DEF 14A of TSS, Inc.
Filed Apr 30, 2025 · FY20240001140361-25-016687
The Board of Directors
The Board of Directors Our Certificate of Incorporation and Amended and Restated Bylaws provide that our business is to be managed by or under the direction of our Board of Directors. We do not have a policy as to whether the role of Chief Executive Officer and Chairman of the Board of Directors should be separate or combined or whether the Chairman of the Board of Directors should be a management or non-management director. Our Board of Directors believes that having an independent director serve as the non-executive Chairman of our Board of Directors is in the best interests of our stockholders. This structure allows the Chairman of our Board of Directors to focus on the effectiveness of our Board of Directors while the Chief Executive Officer focuses on executing our strategic plan and managing our operations and performance. In accordance with our Certificate of Incorporation, our Board of Directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our Board of Directors currently consists of four members, classified into three classes as follows:
The Board of Directors
| • | Mr. Michael Fahy and Mr. Darryll E. Dewan constitute a class with a term ending at the 2025 Annual Meeting of Stockholders; |
The Board of Directors
| • | Mr. Peter H. Woodward constitutes a class with a term ending at the 2026 Annual Meeting of Stockholders; and |
The Board of Directors
| • | Mr. Richard M. Metzler constitutes a class with a term ending at the 2027 Annual Meeting of Stockholders. |
The Board of Directors
Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. Our Board of Directors has voted to nominate each of Mr. Dewan and Mr. Fahy for election at the 2025 Annual Meeting of Stockholders for a term of three years to serve until the 2028 Annual Meeting of Stockholders and until his successor has been elected and qualified, or until his earlier death, resignation or removal. Set forth below are the names of the persons nominated for director and our current directors whose terms do not expire this year, their ages, their offices in the company, if any, their principal occupations or employment for the past five years, the length of their tenure as directors, the names of other public companies in which such persons have held directorships during the past five years, and the experience, qualifications, attributes and skills that support the conclusion that these persons should serve as members of our Board of Directors. Mr. Woodward, Mr. Fahy and Mr. Metzler are non-employee directors and the members of the Audit Committee and the Compensation Committee.
The Board of Directors
| Name | Age | Position with the Company | | Peter H. Woodward | 52 | Chairman | | Richard M. Metzler | 72 | Director | | Michael Fahy | 50 | Director | | Darryll E. Dewan | 73 | President, Chief Executive Officer and Director |
The Board of Directors
Peter H. Woodward, age 52, has been a Director since January 3, 2012, and Chairman of our Board of Directors since March 2012. Mr. Woodward is the Founder and President of MHW Capital Management, a private investment firm that takes concentrated positions in micro-cap turnaround companies, with a focus on the technology sector. Prior to founding MHW Capital Management in 2005, Mr. Woodward was a Managing Director at Regan Fund Management Ltd., a hedge fund group specializing in active equity investments in public companies and revitalizing their business plans. In addition to serving as the Chairman of our Board of Directors, Mr. Woodward serves as the Chairman of the Board of Directors of Precision Optics Corporation and as the Chief Executive Officer of Innovative Power, LLC. Previously, he served as Chief Executive Officer and director of Cartesian, Inc., Chairman of the Board of Hampshire Group, Limited, and as a Director at News Edge Corp., Zomax, Inc. and Innodata-Isogen, Inc. Mr. Woodward holds a Bachelor of Arts degree in Economics from Colgate University and a Master’s degree in International Economics from Columbia University. He is a Chartered Financial Analyst. Mr. Woodward is very familiar with our industry and his capital markets experience is valuable to our Board of Directors. Richard M Metzler age 72, has been a Director since April 2021. Mr. Metzler is currently the Chairman of Diverse Logistics & Distribution, a big/bulky retail home delivery company, and the Founder and CEO of Logistics Partners, LLC. From 2018 until January 2022, Mr. Metzler served as the Chief Executive Officer of Lone Star Overnight, LLC, a parcel delivery services company, and, since January 2021, has also served as the Chief Executive Officer of Ocelot Acquisition Corporation I, a special-purpose acquisition company. Mr. Metzler has over 25 years of senior leadership experience within the logistics industry, specifically within