DEF 14A of BRC Group Holdings, Inc.
Filed May 10, 2024 · FY20230001213900-24-041725
PROPOSAL NO. 1 ELECTION OF DIRECTORS
PROPOSAL NO. 1 ELECTION OF DIRECTORS The Company’s board of directors has nominated each of Robert L. Antin, Tammy Brandt, Robert D’Agostino, Thomas J. Kelleher, Renée E. LaBran, Randall E. Paulson, Bryant R. Riley, Michael J. Sheldon, and Mimi K. Walters to be elected as a director at the Company’s annual meeting. If elected, the nominees will serve as directors until the Company’s annual meeting of stockholders in 2025, or until their respective successors are duly elected and qualified or their earlier death, resignation, or removal. If any of the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although the Company knows of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as the Company’s board of directors may designate. Upon expiration of the term of any director, the successor to such director (or such director, if such director is re-elected) will be elected for a one-year term at the next annual meeting of stockholders. The Company recognizes the importance of diversity at all levels of our organization, including our Board of Directors. We consider all aspects of diversity in determining the composition of and related appointments to our Board. This includes, but is not limited to, the balance of relevant skills, knowledge, experience and merit in the businesses and industries in which we operate, in addition to diverse backgrounds and perspectives which align with the strategic needs of the Company and the needs required for our Board to be effective. We respect the value and benefits that diverse perspectives can bring to our organization, and we strive to see diversity, inclusion, and equity (DEI) in our mission to deliver value to all our stakeholders — including our colleagues, clients, and partners.
B. Riley Financial, Inc. Board Diversity Matrix (as of March 31, 2024)
B. Riley Financial, Inc. Board Diversity Matrix (as of March 31, 2024)
B. Riley Financial, Inc. Board Diversity Matrix (as of March 31, 2024)
| Total Number of Directors | 9 | | | | Part I: Gender Identity | Male | Female | Did Not Disclose | | Directors | 3 | 3 | 3 | | Part II: Demographic Information | | | | | White | 3 | 3 | — | | LGBTQ+ | 1 | | | | Did Not Disclose Demographic Information | 3 | | |
B. Riley Financial, Inc. Board Diversity Matrix (as of March 31, 2024)
There are no familial relationships between any of the Company’s directors or the Company’s executive officers and any other director or executive officer. No arrangement or understanding exists between any nominee and any other person or persons pursuant to whom any nominee was or is to be selected as a director or director nominee of the Company.
Information Regarding Directors
Information Regarding Directors The following table provides the name, age, and position(s) of each of our directors as of March 31, 2024:
Information Regarding Directors
| Name | Age | Committees | | Bryant R. Riley | 57 | None. | | Thomas J. Kelleher | 56 | None. | | Robert L. Antin | 74 | Compensation Committee, Environmental, Social and Corporate Governance Committee | | Tammy Brandt | 49 | None. | | Robert D’Agostino | 57 | Audit Committee, Compensation Committee* | | Renée E. LaBran | 64 | Audit Committee, Environmental, Social and Corporate Governance Committee | | Randall E. Paulson | 62 | Audit Committee* | | Michael J. Sheldon | 64 | Compensation Committee | | Mimi K. Walters | 61 | Environmental, Social and Corporate Governance Committee* |
Information Regarding Directors
* Chairman of the respective committee.
Our Nominees for Director
Our Nominees for Director Bryant R. Riley has served as our Chairman and Co-Chief Executive Officer since June 2014 and July 2018 respectively, and as a director since August 2009. He also previously served as our Chief Executive Officer from June 2014 to July 2018. In addition, Mr. Riley served as the Chairman of B. Riley & Co., LLC since founding the stock brokerage firm in 1997 until its combination with FBR Capital Markets & Co., LLC in 2017 and as Chief Executive Officer of B. Riley & Co., LLC from 1997 to 2006. He also served as Chairman of B. Riley Principal Merger Corp. from April 2019 to February 2020, at which time it completed its business combination with Alta Equipment Group, Inc. (NYSE: ALTG); as Chairman of B. Riley Principal Merger Corp. II from May 2020 to November 2020 at which time it had completed it business combination with Eos Energy Enterprises Inc. (Nasdaq: EOSE); and as Chairman of B. Riley Principa1 150 Merger Corp. from June 2020 to July 2022, at which time it completed its business combination with FaZe Holdings, Inc. (Nasdaq: FAZE). He served as Chairman of B. Riley Principal 250 Merger Corp. from May 2021 until its dissolution in May 2023. Mr. Riley served as director of Select Interior Concepts, Inc. from November 2019 until October 2021. He also previously served on the board of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) from April 2019 to September 2020; Sonim Technologies, Inc. (Nasdaq: SONM) from October 2017 to March 2019; and Freedom VCM Holdings, LLC (fka Franchise Group, Inc., a public company (Nasdaq: FRG), with the last day of trading of 8/21/23) from September 2018 through March 2020, rejoining in August of 2023. Mr. Riley received his B.S. in Finance from Lehigh University. Mr. Riley’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Riley’s extensive experience serving on other public company boards is an important resource for the Board. Thomas J. Kelleher has served as our Co-Chief Executive Officer since July 2018 and as a member of our board since October 2015. He also previously served as President from August 2014 to July 2018. Mr. Kelleher previously served as Chief Executive Officer of B. Riley & Co., LLC, a position he held from 2006 to 2014. From the firm’s founding in 1997 to 2006, Mr. Kelleher held several senior management positions with B. Riley & Co., LLC, including Chief Financial Officer and Chief Compliance Officer. Mr. Kelleher served on the board of directors of Special Diversified Opportunities Inc. from October 2015 to June 2017. He received his Bachelor of Science in Mechanical Engineering from Lehigh University. Mr. Kelleher’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Kelleher’s executive leadership experience is an important resource for the Board. Robert L. Antin has served as a member of the Board since June 2017. Mr. Antin was a co-founder of VCA Inc., a national animal healthcare company that provides veterinary services, diagnostic testing and various medical technology products and related services to the veterinary market and was publicly traded (Nasdaq: WOOF) until the company was privately acquired in September 2017. Mr. Antin has served as a Chief Executive Officer and President at VCA Inc. since its inception in 1986. Mr. Antin also served as the Chairman of the Board of VCA, Inc. from inception through the September 2017 acquisition. Mr. Antin currently serves on the Board of Directors of Rexford Industrial Realty, Inc. (NYSE: REXR) since July 2013, and Passion Dental, a private company, since 2020. He previously served on the Board of Heska Corporation (Nasdaq: HSKA) from November 2020 to May 2023. From September 1983 to 1985, Mr. Antin was President, Chief Executive Officer, a director, and co-founder of