DEF 14A of Clarus Corp
Filed Apr 29, 2024 · FY20230001558370-24-006112
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our Bylaws provide that our Board of Directors will consist of not less than three, nor more than seven members, with such number to be fixed by the Board of Directors. The current number of directors has been fixed at six by the Board of Directors. Our Nominating/Corporate Governance Committee and our Board of Directors have selected the six nominees for directors that are listed in this Proxy Statement for election at the Meeting. Our directors are elected annually at the Annual Meeting of Stockholders. Their respective terms of office will continue until the next Annual Meeting of Stockholders and until their successors have been duly elected and qualified in accordance with our Bylaws. There are no family relationships among any of our directors, nominees for director or executive officers. Except as otherwise specified or in the case of broker non-votes, each Proxy Card received will be voted for the election of the six nominees for director named below to serve until the next Annual Meeting of Stockholders and until their successors shall have been duly elected and qualified. Each of the nominees named below has been nominated by the Nominating/Corporate Governance Committee of the Board of Directors and has consented to be named a nominee in this Proxy Statement and to serve as a director, if elected. Should any nominee become unable or unwilling to accept a nomination for election, the persons named in the enclosed Proxy Card will vote for the election of a nominee designated by the Board of Directors or will vote for such lesser number of directors as may be prescribed by the Board of Directors in accordance with our Bylaws. When considering whether directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating/Corporate Governance Committee and the Board of Directors focused primarily on the information discussed in each of the nominee’s individual biographies set forth below, which contains information regarding the person’s service as a director, business experience and director positions held currently or at any time during the last five years. The age and principal occupation of each person nominated as a director is set forth below: Warren B. Kanders, 66, our Executive Chairman, has served as one of our directors since June 2002 and as Executive Chairman of our Board of Directors since December 2002. Since 1990, Mr. Kanders has served as the President of Kanders & Company, Inc., a private investment firm principally owned and controlled by Mr. Kanders, which makes investments in and provides consulting services to public and private entities. Since April 2012, Mr. Kanders has served as the Chief Executive Officer and Chairman of the Board of Directors of Cadre Holdings, Inc., a company listed on the New York Stock Exchange since the closing of its initial public offering in November 2021, and a global leader in the manufacture and distribution of safety equipment for professionals. From January 1996 until its sale to BAE Systems plc (“BAE Systems”) on July 31, 2007, Mr. Kanders served as the Chairman of the Board of Directors, and from April 2003 as the Chief Executive Officer, of Armor Holdings, Inc. (“Armor Holdings”), formerly a New York Stock Exchange-listed company and a manufacturer and supplier of military vehicles, armored vehicles, and safety and survivability products and systems to the aerospace and defense, public safety, homeland security, and commercial markets. Mr. Kanders received an A.B. degree in Economics from Brown University. Based upon Mr. Kanders’ role as Executive Chairman of the Company, service as a chairman and a director of a wide range of other public companies, financial background and education, as well as his extensive investment, capital raising, acquisition and operating expertise, the Company believes that Mr. Kanders has the requisite set of skills to serve as a Board member of the Company. Donald L. House, 82, has served as one of our directors since January 1993. Mr. House served as Chairman of our Board of Directors from January 1994 until December 1997 and as our President from January 1993 until December 1993. Mr. House is currently a private investor, and in the past, he has served on a number of Boards of Directors of public and private companies, including a position as a member of the Board of Directors of Carreker Corporation from May 1998 until March 2007, and as Chairman of Version One, Inc. from January 2003 until August 2017. Mr. House graduated with B.S. and M.S. degrees from the Georgia Institute of Technology. Based upon Mr. House’s role as the Chairman of the Compensation Committee of the Company’s Board of Directors, prior experience as a chairman and an executive officer of companies in a variety of industries, financial expertise and extensive experience serving as a member of the boards of directors and committees of other public companies, the Company believes that Mr. House has the requisite set of skills to serve as a Board or Board committee member of the Company. Nicholas Sokolow, 74, has served as one of our directors since June 2002, and has been designated as the “lead independent director” of the Company’s Board of Directors since June 2016. Since April 2012, Mr. Sokolow has served as a member of the Board of Directors of Cadre Holdings, Inc., a company listed on the New York Stock Exchange since the closing of its initial public offering in November 2021, and a global leader in the manufacture and distribution of safety equipment for professionals. From January 1996 until its sale to BAE Systems on July 31, 2007, Mr. Sokolow served as a member of the Board of Directors of Armor Holdings. Mr. Sokolow served as a member of the Board of Directors of Stamford Industrial Group, Inc. from October 2006 until September 2009. From 2007 until December 31, 2014, Mr. Sokolow practiced law at the firm of Lebow & Sokolow LLP. From 1994 to 2007, Mr. Sokolow was a partner at the law firm of Sokolow, Carreras & Partners. From June 1973 until October 1994, Mr. Sokolow was an associate and partner at the law firm of Coudert Brothers. Mr. Sokolow graduated with Economics and Finance degrees from the Institut D’Etudes Politiques, a Law degree from the Faculte de Droit and a Masters of Comparative Law degree from the University of Michigan. Mr. Sokolow is also an honorary member of the French Bar. Based upon Mr. Sokolow’s role as the Chairman of the Nominating/Corporate Governance Committee of the Company’s Board of Directors, education, legal background involving mergers and acquisitions, corporate governance expertise and extensive experience serving as a member of the boards of directors and committees of other public companies, the Company believes that Mr. Sokolow has the requisite set of skills to serve as a Board or Board committee member of the Company.