parcel, freight, third-party logistics, and e-commerce. Prior to his role at Lone Star Overnight, LLC, Mr. Metzler served as the Chief Marketing Officer at Austin-based uShip, Inc., an online marketplace for shipping services, from 2013 to 2018. Previously, Mr. Metzler has held leadership roles including Vice President of FedEx Logistics, CEO of APL Logistics, Executive Vice President at DHL, and Chief Commercial Officer at Greatwide Logistics. Since 2017, Mr. Metzler has served as the Chairman of the board of directors and as a member of the compensation committee for iGPS Logistics, a private company. Mr. Metzler has also worked extensively with private equity, debt financing, venture capital, and as a senior leader in portfolio companies advising on investments and divestitures. Mr. Metzler also brings with him extensive global M&A experience. Mr. Metzler provides our Board of Directors with substantial financing and M&A expertise and significant operational and executive experience gained in his capacity as a chief executive officer and board member of rapidly growing businesses in the logistics industry. Michael Fahy, age 50, was appointed to and has served as a Director on our board since October 2, 2024. Mr. Fahy is currently the Chief Executive Officer and President of Neovia Logistics, having served in that capacity since October 2023, where he is responsible for the direction and strategic growth of approximately 100 sites across 18 countries over various business sectors, including automotive, industrial, aerospace, consumer retail and technology. Additionally, since 2018, Mr. Fahy has held multiple leadership roles at Simon Group Holdings (“SGH”), including as Chief Executive Officer of three of SGH’s start-up technology platform companies. From November 2020 to October 2023, Mr. Fahy served first as an Executive Vice President of Contract Logistics and then as a Regional Chief Executive Officer of DB Schenker Americas. From 1996 to 2017, Mr. Fahy worked at Syncreon where he held multiple positions culminating in President of the Technology Sector for the company. Mr. Fahy earned a Bachelor of Science in Manufacturing Engineering from the Technological University Dublin. Mr. Fahy provides our Board of Directors with significant operational and executive experience gained in his capacity as a chief executive officer and in other leadership positions of rapidly growing businesses, with experience specifically in the technology sector. He has also had significant business dealings with our largest customer. Darryll E. Dewan, age 73, has served as a Director and as our President and Chief Executive Officer since November 2022. Prior to joining TSS, Mr. Dewan was a Vice President at Dell Technologies, Inc. from 2012 to November 2022 where he served as the global sales leader for all direct and indirect sales, field operations and marketing of the Dell Endpoint Data Security Business. Prior to his role at Dell, Mr. Dewan held various executive level positions in sales, marketing and business development with companies including Credant Technologies, Inc., VA Software Solutions, i2 Technologies, Amdahl Corp and IBM. Mr. Dewan holds a Bachelor of Arts degree in economics from the University of Notre Dame. Mr. Dewan has over 30 years of experience as an executive of publicly traded companies.
Compensation Committee
| • | recommend to our Board of Directors the adoption, amendment and termination of any bonus, equity and other deferred compensation plans; |
Compensation Committee
Our Compensation Committee approves and makes recommendations to our Board of Directors with respect to the compensation for our executive officers (other than Mr. Dewan) with the advice of Mr. Dewan and/or one or more other executive officers designated by Mr. Dewan. Although the Compensation Committee receives information and recommendations regarding the design and level of compensation for the executive officers from management, the Compensation Committee makes the final recommendations to the Board of Directors as to the design and compensation levels for the executive officers. To the extent we enter into employment agreements with our executive officers, those agreements would be subject to negotiation between us and the applicable executive officer. The Compensation Committee did not engage a compensation consultant in 2024. Our 2015 Plan and the proposed 2025 Omnibus Incentive Compensation Plan provides the Compensation Committee with the discretion to issue stock options, but we do not have a policy concerning the timing of stock option grants. Although we have no specific practice concerning the timing of stock option grants, we do not time the disclosure of material nonpublic information to affect the value of executive compensation. A copy of the Compensation Committee’s written charter is publicly available on our website at www.tssiusa.com.
