DEF 14A of Outdoor Holding Co
Filed Nov 29, 2023 · FY20230001493152-23-043054
INFORMATION ABOUT OUR BOARD OF DIRECTORS
INFORMATION ABOUT OUR BOARD OF DIRECTORS
Board Highlights
Board Highlights The Board is currently comprised of nine directors, six of whom qualify as independent directors under applicable standards of the Nasdaq Stock Market LLC (“Nasdaq”). The Board seeks members with varying professional backgrounds and other differentiating perspectives and characteristics who combine a broad spectrum of experience and expertise with a reputation for integrity and passion for the firearms and ammunition industry. The Board believes that maintaining a diverse membership enhances the Board’s discussions and oversight of the Company and enables the Board to better represent all of the Company’s shareholders. The Company maintains a corporate membership in the National Association of Corporate Directors (the “NACD”), which provides each director with access to continuing education, research materials, and publications relating to corporate governance, board leadership, and other topical information.
Board Demographics and Skills Matrix
Board Demographics and Skills Matrix The matrix below provides information regarding our directors’ knowledge, skills, experiences, tenure, age and professional attributes, as well as certain demographic information that is based on the voluntary self-identification of each member of the Board. The matrix does not encompass all the knowledge, skills, experiences, or attributes of our directors, and the fact that we do not list a particular item does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience, or attribute with respect to a director does not mean the director is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board.
Board Demographics and Skills Matrix
| Skills and Experience | Wagenhals | Wallace | Smith | Luth | Lockett | Urvan | Childress | Walker | Tsentas | | Public Company Board | ● | | | ● | | | | ● | | | Public Company Executive | ● | | ● | | | | | | | | Firearms / Ammunition Industry | ● | | ● | ● | | ● | ● | | ● | | Manufacturing | ● | | ● | ● | | | | | | | Military / Law Enforcement | | | | | | | | | ● | | Finance / Accounting | | ● | | | ● | ● | | | ● | | Government / Policy / Legal | | | | ● | ● | ● | | ● | | | Marketing / Sales | ● | ● | | | | ● | ● | | | | Technology / Digital | ● | | | | | ● | | | | | Tenure and Independence | | | | | | | | | | | Tenure (Years) | 6 | 6 | 1 | 1 | 2 | 2 | 2 | 1 | 1 | | Independence | | ● | | ● | ● | | ● | ● | ● | | Demographics | | | | | | | | | | | Age | 82 | 66 | 45 | 69 | 37 | 57 | 77 | 64 | 36 | | Gender Identity | M | M | M | M | F | M | M | M | M | | African American or Black | | | | | | | | ● | | | Alaskan Native or Native American | | | | | | | | | | | Asian | | | | | | | | | | | Hispanic or Latinx | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | White | ● | ● | ● | ● | ● | ● | ● | | ● | | LGBTQ+ | | | | | ● | | | | |
Board Demographics and Skills Matrix
For more information about the Board and Corporate Governance, see “Corporate Governance” below.
Profiles of Our Director Nominees
Profiles of Our Director Nominees Jared R. Smith was appointed as Chief Executive Officer and a director of the Company on July 24, 2023; previously, Mr. Smith had served as the Company’s President and Chief Operating Officer since January 2023. Mr. Smith has more than 17 years of experience in the ammunition industry. He was employed at Fiocchi of America, a global manufacturer of premium ammunition for competition, hunting and defense applications located in Ozark, Missouri from 2010 to December 2022, where, since 2017, he held the position of General Manager. As General Manager, Mr. Smith maintained full Profit and Loss ownership and managed separate manufacturing operations (340+ employees) while overseeing three acquisitions, and leading Fiocchi’s revenue growth in three years from $95 million to in excess of $200 million. Prior to taking the General Manager role, Mr. Smith also held positions as the Vice President-International Strategy and Development and Director of Procurement and Supply Chain at Fiocchi of America. We believe that Mr. Smith possesses attributes that qualify him to serve as a member of the Board, including his extensive business management experience and his knowledge of the firearms and ammunitions industry. Fred W. Wagenhals has been the Chairman of the Board of the Company since December 2016. On July 24, 2023, Mr. Wagenhals assumed the position of Executive Chairman. Mr. Wagenhals also served as our Chief Executive Officer from December 2016 until July 24, 2023 and as our President from December 2016 through March 2021. Prior to joining AMMO, Mr. Wagenhals was a private investor from August 2005 until December 2016. Prior to that, Mr. Wagenhals was employed at Action Performance Companies, Inc., a leading designer and marketer of licensed motorsports products related to NASCAR, as Chairman, President, and Chief Executive Officer from November 1993 to December 2005, Chairman of the Board and Chief Executive Officer from May 1992 until September 1993, and President from July 1993 until September 1993. Action-Performance Companies, Inc. was sold in August 2005 to International Speedway Corp. and Speedway Motorsports. Mr. Wagenhals is a member of the Model Car Hall of Fame, was an Arizona Entrepreneur of the Year award recipient for the Retail/Wholesale category by the Center for Entrepreneurial Leadership, Inc. in 