DEF 14A of TSS, Inc.
Filed Apr 30, 2024 · FY20230001437749-24-013960
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 three members, classified into three classes as follows:
The Board of Directors
| • | Mr. Richard M. Metzler constitutes a class with a term ending at the 2024 Annual Meeting of Stockholders; | | • | Mr. Darryll E. Dewan constitutes a class with a term ending at the 2025 Annual Meeting of Stockholders; and | | • | Mr. Peter H. Woodward constitutes a class with a term ending at the 2026 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 Mr. Metzler for election at the 2024 Annual Meeting of Stockholders for a term of three years to serve until the 2027 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 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 | 51 | Chairman | | Richard M. Metzler | 71 | Director | | Darryll E. Dewan | 72 | Chief Executive Officer and Director |
The Board of Directors
Peter H. Woodward, age 51, 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 71, 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 experiences gained in his capacity as a chief executive officer and board member of rapidly growing businesses in the logistics industry. Darryll E. Dewan, age 72, 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 until 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 CEO, President and executive in 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; |
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, 2023 and 2022 to (1) our President and Chief Executive Officer, (2) our Chief Financial Officer, and (3) our Senior Vice President, Operations (collectively, the “named executive officers”).
Summary Compensation Table
| Name and Principal Position(s) | Year | Salary | Bonus | Stock Awards (1) | Option Awards (1) | All Other Compensation | Total | | Darryll E. Dewan, | 2023 | $350,000 | 147,960 | $- | | $60,670(2) | $558,630 | | President and Chief Executive Officer from November 14, 2022 | 2022 | $44,423 | - | | 512,500 | 10,000 | $566,923 | | John K. Penver, | 2023 | 275,000 | 63,155 | 59,000 | - | - | 397,155 | | Chief Financial Officer | 2022 | 275,000 | 42,969 | - | - | - | 289,583 | | Karl T. Marrott, | 2023 | 250,000 | 44,914 | 59,000 | - | 178,180(4) | 532,094 | | Senior Vice President, Operations (3) | 2022 | 34,970 | - | 61,000 | 82,000 | 20,764 | 198,734 |
Summary Compensation Table
| (1) Amounts shown are the grant date fair value of restricted stock and stock option awards. The grant date fair value of the award is based on the Black-Scholes-Merton valuation model. | | (2) Includes a housing allowance of $5,000 per month | | (3) Mr. Marrott commenced as our SVP Operations on November 2, 2022 | | (4) Includes $100,000 of relocation costs and $78,180 of a tax gross-up relating to these relocation costs. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information about all equity compensation awards held by the named executive officers at December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
| | Option Awards | | | | Stock Awards | | | Name | Number of securities underlying unexercised options (#) Exercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | 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 (1) ($) | | Darryll E. Dewan | 416,667(2) | 833,333(2) | 0.62 | 11/14/2032 | - | | | John K. Penver | 200,000(3) | - | 0.10 | 8/29/2024 | 100,000(4) | 30,000 | | Karl T. Marrott | 66,667(5) | 133,333(5) | 0.49 | 1/22/2028 | 100,000(6) | 30,000 |
Outstanding Equity Awards at Fiscal Year End
| (1) Computed based on a closing market price of $0.30 per share for the Company’s common stock at December 31, 2023. |
Outstanding Equity Awards at Fiscal Year End
| (2) Represents the vested and unvested portion of an award of 1,2500,000 restricted shares of our common stock granted to Mr. Dewan on November 14, 2022 under the 2015 Plan that will vest in three equal annual installments of 416,667 shares on each of the first, second and third anniversaries of the grant date. |
Outstanding Equity Awards at Fiscal Year End
| (3) On April 10, 2017, the exercise price and vesting schedule applicable to these stock options were amended. The number of shares underlying these stock options was increased to 300,000 shares. In accordance with amendments to the stock option agreements governing these stock options, the revised exercise price per share is $0.10. As amended, the stock options became exercisable (a) with respect to 150,000 shares on April 10, 2018, and (b) with respect to 150,000 shares on April 10, 2019. |
Outstanding Equity Awards at Fiscal Year End
| (4) Represents the unvested portion of an award of 100,000 restricted shares of our common stock granted to Mr. Penver on February 24, 2023 under the 2015 Plan that will vest in three equal annual installments of 33,333 shares on each of the first, second and third anniversaries of the grant date |
Outstanding Equity Awards at Fiscal Year End
| (5) Represent an award of stock options to acquire 200,000 shares of our common stock granted to Mr. Marrott on November 2, 2022. The options become exercisable in three equal annual installments of 66,667 shares on each of the first, second and third anniversaries of the grant date. These options become immediately exercisable in the event of a Change in Control (as defined in the executive’s employment agreement. |
Outstanding Equity Awards at Fiscal Year End
| (6) Represents the unvested portion of an award of 100,000 restricted shares of our common stock granted to Mr. Marrott on February 24, 2023 under the 2015 Plan that will vest in three equal annual installments of 33,333 shares on each of the first, second and third anniversaries of the grant date |
Director Compensation
Director Compensation In 2023, we compensated each of our non-employee directors 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 $2,500. In April 2017, we granted Mr. Woodward an option to purchase 200,000 shares of our common stock which vested on the first anniversary of the date of grant. These options were also outstanding at December 31, 2024. In May 2021, upon his joining the Board of Directors, we granted Mr. Metzler an option to purchase 150,000 shares of our common stock which vest over a three-year period. These options were outstanding at December 31, 2024. We also reimburse our directors for travel, lodging and other reasonable out-of-pocket expenses in connection with the attendance at Board, committee, and stockholder meetings, as well as for other reasonable expenses related to service on the Board. We do not maintain any pension, nonqualified defined contribution or other deferred compensation plans for our non-employee directors. The following table summarizes compensation earned by our non-employee directors during fiscal year 2023.
