DEF 14A of Fitlife Brands, Inc.
Filed Jul 5, 2024 · FY20230001437749-24-022224
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
General
General Our Bylaws provide that the Board of Directors shall consist of not less than one, nor more than nine directors, and that upon any change in the number of directors, any newly created directorships or eliminated directorships shall be apportioned by the remaining members of the Board of Directors or by stockholders. The Company’s Board of Directors currently consists of five directors. Mr. Lewis Jaffe has notified the Company that he will not stand for re-election at the Annual Meeting and will retire from the Board at that time. Mr. Jaffe has been a director of the Company since 2010 and will continue as a director until his term ends immediately prior to the Annual Meeting. Five directors are nominated for election at the Annual Meeting. Each nominee has confirmed that he will be able and willing to serve as a director if elected. If any of the nominees becomes unable or unwilling to serve, your proxy will be voted for the election of a substitute nominee recommended by the current Board of Directors. Upon recommendation of the Board of Directors, the Board of Directors has nominated for election as directors at our Annual Meeting Messrs. Dayton Judd, Grant Dawson, Matt Lingenbrink, Todd Ordal and Seth Yakatan.
Required Vote and Recommendation
Required Vote and Recommendation The election of directors shall be elected by a plurality of the votes cast (meaning the five nominees receiving the highest number of shares voted “FOR” their election will be elected). “WITHHOLD” votes and broker non-votes are not considered votes cast for the foregoing purpose and will have no effect on the election of the nominees. Unless otherwise instructed or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the election of the nominees. The Board of Directors recommends that the stockholders vote “FOR” the election of Messrs. Judd, Dawson, Yakatan, Ordal and Lingenbrink. The following sections set forth certain information regarding the nominees for election as directors of the Company. There are no family relationships between any of the directors and the Company’s executive officers.
Required Vote and Recommendation
| Name | Age | Title | | Dayton Judd | 52 | Chief Executive Officer and Chairman | | Grant Dawson | 55 | Director | | Matt Lingenbrink | 42 | Director Nominee | | Todd Ordal | 67 | Director | | Seth Yakatan | 53 | Director |
Required Vote and Recommendation
Each of the Company’s executive officers and directors will hold office until their successors are duly elected and qualified. The background and principal occupations of each director nominee are as follows: Dayton Judd has served as a director of the Company since June 2017, is currently the Chairman of the Company’s Board of Directors and began serving as the Company’s Chief Executive Officer on February 18, 2018. Mr. Judd is the founder and Managing Partner of Sudbury Capital Management (“Sudbury”). Prior to founding Sudbury, Mr. Judd worked from 2007 through 2011 as a Portfolio Manager at Q Investments, a multi-billion dollar hedge fund in Fort Worth, Texas. Prior to Q Investments, he worked with McKinsey & Company from 1996 through 1998, and again from 2000 through 2007. He graduated from Brigham Young University in 1995 with a Bachelors Degree, summa cum laude, and a Masters Degree, both in accounting. He also earned an M.B.A. with high distinction from Harvard Business School in 2000, where he was a Baker Scholar. Mr. Judd is a Certified Public Accountant. He currently serves on the Board of Directors of LifeVantage Corp (Nasdaq: LFVN) and Optex Systems Holdings Inc. (Nasdaq: OPXS). The Company’s Nominating and Corporate Governance Committee believes that Mr. Judd’s significant experience in investing in microcap companies, together with his substantial ownership position in the Company’s Common Stock, assists the Board of Directors in the management of the Company and setting goals and objectives to build stockholder value. Grant Dawson has served as a director of the Company since November 2013 and is currently a Portfolio Manager of Fixed Income Investments for Polar Asset Management Partners (“Polar”), where he has worked since 2014. Mr. Dawson brings more than 20 years of experience in finance and has significant board-level experience in corporate governance for public companies. Prior to Polar, he was Managing Director of Fixed Income Investments for Manulife Asset Management, a subsidiary of Manulife Financial Corporation and Vice President and Lead Analyst responsible for corporate debt ratings with Dominion Bond Rating Agency. Prior