1997, and was honored as the Anheuser-Bush Entrepreneur in Residence at the University of Arizona College of Business and Public Administration during 1997 and 1998. He also taught a sports entrepreneurship class at the University of Arizona. We believe that Mr. Wagenhals possesses attributes that qualify him to serve as a member of the Board, including his extensive business management experience, his knowledge of the firearms and ammunitions industry, his track record of building diverse distribution channels and developing a disciplined branding and marketing strategy at Action Performance, Inc., and his contributions to our overall business development and strategic direction. Russell William “Rusty” Wallace, Jr. has been a director of the Company since June 2017. Mr. Wallace has been the principal shareholder of the Rusty Wallace Automotive Group, a group of eight automotive dealerships located in Eastern Tennessee, since 1991. Mr. Wallace owned Rusty Wallace Racing, a racing team that competed in the NASCAR Series, from 2006 to 2013, and he competed in NASCAR races as a driver for more than 16 years and had 55 victories prior to his retirement in 2005. Following his racing career, Mr. Wallace served as an analyst for ABC and ESPN from 2006 to 2014. Since 2015, Mr. Wallace has served as Lead Analyst for the Motor Racing Network, a U.S. radio network that syndicates broadcasts of auto racing events, particularly NASCAR. He is a member of the NASCAR Hall of Fame, the International Motorsports Hall of Fame, the Motorsports Press Association Hall of Fame, and the Motorsports Hall of Fame of America. We believe that Mr. Wallace possesses attributes that qualify him to serve as a member of the Board, including his extensive experience in management, business operations, and growth of high-volume businesses including as the owner of auto dealerships and a NASCAR racing team. Jessica M. Lockett has been a director of the Company since December 2020. Ms. Lockett is a corporate and securities law attorney with experience representing public and private companies at various stages of development with respect to matters of corporate governance, securities regulations (including filings under the Securities Act of 1933 and reporting under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), mergers and acquisitions, financing, fundraising and other corporate transactions. Ms. Lockett earned her J.D., cum laude, from Thomas Jefferson School of Law in 2012 and received the CALI and Witkin Awards in Securities Regulations from Cal Western School of Law. Ms. Lockett graduated from the University of Arizona with a Bachelor of Arts in Psychology. Ms. Lockett has been an attorney with Lockett + Horwitz, a professional law corporation, since 2016 and is an active member of the State Bar of California. We believe that Ms. Lockett possesses attributes that qualify her to serve as a member of the Board, including her extensive experience in corporate and securities law with a focus on representing private and public companies at various stages of development. We believe that her experience enhances the Board’s corporate governance. Richard R. Childress has been a director of the Company since January 2021. Since 1969, Mr. Childress has owned and operated Richard Childress Racing, a professional racing team that currently competes in the NASCAR Cup Series and the NASCAR Xfinity Series. Mr. Childress also owns Childress Vineyards, which he founded in 2004. Childress Vineyards is situated in North Carolina’s first federally designated region for grape growing and produces over 30 wines. In addition to starting Richard Childress Racing, Mr. Childress was a NASCAR driver from 1969 to 1981. Mr. Childress served as the First Vice President of the Board of Directors of the National Rifle Association (the “NRA”) from 2017 to 2019. Mr. Childress was inducted into the NASCAR Hall of Fame in 2017. We believe that Mr. Childress possesses attributes that qualify him to serve as a member of the Board, including his extensive experience building and leading high-performing businesses and teams and his deep knowledge of the firearms and ammunitions industry and relationships with important customers and other stakeholders through his experience as a member of the NRA’s Board of Directors. Steve F. Urvan has been a Director of the Company since April 2021. Mr. Urvan was employed by the Company from April 2021 through January 5, 2023 as Chief Strategy Officer. Mr. Urvan is the Founder and Chief Strategy Officer of BitRail, a regulatory compliant payments company that provides private label payment infrastructure to large brands, since its founding in early 2018. Mr. Urvan founded GunBroker.com in 1999 and served as its Chief Executive Officer until the Company acquired it in April 2021. Mr. Urvan has spent over 20 years as an entrepreneur, advisor, investor, and philanthropist with a passion for building and growing companies across various industries, but always with a focus of technology as a core or enabler. Mr. Urvan remains active in other companies that he founded including Media Lodge, App Cohesion, and North Harbor Insurance Company, and manages an investment portfolio though the Urvan Family Office. We believe that Mr. Urvan possesses attributes that qualify him to serve as a member of the Board, including his extensive experience building and leading Gunbroker.com and his deep knowledge of the firearms and ammunitions industry via that leadership.
Profiles of Our Director Nominees
Christos Tsentas has been a director of the Company since November 2022. Mr. Tsentas has served as a Partner of Albion River LLC, a private direct investment firm, with a focus on aerospace, defense and government related opportunities since 2020. Earlier, he served as an investment banker at KippsDeSanto & Co., an M&A advisory firm focused on the aerospace and defense markets, from 2009 to 2015. Mr. Tsentas serves on the board of directors of Magpul Industries Corporation, a designer and manufacturer of firearms accessories and outdoor lifestyle products. Mr. Tsentas holds a B.S. in Finance and Accounting from the University of Virginia and an M.B.A. from Columbia Business School. We believe that Mr. Tsentas possesses attributes that qualify him to serve as a member of the Board, including his experience as an investment banker with a focus on the defense industry and as a board member of a designer and manufacturer of firearms accessories. Wayne Walker has been a director of the Company since November 2022. Mr. Walker has more than 30 years of experience in corporate law, governance and corporate restructuring, including 15 years at the DuPont Company in the Securities and Bankruptcy Group, where he worked in the Corporate Secretary’s office and served as Senior Counsel. In 2003, Mr. Walker founded Walker Nell Partners, Inc. (“Walker Nell”), an international business consulting firm providing corporate governance and restructuring, fiduciary services, litigation support, and other services to client corporations and law firms, where he continues to serve as President. Earlier in his career, Mr. Walker served as Partner at ParenteBeard LLC, an accounting firm, from 2001 to 2004 and as Senior Legal Counsel at E. I. du Pont de Nemours and Company from 1984 to 1998. He has served: (i) as a director of PharmaCyte Biotech, Inc., a biotechnology company focused on developing cellular therapies (Nasdaq: PMCB) since December 2022, (ii) on the board of directors of Wrap Technologies, Inc. (Nasdaq: WRAP), a global public safety technology and services company, from 2018 to October 2023, where he served as chairman of the board and as a member of the board’s compensation committee, (iii) as chairman of the board of Petro Pharmaceuticals, Inc. (Nasdaq: PTPI), a men’s health company, since 2020, (iv) on the board of directors of AYRO, Inc. (Nasdaq: AYRO), a designer and producer of all-electric vehicles, since 2020 , (v) on the board of directors of Pitcairn Trust Company, a national advisor to family offices, since 2018. He is the former Vice President of the Board of Education of the City of Philadelphia, Chairman of the Board of Trustees of National Philanthropic Trust, a public charity that holds over $20.0 billion of assets under management, and Chairman of the Board of Directors for Habitat for Humanity International, a global non-profit, non-governmental housing organization. Mr. Walker holds a B. A. from Loyola University New Orleans and a J.D. from the Columbus School of Law at the Catholic University of America. He also studied finance for non-financial managers at the University of Chicago’s Graduate School of Business. We believe that Mr. Walker possesses attributes that qualify him to serve as a member of the Board, including his experience as an attorney, more than 30 years of experience in corporate governance, restructuring and corporate litigation enhances the Board’s corporate governance and related experience. Randy Luth has been a director of the Company since January 2023. Mr. Luth has served as the president of Luth-AR-LLC, a producer of products for the AR-15 market, since 2013. Mr. Luth was the Chief Executive Officer of DPMS Panther Arms, a producer of AR-15 firearms and firearm components, from 1986 until its sale in December 2007 to the Freedom Group. Previously, Mr. Luth served as a director of the Company from November 2017 to January 2021. We believe that Mr. Luth possesses attributes that qualify him to serve as a member of the Board, including his extensive experience building and leading firearm and firearm components companies and his deep knowledge of the firearms and ammunitions industry via that leadership.