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Summary Compensation Table
Summary Compensation Table The following table shows the total compensation earned during the last two fiscal years ended December 31, 2024 and 2023 to (1) our President and Chief Executive Officer, (2) our Chief Financial Officer, and (3) our Chief Operating Officer (collectively, the “named executive officers”).
Summary Compensation Table
| Name and Principal Position(s) | Year | Salary | Bonus | Stock Awards(1)(2) | Option Awards(1) | All Other Compensation | Total | | Darryll E. Dewan, President and Chief Executive Officer from November 14, 2022 | 2024 | $385,000 | 273,543 | $93,000 | $81,000 | $60,000(3) | $892,543 | | | 2023 | 385,000 | 147,960 | — | — | 60,670 | 593,630 | | Daniel M. Chism, Chief Financial Officer(4) | 2024 | 170,492 | 147,146 | 372,600 | 138,750 | — | 828,988 | | | 2023 | — | — | — | — | — | — | | Karl T. Marrott, Chief Operating Officer(5) | 2024 | 281,489 | 113,163 | 581,000 | — | — | 975,652 | | | 2023 | 250,000 | 44,914 | 59,000 | — | 178,180 | 532,094 |
Summary Compensation Table
| (1) Amounts shown are the grant-date fair value of restricted stock and stock option awards, determined in accordance with FASB ASC Topic 718. The grant-date fair value of option awards is based on the Black-Scholes-Merton valuation model. Underlying assumptions used in calculating the grant date fair value of option awards are presented in Note 8 to our Audited Financial Statements included in Item 8 of our Annual Report on Form 10-K filed with the SEC on April 15, 2025. |
Summary Compensation Table
| (2) Included in the 2024 grants are the following number of restricted shares granted to each recipient, the vesting of which is dependent on both future service and meeting certain performance criteria: 100,000 shares for each of Mr. Dewan and Marrott valued at $31,000; and 80,000 shares for Mr. Chism valued at $137,600 on the respective dates of grant. |
Summary Compensation Table
| (3) Includes a housing allowance. |
Summary Compensation Table
| (4) Mr. Chism commenced as our Chief Financial Officer on June 7, 2024, replacing John K. Penver. |
Summary Compensation Table
| (5) Mr. Marrott was promoted from SVP Operations to Chief Operating Officer on July 1, 2024. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information about all equity compensation awards held by the named executive officers at December 31, 2024.
Outstanding Equity Awards at Fiscal Year End
| | Option Awards(7) | | | | Stock Awards(7) | | | Name | Number of securities underlying unexercised options (#) Exercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of share or units of stock that have not vested(8) ($) | | Darryll E. Dewan | — | 416,668(1) | $0.62 | 11/14/2032 | 360,000 | 4,204,800 | | | 100,000(2) | 350,000(2) | 0.31 | 1/24/2034 | | | | Daniel M. Chism | — | 125,000(3) | 1.72 | 6/7/2034 | 335,000(4) | 3,912,800 | | Karl T. Marrott | — | 66,668(5) | 0.60 | 1/22/2028 | 493,334(6) | 5,762,141 |
Outstanding Equity Awards at Fiscal Year End
| (1) Represents a portion of an award of options to acquire 1,250,000 shares of our common stock granted to Mr. Dewan on November 14, 2022 under the 2015 Plan, scheduled to vest in three equal annual installments on each of the first, second and third anniversaries of the grant date. The first two tranches vested and were exercised; these shares represent the final vesting tranche of the option covering 416,668 shares scheduled to vest November 14, 2025. |
Outstanding Equity Awards at Fiscal Year End
| (2) Represents an award of options to acquire 450,000 shares of our common stock granted to Mr. Dewan on January 24, 2024 under the 2015 Plan, scheduled to vest 100,000 on January 24, 2025; 150,000 on January 24, 2026; 150,000 on January 24, 2027; and 50,000 on January 24, 2028. |
Outstanding Equity Awards at Fiscal Year End
| (3) Represents an award of an option to acquire 125,000 shares of our common stock granted to Mr. Chism upon his hire on June 7, 2024, which will vest in three annual installments of 41,667, 41,667 and 41,666 shares on each of the first, second and third anniversaries of the grant date. |
Outstanding Equity Awards at Fiscal Year End
| (4) Represents the unvested portion of four awards of restricted stock to Mr. Chism, comprised of the following: (i) 125,000 restricted shares granted upon his hire on June 7, 2024, which will vest in two annual installments of 62,500 shares on each of the first and |
Outstanding Equity Awards at Fiscal Year End