to such time, Mr. Dawson held various senior management positions in credit management and corporate finance with Nortel and in equity research with Dain Rauscher Ltd. Mr. Dawson earned an M.B.A. from the SMU Cox School of Business, a B.Comm in Finance from the University of Windsor, and holds the Chartered Financial Analyst designation. Additionally, Mr. Dawson is a member of the Institute of Corporate Directors and holds the ICD.D designation. The Company’s Nominating and Corporate Governance Committee believes that Mr. Dawson’s extensive expertise and knowledge regarding corporate finance and investment banking matters, as well as corporate governance, provides the Company with valuable insight. Matt Lingenbrink, director nominee, currently leads the marketing organization of Interstate Batteries as Vice President, Marketing and E-commerce since April 2024. Prior to his time at Interstate Batteries, he held various roles leading corporate strategy, business development, and route-to-market at Keurig Dr Pepper Inc., and its predecessor Dr Pepper Snapple Group, from August 2017 to April 2024. Prior to that, Mr. Lingenbrink worked with Bain & Company from September 2007 to August 2017, consulting with large clients across the consumer packaged goods industry and other industries on growth strategy, corporate diligence, and post-merger integration. Mr. Lingenbrink received his Bachelor’s Degree and a Master’s Degree in Accounting from Brigham Young University, and earned an M.B.A. from Harvard Business School. The Company’s Nominating and Corporate Governance Committee believes that Mr. Lingenbrink’s broad experience with consumer products strategy, marketing, and distribution will provide management and the Board of Directors with valuable perspectives relating to enhancing the value of the Company’s brands. Todd Ordal has served a director of the Company since September 2015, and is the President and founder of Applied Strategy, LLC, a private consulting company founded in 2003 that provides consulting and coaching services to chief executive officers and other executives around the word. Prior to joining the Company’s Board of Directors, Mr. Ordal served as a director for iSatori, Inc. from April 2012 until the completion of the Company’s acquisition of iSatori. Before founding Applied Strategy, LLC, Mr. Ordal served as Chief Executive Officer of Dore Achievement Centers from December 2002 until November 2004, and President and Chief Executive Officer of Classic Sports Companies from January 2001 until December 2002. Prior to Classic Sport Companies, Mr. Ordal served as a Division President for Kinko’s Service Corporation, where he had accountability for $500 million in revenue, 300 stores and 7,000 people, and as a member of the Board of Directors for Kinko’s from July 1992 until July 1997. He has also served on several non-profit boards and boards of advisors. Mr. Ordal received his Bachelors Degree in psychology from Morehead State University and his M.B.A. from Regis University. The Company’s Nominating and Corporate Governance Committee believes that Mr. Ordal’s considerable experience with growing successful businesses, as well as his extensive knowledge and understanding of marketing and finance matters, provides the Board of Directors with valuable guidance and insight. Seth Yakatan has served a director of the Company since September 2015, and as a Partner of Katan Associates, Inc., a corporate strategy and finance advisory group, since April 2001. Prior to joining the Company’s Board of Directors, Mr. Yakatan served as a director for iSatori, Inc. from September 2014 until the completion of the Company’s acquisition of iSatori. Prior to founding Katan Associates, Inc. in 2001, Mr. Yakatan worked in merchant banking at the Union Bank of California, N.A. in the Specialized Lending Media and Telecommunications Group, and as a venture capital analyst with Ventana Growth Funds and Sureste Venture Management. Mr. Yakatan holds an M.B.A. in Finance from the University of California, Irvine, and a Bachelor of Arts in History and Public Affairs from the University of Denver. The Company’s Nominating and Corporate Governance Committee believes that Mr. Yakatan’s 25 years of experience as a life sciences business development and corporate finance professional, including actively supporting small cap and major companies in achieving corporate, financing, and asset monetization objectives, provides the Board of Directors with valuable guidance and expertise based on his extensive knowledge and understanding of banking matters. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any of the Company’s director nominees during the past ten years.