ELECTION OF DIRECTORS
Michael A. Henning, 83, has served as one of our directors since May 2010. Mr. Henning served as a director and the Chairman of the Audit Committee of the Board of Directors of Highlands Acquisition Corp. from May 2007 until September 2009. From 2000 to May 2015, Mr. Henning had served as the Chairman of the Audit Committee and member of the Compensation Committee and had previously served as the Vice Chairman of the Finance Committee, of the Board of Directors of CTS Corporation, a NYSE-listed company that provides electronic components to auto, wireless and PC businesses. From December 2002 to May 2017, Mr. Henning served on the Board of Directors of Omnicom Group Inc., a NYSE-listed global communications company, where he also served on the Audit Committee and the Compensation Committee. From 2007 to May 2017, Mr. Henning served on the Board of Directors of Landstar System, Inc., a NASDAQ-listed transportation and logistics services company, and served on committees such as the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Mr. Henning retired as Deputy Chairman from Ernst & Young in 2000 after forty years with the firm. Mr. Henning was the inaugural Chief Executive Officer of Ernst & Young International, serving from 1993 to 1999. From 1991 to 1993, he served as Vice Chairman of Tax Services at Ernst & Young. Mr. Henning was also the Managing Partner of the firm’s New York office, from 1985 to 1991, and the Partner in charge of International Tax Services, from 1978 to 1985. From 1994 to 2000, Mr. Henning served as a Co-Chairman of the Foreign Investment Advisory Board of Russia, where he co-chaired a panel of 25 chief executive officers from the G-7 countries who advised the Russian government in adopting international accounting and tax standards. Mr. Henning graduated with a B.B.A. degree from St. Francis College and received a Certificate from the Harvard University Advanced Management Program. Mr. Henning is a Certified Public Accountant. Based upon Mr. Henning’s role as the Chairman of the Audit Committee of the Company’s Board of Directors, his accounting and financial expertise and extensive experience serving as a member of the boards of directors and committees of other public companies, the Company believes that Mr. Henning has the requisite set of skills to serve as a Board or Board committee member of the Company. Susan Ottmann, 58, has served as one of our directors since June 2021. Ms. Ottmann has more than 25 years of industrial engineering experience in multiple engineering, marketing, manufacturing and leadership roles for a number of multinational companies. Since August 2018, Ms. Ottmann has served as the graduate program director for Engineering Professional Development in the College of Engineering at the University of Wisconsin-Madison where she also teaches courses in technical leadership and technical project management for both credit and professional development programs. From October 2015 to August 2018, Ms. Ottmann was the business and program director in the College of Engineering at the University of Wisconsin-Madison where she managed the manufacturing systems online master’s program, led technical leadership short course programs and managed the Engineering Professional Development department’s human resource and finance staff as well as business process teams. From September 2013 to July 2015, Ms. Ottmann was the general manager for Thermo Fisher Scientific’s global analytical instrument business where she managed a team of 770 associates with operations in the US, UK, Germany and China, as well as sales teams worldwide. From April 2006 to September 2013, Ms. Ottmann served in various roles at Danaher Corporation, including serving as President and Vice President in certain of its global business units. Ms. Ottmann received B.S. degrees in Mechanical Engineering and Engineering & Public Policy from Carnegie Mellon as well as an M.S. degree in Management from North Carolina State University. Based upon Ms. Ottmann’s diverse global business, educational and leadership experience in a variety of engineering, commercial, financial, product development, marketing, and manufacturing roles, the Company believes that Ms. Ottmann has the requisite set of skills to serve as a Board or Board committee member of the Company. Roger Werner, 74, has served as one of our directors since March 2024. Mr. Werner has extensive marketing experience in the automotive industry as well as in the television programming industry having designed, built and managed some of television’s most successful sports networks. From April 2015 until September 2023, Mr. Werner served as an advisor and a director at The MotorTrend Group, a producer of digital automotive related content and a Discovery Communications company. From October 2006 until May 2013, Mr. Werner served as a member of the board of directors of Outdoor Channel Holdings, Inc, a NASDAQ listed entertainment and media company, and served as its President as well as Chief Executive Officer from February 2007 until January 2012. Mr. Werner also served as the Co-Chairman of the board of directors of Outdoor Channel Holdings, Inc, from February 2012 until May 2013. From January 1995 until October 2001, he served as the founder, President and CEO of Speedvision (now Fox Sports 1) and Outdoor Life Network (now NBC Sports). From November 1990 to August 1994, Mr. Werner served as President and CEO of Daniels Programming Ventures, LLC, where he managed Daniels’ interest in Prime Ticket Network (now Fox Sports West), and Prime Sports Network Group (now Fox Sports Net), a joint venture with Liberty Media, along with a number of other sports media properties. From March 1982 to August 1988 he was the Chief Operating Officer of ESPN, and from August 1988 to November 1990 he was its President and Chief Executive Officer. Prior to working at ESPN, he served as a management consultant for McKinsey and Company from October 1979 to March 1982. Mr. Werner received a B.A from Trinity College and holds an M.B.A. from the University of Virginia’s Darden School where he served two terms as a trustee. Mr. Werner also serves as Chairman of ACCUS (the Automobile Competition Committee of the United States) America’s representative to the FIA (International Automobile Federation) and the American Motorsport industry’s trade association. Based upon Mr. Werner’s extensive marketing expertise in the automotive industry as well as in the television programming industry and extensive experience serving as a member of the boards of directors of other public companies, the Company believes that Mr. Werner has the requisite set of skills to serve as a Board or Board committee member of the Company. The affirmative vote of a plurality of the votes cast virtually at the Meeting or represented by proxy at the Meeting is necessary for the election as directors of the six nominees named in this Proxy Statement (assuming a quorum of a majority of the outstanding shares of common stock is present). THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE ABOVE-NAMED DIRECTOR NOMINEES.
GOVERNANCE OF THE COMPANY
GOVERNANCE OF THE COMPANY
Corporate Governance
Corporate Governance Our Board of Directors is committed to sound and effective corporate governance practices. The Company’s management and our Board of Directors reviewed our corporate governance practices in light of the Sarbanes-Oxley Act of 2002 as well as the rules of the SEC and the NASDAQ Global Select Market (“NASDAQ”). Based on that review, the Board of Directors maintains codes of ethics and conduct, corporate governance guidelines, committee charters, complaint procedures for accounting and auditing matters, an Audit Committee pre-approval policy, an insider trading policy and a compensation recovery policy. The Company is listed on the NASDAQ, and therefore, it has modeled its corporate governance practices after the listing requirements of NASDAQ.
Corporate Governance Guidelines and Documents
Corporate Governance Guidelines and Documents The Code of Ethics for Senior Executive Officers and Senior Financial Officers, the Code of Business Conduct and Ethics, Complaint Procedures for Accounting and Auditing Matters, the Corporate Governance Guidelines, and the Charters of our Audit, Compensation and Nominating/Corporate Governance Committees were adopted by Clarus for the purpose of promoting honest and ethical conduct, promoting full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by Clarus, and promoting compliance with all applicable rules and regulations that apply to Clarus and its officers and directors. These policies are available on our Internet website, at www.claruscorp.com, under the tab “Governance Documents” within the section called “Governance.” In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Clarus Corporation, Attention: Secretary, 2084 East 3900 South, Salt Lake City, UT 84124.
Board of Directors
Board of Directors Our Board of Directors is currently comprised of the following six members: Warren B. Kanders, Michael A. Henning, Donald L. House, Susan Ottmann, Nicholas Sokolow and Roger Werner. On January 8, 2024, James E. Walker III notified the Board of Directors of his resignation as a director of the Company, effective as of January 8, 2024. During fiscal 2023, the Board of Directors held nine meetings, and acted by unanimous written consent in lieu of a meeting eight times. During fiscal 2023, all of the directors attended 75% or more of the aggregate number of meetings of (i) the full Board of Directors held during the period in which he or she was a director in fiscal year 2023, and (ii) the committees of the Board of Directors of which he or she was a member. The Company does not have a formal policy as to Board of Directors attendance at our Annual Meetings of Stockholders. All of the members of our Board of Directors who served as directors during fiscal 2023 attended last year’s virtual Annual Meeting of Stockholders, which was held on June 1, 2023.
