DEF 14A of CPS Technologies Corp/De/
Filed Mar 17, 2025 · FY20240001437749-25-008032
PROPOSAL 1. ELECTION OF DIRECTORS
PROPOSAL 1. ELECTION OF DIRECTORS Pursuant to the Company’s By-laws, the number of directors which shall constitute the whole Board is determined by a resolution of the stockholders or Board, but in no event may be less than one director. The Board is currently authorized to consist of five members. Each director holds office until the next annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier death, resignation, or removal. Directors need not be stockholders. In the event of a vacancy on the Board, the remaining directors may exercise the powers of the full Board until the vacancy is filled except as otherwise provided by law. Unless and until filled by stockholders, any vacancy in the Board, however occurring and including a vacancy resulting from an enlargement of the Board, may be filled by a vote of the majority of the directors then in office, even though less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy is elected for the unexpired term of his or her predecessor, and a director chosen to fill a vacancy resulting from an enlargement of the Board holds office until the next annual meeting of stockholders and until the director’s successor shall have been elected and qualified or until his or her earlier death, resignation or removal.
Nominees for Director
Nominees for Director Five directors are to be elected at the Meeting. The Board, as recommended by its Compensation and Nominating Committee, has nominated each of Grant C. Bennett, I. James Cavoli, Francis J. Hughes, Jr., Ralph M. Norwood and Daniel C. Snow for election to the Board. Each of Messrs. Bennett, Cavoli, Hughes and Norwood and Dr. Snow is currently a director of the Company and each has consented to being named in this Proxy Statement and to serve if elected. If elected, the nominees will hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. The affirmative vote of a plurality of the votes cast at the Meeting with respect to a particular director’s election is required to elect such director. Thus, the number of votes cast with respect to each director’s election excludes abstentions and broker non-votes with respect to that director’s election. It is intended that, unless you give contrary instructions, shares represented by proxies solicited by the Board will be voted for the election of the nominees listed below.
COMPENSATION DISCUSSION AND ANALYSIS
| ● | For employees generally, to monitor and review all general compensation strategies and programs of the Company, including equity incentives and benefit programs. |
Compensation Philosophy and Objectives
| ● | We maintain annual incentive opportunities sufficient to provide motivation to achieve specific operating goals and to generate rewards that are intended to bring total compensation to competitive levels. |
Compensation Philosophy and Objectives
| ● | We provide meaningful equity-based incentives for executives and other key employees to ensure that individuals are motivated over the long-term to respond to our business challenges and opportunities as owners and not just as employees. |
Procedure
Procedure Compensation decisions are tied to the Company’s fiscal year for officers, and for non-officer employees, of the Company. For each employee, a performance evaluation is conducted by his or her supervisor, the results of which are shared with the employee. The evaluation encompasses a review of the employee’s individual performance over the course of the year and includes recognition of the achievement by CPS of its objectives and priorities. Compensation decisions are made after the results of the performance evaluations have been considered and an analysis is completed that considers the goals of market competitiveness and enhancement of stockholder value. Compensation levels at peer companies are considered as part of the process. No upward adjustment is made to an employee’s compensation if the individual’s performance does not merit, or if the Company’s financial condition and performance do not support, such an adjustment. For each non-officer employee who earns more than $150,000 per year and reports directly to the Chief Executive Officer, the Chief Executive Officer recommends and the Compensation Committee must approve compensation. For all other non-officer employees the Chief Executive Officer sets compensation levels and presents the aggregate information to the Compensation Committee for its information. Bonuses, if any, are typically paid in the first quarter following the employee’s evaluation, and salary increases are effective the first day of the fiscal year, on or about January 1, excluding mid-year merit increases or promotions, which are based on the effective date or the increase or promotion. Compensation packages for CPS’s corporate officers are analyzed and discussed individually by the Compensation Committee, and decisions are made once the Compensation Committee has obtained all of the information it deems necessary. Information that is considered in making officer compensation decisions may include information provided to the Compensation Committee via presentations made to the committee by the officers themselves. The Compensation Committee also considers the Company’s financial condition and performance, as well as the performance, financial condition and compensation levels of peer companies. For officers, bonuses are typically paid in the first quarter of the year following the year to which the bonus relates, and salary increases are effective the first day of the fiscal year, on or about January 1 of the current year. Beginning in 2022, officer salary increases were made retroactive to the first of the year of approval. The accounting and tax treatment of compensation decisions generally have not been material factors in determining the amount and type of compensation given to executive officers, other than to balance the potential cost to the Company with the benefit or value to the executive. The tax and accounting treatment of different compensation arrangements may play a greater role in the decision-making process in the future. The effects on Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) also would be considered when applicable. The Compensation Committee has not to date employed any compensation consultants to assist it with compensation decisions, although it is authorized by its charter to do so and reserves the right to engage such consultants when and if deemed necessary or advisable. The Compensation Committee also has the authority to form, and delegate any of its responsibilities to, subcommittees as it deems appropriate, although to date it has not done so.