Summary Compensation Table
Summary Compensation Table The following table sets forth information concerning the compensation paid to the Company’s Chief Executive Officer, and the Company’s two most highly compensated executive officers other than its Chief Executive Officer, who were serving as executive officers as of December 31, 2023 and whose annual compensation exceeded $100,000 during such year (collectively the “Named Executive Officers”).
Summary Compensation Table
| Name and principal position | Year | Salary | Bonus | Stock awards | Warrants/ option awards (1) | All other compensation (2) | Total | | Dayton Judd | 2023 | $372,000 | $160,000 | $- | $- | $- | $532,000 | | Chief Executive Officer and Chair of the Board | 2022 | $340,462 | $135,000 | $- | $- | $- | $475,462 | | Patrick Ryan | 2023 | $148,077 | $5,000 | $- | $- | $151,669 | $304,746 | | Chief Retail Officer | 2022 | $138,077 | $- | $- | $- | $186,045 | $324,122 | | Jakob York | 2023 | $204,616 | $40,000 | $- | $16,060 | $- | $260,676 | | Chief Financial Officer | 2022 (3) | $69,230 | $- | $- | $89,700 | $- | $158,930 |
Summary Compensation Table
| (1) The amounts in this column represent the grant date fair value of stock option awards computed in accordance with FASB guidance, excluding the effect of estimated forfeitures under which the Named Executive Officer has the right to purchase, subject to vesting, shares of the Company’s Common Stock. | | (2) Amounts reflect commissions paid to the Named Executive Officer. | | (3) Jakob York began serving as CFO on August 15, 2022. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding unexercised options and stock that had not vested and equity incentive awards held by each of the Named Executive Officers outstanding as of December 31, 2023:
Outstanding Equity Awards at Fiscal Year-End
| | Grant date | Number of securities underlying unexercised options exercisable | Number of securities underlying unexercised options unexercisable | Equity incentive plan awards: Number of underlying unexercised unearned options | Option exercise price | Option expiration date | | Dayton Judd | 7/31/2018 | 221,400 | - | - | $0.70 | 7/31/2028 | | Chief Executive Officer and Chairman | 2/5/2021 | 72,000 | - | - | $5.24 | 2/5/2026 | | | 2/5/2021 | 56,000 | - | - | $4.76 | 2/5/2031 | | Jakob York | 8/15/2022 | 5,000(1) | 5,000 | - | $15.65 | 8/15/2027 | | Chief Financial Officer | 8/15/2023 | 500(2) | 1,500 | - | $18.15 | 8/15/2028 |
Outstanding Equity Awards at Fiscal Year-End
| (1) One-fourth of the stock options vested on the grant date of August 15, 2022, with the remainder vesting in three equal annual installments thereafter, becoming fully vested on August 15, 2025. | | (2) One-fourth of the stock options vested on the grant date of August 15, 2023, with the remainder vesting in three equal annual installments thereafter, becoming fully vested on August 15, 2026. |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table presents certain information regarding compensation paid to the Company’s Principal Executive Officer (“PEO”) and other Named Executive Officers (“Other NEOs” or “Non-PEOs”), and certain measures of financial performance, for the years ended December 31, 2023, 2022 and 2021. The amounts shown below are calculated in accordance with Item 402(v) of Regulation S-K. The Compensation Committee believes that 2023 compensation decisions for the PEO and Non-PEOs are reflective of the firm’s overall operating, strategic, financial and stock price performance and thus aligned with shareholders.