Compensation Committee
| ● | to review on an annual basis director compensation and benefits. |
Discussion of Director Compensation
Discussion of Director Compensation We pay three primary components of compensation to our non-management directors: an annual cash retainer, committee chairman fees, and equity awards, generally comprising of stock equity awards such as stock options. In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties on our Board of Directors and its committees as well as the skill level required by the Company of members of the Board of Directors and the need to continue to attract highly qualified candidates to serve on our Board of Directors. Director compensation arrangements are reviewed annually to maintain such standards. In 2023, members of our Board of Directors were compensated as follows: (i) the non-employee directors each received an annual stock option grant at the Annual Meeting of Stockholders of 15,000 shares at an exercise price equal to the closing price of the Company’s common stock on the date of such grant, and vesting and becoming exercisable in four equal consecutive quarterly tranches; (ii) all non-employee directors serving on the Board of Directors received an annual payment of $35,000, payable in equal quarterly installments, in consideration for their services on the Board; (iii) Mr. Sokolow, the lead independent director of the Board of Directors, received an additional annual payment of $10,000, payable in equal, quarterly installments, in consideration of his service as the lead independent director of the Board of Directors, (iv) the chairmen of the respective Board committees, other than the Board of Directors’ Audit Committee, received an additional annual payment of $10,000, payable in equal quarterly installments, in consideration for their services as chairmen on the respective Board of Directors’ committees; and (v) the chairman of the Board of Directors’ Audit Committee received an additional annual payment of $15,000, payable in equal quarterly installments, in consideration for his service as the chairman of the Board of Directors’ Audit Committee. Commencing with the 2024 Annual Meeting, (i) the annual stock option grant of 15,000 stock options awarded to each of the Company’s non-employee directors following each of the Company’s Annual Meeting of Stockholders will be increased to 20,000 stock options; and (ii) the annual payment of $35,000 paid to all non-employee directors serving on the Board of Directors will be increased to $40,000. In addition, upon the closing of the sale of the Company’s Precision Sport Segment on February 29, 2024, the independent members of the Board and the members of the Special Committee received the following additional compensation in connection with their respective additional responsibilities as part of reviewing, considering, evaluating, negotiating, and ultimately determining whether to approve a possible sale of the Company’s Precision Sport Segment: (i) each of the then serving independent directors of the Board received a one-time payment in the amount of $15,000; (ii) each member of the Special Committee received a one-time payment in the amount of $25,000; (iii) Mr. Henning, as a special advisor to the Company and the Special Committee regarding internal audit matters, received a one-time payment in the amount of $25,000; and (iv) Mr. Sokolow, as chairman of the Special Committee, received a one-time payment in the amount of $15,000. In 2023, our current employee director, Mr. Kanders, was compensated pursuant to his employment agreement (which is described below under the heading “Employment Agreements”).
Overview
Overview The Compensation Committee assists the independent members of the Board of Directors in establishing a compensation package for Clarus’ Executive Chairman and assists the Board of Directors in establishing compensation packages for Clarus’ other Named Executive Officers, its key employees and non-employee directors as well as administering Clarus’ incentive plans. The Compensation Committee is generally responsible for setting and administering the policies which govern annual salaries of named executive officers, raises and bonuses and certain awards of stock options and common stock under the Company’s 2015 Stock Incentive Plan and otherwise, and such responsibility is generally limited to the actions taken by the Compensation Committee, although at times the full Board of Directors has determined annual executive officer and key employee salaries, raises and bonuses as well as grants of stock options and common stock without having first received recommendations from the Compensation Committee. From time to time, the Compensation Committee reviews our compensation packages to ensure that they remain competitive with the compensation packages offered by similarly situated companies and continue to incentivize management and align management’s interests with those of our stockholders. Although we do not target executive compensation to any peer group median, we strive to provide a compensation package that is competitive in the market and rewards each executive officer’s performance. The Compensation Committee is comprised of three directors, each of whom has considerable experience in executive compensation issues. Each member of the Compensation Committee meets the independence requirements specified by NASDAQ and by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). No member of the Compensation Committee has ever been an officer or employee of the Company, nor is there a direct or indirect relationship between any of the members of the Committee and any of the Company’s executive officers. The Compensation Committee operates under a written charter adopted by the Board of Directors that is available on our Internet website, at www.claruscorp.com, under the tab “Governance Documents” within the section called “Governance.”
Compensation Program Components
Compensation Program Components Our executive compensation program emphasizes company performance, individual performance and an increase in stockholder value over time in determining executive pay levels. Our executive compensation program consists of three key elements: (i) annual base salaries; (ii) a performance-based annual bonus; and (iii) periodic grants of stock options and restricted stock. The Compensation Committee believes that this three-part approach best serves our and our stockholders’ interests by motivating executive officers to improve our financial position, holding executives accountable for the performance of the organizations for which they are responsible and by attracting key executives into our service. Under our compensation program, annual compensation for Named Executive Officers is composed of a significant portion of pay that is “at risk”, specifically, the annual bonus, stock options and restricted stock. For the fiscal year ended December 31, 2023, the components of compensation for Named Executive Officers were: (i) cash compensation; (ii) equity-based compensation; and (iii) perquisites and other personal and additional benefits. Additional details on each element of our compensation program are outlined below.