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance
| Year # | Summary Compensation Table Total for Principal Executive Officer (“PEO”) | "Compensation Actually Paid" to PEO | Average Summary Compensation Table Total for Non-PEO NEOs (1) | Average "Compensation Actually Paid" to Non-PEO Named Executive Officers (“NEOs”) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return | Net Income (thousands $) | | 2024 | 333,389 | 313,800 | 239,720 | 220,131 | 70.74 | (3,135) | | 2023 | 710,347 | 354,112 | 300,716 | 279,230 | 102.62 | 1,370 | | 2022 | 566,674 | 439,039 | 289,450 | 289,450 | 117.47 | 2,131 |
Pay Versus Performance
Note 1: Non-PEO consists of Charles Griffith, Chief Financial Officer, and Daniel Barton, Vice President Operations, for 2024. 2023 and 2022 include Mr. Griffith only, but excludes the $20,000 bonus for service as acting PEO in 2023, which is included in the 2023 PEO compensation above, see note (3) to the Summary Compensation Table below. Officer compensation (both named and un-named) is determined by the Board. In terms of base salary the Board considers the market for similarly situated employees at peer companies and the employee’s overall performance both individually and as it relates to the overall results. Variable compensation considers revenue and profitability during the year as they relate to the financial plan submitted to and approved by the Board prior to the beginning of the fiscal year. Compensation actually paid to the PEO and Non-PEO NEO reflects the actual salaries and other compensation plus the bonus amount accrued for during the year, but paid early in the following year. The Board elected not to consider shareholder return as a factor in results that would impact compensation.
Policy for Granting Certain Option Awards
Policy for Granting Certain Option Awards The Company does not have a formal policy regarding the granting of stock options. When granting stock options the Board of Directors takes into consideration any MNPI in the determination of the date on which the options will be granted. In 2024 no options were granted during the four business day-period prior to, or one business day following, the filing of the Company’s periodic reports or the filing or furnishing of a Form 8-K that discloses material non-public information.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | Brian T. Mackey | 2024 | $300,000(1) | $-(2) | $19,589(9) | $13,800(4) | $333,389 | | President, Chief Executive Officer | 2023 | $119,505(1) | $60,000(2) | $368,852(7) | $44,154(1)(4) | $592,511 | | Charles K. Griffith, Jr. | 2024 | $210,000(5) | -(2) | $19,589(9) | $10,800(4) | $240,389 | | Chief Financial Officer | 2023 | $206,483(5) | $80,000(2)(3) | $21,486(8) | $12,747(4) | $320,716 | | Daniel Barton | 2024 | $210,000(6) | $-(2) | $19,589(9) | $9,461(4) | $239,050 | | Vice President Operations | 2023 | $206,387(6) | $48,000(2) | $21,486(8) | $10,074(4) | $285,947 |
Summary Compensation Table
| (1) Mr. Mackey’s annual base salary was set at $300,000 upon his date of hire in August 2023. In 2023, he was also paid $40,000 for costs associated with relocating to Massachusetts. |
Summary Compensation Table
| (2) The Company instituted a bonus plan for 2023, to be reviewed and paid in 2024. The amount earned for 2023 is included in the 2023 amounts, although actually paid in 2024. In 2024 no bonuses were earned. Our 2023 filing showed bonuses actually received in 2023 and thus is different than the 2023 bonus amounts shown above. |
Summary Compensation Table
| (3) The Board issued an additional $20,000 bonus to Mr. Griffith for the three-month period during 2023 during which he served as acting President of CPS. |
Summary Compensation Table
| (4) In addition to the $40,000 for Mr. Mackey in 2023(see footnote (1)), amount represents Company payments to employee 401k accounts. These amounts were made under the same formula as are made to all employees participating in the Company 401(k) plan. |
Summary Compensation Table
| (5) Mr. Griffith’s annual base salary for 2023 and 2024 was $210,000. |
Summary Compensation Table
| (6) Mr. Barton’s annual base salary for 2023 and 2024 was $210,000. |
Summary Compensation Table
| (7) Amount represents an award on August 1, 2023 of an option to purchase 200,000 shares of Common Stock at $2.93 per share, which vests in five equal annual installments commencing the first anniversary of the date of grant and has a 10 year term. The dollar amount presented represents the aggregate fair value of the award on the date of grant computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The fair value of the option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 2023: dividend yield of 0%, expected volatility of 59.7%, risk-free interest rate of 4.24%, and expected life of 5 years. |
Summary Compensation Table
| (8) Amount represents an award on April 25, 2023 of an option to purchase 15,000 shares of Common Stock at $2.66 per share, which vests in five equal annual installments commencing the first anniversary of the date of grant and has a 10 year term. The dollar amount presented represents the aggregate fair value of the award on the date of grant computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The fair value of the option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 2023: dividend yield of 0%, expected volatility of 59.7%, risk-free interest rate of 3.43%, and expected life of 5 years. |