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (1) | Average Summary Compensation Total for Non-PEO Named Executive Officers (2) | Value of Initial $100 Investment based on Total Shareholder Return (3) | Net Income ($) | | 2023 | $532,000 | $637,120 | $282,711 | $354 | $5,296,000 | | 2022 | $475,462 | $411,022 | $241,526 | $295 | $4,429,000 | | 2021 | $1,277,503 | $2,941,259 | $269,339 | $196 | $5,410,000 |
Pay Versus Performance Table
| (1) Dayton Judd served as the Company’s PEO during the fiscal years presented. The following amounts were added and deducted from the Summary Compensation Table (“SCT”) amount to determine the compensation actually paid to the PEO in accordance with SEC regulations: |
Pay Versus Performance Table
| Adjustments to Determine Compensation “Actually Paid” | 2023 | 2022 | 2021 | | Deduction for Amount Reported under the “Stock Awards” column in the SCT | $- | $- | $(666,344) | | Deduction for Amount Reported under the “Option Awards” column in the SCT | - | - | (184,620) | | Increase for the Fair Value of Awards Granted during year that remain unvested as of year-end | - | - | 680,400 | | Increase for the Fair Value of Awards Granted during year that remain vested as of year-end | - | - | 1,834,320 | | Increase/deduction for Change in Fair Value from prior year-end to current year-end of Awards Granted prior to year-end that were outstanding and unvested as of year-end | 86,980 | (36,720) | - | | Increase/deduction for Change in Fair Value from prior year-end to Vesting Date of Awards Granted prior to year-end that vested during year | 18,140 | (27,720) | - | | Total Adjustments | $105,120 | $(64,440) | $1,663,756 |
Pay Versus Performance Table
| (2) For the year ended December 31, 2023, Patrick Ryan and Jakob York were our Other NEOs. For the years ended December 31, 2022 and 2021, Patrick Ryan and Jenna Sinnett were our Other NEOs. No adjustments were required for our Other NEOs as neither of them had components of their compensation that would require adjustments. |
Pay Versus Performance Table
| (3) Represents the cumulative shareholder return of a fixed investment of $100 made at the closing price of the Company’s Common Stock at December 31, 2020 for the measurement period beginning on such date and continuing through and including the end of the applicable fiscal year reflected in the table. |
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table We generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table. PEO From 2022 to 2023, compensation actually paid to the PEO increased by $226,098 or 55%. Over the same period, the Company’s Total Shareholder Return increased by 19%. Key factors that drove the increase in pay during this period were an increase in the share price affecting the value of previously issued options. Other NEOs From 2022 to 2023, compensation paid to the other NEOs increased by $41,185 or 17%. Over the same period, the Company’s Total Shareholder Return increased by 19%. Key factors that drove the increase in pay during this period were higher cash compensation to the Other NEOs. Compensation Actually Paid and Net Income Our Company has historically looked to net income as a performance measure for our executive compensation program. In fiscal 2023, our net income increased $0.9 million, or 20%, as compared to fiscal 2022, and the compensation actually paid for our PEO and non-PEO NEOs also increased between 2022 and 2023. Compensation Actually Paid and Cumulative TSR Historically we have not used financial performance measures such as TSR to align with compensation actually paid to our NEO’s. As described in more detail above, part of the compensation our NEOs are eligible to receive consists of annual performance-based cash bonuses and equity awards that are designed to provide appropriate incentives to our executives to achieve defined annual corporate goals. All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference in any filing of our Company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
NON-EXECUTIVE DIRECTOR COMPENSATION
NON-EXECUTIVE DIRECTOR COMPENSATION We currently have five directors, four of whom are considered independent. Non-independent directors who are also employees of the Company do not receive compensation for their services as a director on the Board. Prior to November 8, 2023, each of our non-employee directors were entitled to receive $40,000 per annum for their services on the Board pursuant to the Company’s current director compensation plan, which compensation may be paid in cash, shares of Company Common Stock or a combination thereof, at the option of each individual director. Effective November 8, 2023, the compensation paid to our non-employee directors increased to $50,000 per annum. The table below summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31, 2023:
NON-EXECUTIVE DIRECTOR COMPENSATION
| | Fees earned or paid in cash | Stock awards | Option awards | Total | | Grant Dawson | $42,500 | $- | $- | $42,500 | | Lewis Jaffe | $42,500 | $- | $- | $42,500 | | Todd Ordal | $42,500 | $- | $- | $42,500 | | Seth Yakatan | $42,500 | $- | $- | $42,500 |