AlternaCare Corp., a publicly held company that owned, operated and developed freestanding out-patient surgical centers. From July 1978 until September 1983, Mr. Antin was an officer of American Medical International, Inc., an owner and operator of health care facilities. Mr. Antin received his MBA with a certification in hospital and health administration from Cornell University. Mr. Antin’s executive leadership experience provides an important resource to the Board. Tammy Brandt has served as a member of the Board since December 20, 2021. Since February 2023, Ms. Brandt has served as a senior member of the legal team at Creative Artists Agency (CAA), a leading global entertainment and sports agency. From March 2021 to January 2023, Ms. Brandt served as Chief Legal Officer; Head of Business and Legal Affairs at FaZe Clan Inc. (Nasdaq: FAZE), a leading gaming, lifestyle, and media platform. A champion of diversity and inclusion, Ms. Brandt devotes her time and voice to organizations that advance and empower students and underrepresented groups. She has served on the Lambda Legal West Coast Leadership Board since 2019. From 2018 to June 2022, Ms. Brandt served on the Board of Cayton Children’s Museum, including as chair of its Audit Committee and a member of its Nomination and Governance Committee. From May 2017 to May 2021, she served as Chief Legal Officer at Dreamscape Immersive, and previously served as Chief Corporate, Securities, M&A and Alliance Counsel at DXC Technology and its predecessor, Computer Sciences Corporation; and as General Counsel at ServiceMesh, Inc., an enterprise software company in the cloud management space. Ms. Brandt is a graduate of Notre Dame Law School, where she was Managing Editor of the Notre Dame Law Review, and graduated summa cum laude with a Bachelor of Science in economics and business administration from Bluffton University. Ms. Brandt’s business and legal experience provides an important resource to the Board. Robert D’Agostino has served as a member of the Board since October 2015. Mr. D’Agostino has served as President of Q-mation, Inc. since 1999. Q-mation, Inc. is a leading supplier of software solutions targeted at increasing operational efficiencies and asset performance in manufacturing companies. Mr. D’Agostino joined Q-mation, Inc. in 1990 and held various sales, marketing, and operations management positions prior to his appointment as President. He previously served on the board of Alliance Semiconductor Corp. from July 2005 to February 2012. Mr. D’Agostino graduated from Lehigh University with a B.S. in Chemical Engineering. Mr. D’Agostino’s executive leadership experience provides an important resource to the Board.
Our Nominees for Director
Renée E. LaBran has served as a member of the Board since August 11, 2021. Ms. LaBran co-founded Rustic Canyon Partners, a technology venture capital fund launched in 2000, and has served from 2006 to 2021 as Partner with Rustic Canyon/Fontis Partners, an investment fund which is now completed, targeting growth investments and lower middle market buy-outs in media, consumer goods, and business and consumer services industries. During this time, she served as a board director and advisor to multiple portfolio companies while providing oversight of her investment firm’s finance and operations functions. Ms. LaBran currently serves on the board of Idealab, Inc. since March 2015 and Stravos Education, LLC since August 2022. Ms. LaBran previously served on the boards of Iconic Sports Acquisition Corp (NYSE:ICNC-UN) from October 2021 to October 2023; Sambazon, Inc. from 2009 to 2021; and TomboyX from 2018 to 2019. From March 2015 to December 2020, she served as a governor-appointed non-attorney public member on the Board of Trustees for the State Bar of California. Ms. LaBran is an Adjunct Professor at UCLA Anderson School of Management’s MBA program, earned an M.B.A. with distinction from Harvard Business School, and received an A.B. degree in Economics from UC Berkeley. Ms. LaBran’s board experience, business and financial acumen, and venture capital experience provide an important resource to the Board. Randall E. Paulson has served as a member of the Board since June 18, 2020. Mr. Paulson currently serves on the Board of Directors of Testek Inc. and Dash Medical Holdings, LLC and previously served on the Boards of EAG, Inc. from 2008 to 2017, and L-com, Inc. from 2012 to 2016. Testek, EAG and L-com are portfolio companies of Odyssey Investment Partners, LLC where he served as a Managing Principal from 2005 to 2019. Prior to this, Mr. Paulson was Executive Vice President — Acquisitions and Strategic Development at National Financial Partners, a New York based consolidator of independent financial services distribution firms. From 1993 to 2000, Mr. Paulson was at Bear, Stearns & Co. Inc. where he was a Senior Managing Director in the Mergers and Acquisitions and Corporate Finance groups. Prior to Bear Stearns, Mr. Paulson was a member of GE Capital’s merchant banking group. A native of Minnesota, Mr. Paulson received a BSB in Accounting from the University of Minnesota and his MBA from the Kellogg Graduate School of Management at Northwestern University. Mr. Paulson’s financial services industry and accounting experience will provide an important resource to the Board. Michael J. Sheldon has served as a member of the Board since July 2017. Mr. Sheldon served as CEO of Deutsch North America, one of the most awarded creative agencies in the United States, from January 2015 until his retirement in December 2019. Mr. Sheldon had also served as CEO of Deutsch’s Los Angeles office from September 1997 to January 2015. Mr. Sheldon received a B.A. degree from Michigan State University in Advertising. Mr. Sheldon’s entrepreneurial skills and marketing experience provide an important resource to the Board. Mimi K. Walters has served as a member of the Board since July 12, 2019. She served from 2015 to 2019 as the U.S. Representative for California’s 45th Congressional District. She has worked on key legislation, business and policy initiatives related to technology, energy, environmental and healthcare, including the opioid crisis and veterans’ medical services. As a member of House leadership, she served on the Energy and Commerce Committee, the Judiciary Committee and the Transportation and Infrastructure Committee. Ms. Walters represented California’s 37th State Senate District from 2008 to 2014, where she served on the Banking and Financial Institutions Committee and as Vice Chair for the Public Employment and Retirement Committee. From 2004 to 2008, she represented California’s 73rd Assembly District. Ms. Walters was a member of the Laguna Niguel City Council from 1996 to 2004, serving as Mayor in 2000, and chair of Laguna Niguel’s Investment and Banking Committee. Previously, Ms. Walters was an investment executive at Drexel Burnham Lambert and, subsequently, Kidder, Peabody & Co. from 1988 to 1995. Currently, Ms. Walters is the Chief Commercial Officer for Leading Edge Power Solutions, LLC since November 2019 and serves on the Board of Directors of Eos Energy Enterprises, Inc. (Nasdaq: EOSE) since November 2020. Ms. Walters earned a Bachelor of Arts in political science from the University of California, Los Angeles. Ms. Walters extensive political and financial experience provides an important resource to the Board.