second anniversaries of the grant date; (ii) 50,000 performance-based restricted shares granted June 7, 2024 under the 2015 Plan which will vest January 1, 2026; (iii) 150,000 restricted shares granted January 16, 2025, which will vest in three equal installments of 50,000 on each of the first three anniversaries of the grant; and (iv) a performance-based grant of 10,000 restricted shares for which the performance criteria have not yet been met, granted under the 2015 Plan, with vesting scheduled to occur in two equal installments of 5,000 each upon the board’s certification of meeting performance criteria expected approximately March 15, 2026 and on January 1, 2027.
Outstanding Equity Awards at Fiscal Year End
| (5) Represents a portion of an award of options to acquire 200,000 shares of our common stock granted to Mr. Marrott on November 2, 2022 under the 2015 Plan, scheduled to vest in three equal annual installments on each of the first, second and third anniversaries of the grant date. The first two tranches vested and were exercised; these shares represent the final vesting tranche of the option covering 66,668 shares scheduled to vest November 2, 2025. |
Outstanding Equity Awards at Fiscal Year End
| (6) Represents the unvested portion of five awards of restricted stock to Mr. Marrott, comprised of the following: (i) 33,334 restricted shares granted under the 2015 Plan vesting February 24, 2025; (ii) 250,000 restricted shares granted June 27, 2024, which will vest in two equal installments of 125,000 on each of the first two anniversaries of the grant; (iii) 50,000 restricted shares granted January 19, 2024 which will vest January 1, 2026; (iv) 150,000 restricted shares granted January 16, 2025, which will vest in three equal installments of 50,000 on each of the first three anniversaries of the grant; and (v) a performance-based grant of 10,000 restricted shares for which the performance criteria have not yet been met, granted under the 2015 Plan, with vesting scheduled to occur in two equal installments of 5,000 each upon the board’s certification of meeting performance criteria expected approximately March 15, 2026 and on January 1, 2027. |
Outstanding Equity Awards at Fiscal Year End
| (7) Upon a Change in Control (as defined in the executives’ employment agreements), all restricted shares presented immediately vest and all options presented become immediately exercisable. |
Outstanding Equity Awards at Fiscal Year End
| (8) Computed based on a closing market price of $11.86 per share for our common stock at December 31, 2024. |
Director Compensation
Director Compensation Until October 1, 2024, we compensated each of our non-employee directors with an annual retainer of $22,500. The Chairman of our Board of Directors earned an additional annual retainer of $12,500, the Chairman of the Audit Committee earned an additional annual retainer of $5,000, and the Chairman of the Compensation Committee earned an additional annual retainer of $2,500. Effective October 1, 2024, the annual retainer for board service was increased to $40,000 and the additional retainers for service as the Chairman of the Board, Chairman of the Audit Committee, and Chairman of the Compensation Committee, respectively, were increased to $15,000, $10,000 and $5,000 annually. In April 2017, we granted Mr. Woodward an option to purchase 200,000 shares of our common stock which vested on the first anniversary of the date of grant. These options were also outstanding at December 31, 2024. In May 2021, upon his joining the Board of Directors, we granted Mr. Metzler an option to purchase 150,000 shares of our common stock which vested over a three-year period. Following his exercise of these options on May 7, 2024, Mr. Metzler no longer holds any options for our stock. On October 11, 2024, upon his joining the Board of Directors, we granted Mr. Fahy an option to purchase 20,000 shares of our common stock, one third of which is scheduled to vest upon each of the first three anniversaries of the grant. At December 31, 2024, all of these options remained outstanding and none of them was exercisable. We also reimburse our directors for travel, lodging and other reasonable out-of-pocket expenses in connection with the attendance at Board, committee and stockholder meetings, as well as for other reasonable expenses related to service on the Board. We do not maintain any pension, nonqualified defined contribution or other deferred compensation plans for our non-employee directors. The following table summarizes compensation earned by our non-employee directors during fiscal year 2024.