Summary Compensation Table
| (9) Amount represents an award on February 28, 2024 of an option to purchase 15,000 shares of Common Stock at $2.34 per share, which vests in five equal annual installments commencing the first anniversary of the date of grant and has a 10 year term. The dollar amount presented represents the aggregate fair value of the award on the date of grant computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The fair value of the option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 2023: dividend yield of 0%, expected volatility of 61.2%, risk-free interest rate of 4.26%, and expected life of 5 years. |
Summary Compensation Table
For further information on equity incentive awards granted to our named executive officers, see the disclosure below. For more information on compensation generally and information on severance and change of control rights, see the Compensation Discussion and Analysis section above.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information regarding unexercised options held by our named executive officers outstanding as of the end of the Company’s 2024 fiscal year, which date was December 28, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | | Name | Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | | | (#) Exercisable | (#) Unexercisable | (#) | ($) | | | Brian T. Mackey | 40,000(1) | 160,000(1) | - | 2.93 | 8/1/33 | | | - | 15,000(2) | - | 2.34 | 2/28/34 | | Charles K. Griffith, Jr. | 40,000(3) | - | - | 1.55 | 4/8/29 | | | 3,000(4) | 3,000(4) | - | 1.49 | 3/3/30 | | | 3,000(5) | 2,000(5) | - | 5.11 | 5/13/31 | | | 3,000(6) | 12,000(6) | - | 2.66 | 4/25/33 | | | - | 15,000(2) | - | 2.34 | 2/28/34 | | Daniel Barton | 3,000(7) | 2,000(7) | - | 5.98 | 8/16/31 | | | 20,000(8) | 30,000(8) | - | 2.90 | 1/28/32 | | | 3,000(6) | 12,000(6) | - | 2.66 | 4/25/33 | | | - | 15,000(2) | - | 2.34 | 2/28/34 |
Outstanding Equity Awards at Fiscal Year-End
| (1) (2) Granted on August 1, 2023 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. Granted on February 28, 2024 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. | | (3) Granted on April 8, 2019 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. | | (4) Granted on March 3, 2020 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. | | (5) (6) (7) (8) Granted on May 13, 2021 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. Granted on April 25, 2023 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. Granted on August 16, 2021 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. Granted on January 28, 2022 with vesting in five equal annual installments commencing on the first anniversary of the date of grant, with a term of 10 years. |
Outstanding Equity Awards at Fiscal Year-End
Equity Incentive Plans The Company currently administers the 2009 Plan, which expired in December 2019 but which will remain in effect until all awards outstanding under such plan have been exercised or expire, and the 2020 Plan. At December 28, 2024, options to purchase 798,300 shares were outstanding under the Plans. The goal of the Company’s equity incentive awards is to promote the success and interests of the Company and its stockholders by permitting and encouraging recipients to obtain a proprietary interest in the Company or any subsidiaries through the grant and exercise of such awards, and motivating such recipients to remain with the Company and work towards its success. Grants in Fiscal Year 2024 On February 22, 2024, the Board approved the grant of options under the 2020 Plan to purchase 25,000 shares, to an employee as part of a promotion package. These incentive stock options, which are exercisable at $2.30 per share, vest in equal annual installments over a five-year period commencing on the first anniversary of the date of grant and have a term of 10 years. On February 28, 2024, the Board of Directors approved the grant to each of the members of the Board options under the 2020 Plan to purchase 15,000 shares of Common Stock, for an aggregate 75,000 shares. These non-qualified stock options, which are exercisable at $2.34 per share, vested immediately on grant and have a term of 10 years. On February 28, 2024, the Board approved the grant of options under the 2020 Plan to purchase 105,000 shares, including 15,000 shares each to Messers. Mackey, Griffith and Barton. These incentive stock options, which are exercisable at $2.34 per share, vest in equal annual installments over a five-year period commencing on the first anniversary of the date of grant and have a term of 10 years. On December 10, 2024, the Board of Directors approved the grant to new Board member I. James Cavoli, options under the 2020 Plan to purchase 15,000 shares of Common Stock. These non-qualified stock options, which are exercisable at $1.58 per share, vested immediately on grant and have a term of 10 years. Such grants were the only grants of stock options made to the named executive officers and directors of the Company during the 2024 fiscal year.
Compensation of Directors
Compensation of Directors The following table sets forth all compensation of the Company’s non-employee directors for the fiscal year ended December 28,2024.
Compensation of Directors
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | Francis J. Hughes, Jr. | $18,000(1)(2) | $23,297(3)(4) | - | $41,297 | | Thomas M. Culligan(7) | $8,000(1) | $23,297(3)(4) | $102(5) | $31,399 | | Ralph M. Norwood | $18,000(1) | $23,297(3)(4) | $1,097(5) | $42,394 | | Daniel C. Snow, Ph.D. | $18,000(1) | $23,297(3)(4) | - | $41,297 | | Grant C. Bennett | $18,000(1) | $23,297(3)(4) | - | $41,297 | | I. James Cavoli(8) | $2,000(1)(9) | $15,693(6) | - | $17,693 |
Compensation of Directors
| (1) Includes quarterly stipend and fees paid for Board of Directors and committee meetings attended during the fiscal year. |
Compensation of Directors
| (2) Cash fees payable to Mr. Hughes for his service as a director are paid to ARD at his request, for which Mr. Hughes serves as President. |
Compensation of Directors
| (3) Amount represents the award on February 28, 2024 of a non-qualified option to purchase 15,000 shares of Common Stock at $2.34 per share, which vested in full on date of grant and has a 10 year term. The dollar amount presented represents the aggregate fair value of the award on the date of grant computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The fair value of the option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 2024: dividend yield of 0%, expected volatility of 61.2%, risk-free interest rate of 4.28%, and expected life of 7.6 years. |
Compensation of Directors
| (4) Mr. Hughes had an aggregate of 128,100 options outstanding at the 2024 fiscal year-end, all of which were fully vested and exercisable. Mr. Culligan had an aggregate of 0 options outstanding at the 2024 fiscal year-end. Mr. Norwood had an aggregate of 103,100 options outstanding at the 2024 fiscal year-end, all of which were fully vested and exercisable. Dr. Snow had an aggregate of 38,100 options outstanding at the 2024 fiscal year-end, all of which were fully vested and exercisable. Mr. Bennett had an aggregate of 32,600 options outstanding at the 2024 fiscal year-end, all of which were fully vested and exercisable. Mr. Cavoli had an aggregate of 15,000 options outstanding at the 2024 fiscal year-end, all of which were fully vested and exercisable. |
Compensation of Directors
| (5) Amount represents expenses reimbursed for travel. |
Compensation of Directors
| (6) Amount represents the award on December 10, 2024 of a non-qualified option to purchase 15,000 shares of Common Stock at $1.58 per share, which vested in full on date of grant and has a 10 year term. The dollar amount presented represents the aggregate fair value of the award on the date of grant computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The fair value of the option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 2024: dividend yield of 0%, expected volatility of 61.2%, risk-free interest rate of 4.16%, and expected life of 7.6 years. |
Compensation of Directors
| (7) Mr. Culligan resigned from the Board effective June 21, 2024. |
Compensation of Directors
| (8) Mr. Cavoli joined the Board effective December 3, 2024. |
Compensation of Directors
| (9) Cash fees payable to Mr. Cavoli for his service as a director are paid to Brenta Group LLC at his request, for which Mr. Cavoli is the sole member. |
Compensation of Directors
Board members are entitled to receive a Board meeting fee of $1,000 per meeting unless waived. Board members also received a quarterly stipend of $3,000 for their service during fiscal year 2024. Directors also are entitled to receive grants of stock options. In February 2024, the Board granted to each of Messrs. Hughes, Bennett, Culligan and Norwood and Dr. Snow options to purchase 15,000 shares of Common Stock at $2.34 per share, the closing price of the Common Stock on the date of grant. These options have a term of 10 years and were exercisable in full on the date of grant. In December 2024 the Board granted Mr. Cavoli options to purchase 15,000 shares of common stock at 1.58 per share, the closing price of the Common Stock on the date of grant. The Company may reimburse members of the Board for their reasonable out-of-pocket expenses incurred in attending Board and committee meetings. The Company believes that members of the Board received compensation during fiscal year 2024 commensurate with their responsibilities to the Company and appropriate for a company of the Company’s size and revenues.