Director Compensation
| Name | Fees earned or paid in cash ($) | Stock Awards ($) | Option Awards ($) | All other compensation | Total ($) | | Peter H. Woodward | $45,000 | - | $- | | $45,000 | | Richard M. Metzler | 40,000 | - | - | | 40,000 |
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 of our Company for each of the last two 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 Company or the Compensation Committee view the link between the Company’s 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 2023, 2022 and 2021. 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
| | Summary Compensation Table Total for PEOs (1)(2) | | Compensation Actually Paid to PEOs (3) | | Average Summary Compensation Table Total for Non-PEO | Average Compensation Actually Paid to Non-PEO NEOs (5) | Value of Initial Fixed $100 Investment Based on Total Shareholder | Net income (loss) | | Years | PEO 1 | PEO 2 | PEO 1 | PEO 2 | NEOs (4) | | Return (6) | ((000’s) | | 2023 | N/A | 564,405 | N/A | 376,905 | 462,531 | 389,314 | $52 | $73 | | 2022 | 454,300 | 566,923 | 492,633 | 466,923 | 322,485 | 332,751 | $97 | $(73) | | 2021 | 405,417 | N/A | 340,417 | N/A | 269,792 | 251,592 | $78 | $(1,297) |
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. |
Pay versus Performance Table
| (2) Amounts in this column represent the “Total” column set forth in the SCT on page 9. 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”. 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 CAP for the position of PEO and average CAP for our other NEOs
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 | 2023 | N/A | N/A | N/A | N/A | N/A | | | 2022 | $454,300 | - | 38,333 | - | $492,633 | | | 2021 | $405.417 | - | (21,667) | (43,333) | $340,417 | | PEO 2 | 2023 | $564,405 | - | (62,500) | (125,000) | $376,905 | | | 2022 | $566,923 | (12,500) | - | 412,500 | $466,923 | | | 2021 | N/A | N/A | N/A | N/A | N/A | | Non-PEO NEO’s | 2023 | $462,531 | (59,000) | (44,217) | 30,000 | $389,314 | | | 2022 | $322,485 | 5,133 | - | 5,133 | $322,751 | | | 2021 | $269,792 | (6,067) | (12,133) | - | $251,592 |
Pay versus Performance Table
| (a) The amount in this row 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 if 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 2023 were John K. Penver and Karl T. Marrott, and in 2022 and 2021 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 the Company’s 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 the Company’s share price at the end and the beginning of the measurement period by the Company’s 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 the Company’s share price at December 31, 2020. |
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1)
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1) Our Board of Directors has nominated Mr. Richard M. Metzler for election at the 2024 Annual Meeting of Stockholders for a term of three years to serve until the 2027 Annual Meeting of Stockholders, and until his successor has been elected and qualified, or until his earlier death, resignation or removal. The Board of Directors currently consists of three members, classified into three classes as follows:
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1)
| ● | Mr. Richard M. Metzler constitutes a class with a term ending at the 2024 Annual Meeting of Stockholders; |
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1)
| ● | Mr. Darryll E. Dewan constitutes a class with a term ending at the 2025 Annual Meeting of Stockholders; and |
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1)
| ● | Mr. Peter H. Woodward constitute a class with a term ending at the 2026 Annual Meeting of Stockholders. |
PROPOSALS TO BE VOTED UPON BY STOCKHOLDERS ELECTION OF DIRECTORS (Notice Item 1)
At each Annual Meeting of Stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. 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. The Board of Directors has nominated Mr. Metzler for election at the 2024 Annual Meeting of Stockholders for a term of three years to serve until the 2027 Annual Meeting of Stockholders, and until his successor is elected and qualified, or until his earlier death, resignation or removal. The Class II director, Mr. Dewan, serves until the 2025 Annual Meeting of Stockholders, and the Class III director, Mr. Woodward, serves until the 2026 Annual Meeting of Stockholders, and until his successor has been elected and qualified, or until his earlier death, resignation or removal. Unless authority to vote for these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election of Mr. Metzler. If Mr. Metzler becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board of Directors may recommend in his place. We have no reason to believe that Mr. Metzler will be unable or unwilling to serve as a director. A plurality of the shares voted affirmatively at the annual meeting is required to elect the nominee as a director. THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. RICHARD M. METZLER AS DIRECTOR, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.