Director Compensation
| Name | Fees earned or paid in cash ($) | Stock Awards ($) | Option Awards ($) | All other compensation | Total ($) | | Peter H. Woodward | $46,250 | — | $— | $— | $46,250 | | Richard M. Metzler | 30,000 | — | — | — | 30,000 | | Michael Fahy | 10,000 | — | 87,800 | — | 97,800 |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE 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 and certain financial performance metrics for each of the last three completed calendar years. In determining the “compensation actually paid” to our Named Executive Officers (“NEOs”), we are required to make various adjustments to amounts that have previously been reported in the Summary Compensation Table in previous years, as the SEC’s calculation method for this section differs from those required in the Summary Compensation Table. The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Board of Directors or the Compensation Committee view the link between our performance and its PEO and NEOs pay.
Pay versus Performance Table
Pay versus Performance Table The table below presents information of our principal executive officers (“PEO”) and our NEO’s in comparison to certain financial performance metrics for 2024, 2023 and 2022. The metrics are not those that the Compensation Committee uses when setting executive compensation. The use of the term “compensation actually paid” (“CAP”) is required by the SEC rules. Neither CAP nor the total amount reported in the Summary Compensation Table (“SCT”) reflect the amount of compensation actually paid, earned or received during the applicable year. Per SEC rules, CAP was calculated by adjusting the SCT total values for the applicable year as described in the footnotes to the table.
Pay versus Performance Table
| Years | Summary Compensation Table Total for PEOs(1)(2) | | Compensation Actually Paid to PEOs(3) | | Average Summary Compensation Table Total for Non-PEO NEOs(4) | Average Compensation Actually Paid to Non-PEO NEOs(5) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(6) | Net income (loss) (000’s) | | | PEO 1 | PEO 2 | PEO 1 | PEO 2 | | | | | | 2024 | N/A | 892,543 | N/A | 18,762,027 | 902,320 | 5,164,927 | $2,045 | $5,976 | | 2023 | N/A | 593,630 | N/A | 406,130 | 462,531 | 389,314 | $52 | $74 | | 2022 | 454,300 | 566,923 | 492,633 | 966,923 | 322,485 | 322,751 | $97 | $(73) |
Pay versus Performance Table
| (1) Anthony Angelini (“PEO 1”) served as our PEO through November 14, 2022, at which time Darryll E. Dewan (“PEO 2:”) became the PEO and served for the remainder of the year 2022 and all of 2023 and 2024. |
Pay versus Performance Table
| (2) Amounts in this column represent the “Total” column set forth in the Summary Compensation Table (“SCT”) presented separately in this proxy statement. See the footnotes to the SCT for further detail regarding the amounts in these columns. |
Pay versus Performance Table
| (3) The dollar amounts reported in these columns represent the amounts of “compensation actually paid” (“CAP”). The amounts are computed in accordance with Item 402(v) of Regulation S-K by deducting and adding the following amounts from the “Total” column of the SCT (pursuant to SEC rules, fair value at each measurement date is computed in a manner consistent with the fair value methodology used to account for share-based payments in our consolidated financial statements under GAAP). |
Pay versus Performance Table
The following table reflects the adjustments made to SCT total compensation to compute the CAP for the position of PEO and average CAP for our other Named Executive Officers (“NEO’s”)
Pay versus Performance Table
| Position | Year | Summary Compensation Table Total | Equity Deductions from SCT total(a) | CAP of Equity Vesting during FY(b) | CAP of Unvested Equity at FYE(c) | Compensation Actually Paid | | PEO 1 | 2024 | N/A | N/A | N/A | N/A | N/A | | | 2023 | N/A | N/A | N/A | N/A | N/A | | | 2022 | $454,300 | — | 38,333 | — | $492,633 | | PEO 2 | 2024 | $892,543 | (174,000) | 4,733,303 | 13,310,181 | $18,762,027 | | | 2023 | $593,630 | — | (62,500) | (125,000) | $406,130 | | | 2022 | $566,923 | (12,500) | — | 412,500 | $966,923 | | Non-PEO NEO’s | 2024 | $902,320 | (546,175) | 194,500 | 4,614,282 | $5,164,927 | | | 2023 | $462,531 | (59,000) | (44,217) | 30,000 | $389,314 | | | 2022 | $322,485 | — | (4,867) | 5,133 | $322,751 |