Cash Compensation
Cash Compensation Base Salary. In reviewing and approving the base salaries of our Named Executive Officers, the Compensation Committee considers the scope of work and responsibilities and other individual-specific factors; the recommendations of our Executive Chairman (except in the case of his own compensation); compensation for similar positions at similarly situated companies; and the executive officer’s experience. The Compensation Committee generally reviews executive officer and key employee salaries annually at the end of the fiscal year and establishes the base salaries for the upcoming fiscal year in connection with establishing the Company’s budget for the upcoming fiscal year. The employment agreements of our Named Executive Officers, other than Mr. Yates, are described below under the heading “Employment Agreements”. The Company does not have an employment agreement with Mr. Yates, who was appointed to serve as the Company’s Chief Financial Officer effective as of January 3, 2022, following the promotion of Mr. Kuehne as the Company’s Executive Vice President and Chief Operating Officer. On November 13, 2020, Mr. Kanders’ annual base salary of $350,000 that was previously established pursuant to his employment agreement dated June 1, 2017 was increased to $425,000 effective as of January 1, 2021. On March 4, 2022, Mr. Kanders’ annual base salary was increased to $550,000 effective as of January 1, 2022. On March 14, 2023, Mr. Kanders’ annual base salary was increased to $600,000 effective as of January 1, 2023, pursuant to the terms of his new employment agreement (the “Kanders Employment Agreement”) dated as of March 14, 2023. In establishing the 2023 salary of Mr. Kanders, the Compensation Committee and the Board of Directors considered his extensive investment, capital raising, acquisition and operating expertise, as well as the responsibilities and duties required by his role as executive chairman of a public company. The Compensation Committee and the Board of Directors also considered, among other things, Mr. Kanders’ increased responsibilities as a result of the Company’s acquisitions in 2021 of Rhino-Rack and MAXTRAX and his importance to the operations and continued future success of the Company. Mr. Kanders devotes only as much of his time as is necessary to the affairs of the Company and also serves in various capacities with other public and private entities, including not-for-profit entities. In 2022 and 2023, the annual base salary for Mr. Yates was $400,000. In establishing Mr. Yates base salary, the Compensation Committee considered, among other things, the compensation for similar positions at similarly situated companies, as well as the responsibilities and duties required by his role as chief financial officer of a public company. On January 1, 2021, the Company and Mr. Walbrecht entered into an employment agreement (the “Walbrecht Employment Agreement”), which provides for Mr. Walbrecht’s employment as the Company’s President for a term expiring on January 1, 2024, subject to certain termination rights, and an annual base salary of $500,000. On March 4, 2022, Mr. Walbrecht’s annual base salary was increased to $550,000 effective as of January 1, 2022. In establishing Mr. Walbrecht’s 2022 base salary, the Compensation Committee and the Board of Directors considered, among other things, the compensation for similar positions at similarly situated companies, as well as the responsibilities and duties required by his role as president of a public company. The Compensation Committee and the Board of Directors also considered, among other things, Mr. Walbrecht’s increased responsibilities as a result of the Company’s acquisitions in 2021 of Rhino-Rack and MAXTRAX. On March 31, 2023, the Company and Mr. Walbrecht mutually agreed to terminate Mr. Walbrecht’s employment with the Company pursuant to the Walbrecht Employment Agreement and entered into a Separation Agreement and General Release dated as of March 31, 2023 (which is described below under the heading “Employment Agreements”). On November 13, 2020, Mr. Kuehne’s annual base salary of $350,000 that was established pursuant to his employment agreement dated as of August 27, 2020 (the “Kuehne Employment Agreement”) was increased to $425,000 effective as of January 1, 2021. On March 4, 2022, Mr. Kuehne’s annual base salary was increased to $550,000 effective as of January 1, 2022. In establishing Mr. Kuehne’s 2022 base salary, the Compensation Committee and the Board of Directors considered, among other things, the compensation for similar positions at similarly situated companies, as well as the responsibilities and duties required by his role as executive vice president and chief operating officer of a public company. The Compensation Committee and the Board of Directors also considered, among other things, Mr. Kuehne’s increased responsibilities as a result of the Company’s acquisitions in 2021 of Rhino-Rack and MAXTRAX and his importance to the operations and continued future success of the Company. On August 27, 2023, the Kuehne Employment Agreement expired in accordance with its terms and Mr. Kuehne remained an at-will employee of the Company, continuing to serve as the Company’s Executive Vice President, Chief Operating Officer, Secretary and Treasurer. On August 31, 2023, the Company and Mr. Kuehne mutually agreed to terminate Mr. Kuehne’s at-will employment and entered into a Separation Agreement and General Release dated as of August 31, 2023 (which is described below under the heading “Employment Agreements”). Performance-Based Annual Bonus. With regard to the performance-based compensation of any Named Executive Officer, the Compensation Committee generally establishes the performance goals and then certifies the satisfaction of such performance goals prior to the payment of the performance-based bonus compensation. In reviewing and approving the annual performance-based bonus for our executive officers, the Compensation Committee may also consider an executive officer’s contribution to the overall performance of Clarus, as well as annual bonuses awarded to persons holding similar positions at similarly situated companies. In 2021, the Compensation Committee and the Board of Directors determined to award each of Messrs. Walbrecht and Kuehne with discretionary cash bonuses for the performance of their respective services in 2021, in the amount of $375,000 and $315,000, respectively, representing a target of 75% of their respective 2021 base salaries. The Compensation Committee and the Board of Directors determined not to award discretionary cash bonuses to any of the Company’s Named Executive Officers for the performance of their respective services in 2022. The Compensation Committee and the Board of Directors determined to award Mr. Yates a discretionary cash bonus for the performance of his services in 2023, pursuant to which he was paid $300,000, representing a target of 75% of his 2023 base salary. In determining to award a discretionary cash bonus to Mr. Yates, the Compensation Committee took into account, among other things, his contributions to the Company’s performance and achievement of certain milestones during the year ended December 31, 2023, including, but not limited to: (i) Mr. Yates’ increased responsibilities as result of the 2023 departures of Messrs. Walbrecht and Kuehne; and (ii) Mr. Yates’ material contributions to the Company’s successful sale of its Precision Sports Segment on February 29, 2024, pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company.
Equity-Based Compensation
Equity-Based Compensation 2005 Stock Incentive Plan and 2015 Stock Incentive Plan We believe that equity-based compensation is the most effective means of creating a long-term link between the compensation provided to executive officers and other key management personnel and the returns realized by the stockholders. In 2020, the Company maintained the 2005 Stock Incentive Plan and the 2015 Stock Incentive Plan (collectively, the “Incentive Plans”) to incentivize executive officers and other key employees. The Incentive Plans are designed to give the Board of Directors discretion and flexibility in designing incentive compensation packages to align the goals of management with those of our stockholders and to motivate executive officers and key employees to improve the operations of the Company, thereby maximizing stockholder value. Pursuant to the Incentive Plans, the Board of Directors may issue to employees, officers, directors, consultants, independent contractors and advisors of the Company and its subsidiaries incentive stock options, nonqualified stock options, and restricted stock. Awards under the Incentive Plans help relate a significant portion of an employee’s long-term remuneration directly to stock price appreciation realized by all our stockholders and align an employee’s interests with that of our stockholders. The Compensation Committee believes equity-based incentive compensation aligns executive and stockholder interests because (i) the use of a multi-year lock-up or vesting schedule or milestone based vesting schedule for equity awards encourages executive retention and emphasizes long-term growth, and (ii) paying a significant portion of management’s compensation in our equity provides management with a powerful incentive to increase stockholder value over the long-term. The specific types and size of awards to be granted (other than options granted to non-employee directors) and the terms and conditions of such awards are determined by the Compensation Committee subject to the provisions of the Incentive Plans. The timing of our equity award grants is not designed to have any relationship with our release of material, non-public information. Awards are generally granted at previously scheduled meetings of the Board of Directors and Compensation Committee and as required by the