Director Compensation
Director Compensation The following table sets forth, for the year ended March 31, 2023, information with respect to compensation for services in all capacities to us and our subsidiaries earned by our directors, who are not officers, who served during the year ended March 31, 2023. We make an annual grant to each director of 40,000 shares of Common Stock. Ms. Lockett receives a director fee of $4,000 per month.
Director Compensation
| Name | Fees earned or paid in cash (1) | Stock awards (2) | Option awards | Non-equity incentive plan compensation | Change in pension value and nonqualified deferred compensation earnings | All other compensation (3) | Total | | Russell William Wallace Jr. | $0 | $140,000 | $- | $- | $- | $- | $140,000 | | Harry Markley | $0 | $140,000 | $- | $- | $- | $- | $140,000 | | Jessica M. Lockett | $48,000 | $140,000 | $- | $- | $- | $- | $188,000 | | Richard R. Childress | $- | $140,000 | $- | $- | $- | $- | $140,000 | | Steve Urvan (3) | $183,692 | $140,000 | $- | $- | $- | $15,561 | $339,253 | | Wayne Walker (4) | $- | $17,500 | $- | $- | $- | $- | $17,500 | | Christos Tsentas (4) | $- | $17,500 | $- | $- | $- | $- | $17,500 | | Randy E. Luth (5) | $- | $- | $- | $- | $- | $- | $- |
Director Compensation
(1) The amounts in this column reflect the amounts earned during the fiscal year, whether or not actually paid during such year. (2) We make an annual grant to each director of 40,000 shares of Common Stock. The amounts in this column reflect the aggregate grant date fair value of the shares of Common Stock granted to our directors during the transition period or fiscal year, as applicable, calculated in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. The Company determined the fair value of these shares to be $3.50 as of the date of the annual grant, with the exception of the grants of Mr. Walker and Mr. Tsentas, whose grant date fair values were $1.75 as they were appointed as directors during the 2023 fiscal year. The amounts reported in this column reflect our accounting expense for these awards and do not correspond to the actual economic value that may be received by the directors from their option awards. (3) Mr. Urvan was employed by the Company from April 2021 through January 5, 2023 as the Chief Strategy Officer of GunBroker.com. Mr. Urvan is not a named executive officer and, therefore, is included in the Director Compensation Table. The amounts reported in the columns “Fees earned or paid in cash” and “All other compensation” are related to his compensation as an employee of the Company for the fiscal year ended March 31, 2023. The amounts reports in “All other compensation” represent $5,511 for 401(k) matching contributions, a $9,730 aggregate incremental cost to the Company of the health and medical insurance premiums for Mr. Urvan and his family and a $320 incremental cost to the Company of a life insurance policy for Mr. Urvan. (4) Mr. Walker and Mr. Tsentas were each appointed as a member of the Board on November 3, 2022. (5) Mr. Luth was appointed as a member of the Board on January 5, 2023.
Cash Bonuses
Cash Bonuses Pursuant to the terms of his employment agreement, Mr. Wagenhals was entitled to a quarterly performance bonus in an amount equal to 0.25% of the Company’s gross sales. Under the terms of his employment agreement, Mr. Wiley is eligible to receive an annual cash bonus in an amount up to 20% of his annual base salary, to be issued at the sole discretion of the Board. Historically, the Board has not authorized the payment of a discretionary bonuses to executive officers. Mr. Smith received a performance bonus of 100% of his prorated salary for the last quarter of fiscal year 2023 per the terms of his employment agreement. We believe that cash bonuses allow us to attract and retain our executive officers in alignment with our business objectives as it aligns compensation with performance. On June 12, 2023, following a review of Mr. Wiley’s performance over the past three years, the Board approved a one-time cash bonus payment to Mr. Wiley. The Company paid $129,000 to Mr. Wiley on June 15, 2023. This amount represents 20% of the total base salary paid to Mr. Wiley in each of the three years ended March 31, 2023, 2022 and 2021 which is the maximum amount per the terms of his employment agreement.
Equity Awards
Equity Awards We provide equity compensation to our named executive officers in order to further align their interests with those of our shareholders and to further focus our named executive officers on our long-term performance. The award amount are determined the named executive officers’ the responsibilities and duties were considered as well as the compensation for similar positions at comparable companies. Pursuant to the terms of their employment agreements, Messrs. Wagenhals, Wiley, and Smith are entitled to receive 200,000, 100,000, and 200,000 shares of Common Stock, respectively, in each of the first three years of their employment with the Company. Such shares are granted in equal installments following the end of each calendar quarter, subject to the named executive officer’s continued employment. The number of shares of Common Stock to be granted pursuant to the named executive officers’ employment agreements are not subject to adjustment in the event of a stock split, stock dividend, recapitalization or similar event unless such adjustment is expressly agreed upon by the Company and the holder. Equity awards are granted annually and issued quarterly per the terms of the respective employment agreements.
Summary Compensation Table
Summary Compensation Table The following table sets forth for the years ended March 31, 2023, 2022 and 2021, information with respect to compensation earned for services in all capacities to us and our subsidiaries by the Company’s Chief Executive Officer and the Company’s Chief Financial Officer. The table sets forth for the years ended March 31, 2023, 2022 and, 2021, information with respect to compensation for services in all capacities to us and our subsidiaries earned by the one other most highly compensated executive officer who received total compensation in excess of $100,000. The Company did not have more than three (including the Chief Executive Officer and Chief Financial Officer) executive officers in any of the years ended March 31, 2023, 2022 and, 2021. For each of the aforementioned fiscal years the Company only had a maximum of three executive officers each of whom was a named executive officer. We refer to our Chief Executive Officer, our Chief Financial Officer, and one other executive officer as our “named executive officers.” Messrs. Wagenhals and Wiley were named executive officers in each of the 2021, 2022 and 2023 fiscal years. Mr. Hilko was a named executive officer in the 2021 fiscal year. Mr. Goodmanson was a named executive officer in the 2022 and 2023 fiscal years. Mr. Smith is a named executive officer as of January 5, 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary (1) | Bonus (1) | Stock awards (2) | All other compensation (3) | Total | | Fred W. Wagenhals (4) | | | | | | | | Chief Executive Officer, | 2023 | $475,000 | $478,636 | $840,000 | $24,062 | $1,817,698 | | and Director | 2022 | $298,750 | $572,463 | $481,250 | $0 | $1,352,463 | | | 2021 | $240,000 | $96,004 | $157,500 | $0 | $493,504 | | Robert D. Wiley | | | | | | | | Chief Financial Officer | 2023 | $240,000 | $0 | $350,000 | $15,084 | $605,084 | | | 2022 | $217,083 | $0 | $350,000 | $0 | $567,083 | | | 2021 | $127,500 | $0 | $90,977 | $0 | $218,477 | | Jared R. Smith (5) | | | | | | | | President and Chief Operating Officer | 2023 | $118,750 | $118,750 | $175,000 | $29,086 | $441,586 | | Robert J. Goodmanson (6) | | | | | | | | Former President | 2023 | $180,000 | 0 | $446,250 | $84,973 | 711,223 | | | 2022 | $240,000 | $0 | $595,000 | $0 | $835,000 | | Steve Hilko | | | | | | | | Former Chief Operating Officer (7) | 2021 | $163,542 | $0 | $58,333 | $0 | $221,875 |
Summary Compensation Table
(1) The amounts in this column reflect the amounts earned during the fiscal year, whether or not actually paid during such year. (2) The amounts in this column reflect the aggregate grant date fair value of shares of Common Stock granted to our named executive officers during the transition period or fiscal year, as applicable, calculated in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. The Company determined the fair value of these shares to be $3.50 as of the date of the annual grant, with the exception of the award of Mr. Smith, whose grant date fair value was$1.75 as he was appointed as an officer during the 2023 fiscal year. The amounts reported in this column reflect our accounting expense for these awards and do not correspond to the actual economic value that may be received by our named executive officers from their awards of shares of Common Stock. (3) The amounts in this column for fiscal 2023 consist of (i) with respect to Mr. Wagenhals, the cost to the Company of his car allowance, (ii) with respect to Mr. Wiley, $7,200 for 401(k) matching contributions, a $7,644 aggregate incremental cost to the Company of the health and medical insurance premiums for Mr. Wiley and a $240 incremental cost to the Company of a life insurance policy for Mr. Wiley, (iii) with respect to Mr. Smith, $24,458 for a relocation allowance and a $4,628 aggregate incremental cost to the Company of the health and medical insurance premiums for Mr. Smith and his family, and (iv) with respect to Mr. Goodmanson, $66,338 in severance payments, $3,580 for 401(k) matching contributions, a $14,040 aggregate incremental cost to the Company of the health and medical insurance premiums for Mr. Goodmanson and his family and a $1,015 incremental cost to the Company of a life insurance policy for Mr. Goodmanson. The named executive officers participate in certain group life, health, disability insurance, and medical reimbursement plans not disclosed in the summary compensation table that are generally available to salaried employees and do not discriminate in scope, terms, and operation. (4) Effective July 24, 2023, Mr. Wagenhals assumed the role of Executive Chairman. (5) Effective January 3, 2023, Mr. Smith was appointed as our President and Chief Operating Officer. Effective July 24, 2023, Mr. Smith was appointed Chief Executive Officer. (6) On March 26, 2021, Mr. Goodmanson was appointed as our President. Mr. Goodmanson resigned from his role as President on December 31, 2022. (7) Mr. Hilko resigned as our Chief Operating Officer effective June 18, 2021.
Grant of Plan-Based Awards
Grant of Plan-Based Awards
Grant of Plan-Based Awards
| | | Estimated future payouts under non-equity incentive plan awards | | | Estimated future payouts under equity incentive plan awards | | | | | | | | Name | Grant date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | All other stock awards: Number of shares of stock or units (#)(1) | All Other option awards: Number of securities underlying options (#) | Exercise or base Price of option awards ($) | Grant date fair value of stock and option awards (2) | | Fred W. Wagenhals | 1/1/22 | - | - | - | - | - | - | 150,000 | - | - | $525,000 | | | 1/1/23 | - | - | - | - | - | - | 50,000 | - | - | $175,000 | | Robert D. Wiley | 1/29/22 | - | - | - | - | - | - | 75,000 | - | - | $262,500 | | | 1/29/23 | - | - | - | - | - | - | 25,000 | - | - | $87,500 | | Jared R. Smith | 1/5/23 | - | - | - | - | - | - | 50,000 | - | - | $175,000 | | Robert J. Goodmanson | 3/26/22 | - | - | - | - | - | - | 97,500 | - | - | $341,250 |
Grant of Plan-Based Awards
| (1) Stock award granted per employment agreements. |
Grant of Plan-Based Awards
| (2) The amounts in this column reflect the aggregate grant date fair value of options awards granted to our named executive officers during the transition period or fiscal year, as applicable, calculated in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. The Company determined the fair value of these shares to be $3.50 as of the date of the annual grant, with the exception of the award of Mr. Smith, whose grant date fair value was$1.75 as he was appointed as an officer during the 2023 fiscal year. The valuation assumptions used in determining such amounts are described in the footnotes to our audited consolidated financial statements included in the Original Form 10-K. The amounts reported in this column reflect our accounting expense for these awards and do not correspond to the actual economic value that may be received by our named executive officers from their option awards. |
Outstanding Equity Awards at Fiscal Year-end
Outstanding Equity Awards at Fiscal Year-end There were no unexercised stock options, Common Stock awards that had not vested or equity incentive plan awards to our named executive officers outstanding at March 31, 2023.
Option Exercises and Stock Vested
Option Exercises and Stock Vested
Option Exercises and Stock Vested
| | Option awards | | Stock awards | | | Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($)(1) | | Fred W. Wagenhals | - | - | 200,000 | $700,000 | | Robert D. Wiley | - | - | 100,000 | $350,000 | | Jared R. Smith | - | - | 50,000 | $175,000 | | Robert J. Goodmanson | - | - | 97,500 | $341,250 |
Option Exercises and Stock Vested
| (1) The amounts in this column reflect the aggregate grant date fair value of options awards granted to our named executive officers during the transition period or fiscal year, as applicable, calculated in accordance with FASB ASC Topic 718, Stock Compensation. The Company determined the fair value of these shares to be $3.50 as of the date of the annual grant, with the exception of the award of Mr. Smith, whose grant date fair value was$1.75 as he was appointed as an officer during the 2023 fiscal year. The valuation assumptions used in determining such amounts are described in the footnotes to our audited consolidated financial statements included in on the Original Form 10-K. The amounts reported in this column reflect our accounting expense for these awards and do not correspond to the actual economic value that may be received by our named executive officers from their option awards. |
Pension Benefits
Pension Benefits We do not have any plans that provide for payments or other benefits at, following, or in connection with retirement.
Non-qualified Deferred Compensation
Non-qualified Deferred Compensation We do not have any non-qualified defined contribution plans or other deferred compensation plans.
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control As discussed above under “Employment Agreements,” our employment agreements with certain of our named executive officers provide for payments in connection with such executive officers’ termination or resignation, including in connection with or following a change in control. The following tables provide estimates of the payments to which each of Messrs. Wagenhals, Wiley, and Smith would have been entitled under their employment agreements if their employment had been terminated as of March 31, 2023. These tables were prepared using the closing price of the Common Stock on Nasdaq on March 31, 2023 ($1.97) and the respective executive officer’s salary then in effect. The amounts under the columns that reflect a change in control assume that a change in control occurred on March 31, 2023 and that the executive officer was terminated on such date. There can be no assurance that a termination of employment, a change in control or both would produce the same or similar results as those described if either or both of them occur on any other date or at any other price, or if any assumption is not correct in fact.
CEO Pay Ratio
CEO Pay Ratio The following table presents the median of the annual total compensation of all our employees (other than Mr. Wagenhals, our Chief Executive Officer), the annual total compensation of Mr. Wagenhals, our Chief Executive Officer during our 2023 fiscal year, and the ratio between the two. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K promulgated by the SEC.
CEO Pay Ratio
| Fiscal year 2023 Chief Executive Officer Compensation | $1,817,698 | | Fiscal year 2023 median employee annual total compensation | $41,770 | | Ratio of Chief Executive Officer to median employee annual total compensation | 44:1 |
CEO Pay Ratio
In identifying our median employee, we chose March 31, 2023, which is the last day of our most recently completed fiscal year, as the determination date. All of our employees are based in the United States and all 595 were considered for identifying the median employee, which we did by applying a consistently applied compensation measure across our employee population. For our consistently applied compensation measure, we used annual base salary, as it represents the primary compensation component paid to all of our employees. As a result, annual base salary provides an accurate depiction of total earnings for identifying our median employee. In determining the annual total compensation of the median employee, we the calculated such employee’s compensation using the same methodology we use for our named executive officers as set forth in our Summary Compensation table. With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column for fiscal 2023 in our summary compensation table. SEC rules and guidance provide significant flexibility in how companies identify the median employee, and each company may use a different methodology and make different assumptions particular to that company. As a result, and as the SEC explained when it adopted these rules, in considering the pay-ratio disclosure, stockholders should keep in mind that the rules were not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather were designed to allow stockholders to better understand and assess each particular company’s compensation practices and pay-ratio disclosures.
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 actually paid to our named executive officers and certain financial performance of the Company.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary compensation table total for PEO | Compensation actually paid to PEO(2) | Average summary compensation table total for Non-PEO named executive officers | Average compensation actually paid to Non-PEO named executive officers(2) | Total shareholder return(3) | Peer group total shareholder return(3) | Net income | Adjusted EBITDA | | 2023 | $1,817,698 | $1,817,698 | $585,964 | $585,964 | $60.62 | $94.37 | (4,596,038) | 26,371,208 | | 2022 | $1,352,463 | $1,352,463 | $701,042 | $701,042 | $147.69 | $123.96 | 33,247,436 | 60,836,438 | | 2021 | $493,504 | $493,504 | $220,176 | $220,176 | $182.15 | $150.68 | (7,812,294) | 3,813,484 |
PAY VERSUS PERFORMANCE
| (1) Mr. Wagenhals served as the Principal Executive Officer (“PEO”) for the fiscal years listed above and the other NEOs for the applicable fiscal years were as follows |
PAY VERSUS PERFORMANCE
2023: Jared R. Smith, Robert D. Wiley, Robert J. Goodmanson 2022: Robert D. Wiley, Robert J. Goodmanson 2021: Robert D. Wiley, Steve Hilko
PAY VERSUS PERFORMANCE
| (2) The 2022 Summary Compensation Table totals reported for our PEO and the average of the Non-PEO NEOs for each year were subject to the following adjustments per Item 402(v)(2)(iii) of Regulation S-K to calculate “compensation actually paid”: |
PAY VERSUS PERFORMANCE
| | 2023 | | 2022 | | 2021 | | | | | AVERAGE | | AVERAGE | | AVERAGE | | | | FOR | | FOR | | FOR | | | | OTHER | PEO | OTHER | | OTHER | | | PEO | NEOs | PEO | NEOs | PEO | NEOs | | Summary Compensation Table (“SCT”) Total | $1,817,698 | $585,964 | $1,352,463 | $701,042 | $493,504 | $220,176 | | Less: Amount reported under the “Stock Awards” Column of the SCT | $840,000 | $323,750 | $481,250 | $472,500 | $157,500 | $74,655 | | Plus: Year End Fair Value of Outstanding and Unvested Equity Awards | $- | $- | $- | $- | $- | $- | | Plus: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | $- | $- | $- | $- | $- | $- | | Plus: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | $(840,000) | $(323,750) | $(481,250) | $(472,500) | $(157,500) | $(74,655) | | Plus: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | $- | $- | $- | $- | $- | $- | | Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | $- | $- | $- | $- | $- | $- | | Plus: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | $- | $- | $- | $- | $- | $- | | Total Adjustments: | $- | $- | $- | $- | $- | $- | | COMPENSATION ACTUALLY PAID | $1,817,698 | $585,964 | $1,352,463 | $701,042 | $493,504 | $220,176 |
PAY VERSUS PERFORMANCE
| (3) Total Shareholder Return of the Nasdaq Capital Market Composite and the Russell 2000 Index (“Russell 2000”) is cumulative for the periods from March 31, 2019 through March 31, 2023, 2022, and 2021, respectively. The calculation assumes an investment of $100 in shares of Common Stock and in each of the indexes on March 31, 2019. The calculation of cumulative stockholder return on the Nasdaq CMC and Russell 2000 include reinvestment of dividends, but the calculation of cumulative stockholder return on the Common Stock does not include reinvestment of dividends because we did not pay any dividends during the measurement period. |
PAY VERSUS PERFORMANCE
| (4) Adjusted EBITDA is a non-GAAP financial measure that displays our net income (loss), adjusted to eliminate the effect of certain items as adjustments because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. Non-GAAP financial measures have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following: (i) Employee stock awards and stock grants expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company and an important part of our compensation strategy; (ii) the assets being depreciated or amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments; and (iii) non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs. Other companies, including companies in our industry, may calculate the non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. Because of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net loss and our other financial results presented in accordance with GAAP. We use Adjusted EBITDA to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Please refer to our press release announcing the Company’s result for a reconciliation of Adjusted EBITDA to GAAP Net Income/(Loss) for the three months and years ended March 31, 2023 and 2022, include as Exhibit 99.1 to the Current Report on Form 8-K filed with the Commission on June 14, 2023. Please refer to our press release announcing the Company’s result for a reconciliation of Adjusted EBITDA to GAAP Net Income/(Loss) for the years ended March 31, 2022 and 2021, include as Exhibit 99.1 to the Current Report on Form 8-K filed with the Commission on June 29, 2022. |
PAY VERSUS PERFORMANCE
The items shown in the table above are included as adjustments because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.
Relationship Between Compensation Actually Paid and Total Shareholder Return
Relationship Between Compensation Actually Paid and Total Shareholder Return The graph below illustrates the relationship between our TSR and the Peer Group TSR, as well as the relationship between Compensation Actually Paid and our TSR for the PEO and NEOs.
Relationship Between Compensation Actually Paid and GAAP Net Income
Relationship Between Compensation Actually Paid and GAAP Net Income The graph below reflects the relationship between the PEO and Average NEOs Compensation Actually Paid and our GAAP Net Income.
Relationship Between Compensation Actually Paid and Adjusted EBITDA (Company-Selected Measure)
Relationship Between Compensation Actually Paid and Adjusted EBITDA (Company-Selected Measure) The graph below reflects the relationship between PEO and Average NEOs Compensation Actually Paid and the Company’s Adjusted EBITDA.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our directors are elected by the shareholders at each annual shareholder meeting. The Board currently consists of nine directors: Fred W. Wagenhals, Jared R. Smith, Russell William Wallace, Jr., Jessica M. Lockett, Richard R. Childress, Steven F. Urvan, Wayne Walker, Christos Tsentas, and Randy E. Luth. The Company nominates nine current directors for election to the Board at the Annual Meeting. Each nominee, if elected at the Annual Meeting, will hold office for a one-year term until our next annual meeting of shareholders or until their successor is elected and qualified, or until their earlier death, resignation or removal. The Board believes that each nominee has valuable individual skills and experiences that, taken together, provide us with the knowledge, judgment and strategic vision necessary to provide effective oversight of the Company. The biographies below reflect the particular experience, qualifications, attributes and skills that led the Board to conclude that each nominee should serve on the Board. The information set forth under the heading “Information About Our Board of Directors” details the Director Nominees’ business experience and qualifications that led to the nomination by the Nominations and Corporate Governance Committee and approval by the Board for recommendation of each individual for election. If, for any reason, any Director Nominee becomes unavailable for election, the proxies will be voted for such substitute nominee(s) as the Board may propose.