Pay versus Performance Table
| (a) The amount in this column represents the grant date fair value of equity-based awards granted during each year. (For this purpose, the fair value of equity awards is computed in a manner consistent with the fair value methodology used to report Outstanding Equity Awards at Fiscal Year-End.) |
Pay versus Performance Table
| (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (ii) for awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date (from the end of the prior fiscal year). |
Pay versus Performance Table
| (c) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change in fair value as of the end of the applicable year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year. |
Pay versus Performance Table
| (4) Our non-PEO named executive officers for 2024 were Daniel M. Chism and Karl T. Marrott. In 2023, the non-PEO named executive officers were John K. Penver and Karl T. Marrott. In 2022, our non-PEO named executive officers were John K. Penver and Kieran P. Brennan. The dollar amounts reported in this column represent the average of the amounts reported for our NEOs as a group in the “Total” column of the Summary Compensation Table in each applicable year. See note (3) above. |
Pay versus Performance Table
| (5) The dollar amounts reported in this column represent the average amount of CAP to the NEOs as a group, as computed in accordance with the Pay Verses Performance Rules. They do not reflect the actual average amount of compensation earned or paid to the NEOs as a group during the applicable year. |
Pay versus Performance Table
| (6) Cumulative total shareholder return (“TSR”) is calculated by dividing the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. There were no dividends for the common stock. The beginning of the measurement period for calculating the cumulative total shareholder return was our share price at December 31, 2021. |
Pay versus Performance Table
Relationship of CAP to Certain Other Measures: As part of our overall compensation philosophy, we utilize grants of stock options and restricted stock as a recruiting and retention tool and to align the interests of our named executive officers with those of our stockholders by incentivizing them to increase stockholder value. As shown in the tables above, the calculated Compensation Actually Paid (“CAP”), as defined, increased significantly in 2024 for our PEO and our non-PEO NEO’s, primarily due to the increase in the company’s stock price and the impact that had on executives’ stock compensation. The total CAP to our PEO, as presented in the preceding tables, increased 4,520% from 2023 to 2024 and the total CAP to our other non-PEO NEO’s increased 1,227% over the same time period primarily due to appreciation in our stock price and the resulting impact on calculated stock compensation. In comparison, the Total Shareholder Return (“TSR”), based on an initial $100 investment at the beginning of the periods presented above, increased 3,833% from 2023 to 2024, in relative alignment with the percentage increase in CAP. A $100 investment in our stock on December 31, 2021 would have been worth $2,045 on December 31, 2024, an increase from $52 on December 31, 2023. Over the same time period, the TSR of the peer group to whom we compare ourselves increased only 24%. Similarly, our net income grew 7,976% from 2023 to 2024. This growth in net income is generally aligned with, and outpaced, the increase in CAP to our PEO and other non-PEO NEO’s. The growth in CAP for the PEO and other non-PEO NEO's is closely correlated with our growth in TSR and net income over the same period.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS