 1, July 1, and October 1); |
COMPENSATION OF DIRECTORS
| • | the additional cash compensation payable to the chairperson of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee remain unchanged as follows: |
COMPENSATION OF DIRECTORS
| o | the chairperson of the Audit Committee receives additional cash compensation of $7,500 per year, payable in equal quarterly installments of $1,875 on the first day of each calendar quarter (i.e., January 1, April 1, July 1, and October 1); | | o | the chairperson of the Compensation Committee receives additional cash compensation of $5,000 per year, payable in equal quarterly installments of $1,250 on the first day of each calendar quarter (i.e., January 1, April 1, July 1, and October 1); | | o | the chairperson of the Nominating and Corporate Governance Committee receives additional cash compensation of $2,500 per year, payable in equal quarterly installments of $625 on the first day of each calendar quarter (i.e., January 1, April 1, July 1, and October 1); |
COMPENSATION OF DIRECTORS
| • | each non-employee director receives a grant of 6,000 Common Shares on the date he or she is re-elected to serve on the Board; and |
COMPENSATION OF DIRECTORS
| • | the non-employee director serving on our Loan Approval Committee receives additional cash compensation of $7,500 per year, payable in equal quarterly installments of $1,875 on the first day of each calendar quarter (i.e., January 1, April 1, July 1, and October 1). |
COMPENSATION OF DIRECTORS
John L. Villano, an executive officer as well as a director, does not receive compensation in connection with his position as a member of the Board. The following table provides compensation information for the year ended December 31, 2023 for each of the Independent Directors.
COMPENSATION OF DIRECTORS
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards($)(2) | Total ($) | | Leslie Bernhard | $95,000 | $21,240 | $116,240 | | Arthur L. Goldberg | $97,500 | $21,240 | $118,740 | | Brian A. Prinz | $100,000 | $21,240 | $121,240 | | Jeffery Walraven(3) | $0 | $0 | $0 |
COMPENSATION OF DIRECTORS
| (1) During the year ended December 31, 2023, each of Ms. Bernhard and Messrs. Goldberg and Prinz was awarded a bonus of $30,000 which is included in their respective amount. |
COMPENSATION OF DIRECTORS
| (2) During the year ended December 31, 2023, under the Director Plan, each of Ms. Bernhard and Messrs. Goldberg and Prinz was awarded an aggregate of 6,000 Common Shares, respectively. The dollar amounts reflected in the table are the aggregate grant date fair value for the Common Shares awarded computed in accordance with Financial Accounting Standards Board Accounting Standards Codified Topic 718 (“FASB ASC Topic 718”). |
COMPENSATION OF DIRECTORS
| (3) Appointed to the Board on August 21, 2024. |
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| | | | | Stock | All Other | | | Name and Principal Position | Year | Salary | Bonus | Awards(2) | Compensation | Total | | | | ($) | ($) | ($) | ($) | ($) | | John L. Villano | 2023 | $750,000 | $337,500 | $506,544(3) | $114,392(5) | $1,708,436 | | Chairman of the Board, Chief Executive Officer, President, Interim Chief Financial Officer and Director(1) | 2022 | $750,000 | $250,000 | $500,000(4) | $24,990 | $1,524,990 |
Summary Compensation Table
| (1) From May 4, 2023 through June 5, 2024, John L. Villano also held the position of Interim Chief Financial Officer upon the departure of John E. Warch, our then Chief Financial Officer, on May 4, 2023. On June 5, 2024, Nicholas M. Marcello, Vice President of Finance & Operations, was promoted to Interim Chief Financial Officer, replacing John L. Villano in that position and on August 8, 2024, Mr. Marcello was promoted to Chief Financial Officer. |
Summary Compensation Table
| (2) Represents the aggregate grant-date fair value of the awards computed in accordance with FASB ASC Topic 718. |
Summary Compensation Table
| (3) Represents the grant-date fair value on an aggregate of 130,890 Common Shares awarded on February 17, 2023, computed in accordance with FASB ASC Topic 718. |
Summary Compensation Table
| (4) Represents the grant-date fair value on an aggregate of 98,425 Common Shares awarded on April 5, 2022, computed in accordance with FASB ASC Topic 718. |
Summary Compensation Table
| (5) Represents an auto allowance of $26,000 per annum and a one-time payment by the Company, in the amount of $88,392, to cover the estimated tax liability for the 2023 Stock Award. |
Employment Agreement — John L. Villano
Employment Agreement — John L. Villano In August 2016, in anticipation of our initial public offering, we entered into an employment agreement with John L. Villano. The material terms of Mr. Villano’s employment agreement are as follows:
Employment Agreement — John L. Villano
| • | Mr. Villano serves as our Chairman, Chief Executive Officer and President. He also served as our Interim Chief Financial Officer until June 2024. |
Employment Agreement — John L. Villano
| • | The term of his employment, which commenced in February 2017, is five years, unless terminated earlier in accordance with his employment agreement. The termination date is extended one year on each anniversary date of the agreement unless either party to the agreement provides written notice at least 180 days before the next anniversary date that it is electing not to renew the agreement, in which case the agreement will terminate at the end of the fourth year from the next anniversary date. |
Employment Agreement — John L. Villano
| • | As of April 2021, Mr. Villano’s base salary was $500,000 per annum. In addition, for the year ended December 31, 2021, he was entitled to a one-time cash bonus of $250,000, which was paid in 2021. He was also entitled to a “target bonus” of up to $250,000, as determined by the Compensation Committee, which would have been payable in 2022. Mr. Villano waived his right to receive the target bonus. |
Employment Agreement — John L. Villano
| • | In April 2022, Mr. Villano’s base salary was increased to $750,000 per annum, retroactive to January 1, 2022. |
Employment Agreement — John L. Villano
| • | Mr. Villano is entitled to incentive compensation in such amount as shall be determined by the Compensation Committee of the Board in its sole and absolute discretion, based on our achievement of the financial performance goals set by the Board and capital transactions. |
Employment Agreement — John L. Villano
| • | Mr. Villano has the right to participate in all retirement, pension, deferred compensation, insurance and other benefit plans adopted and maintained by us for the benefit of employees and be entitled to additional compensation in an amount equal to the cost of any such benefit plan or program if he chooses not to participate. |
Employment Agreement — John L. Villano
| • | Mr. Villano is indemnified to the full extent permitted by law against and for any claims, liabilities, losses, expenses and costs incurred that relate to any acts or omission taken in his capacity as an officer or director. |
Employment Agreement — John L. Villano
| • | We have the right to terminate the employment agreement at any time with or without cause and for death or disability (as defined in the employment agreement). See below for the payments due upon a termination. |
Employment Agreement — John L. Villano
| • | Mr. Villano is subject to a two-year non-competition provision if we terminate the employment agreement for cause. |
Employment Agreement — John L. Villano
| • | In the event any payment to the employee is subject to an excise tax under the Code, we will pay the employee an additional amount equal to the amount of the excise tax and any other taxes (whether in the nature of excise taxes or income taxes) due with respect to such payment. |
Employment Agreement — John L. Villano
In April 2021, Mr. Villano received a grant of 89,928 restricted Common Shares (based on the closing price of $5.56 per Common Share on April 8, 2021) vesting in three equal installments on each of January 1, 2022, 2023 and 2024, which are subject to forfeiture, to the extent unvested, if he voluntary resigns as an employee of the Company without “Good Reason” or if his employment is terminated for “Cause.” In April 2022, Mr. Villano received a grant of 98,425 restricted Common Shares (based on the closing price of $5.08 per Common Share on April 5, 2022) vesting in three equal installments on each of January 1, 2023, 2024 and 2025, which are subject to forfeiture under the same terms and conditions as the 2021 grant. In February 2023, Mr. Villano received a grant of 130,890 restricted Common Shares (based on the closing price of $3.82 per Common Share on February 16, 2023) vesting in three equal installments on each of January 1, 2024, 2025 and 2026, which are subject to forfeiture under the same terms and conditions as the 2021 grant. In March 2024, Mr. Villano received a grant of 111,857 restricted Common Shares (based on the closing price of $4.53 per Common Share on March 19, 2024) vesting in three equal installments on each of January 1, 2025, 2026, and 2027, which are subject to forfeiture under the same terms and conditions as the 2021 grant. For the year ended December 31, 2022, Mr. Villano was entitled to a “target bonus” of $250,000 as determined by the Compensation Committee, which was paid in March 2023. In addition, for 2023, he is entitled to a “target bonus” of up to $375,000. The Compensation Committee approved a bonus of $337,500, which was paid in 2024.
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023 The following table sets forth information concerning outstanding equity awards to the Named Executive Officer as of December 31, 2023.
Outstanding Equity Awards at December 31, 2023
| | Stock Awards | | | | Number of Common Shares or units of | Market value of Common Shares or | | | stock that have not vested | units of stock that have not vested | | Name | (#) | ($) (1) | | John L. Villano | 226,483(2) | $847,046 |
Outstanding Equity Awards at December 31, 2023
| (1) Calculated based on the closing market price of $3.74 on December 29, 2023. | | (2) 106,414 of these restricted Common Shares vest on January 1, 2024, 76,439 of these restricted Common Shares vest on January 1, 2025 and 43,630 of these restricted Common Shares vest on January 1, 2026. Unvested shares may not be transferred, sold, pledged, hypothecated or assigned, and are subject to forfeiture. |
Pay Versus Performance Table
Pay Versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid to our principal executive officer (“PEO”) and our other Named Executive Officers (“Non-PEO Named Executives”) and certain financial performance of the Company for each of the fiscal years ended December 31, 2023, 2022 and 2021.
Pay Versus Performance Table
| Year (a) | Summary Compensation Table Total for PEO(1) (b) | Compensation Actually Paid to PEO (2) (c) | Average Summary Compensation Table Total for Non-PEO Named Executives (3) (d) | Average Compensation Actually Paid to Non-PEO Named Executives (2) (e) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (4) (f) | Net Income (g) | | 2023 | $1,708,436 | $1,887,537 | N/A | N/A | $125.7 | 15,899,153 | | 2022 | $1,524,990 | $1,202,148 | $314,998 | $284,758 | $103.1 | $20,908,651 | | 2021 | $1,250,000 | $1,318,345 | $193,269 | $193,269 | $151.9 | $13,318,696 |
Pay Versus Performance Table
| (1) For each year shown, the PEO was John L. Villano. The values reflected in this column represent the “Total” compensation set forth in the Summary Compensation Table (“SCT”) on page 12 above. |
Pay Versus Performance Table
| (2) Compensation actually paid (“CAP”) is defined by the SEC and is computed in accordance with Item 402(v) of Regulation S-K as follows: |
Pay Versus Performance Table
| Adjustments to Determine CAP to the PEO | 2023 | 2022 | 2021 | | Total Compensation in the Summary Compensation Table | $1,708,436 | $1,524,990 | $1,250,000 | | Deduction for Amounts Reported under the “Stock Awards” Column in the Summary Compensation Table | $(506,544) | $(500,000) | $(500,000) | | Deduction for Amounts Reported under “Option Awards” Column in the Summary Compensation Table | $- | $- | $- | | Add the fair value as of the end of the covered fiscal year of all awards granted during the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | $489,529 | $324,803 | $525,180 | | Add the amount equal to the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year | $42,061 | $(152,278) | $- | | Add for awards that are granted and vest in the same year, the fair value as of the vesting date | $- | $- | $- | | Add the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | $40,814 | $(76,139) | $- | | Deduction for any awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered fiscal year, the amount equal to the fair value at the end of the prior fiscal year | $- | $- | $- | | Add the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | $113,242 | $80,772 | $43,165 | | Total Adjustments | $179,101 | $(322,842) | $68,345 | | CAP to the PEO | $1,887,537 | $1,202,148 | $1,318,345 |
Pay Versus Performance Table
| Adjustments to Determine CAP to the other Non-PEO Named Executives | 2023 | 2022 | 2021 | | Total Average Compensation in the Summary Compensation Table | $- | $314,998 | $193,269 | | Deduction for Amounts Reported under the “Stock Awards” Column in the Summary Compensation Table | $- | $(30,240) | $- | | Deduction for Amounts Reported under “Option Awards” Column in the Summary Compensation Table | $- | $- | $- | | Add the fair value as of the end of the covered fiscal year of all awards granted during the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | $- | $- | $- | | Add the amount equal to the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year | $- | $- | $- | | Add for awards that are granted and vest in the same year, the fair value as of the vesting date | $- | $- | $- | | Add the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | $- | $- | $- | | Deduction for any awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered fiscal year, the amount equal to the fair value at the end of the prior fiscal year | $- | $- | $- | | Add the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | $- | $- | $- | | Total Adjustments | $- | $(30,240) | $- | | CAP to the other Non-PEO Named Executives | $- | $284,758 | $193,269 |
Pay Versus Performance Table
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Non-PEO Named Executives as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the Non-PEO Named Executives in each applicable year are as follows: (i) for 2023, we did not have any Non-PEO Named Executives; for 2022, John E. Warch and William C. Haydon, the Company’s former chief financial officer and former chief investment officer, respectively; and (ii) for 2021, William C. Haydon. |
Pay Versus Performance Table
| (4) The amounts reported represent the measurement period value of an investment of $100 in our Common Shares on December 30, 2020 (the last trading day before the 2021 fiscal year), and then valued again on December 31, 2021 (the last trading day of the 2021 fiscal year), December 30, 2022 (the last trading day of the 2022 fiscal year) and December 29, 2023 (the last trading day of the 2023 fiscal year) based on the closing price per share of our Common Shares as of such dates and assuming the reinvestment of dividends. |
Relationship Between Compensation Actually Paid and Financial Performance Measures
Relationship Between Compensation Actually Paid and Financial Performance Measures The relationship between the CAP to our PEO and to our other Named Executive Officers, with (i) our cumulative total shareholder return (“TSR”), and (ii) our net income, in each case, for the fiscal years ended December 31, 2023, 2022 and 2021 is described as follows: From 2021 to 2023, the CAP to our PEO increased by approximately $569,000, or 43.2%, from $1,318,345 to $1,887,537. From 2021 to 2023, the CAP to our Non-PEO Named Executives increased by approximately 47.3%, from $193,269 to $284,758. We did not have any Non-PEO Named Executives in 2023. From 2021 to 2023, the Company’s TSR decreased by approximately 17.2% from $151.9 to $125.7, based on an investment of $100 in our Common Shares on the last trading day of the fiscal year 2021 as compared to 2023, and our net income increased by approximately 16.2%, from $13,318,696 to $15,899,153.