Incentive Plans, options and stock awards are granted with an exercise price and value equal to the fair market value of the Company’s common stock, which is the closing price on the date of such grant. The Compensation Committee may also approve any equity-based grants in connection with the hiring or promotion of an executive officer. The Compensation Committee will continue to evaluate its equity grant policies as well as the timing of such awards in relation to the Company’s disclosure of material nonpublic information. The Company’s 2005 Stock Incentive Plan expired in accordance with its terms in June 2015 and any shares of common stock then remaining available for grant under the 2005 Stock Incentive Plan have been canceled. However, at December 31, 2023, 40,000 shares of common stock subject to outstanding awards granted under the 2005 Stock Incentive Plan prior to the expiration of the 2005 Stock Incentive Plan will remain available for issuance in accordance with their terms. Under the terms of the Walbrecht Employment Agreement, on January 1, 2021, the Company issued and granted to Mr. Walbrecht an option to purchase 400,000 shares of the Company’s common stock pursuant to the Company’s 2015 Stock Incentive Plan, having an exercise price of $15.15 per share (because the date of grant was not a trading day, the exercise price is equal to the closing price of the Company’s common stock on the immediately succeeding trading day, January 4, 2021), of which only: (i) 133,334 shares vested on January 1, 2022, and (ii) 133,333 shares vested on January 1, 2023. On May 28, 2021, the Company issued and granted to Mr. Kanders a restricted stock award of 500,000 restricted shares of the Company’s common stock pursuant to the 2015 Stock Incentive Plan, all of which will vest if, on or before May 28, 2024, the closing share price of the Company’s common stock shall have equaled or exceeded $35.00 per share for twenty consecutive trading days. In granting this stock award to Mr. Kanders, the Company’s Compensation Committee considered, among other things, the leadership Mr. Kanders provided in structuring and negotiating the terms of the purchase agreement governing the Company’s acquisition of Rhino-Rack. On January 3, 2022, the Company issued and granted to Mr. Yates options to purchase 30,000 shares of the Company’s common stock pursuant to the Company’s 2015 Stock Incentive Plan, having an exercise price per share of $27.65, which vested or will vest and become exercisable in three equal consecutive annual tranches on each of December 31, 2022, December 31, 2023, and December 31, 2024, respectively. On March 4, 2022, the Company issued and granted to each of Messrs. Kanders, Walbrecht, and Kuehne, restricted stock awards comprised of 500,000, 100,000 and 100,000 restricted shares of the Company’s common stock, respectively, pursuant to the 2015 Stock Incentive Plan, all of which will vest if, on or before March 4, 2032, the closing share price of the Company’s common stock shall have equaled or exceeded $50.00 per share for twenty consecutive trading days. In determining to grant the restricted stock awards to each of Messrs. Kanders, Walbrecht, and Kuehne, the Compensation Committee and the Board of Directors took into account, among other things, their respective contributions to the Company’s performance and achievement of certain milestones during the year ended December 31, 2021, including, but not limited to: (i) revenues achieved by the Company in 2021 as compared to 2020, (ii) helping the Company to successfully navigate through challenges of the COVID-19 pandemic, including corresponding supply chain and logistic challenges, (iii) the increased total shareholder return as of December 31, 2021 compared to as of December 31, 2020, (iv) acquiring and integrating Rhino-Rack and MAXTRAX in 2021, and (v) completing a secondary public offering in the amount of $85 million. Pursuant to the terms of the Kanders Employment Agreement, a stock award of 500,000 shares of restricted common stock was granted to Mr. Kanders on March 14, 2023 under the Company’s 2015 Stock Incentive Plan of which (A) 250,000 shares shall vest if on or before March 14, 2033, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the common stock shall have equaled or exceeded $15.00 per share for twenty consecutive trading days; and (B) 250,000 shares shall vest if on or before March 14, 2033, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the common stock shall have equaled or exceeded $18.00 per share for twenty consecutive trading days. In light of the equity award grants previously granted by the Company to the Named Executive Officers, the Compensation Committee and the Board of Directors determined not grant any other performance-based equity awards to the Named Executive Officers in 2023. Equity based compensation earned in 2023, 2022, and 2021 by the Named Executive Officers are reflected in the “Stock Awards,” and “Option Awards,” columns in the Summary Compensation Table set forth on page 25 of this Proxy Statement.
Post-Employment and Other Events
Post-Employment and Other Events Termination, death, disability and change-in-control events may trigger the payment of certain compensation to the Named Executive Officers that is not available to all salaried employees. Such compensation payable to our current Named Executive Officers is discussed under the headings “Employment Agreements” and “Potential Payments Upon Termination or Change in Control.”
Summary Compensation Table
Summary Compensation Table The following summary compensation table sets forth information concerning the annual and long-term compensation earned for the periods presented below by our Named Executive Officers.
Summary Compensation Table
| | | | | | | Non-Equity | Non-qualified | | | | | | | | Stock | Option | Deferred | Deferred | All Other | | | Name and Principal | | Salary | Bonus | Awards | Awards | Compensation | Compensation | Compensation | Total | | Position | Year | ($) | ($) | ($)(1) | ($)(2) | Earnings | Earnings | ($) | ($) | | Warren B. Kanders | 2023 | 601,923 | — | 4,045,819 | — | — | — | 76,368(3) | 4,724,110 | | Executive Chairman | 2022 | 550,000 | — | 7,686,720 | — | — | — | 77,288 | 8,314,008 | | | 2021 | 423,461 | — | 7,230,085 | — | — | — | 68,441 | 7,721,987 | | Michael J. Yates(4) | 2023 | 400,000 | 300,000 | — | — | — | — | 41,040(5) | 741,040 | | Chief Financial Officer, Secretary and Treasurer | 2022 | 400,000 | — | — | 312,255 | — | — | 27,267 | 739,522 | | | 2021 | — | — | — | — | — | — | — | — | | John C. Walbrecht(6) | 2023 | 179,808 | — | — | — | — | — | 4,268(7) | 184,076 | | President | 2022 | 550,000 | — | 1,537,344 | — | — | — | 39,448 | 2,126,792 | | | 2021 | 498,750 | 375,000 | — | 2,352,040 | — | — | 36,906 | 3,262,696 | | Aaron J. Kuehne(8) | 2023 | 388,580 | — | — | — | — | — | 16,608(9) | 405,188 | | Executive Vice President, Chief Operating Officer, Secretary and Treasurer | 2022 | 550,000 | — | 1,537,344 | — | — | — | 32,862 | 2,120,206 | | | 2021 | 423,461 | 315,000 | — | — | — | — | 31,533 | 769,994 |
Summary Compensation Table
| (1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see the footnote titled “Stock-Based Compensation Plan” in the financial statements contained in the Annual Reports on Form 10-K for the years ended December 31, 2023, December 31, 2022 and December 31, 2021. |
Summary Compensation Table
| (2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see the footnote titled “Stock-Based Compensation Plan” in the financial statements contained in the Annual Reports on Form 10-K for the years ended December 31, 2023, December 31, 2022 and December 31, 2021. |
Summary Compensation Table
| (3) “All Other Compensation” amount for Mr. Kanders in 2023 consists of the following items: health, short-term and long-term disability, and AD&D, $67,798; and life insurance, $8,570. |
Summary Compensation Table
| (4) Mr. Michael J. Yates was appointed to serve as the Company’s Chief Financial Officer effective as of January 3, 2022 and has also served as our Secretary and Treasurer since August 31, 2023. |
Summary Compensation Table
| (5) “All Other Compensation” amount for Mr. Yates in 2023 consists of the following items: 401(k) matching contributions, $12,231; wellness time conversion, $7,692; health, short-term and long-term disability, $18,591; and life insurance and AD&D, $2,166. |
Summary Compensation Table
| (6) On March 31, 2023, the Company and Mr. Walbrecht mutually agreed to terminate Mr. Walbrecht’s employment with the Company pursuant to the Employment Agreement dated as of January 1, 2021, between the Company and Mr. Walbrecht and entered into a Separation Agreement and General Release dated as of March 31, 2023. |
Summary Compensation Table
| (7) “All Other Compensation” amount for Mr. Walbrecht in 2023 consists of the following items: health, short-term and long-term disability, $3,831; and life insurance and AD&D, $437. |
Summary Compensation Table
| (8) On August 27, 2023, the employment agreement dated as of August 27, 2020, between the Company and Mr. Kuehne expired in accordance with its terms and Mr. Kuehne remained an at-will employee of the Company, continuing to serve as the Company’s Executive Vice President, Chief Operating Officer, Secretary and Treasurer. On August 31, |
Summary Compensation Table
| 2023, the Company and Mr. Kuehne mutually agreed to terminate Mr. Kuehne’s at-will employment and entered into a Separation Agreement and General Release dated as of August 31, 2023. |
Summary Compensation Table
| (9) “All Other Compensation” amount for Mr. Kuehne in 2023 consists of the following items: wellness time conversion, $6,346; health, short-term and long-term disability, $9,693; and life insurance and AD&D, $569. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information concerning grants of plan-based awards in fiscal year 2023 to our Named Executive Officers.