Charlie Riley
Charlie Riley Charlie Riley is the son of Bryant Riley, the Company’s Chairman and Co-Chief Executive Officer, and is employed by the Company’s subsidiary, B. Riley Principal Investments, LLC as an associate. For 2023, the Company paid Charlie Riley total compensation of $217,785, consisting of salary, bonus, and an award of restricted stock units of 738 of our common shares, with a grant date fair value of $28,324, calculated in accordance with FASB ASC 718, that vests ratably over three years beginning on March 15, 2024, subject to continued employment.
Role of Independent Compensation Consultant
Role of Independent Compensation Consultant In 2023, the Compensation Committee retained Mercer LLC, an independent consulting firm, to assist the Compensation Committee in fulfilling its duties in setting compensation for our Co-Chief Executive Officers and other named executive officers. Mercer was engaged by and is reporting solely to the Compensation Committee, and the Compensation Committee has the sole authority to approve the terms of the engagement. Mercer did not provide any services to the Company in Fiscal 2023 other than executive compensation consulting services provided to the Compensation Committee. Before engaging Mercer, the Compensation Committee determined that Mercer is independent, after taking into account the factors set forth in Rule 10C-1 of the Exchange Act and Nasdaq Marketplace Rule 5605(d)(3). Mercer identified a group of public peer companies to benchmark compensation for our Co-Chief Executive Officers and other named executive officers against peer company Chief Executive Officers and market survey data. Mercer’s analysis considered: (i) base salary; (ii) annual incentive compensation; (iii) total cash compensation; (iv) long-term incentive compensation; (v) and total direct compensation.
Peer Group
Peer Group As part of its services, in 2023, Mercer compiled data regarding Chief Executive Officer and other named executive officer compensation from the following “peer” companies: BGC Group, Inc., Canaccord Genuity Inc., Cowen Inc., Greenhill & Co. Inc., Houlihan Lokey Inc., Lazard Ltd., Moelis & Company, Oppenheimer Holdings Inc., Perella Weinberg Partners, Piper Sandler Cos and PJT Partners Inc. This peer group includes companies primarily consisting of investment banks and asset managers with revenues and market capitalizations most comparable to ours. Though the Compensation Committee considered the level of compensation paid by the firms in the peer group as a reference point that provides a framework for its decisions regarding compensation for the Co-Chief Executive Officers and other named executive officers, in order to maintain competitiveness and flexibility, the Compensation Committee did not target compensation at a particular level relative to the peer group. Similarly, the Compensation Committee did not employ a formal benchmarking strategy or rely upon specific peer-derived targets. This peer group market data is an important factor considered by the Compensation Committee when setting compensation, but it is only one of multiple factors considered by the Compensation Committee, and the amount paid to each named executive officer may be more or less than the composite market median based on individual performance, the roles and responsibilities of the executive, experience level of the individual, internal equity and other factors that the Compensation Committee deems important.
B. Riley Financial, Inc. Annual Incentive Plan
B. Riley Financial, Inc. Annual Incentive Plan The Compensation Committee believes performance-based cash compensation is important to focus B. Riley’s executives on, and reward B. Riley’s executives for, achieving key objectives. In furtherance of this, in July 2021, the Compensation Committee approved an annual incentive compensation discretionary bonus plan for our named executive officers, which remained in place for Fiscal 2023. The purpose of the B. Riley discretionary bonus plan is to increase stockholder value and the success of B. Riley by motivating key employees, including B. Riley’s named executive officers, to perform to the best of their abilities and to achieve B. Riley’s objectives. No specific target levels of performance are set by the Compensation Committee to determine the annual incentive compensation of our named executive officers. Instead, the Compensation Committee determines the amount of each named executive officer’s annual incentive compensation based on the Compensation Committee’s subjective assessment of the Company (and in some cases, of a particular business unit) and individual performance relative to the qualitative and quantitative performance indicators used by the Compensation Committee to evaluate performance.
Long-Term Equity Incentive Compensation
Long-Term Equity Incentive Compensation The Compensation Committee believes that a significant portion of our named executive officer compensation should be in the form of equity-based awards as a retention tool, and to align further the long-term interests of our named executive officers with those of our other stockholders. In furtherance of that objective, the Compensation Committee makes annual grants of long-term, equity-based incentive compensation awards to our named executive officers. The Compensation Committee understands that equity incentive compensation can promote high-risk behavior if the incentives it creates for short-term performance are not properly aligned with the interests of our Company over the long-term. The Compensation Committee believes that the structure of our Company’s long-term equity incentive compensation appropriately mitigates the risk by directly aligning the recipients’ interests with those of our Company. We use judgment and discretion rather than relying solely on formulaic results, and do not use highly leveraged incentives that drive risky short-term behavior. Instead, we reward consistent and longer-term performance. Our long-term equity incentive compensation rewards long-term performance on a per share basis. In February 2023, the Compensation Committee granted time-based restricted stock unit awards (“RSUs”) under the 2021 Plan to our named executive officers as a component of their annual compensation for the fiscal year ended December 31, 2023, as further described below in the “Executive Compensation-2023 Summary Compensation Table” and “2023 Grants of Plan-Based Awards.” The RSUs vest ratably over a three-year period beginning on March 15, 2024, subject to the named executive officer’s continued employment with our Company. The Compensation Committee believes that these awards appropriately align the interests of our named executive officers with those of our stockholders and retain, motivate, and reward such executives.
Timing Mix and Level of Equity Compensation Awards
Timing Mix and Level of Equity Compensation Awards In determining the number and type of equity awards to grant in any fiscal year, the Compensation Committee considers a variety of factors, including the responsibilities and seniority of the named executive officer, the contribution that the named executive officer is expected to make to our Company in the coming years and has made in the past, and the size and terms of prior equity awards granted to the named executive officer. Decisions regarding these equity awards are typically made at the Compensation Committee’s first fiscal quarter meeting at which executive compensation for the coming year is determined. However, the Compensation Committee may also grant equity awards from time to time based on individual and corporate achievements and other factors it deems relevant, such as for retention purposes or to reflect changes in responsibilities or similar events or circumstances.
Change in Control and Post-Termination Severance Benefits
Change in Control and Post-Termination Severance Benefits The employment agreements for each of our named executive officers provide them certain benefits if their employment is terminated under specified conditions. The Compensation Committee believes these benefits are important elements of each named executive officer’s comprehensive compensation package, primarily for their retention value and their alignment of the interests of our named executive officers with those of our stockholders. The details and amounts of these benefits are described in the Executive Compensation section under “Payment Due Upon Termination Without Cause, for Death or Disability, or Resignation for Good Reason.”
Employment Agreements
Employment Agreements
Amended and Restated Employment Agreements
Amended and Restated Employment Agreements The Company is party to employment agreements with each of the named executive officers, which agreements were amended and restated on April 11, 2023. The material terms of the amended and restated employment agreements for each such executive are as follows: • An initial term of two years with automatic one year renewals unless either party notified the other party of non-renewal at least 90 days prior to the end of the then-current term. • An annual base salary, subject to review and adjustment on an annual basis, in the amounts of: $700,000 per year for Mr. Riley and Mr. Kelleher, $450,000 per year for Mr. Ahn, $550,000 per year for Mr. Young, $550,000 per year for Mr. Moore and $450,000 per year for Mr. Forman. • Eligibility for annual performance bonuses based on individual performance and/or Company performance in an amount determined by the Company in its sole discretion, to be paid in cash less applicable withholdings no later than March 15th of the following calendar year subject to the executive’s continued employment through the payment date. • Eligibility for each fiscal year to receive an annual long-term incentive award under our equity incentive plan with a value determined by the Company in its sole discretion. Each such award will be subject to approval of the Compensation Committee and vest annually over a three-year period. • Notwithstanding the terms of any existing agreement or plan, all outstanding unvested stock options, restricted stock units, stock appreciation rights and other unvested equity linked awards granted to such individual during the term of such individual’s employment agreement shall become fully vested upon a Change of Control (as defined in the 2021 Plan) and exercisable for the remainder of their full term. • Participation in benefit plans for our executives, reimbursement for all reasonable and necessary out-of-pocket expenses incurred by such executive in the performance of such executive’s respective duties and vacation in accordance with our policies. • A requirement for each party to give twenty (20) days prior written notice to terminate such individual’s employment. • If such executive is terminated with Cause (as defined in the employment agreements) or resigns without Good Reason (as defined in the employment agreements), such individual receives such individual’s base salary and accrued unused leave through termination. • If such executive is terminated without Cause, for death or for Disability (as defined in the employment agreements) or resigns for Good Reason, such executive receives, subject to the execution of a general release, a severance payment payable in one lump sum within 60 days of termination in an amount equal to the four (4) times such individual’s base salary for Mr. Riley and Mr. Kelleher, and two (2) times such individual’s base salary for Messrs. Ahn, Young, Moore and Forman. In such circumstances, such individual shall also be eligible for reimbursement for the monthly COBRA premium paid by such executive for himself (and his dependents, if applicable), for a period ending upon the earliest of the twelve (12) month anniversary of such termination and the date on which such executive becomes eligible to receive substantially similar coverage from another employer. • Restrictive covenants, including non-competition and client non-solicitation covenants that apply while the executive is employed by the Company, an employee non-solicitation covenant that applies while the executive is employed by the Company and for one year thereafter and perpetual confidentiality and non-disparagement covenants.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table shows information concerning the annual compensation for services provided to us by our named executive officers during fiscal 2023, 2022 and 2021.(1)
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(2) ($) | Stock Awards(3) ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation(4) ($) | Total ($) | | Bryant R. Riley | 2023 | 700,000 | — | 1,889,256 | — | 2,974,063 | 5,563,318 | | Chairman and Co-Chief Executive Officer | 2022 | 700,000 | — | 2,118,490 | — | 548,758 | 3,367,249 | | | 2021 | 639,616 | 5,600,000 | 13,413,655 | — | 353,167 | 20,006,437 | | Thomas J. Kelleher | 2023 | 700,000 | — | 1,889,256 | — | 2,974,063 | 5,563,318 | | Co-Chief Executive Officer | 2022 | 700,000 | 2,800,000 | 2,118,490 | — | 548,758 | 6,167,249 | | | 2021 | 639,616 | 5,600,000 | 13,413,655 | — | 304,292 | 19,957,562 | | Phillip J. Ahn | 2023 | 450,000 | 675,000 | 944,609 | — | 1,485,871 | 3,555,479 | | Chief Financial Officer and Chief Operating Officer | 2022 | 450,000 | 675,000 | 1,109,676 | — | 264,968 | 2,499,643 | | | 2021 | 419,808 | 1,350,000 | 7,096,615 | — | 164,961 | 9,031,383 | | Kenneth Young | 2023 | 550,000 | — | 708,456 | — | 2,420,493 | 3,678,950 | | President | 2022 | 550,000 | 750,000 | 1,109,676 | — | 1,168,749 | 3,578,425 | | | 2021 | 550,000 | 2,200,000 | 6,464,615 | — | 1,523,536 | 10,738,151 | | Andrew Moore | 2023 | 550,000 | 1,100,000 | 944,609 | — | 1,663,877 | 4,258,485 | | Chief Executive Officer, B. Riley Securities, Inc. | 2022 | 550,000 | 1,100,000 | 1,109,676 | — | 289,174 | 3,048,850 | | | 2021 | 519,808 | 2,200,000 | 7,468,215 | — | 181,686 | 10,369,709 | | Alan N. Forman | 2023 | 450,000 | 675,000 | 283,398 | — | 611,714 | 2,020,112 | | Executive Vice President, General Counsel & Secretary | 2022 | 450,000 | 675,000 | 207,309 | — | 159,475 | 1,491,785 | | | 2021 | 404,712 | 1,350,000 | 1,958,136 | — | 121,167 | 3,834,014 |
2023 Summary Compensation Table
____________ (1) The table above summarizes the total compensation earned by each of our named executive officers for the fiscal years ended December 31, 2023, 2022, and 2021. Neither Mr. Riley nor Mr. Kelleher, each of whom were directors during all or a portion of the fiscal years ended December 31, 2023, 2022, and 2021, received any compensation for his services as a director. (2) Bonus amounts in 2023, 2022, and 2021 were discretionary bonuses for named executive officers approved by the Compensation Committee. (3) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of RSUs and performance-based restricted stock units (“PRSUs”) granted during the applicable fiscal year. The assumptions used in the calculations for these amounts are described in Note 19 of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2023. For a discussion of the material terms of outstanding RSUs and PRSUs, see the table below entitled “Outstanding Equity Awards at 2023 Fiscal Year-End.” (4) The table below shows the components of the All Other Compensation column.
2023 Summary Compensation Table
| Name | Dividend Rights Paid Upon 2023 Vesting of RSUs(1) ($) | 401k Plan Match(2) ($) | Other(3) ($) | Total ($) | | Bryant R. Riley | 2,969,113 | 4,950 | — | 2,974,063 | | Thomas J. Kelleher | 2,969,113 | 4,950 | — | 2,974,063 | | Phillip J. Ahn | 1,480,921 | 4,950 | — | 1,485,871 | | Kenneth Young | 1,498,877 | 4,950 | 916,667 | 2,420,493 | | Andrew Moore | 1,663,877 | — | — | 1,663,877 | | Alan N. Forman | 606,764 | 4,950 | — | 611,714 |
2023 Summary Compensation Table
____________ (1) Reflects accrued dividend rights paid upon (i) February 8, 2023 vesting of PRSUs originally granted on February 17, 2021, (ii) May 24, 2023 vesting of RSUs originally granted on May 21, 2020, and (iii) June 2, 2023 vesting of RSUs originally granted on May 28, 2021 and May 24, 2022, in each case in accordance with award agreements, as approved by the Compensation Committee. (2) Reflects the maximum 401(k) employer match for 2023 ($4,950), which was received by each of our NEOs who contributed to the 401(k) in 2023. Our executive officers are eligible for the same 401(k) match program as is available to all employees. (3) Reflects payments to Mr. Young pursuant to a services agreement between one of our wholly owned subsidiaries and Mr. Young for consulting services to Babcock & Wilcox Enterprises, Inc. in the capacity of Chief Executive Officer of Babcock & Wilcox Enterprises.
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table presents information concerning each grant made to our named executive officers in our fiscal year ended December 31, 2023, under any equity or non-equity incentive plan.
2023 Grants of Plan-Based Awards Table
| Name | Grant Date | All Other Stock Awards: Number of Units of Stock(1) (#) | Grant Date Fair Value(2) ($) | | Bryant R. Riley | 2/24/2023 | 49,225 | 1,889,256 | | Thomas J. Kelleher | 2/24/2023 | 49,225 | 1,889,256 | | Phillip J. Ahn | 2/24/2023 | 24,612 | 944,609 | | Kenneth Young | 2/24/2023 | 18,459 | 708,456 | | Andrew Moore | 2/24/2023 | 24,612 | 944,609 | | Alan N. Forman | 2/24/2023 | 7,384 | 283,398 |
2023 Grants of Plan-Based Awards Table
(1) On February 24, 2023, we granted our NEOs RSU awards as a component of their annual compensation for the fiscal year ended December 31, 2023. The RSUs will vest one-third on March 15, 2024, one-third on March 15, 2025, and one-third on March 15, 2026, subject to continued employment with our Company through each vesting date. Each RSU represents the right to receive one share of our common stock. Additionally, each of the above award recipients has the right to receive promptly following each vesting date an amount equal to the product of (i) the number of RSUs vested on such vesting date, multiplied by (ii) the total dividends declared and paid per share of common stock since the date of award. (2) Represents the grant date fair value, which has been computed in accordance with FASB ASC Topic 718.
2023 Outstanding Equity Awards at Fiscal Year-End
2023 Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning outstanding equity awards held by our named executive officers as of December 31, 2023.
2023 Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Units of Stock That Have Not Vested(1) (#) | Market Value of Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Units of Stock That Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market Value of Unearned Units of Stock That Have Not Vested(4) ($) | | Bryant R. Riley(5) | 91,260 | 1,915,547 | 150,000 | 3,148,500 | | Thomas J. Kelleher(6) | 91,260 | 1,915,547 | 150,000 | 3,148,500 | | Phillip J. Ahn(7) | 46,629 | 978,743 | 85,000 | 1,784,150 | | Kenneth Young(8) | 40,476 | 849,591 | 65,000 | 1,364,350 | | Andrew Moore(9) | 46,629 | 978,743 | 85,000 | 1,784,150 | | Alan N. Forman(10) | 11,497 | 241,322 | 17,089 | 358,698 |
2023 Outstanding Equity Awards at Fiscal Year-End
____________ (1) Represents awards of RSUs granted under the 2021 Plan. (2) The market value of awards of RSUs that have not yet vested is based on the number of unvested RSUs as of December 31, 2023, multiplied by the closing sale price of our common shares on December 29, 2023 ($20.99 per share), the final trading day of the year. (3) Represents awards of PRSUs granted on October 27, 2021 under the 2021 Plan, with vesting upon the earlier to occur of: (a) the Company achieving the Adjusted Stock Price Hurdle of $135, defined as the consecutive five trading day average closing price of one share of Company common stock, plus the aggregate amount of dividends paid with respect to such share of common stock assuming the dividends had been reinvested in common stock as of the ex-dividend date, within three years from the date of grant, provided that the PRSUs will not vest prior to February 28, 2024; or (b) immediately prior to a Change in Control (as defined in the 2021 Plan). (4) The market value of awards of PRSUs that have not yet vested is based on the number of unvested PRSUs as of December 31, 2023, multiplied by the closing sale price of our common shares on December 29, 2023 ($20.99 per share), the final trading day of the year. (5) Unvested RSUs and PRSUs held by Mr. Riley at December 31, 2023, vest as follows: Subject to continued employment with our Company, 16,409 RSUs will vest in full on March 15, 2024, 16,408 RSUs will vest in full on March 15, 2025 and 16,408 RSUs will vest in full on March 15, 2026. Additionally, 28,005 RSUs will vest in full on June 2, 2024 and 14,030 RSUs will vest in full on June 2, 2025. 150,000 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved. (6) Unvested RSUs and PRSUs held by Mr. Kelleher at December 31, 2023, vest as follows: Subject to continued employment with our Company, 16,409 RSUs will vest in full on March 15, 2024, 16,408 RSUs will vest in full on March 15, 2025 and 16,408 RSUs will vest in full on March 15, 2026. Additionally, 28,005 RSUs will vest in full on June 2, 2024 and 14,030 RSUs will vest in full on June 2, 2025. 150,000 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved. (7) Unvested RSUs and PRSUs held by Mr. Ahn at December 31, 2023, vest as follows: Subject to continued employment with our Company, 8,204 RSUs will vest in full on March 15, 2024, 8,204 RSUs will vest in full on March 15, 2025 and 8,204 RSUs will vest in full on March 15, 2026. Additionally, 14,668 RSUs will vest in full on June 2, 2024 and 7,349 RSUs will vest in full on June 2, 2025. 85,000 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved. (8) Unvested RSUs and PRSUs held by Mr. Young at December 31, 2023 vest as follows: Subject to continued employment with our Company, 6,153 RSUs will vest in full on March 15, 2024, 6,153 RSUs will vest in full on March 15, 2025 and 6,153 RSUs will vest in full on March 15, 2026. Additionally, 14,668 RSUs will vest in full on June 2, 2024 and 7,349 RSUs will vest in full on June 2, 2025. 65,000 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved. (9) Unvested RSUs and PRSUs held by Mr. Moore at December 31, 2023 vest as follows: Subject to continued employment with our Company, 8,204 RSUs will vest in full on March 15, 2024, 8,204 RSUs will vest in full on March 15, 2025 and 8,204 RSUs will vest in full on March 15, 2026. Additionally, 14,668 RSUs will vest in full on June 2, 2024 and 7,349 RSUs will vest in full on June 2, 2025. 85,000 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved. (10) Unvested RSUs and PRSUs held by Mr. Forman at December 31, 2023 vest as follows: Subject to continued employment with our Company, 2,462 RSUs will vest in full on March 15, 2024, 2,461 RSUs will vest in full on March 15, 2025 and 2,461 RSUs will vest in full on March 15, 2026. Additionally, 2,740 RSUs will vest in full on June 2, 2024 and 1,373 RSUs will vest in full on June 2, 2025. 17,089 PRSUs will vest in full by October 27, 2024 (but not earlier than February 28, 2024) if the Adjusted Stock Price Hurdle of $135 is achieved.
2023 Stock Vested
2023 Stock Vested The following table provides information on the value realized by each of our named executive officers as a result of the vesting of PRSUs and RSUs during the fiscal year ended December 31, 2023.
2023 Stock Vested
| Name | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting ($) | | Bryant R. Riley | 191,917 | 7,472,567 | | Thomas J. Kelleher | 191,917 | 7,472,567 | | Phillip J. Ahn | 96,166 | 3,743,658 | | Kenneth Young | 97,088 | 3,777,615 | | Andrew Moore | 107,088 | 4,173,615 | | Alan N. Forman | 37,358 | 1,457,896 |
2023 Stock Vested
____________ (1) PRSUs of Messrs. Riley, Kelleher, Ahn, Young, Moore and Forman vested on February 8, 2023 as follows: 150,000, 150,000, 75,000, 75,000, 85,000, and 30,000, respectively. The closing price of our common stock on that date was $39.60 in accordance with the B. Riley Financial, Inc. Amended and Restated 2009 Stock Incentive Plan (“the 2009 Plan”) definition of Fair Market Value (FMV). RSUs of Messrs. Riley, Kelleher, Ahn, Young, Moore and Forman vested on May 24, 2023 as follows: 13,827, 13,827, 6,452, 7,374, 7,374, and 4,609 respectively. The closing price of our common stock on that date was $36.83 in accordance with the 2009 Plan definition of Fair Market Value (FMV). RSUs of Messrs. Riley, Kelleher, Ahn, Young, Moore and Forman vested on June 2, 2023 as follows: 28,090, 28,090, 14,714, 14,714, 14,714, and 2,749 respectively. The closing price of our common stock on the prior trading date was $36.43, in accordance with the 2021 Plan definition of Fair Market Value (FMV).
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Each of our named executive officers is party to an employment agreement with the Company, the material terms of which are discussed above under “Compensation Discussion and Analysis — Employment Agreements.” Each of the employment agreements provides for a severance payment equal to four (4) times such individual’s base salary for Mr. Riley and Mr. Kelleher, and two (2) times such individual’s base salary for Messrs. Ahn, Young, Moore and Forman. The employment agreements also provide for reimbursement of a portion of the executive’s COBRA premiums for up to twelve months following a qualifying termination. Qualifying terminations include (i) termination without Cause by the Company, (ii) termination due to death or disability and (iii) resignation for Good Reason, as such terms are defined therein. In addition, the employment agreements provide that all outstanding and unvested equity-based awards, including PRSUs, become fully vested upon a change of control. The tables below provide information about the payments and other benefits to which each of our named executive officers would be entitled upon a certain terminations of employment or in the event of a change in control. The tables below show, for each named executive officer, our estimates of potential cash payments and other benefits that would have been paid to the NEO assuming that (i) a qualifying termination or change in control was effected as of December 31, 2023, and (ii) the market value of RSUs and PRSUs that were unvested as of December 29, 2023 was $20.99 per share, which was the closing price of Company common stock on December 29, 2023, the final trading day of the year. The tables below also assume that all salary amounts earned by each NEO through the date of termination or change in control had already been paid. As a result, all amounts in these tables are only estimates, and the actual amounts that would be paid can only be determined at the time of the event triggering the payments.
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing disclosure regarding the ratio of annual total compensation of Mr. Riley and Mr. Kelleher, our Co-CEOs, to that of our median employee. Our median employee earned $94,627 in total compensation for 2023. Based upon the total 2023 compensation reported for each of Mr. Riley and Mr. Kelleher of $5,563,318, as reported under each CEO’s “Total” in the Summary Compensation Table, our ratio of Co-CEO pay to median employee pay was 59:1. Our median employee is employed in our B. Riley Corporate Services subsidiary.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
Pay Versus Performance Table
Pay Versus Performance Table The following table sets forth information concerning: (1) the compensation of our Principal Executive Officers (“PEOs”) (Mr. Riley — Chairman and Co-Chief Executive Officer and Mr. Kelleher — Co-Chief Executive Officer) and the average compensation for our other Named Executive Officers (“Non-PEO NEOs”), both as reported in the Summary Compensation Table and with certain adjustments to reflect the “compensation actually paid” to such individuals, as defined under SEC rules, for each of the fiscal years ended December 31, 2020, 2021, 2022 and 2023 and (2) our cumulative total shareholder return (“TSR”), the cumulative TSR of our selected peer group (“Russell 2000 Financials Industry TSR”), Net Income (Loss) and Operating Adjusted EBITDA over such years, in each case determined in accordance with SEC rules:
Pay Versus Performance Table
| (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | Year | Summary Compensation Table Total for Mr. Riley ($) | Summary Compensation Table Total for Mr. Kelleher ($) | Compensation Actually Paid to Mr. Riley ($)(2) | Compensation Actually Paid to Mr. Kelleher ($)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(1) | Average Compensation Actually Paid to Non-PEO NEOs ($)(1)(2) | Value of Initial Fixed $100 Investment Based on: | | Net Income (Loss) (millions) ($) | Operating Adjusted EBITDA (millions) ($)(4) | | | | | | | | | Total Shareholder Return ($) | Russell 2000 Financials Industry Total Shareholder Return ($)(3) | | | | 2023 | $5,563,318 | $5,563,318 | $4,932,653 | $4,932,653 | $3,378,257 | $3,178,327 | $129.10 | $118.08 | ($100) | $363 | | 2022 | $3,367,249 | $6,167,249 | ($18,578,276) | ($15,778,276) | $2,654,676 | ($6,818,381) | $186.36 | $105.20 | ($160) | $394 | | 2021 | $20,006,437 | $19,957,562 | $36,817,324 | $36,620,649 | $8,493,314 | $15,852,678 | $448.30 | $124.45 | $445 | $440 | | 2020 | $3,746,062 | $3,720,868 | $9,870,335 | $9,815,272 | $2,405,112 | $5,133,907 | $186.22 | $95.77 | $205 | $324 |
Pay Versus Performance Table
____________ (1) The following individuals are our Named Executive Officers for each fiscal year:
Pay Versus Performance Table
| Year | PEO(s) | Non-PEO NEOs | | 2023 | Bryant R. Riley and Thomas J. Kelleher | Phillip J. Ahn, Kenneth Young, Andrew Moore and Alan N. Forman | | 2022 | Bryant R. Riley and Thomas J. Kelleher | Phillip J. Ahn, Kenneth Young, Andrew Moore, and Alan N. Forman | | 2021 | Bryant R. Riley and Thomas J. Kelleher | Phillip J. Ahn, Kenneth Young, Andrew Moore, and Alan N. Forman | | 2020 | Bryant R. Riley and Thomas J. Kelleher | Phillip J. Ahn, Kenneth Young, Andrew Moore, and Alan N. Forman |
Pay Versus Performance Table
(2) Compensation actually paid to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, adjusted as follows:
Pay Versus Performance Table
| | 2023 | | | | Adjustments | Mr. Riley | Mr. Kelleher | Average Non-PEO NEOs | | Deduction for Amounts Reported under the “Stock Awards” Column in the Summary Compensation Table for Applicable FY | ($1,889,256) | ($1,889,256) | ($720,268) | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | $1,033,233 | $1,033,233 | $393,914 | | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | ($1,238,704) | ($1,238,704) | ($518,855) | | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | $1,464,062 | $1,464,062 | $645,279 | | Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | $0 | $0 | $0 | | Increase based on Dividends or Other Earnings Paid during Applicable FY upon Vesting Date | $0 | $0 | $0 | | TOTAL ADJUSTMENTS | ($630,664) | ($630,664) | ($199,929) |
Pay Versus Performance Table
(3) TSR is cumulative for the measurement periods beginning on December 31, 2019 and ending on December 31 of each of 2023, 2022, 2021 and 2020, respectively, calculated in accordance with Item 201(e) of Regulation S-K. The Russell 2000 Financials Industry Index is the same index we use in our performance graph in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2023. (4) Represents the most important financial performance measure not otherwise included in the above table that is used by the Company to link actual compensation paid during the most recent fiscal year to the Company’s performance, as required pursuant to Item 402(v) of Regulation S-K. We define Operating Adjusted EBITDA, which is a non-GAAP financial measure, as Adjusted EBITDA excluding (i) Trading Income (Loss) and Fair Value Adjustments on Loans, (ii) Realized and Unrealized Gains (Losses) on Investments, and (iii) other investment related expenses. During the fourth quarter of 2023, the Company recast its operating metrics to include revenues from fixed income trading. Operating Adjusted EBITDA has been adjusted to include fixed income trading revenue for the periods presented.
Narrative Disclosure to Pay Versus Performance Table
Narrative Disclosure to Pay Versus Performance Table
Pay Versus Performance Tabular List
Pay Versus Performance Tabular List The following performance measures represent the most important financial performance measures used by us to link compensation actually paid to our NEOs to performance for the fiscal year ended December 31, 2023: • Operating Adjusted EBITDA • Total Adjusted EBITDA • Total shareholder return
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION We use cash and equity-based compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that members of the Board expend in fulfilling their duties to us, the skill level required of such members and other relevant information. The Compensation Committee and the Board have the primary responsibility for reviewing, considering any revisions to, and approving director compensation. We do not pay our management directors for board service in addition to their regular employee compensation. Since June 30, 2020, each of our non-employee directors has received annual fees of $75,000 in cash, payable in quarterly instalments, and $75,000 in equity in the form of restricted stock units granted under the 2021 Plan. Such restricted stock units are subject to vesting and will vest on the earlier of the date of our next annual meeting or May 23, 2024, subject to continued service on the Board through such vesting date. In addition, each of our non-employee directors shall have the right to receive promptly following the vesting date an amount equal to the product of (i) the number of RSUs vested on such date, multiplied by (ii) the total dividends declared and paid per share of common stock since the date of award. Such vesting is subject to full acceleration in the event of certain change in control transactions for us. In addition to the foregoing, the chairpersons of the Audit Committee, the Compensation Committee and the ESG Committee receive annual fees of $15,000, $10,000 and $5,000, respectively, and each of our non-employee directors that is a member of the Audit Committee, Compensation Committee and ESG Committee receives annual fees of $5,000, $2,500 and $2,500, respectively. From time to time, our non-employee directors may receive additional compensation through equity compensation or otherwise at the discretion of the disinterested directors of the Board for extraordinary service relating to their capacity as members of the Board.
2023 Director Compensation Table
2023 Director Compensation Table The following table summarizes the total compensation that members of the Board (other than directors who are named executive officers) earned during the fiscal year ended December 31, 2023 for services rendered as members of the Board.
2023 Director Compensation Table
| Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | Robert L. Antin | 60,000 | 75,000 | 5,960 | 140,960 | | Tammy Brandt | 56,250 | 75,000 | 5,960 | 137,210 | | Robert D’Agostino | 66,861 | 75,000 | 5,960 | 147,821 | | Renée E. LaBran | 61,875 | 75,000 | 5,960 | 142,835 | | Randall E. Paulson | 66,196 | 75,000 | 5,960 | 147,156 | | Michael J. Sheldon | 58,125 | 75,000 | 5,960 | 139,085 | | Mimi K. Walters | 60,000 | 75,000 | 5,960 | 140,960 |
2023 Director Compensation Table
(1) Bryant R. Riley, a member of the Board, our Chairman and Co-Chief Executive Officer, and Thomas J. Kelleher, a member of the Board and our Co-Chief Executive Officer are not included in this table because as employees Messrs. Riley and Kelleher received no additional compensation for services as directors for 2023. The compensation received by Messrs. Riley and Kelleher as our employees is shown in the summary compensation table provided above in “Executive Compensation-Summary Compensation Table.” (2) The amounts in the Stock Awards column reflect the aggregate grant date fair value of restricted stock units granted to the applicable director in 2023 calculated in accordance with FASB ASC 718. On May 23, 2023, we granted 1,997 restricted stock units to Robert Antin, Tammy Brandt, Robert D’Agostino, Renée E. LaBran, Randall Paulson, Michael Sheldon, and Mimi Walters for such directors’ annual stock grant of $75,000 as a non-employee director. The grant date fair value of the restricted stock units was $37.55 per share. All awards will vest on the earlier of May 23, 2024 or our 2024 annual meeting, subject to continued service on the Board through such vesting date. In addition, each of our non-employee directors shall have the right to receive promptly following the vesting date an amount equal to the product of (i) the number of RSUs that vested on such date, multiplied by (ii) the total dividends declared and paid per share of common stock since the date of grant. Vesting for all such awards is subject to full acceleration in the event of certain change in control transactions with respect to us and is contingent upon continued service of the applicable director on the Board through the applicable vesting date. As of December 31, 2023, restricted stock units granted to D’Agostino, Antin, Brandt, LaBran, Paulson, Sheldon, and Walters in the amount of 1,997 each remain outstanding. (3) Reflects accrued dividend rights paid upon May 24, 2023 vesting of RSUs originally granted on May 24, 2022, in accordance with award agreements, as approved by the Compensation Committee.