Grants of Plan-Based Awards
| | | | | | | | | | All Other | | | | | | | | | | | | All Other | Option | | Grant | | | | | | | | | | Stock Awards: | Awards: | Exercise | Date Fair | | | | Estimated Future Payouts | | | Estimated Future Payouts | | | Number of | Number of | or Base | Value of | | | | Under Non-Equity Incentive | | | Under Equity Incentive | | | Shares | Securities | Price of | Stock and | | | | Plan Awards | | | Plan Awards | | | of Stock | Underlying | Option | Option | | | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards | | Name | Date | ($) | ($) | ($) | ($) | ($) | ($) | (#) | (#) | ($) | ($) | | Warren B. Kanders | 3/14/2023 | — | — | — | — | — | — | 500,000(1) | — | — | $4,045,819 |
Grants of Plan-Based Awards
| (1) Restricted stock award granted pursuant to the Company’s 2015 Stock Incentive Plan. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information concerning stock options and stock awards held by the Named Executive Officers at December 31, 2023:
Outstanding Equity Awards at Fiscal Year End
| | Option Awards | | | | | Stock Awards | | | | | | | | | | | | | | Equity | | | | | | | | | | Equity | Incentive | | | | | | | | | | Incentive | Plan Awards: | | | | | | | | | | Plan Awards: | Market or | | | | | Equity Incentive | | | | Market | Number of | Payout Value | | | | | Plan Awards: | | | | Value of | Unearned | of Unearned | | | Number of | Number of | Number of | | | Number of | Shares or | Shares, | Shares, | | | Securities | Securities | Securities | | | Shares or | Units of | Units or | Units or | | | Underlying | Underlying | Underlying | | | Units of | Stock That | Other Rights | Other Rights | | | Unexercised | Unexercised | Unexercised | Option | Option | Stock That | Have Not | That Have | That Have | | | Options (#) | Options (#) | Unearned | Exercise | Expiration | Have Not | Vested | Not Vested | Not Vested | | Name | Exercisable | Unexercisable | Options (#) | Price ($) | Date | Vested (#) | ($) | (#) | ($) | | Warren B. Kanders | 500,000(1) | — | — | 6.80 | 3/9/28 | — | — | — | — | | | — | — | — | — | — | 116,666(2) | 804,995 | — | — | | | 150,000(3) | — | — | 13.21 | 6/5/29 | — | — | — | — | | | 255,997(4) | — | — | 14.39 | 12/2/30 | — | — | — | — | | | — | — | — | — | — | 500,000(5) | 3,450,000 | — | — | | | — | — | — | — | — | 500,000(6) | 3,450,000 | — | — | | | — | — | — | — | — | 500,000(7) | 3,450,000 | — | — | | Michael J. Yates | 20,000(8) | 10,000 | — | 27.65 | 1/3/32 | — | — | — | — | | Aaron J. Kuehne(14) | 55,000(9) | — | — | 4.63 | 8/31/24 | — | — | — | — | | | 125,000(10) | — | — | 4.38 | 8/31/24 | — | — | — | — | | | 50,000(11) | — | — | 6.15 | 8/31/24 | — | — | — | — | | | 500,000(12) | — | — | 6.80 | 8/31/24 | — | — | — | — | | | 300,000(13) | — | — | 15.00 | 8/31/24 | — | — | — | — |
Outstanding Equity Awards at Fiscal Year End
| (1) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on March 9, 2018. Options to purchase 100,000 shares of common stock vested and became exercisable on each of December 31, 2018, December 31, 2019, December 31, 2020, December 31, 2021, and December 31, 2022, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (2) Restricted stock award granted under the Company’s 2015 Stock Incentive Plan on January 7, 2019, of which (i) 116,667 shares of the Company’s common stock vested on each of January 28, 2022 and January 28, 2023, respectively, and (ii) 116,666 shares of the Company’s common stock shall vest on January 28, 2024. |
Outstanding Equity Awards at Fiscal Year End
| (3) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on June 5, 2019. Options to purchase 50,000 shares of common vested and became exercisable on each of June 5, 2020, June 5, 2021 and June 5, 2022, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (4) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on December 2, 2020. Options to purchase (i) 85,331 shares of common stock vested and became exercisable on December 2, 2021; and (ii) 85,333 shares of common stock vested and became exercisable on each of December 2, 2022 and December 2, 2023, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (5) Restricted stock award granted under the Company’s 2015 Stock Incentive Plan on May 28, 2021, of which 500,000 shares of the Company’s common stock will vest if on or before May 28, 2024, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the Company’s common stock shall have equaled or exceeded $35.00 per share for twenty consecutive trading days. |
Outstanding Equity Awards at Fiscal Year End
| (6) Restricted stock award granted under the Company’s 2015 Stock Incentive Plan on March 4, 2022, of which 500,000 shares of the Company’s common stock will vest if on or before March 4, 2032, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the Company’s common stock shall have equaled or exceeded $50.00 per share for twenty consecutive trading days. |
Outstanding Equity Awards at Fiscal Year End
| (7) Restricted stock award granted under the Company’s 2015 Stock Incentive Plan on March 14, 2023 of which (i) 250,000 shares shall vest if on or before March 14, 2033, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the common stock shall have equaled or exceeded $15.00 per share for twenty consecutive trading days; and (ii) 250,000 shares shall vest if on or before March 14, 2033, the Fair Market Value (as defined in the 2015 Stock Incentive Plan) of the common stock shall have equaled or exceeded $18.00 per share for twenty consecutive trading days. |
Outstanding Equity Awards at Fiscal Year End
| (8) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on January 3, 2022. Options to purchase (i) 10,000 shares of common stock vested and became exercisable on each of December 31, 2022 and December 31, 2023, respectively; and (ii) 10,000 shares of common stock will vest and become exercisable on December 31, 2024. |
Outstanding Equity Awards at Fiscal Year End
| (9) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on December 16, 2015. Options to purchase 22,000, 16,500 and 16,500 shares of common stock vested and became exercisable on each of December 31, 2017, December 31, 2018 and December 31, 2019, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (10) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on July 1, 2016. Options to purchase 41,667, 41,667 and 41,666 shares of common stock vested and became exercisable on each of July 1, 2017, July 1, 2018 and July 1, 2019, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (11) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on August 21, 2017. Options to purchase 16,667, 16,667 and 16,666 shares of the common stock vested and became exercisable on each of December 31, 2017, December 31, 2018 and December 31, 2019, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (12) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on March 9, 2018. Options to purchase 100,000 shares of common stock vested and became exercisable on each of December 31, 2018, December 31, 2019, December 31, 2020, December 31, 2021 and December 31, 2022, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (13) Stock option award granted pursuant to the Company’s 2015 Stock Incentive Plan on August 27, 2020. Options to purchase 100,000 shares of common stock vested and became exercisable on each of August 27, 2021, August 27, 2022 and August 27, 2023, respectively. |
Outstanding Equity Awards at Fiscal Year End
| (14) On August 27, 2023, the employment agreement dated as of August 27, 2020, between the Company and Mr. Kuehne expired in accordance with its terms and Mr. Kuehne remained an at-will employee of the Company, continuing to serve as the Company’s Executive Vice President, Chief Operating Officer, Secretary and Treasurer. On August 31, |
Outstanding Equity Awards at Fiscal Year End
| 2023, the Company and Mr. Kuehne mutually agreed to terminate Mr. Kuehne’s at-will employment and entered into a Separation Agreement and General Release dated as of August 31, 2023 (the “Kuehne Separation Agreement”). Pursuant to the terms of the Kuehne Separation Agreement, the Company has agreed to extend the period of time in which Mr. Kuehne has to exercise the stock options set forth herein until August 31, 2024. |
Option Exercises and Stock Vested During Fiscal 2023
Option Exercises and Stock Vested During Fiscal 2023 The following table sets forth information concerning the exercise of stock option awards and vesting of stock awards in fiscal year 2023 to our Named Executive Officers.
Option Exercises and Stock Vested During Fiscal 2023
| | Option Awards | | Stock Awards | | | | Number of | | Number of | | | | Shares | | Shares | | | | Acquired on | Value Realized | Acquired on | Value Realized | | Name | Exercise (#) | on Exercise ($) | Vesting (#) | on Vesting ($) | | Warren B. Kanders | — | $— | 116,667 | $1,163,170 | | John C. Walbrecht | 500,000 | $349,673 | 75,000 | $728,250 |
Pension Benefits — Fiscal 2023
Pension Benefits — Fiscal 2023 There were no pension benefits earned by our Named Executive Officers during the fiscal year ended December 31, 2023.
Non-qualified Defined Contribution and Other Non-qualified Deferred Compensation Plans
Non-qualified Defined Contribution and Other Non-qualified Deferred Compensation Plans The Company does not have any non-qualified defined contribution or other non-qualified deferred compensation plans covering its Named Executive Officers.
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control The tables below reflect the amount of compensation payable to each of the current Named Executive Officers of the Company in the event of termination of such executive officer’s employment. The amount of compensation payable to each current Named Executive Officer upon voluntary termination; retirement; involuntary not-for-cause termination; involuntary for cause termination; termination following a change-in- control; retention following a change-in-control; and in the event of disability or death of the executive is shown below. The amounts shown assume that such termination was effective as of December 31, 2023. The amounts shown thus include amounts earned through such times and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of such executive officer’s separation from the Company. Payments Made Upon Termination Regardless of the manner in which a Named Executive Officer’s employment terminates, he may be entitled to receive amounts earned during his term of employment. In the event that Mr. Kanders’ employment is terminated by the Company without “cause”, by Mr. Kanders for “Good Reason” (as such terms are defined in the “Kanders Employment Agreement” described below under the heading “Employment Agreements), which includes the Company’s uncured breach of any material provision of the Kanders Employment Agreement, any material diminution in the authority or responsibilities delegated to Mr. Kanders, or any reduction in Mr. Kanders’ annual base salary), or if the Company, or its applicable successors and assigns, does not offer to renew the Employment Agreement upon expiration of the term on substantially similar terms, Mr. Kanders will be entitled to receive, among other things, in one lump sum within thirty days of such termination: (a) five times the sum of (i) his highest annual base salary, plus (ii) the annual bonus for such year, in each case since January 1, 2020; plus (b) the amount of any accrued annual bonus; however, if Mr. Kanders is terminated without cause or he terminates the Kanders Employment Agreement for Good Reason, any accrued annual bonus shall be payable only to the extent that the applicable performance targets for the year of termination are actually achieved; plus (c), five times the greatest annual amount of the full cost of maintaining his principal office. In addition, all grants of stock options and common stock granted under the Kanders Employment Agreement or otherwise shall vest and become immediately exercisable and saleable and any lock-up provisions applicable thereto, or to any options granted to the Mr. Kanders, shall terminate. Also, in the event of any termination of Mr. Kanders’ employment as described above, the following shall occur, and be provided or made available to Mr. Kanders at the times specified: (i)(A) all of Mr. Kanders’ benefits accrued under any employee pension, retirement, savings and deferred compensation plans of the Company shall become vested in full upon the date of such a termination; (B) any and all unvested stock options, restricted stock and other equity or equity-based awards (including, but not limited to, the shares of restricted stock granted to Mr. Kanders pursuant to the Kanders Employment Agreement) shall immediately vest as of the date of such termination; and (C) amounts which are vested or which Mr. Kanders is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company or any of its subsidiaries, on or after his termination without regard to the performance by Mr. Kanders of further services or the resolution of a contingency shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have been awarded or accrued; (ii) Mr. Kanders (and any of his dependents) will be entitled to continue participation in all of the Company’s health benefit plans, for the period for which Mr. Kanders could elect COBRA continuation coverage under the Company’s health benefit plans as a result of his termination; and (iii) Mr. Kanders will have the right to have the Company’s (or applicable subsidiary’s) office lease that is used by Mr. Kanders assigned to him, and the Company will pay the lease payments for a period of five years from the date of such termination, and Mr. Kanders shall have the right to purchase any fixed assets in connection therewith (including but not limited to automobiles) that he enjoyed the use of during the term at such assets’ then-depreciated book value. The foregoing payments and benefits described in this paragraph with respect to Mr. Kanders are referred to herein as the “Additional Kanders Termination Benefits”. Payments Made Upon Retirement In the event of the retirement of a Named Executive Officer, no additional benefits are paid. Payments Made Upon Permanent Disability or Death In the event of Mr. Kanders’ death, his designees would be entitled to $134,000 from a Company group term life policy that is maintained for the benefit of all of the Company’s employees. The Company also maintains term life insurance on Mr. Kanders in the amount of $2,000,000 for the benefit of his designees. Additionally, in the event of his termination due to permanent disability or death, the Kanders Employment Agreement provides that Mr. Kanders will be entitled to receive, among other things, in one lump sum within thirty days of such termination: (i) five times the sum of (A) his highest annual base salary, plus (B) the annual bonus for such year, in each case since January 1, 2020; plus (ii) the amount of any accrued annual bonus; plus (iii), five times the greatest annual amount of the full cost of maintaining his principal office. In addition, all grants of stock options and common stock granted under the Kanders Employment Agreement or otherwise shall vest and become immediately exercisable and saleable and any lock-up provisions applicable thereto, or to any options granted to Mr. Kanders, shall terminate. Mr. Kanders will also be entitled to receive the Additional Kanders Termination Benefits. In the event of Mr. Yate’s death, his beneficiary would be entitled to receive $300,000 from a Company group term life policy that is maintained for the benefit of all of the Company’s employees. Payments Made Upon a Change-in-Control Pursuant to the terms of the Kanders Employment Agreement, in the event that Mr. Kanders’ employment is terminated by Mr. Kanders or the Company or its successor or assigns within two years following the occurrence of a “change in control” of the Company (other than a termination by the Company for cause during such period), Mr. Kanders will be entitled to receive, among other things, in one lump sum within thirty days of such termination: (i) five times the sum of (A) his highest annual base salary, plus (B) the annual bonus for such year, in each case since January 1, 2020; plus (ii) the amount of any accrued annual bonus; plus (iii), five times the greatest annual amount of the full cost of maintaining his principal office provided, however, that in the event of a change in control, if the Company or the acquiror requests Mr. Kanders to provide consulting services described in the Kanders Employment Agreement, then the lump sum
Potential Payments Upon Termination or Change-in-Control
payment described above shall be payable upon the expiration of such consulting period, and during such consulting period, Mr. Kanders will be entitled to a consulting fee equal to what he would have otherwise been entitled to be paid under the Employment Agreement during such period. In addition, all grants of stock options and common stock granted under the Kanders Employment Agreement or otherwise shall vest and become immediately exercisable and saleable and any lock-up provisions applicable thereto, or to any options granted to the Mr. Kanders, shall terminate. Mr. Kanders will also be entitled to receive the Additional Kanders Termination Benefits. Pursuant to the terms of the Kanders Employment Agreement, a change-in-control is deemed to occur in the event that:
Potential Payments Upon Termination or Change-in-Control
| ● | the members of the Board of Directors as of March 14, 2023, cease to constitute a majority of the Board of Directors provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Board of Directors shall be considered as though such individual was a member of the Board of Directors as of such date; |
Potential Payments Upon Termination or Change-in-Control
| ● | the Company shall have been sold by either (A) a sale of all or substantially all its assets, or (B) a merger or consolidation, other than any merger or consolidation pursuant to which the Company acquires another entity, or (C) a tender offer, whether solicited or unsolicited; or |
Potential Payments Upon Termination or Change-in-Control
| ● | any party, other than the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting securities of the Company representing 50% or more of the total voting power of all the then-outstanding voting securities of the Company. |
Pay Ratio Disclosure
Pay Ratio Disclosure The 2023 annual total compensation of the median compensated of all our employees who were employed as of December 31, 2023, other than our Executive Chairman, was $59,312. The 2023 annual total compensation of Mr. Kanders, our Executive Chairman, was $4,724,110, and the ratio of these amounts was 80 to 1. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. For these purposes, we identified the median compensated employee using total taxable wages paid to our employees in fiscal 2023, annualizing the salaries paid to new employees that did not work the full fiscal year. After identifying such median compensated employee, we calculated annual total compensation for such employee using the same methodology we used for our Executive Chairman and other Named Executive Officers. Using this methodology, the annual total compensation in 2023 for our median employee was $59,312. We determined our total workforce, excluding our Executive Chairman, to consist of 825 employees.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required and set forth by Section 953(a) of the Dodd-Frank Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation paid to our named executive officers and the financial performance of the Company.
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| | | | | | Value of Initial | | | | | | | | Average | | Fixed $100 | | | | | | | | Summary | Average | Investment | | | | | | Summary | | Compensation | Compensation | Based on: | | | | | | Compensation | Compensation | Table Total for | Actually Paid | Total | Peer Group | | | | | Table Total for | Actually Paid | Non-PEO | to Non-PEO | Shareholder | Shareholder | Net | Adjusted | | | PEO | to PEO | NEOs | NEOs | Return | Return | Income | EBITDA | | Year | ($) | ($)(1) | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | | 2023 | 4,724,110 | 2,973,299 | 443,435 | 208,285 | 52.81 | 146.81 | (15,788) | 1,214 | | 2022 | 8,314,008 | (17,349,302) | 1,662,173 | (3,273,967) | 59.15 | 112.11 | (69,780) | 62,959 | | 2021 | 7,721,987 | 16,860,440 | 2,016,345 | 9,081,793 | 206.49 | 155.34 | 26,093 | 61,503 | | 2020 | 5,167,252 | 6,158,606 | 1,755,471 | 2,503,523 | 114.31 | 130.70 | 5,545 | 22,389 |
Pay Versus Performance Table
| (1) Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our remaining NEOs for the relevant fiscal year, as computed in accordance with Item 402(v) of Regulation S-K, which includes the individuals indicated in the table below for each respective fiscal year. Amounts do not reflect the actual amount of compensation earned by or paid to the PEO or other NEOs during the applicable year. Each of Mr. Walbrecht’s and Mr. Kuehne’s employment with the Company were terminated on March 31, 2023 and August 31, 2023, respectively. |
Pay Versus Performance Table
| Year | PEO | Non-PEO NEOs | | 2023 | Warren B. Kanders | John C. Walbrecht, Aaron J. Kuehne, and Michael J. Yates | | 2022 | Warren B. Kanders | John C. Walbrecht, Aaron J. Kuehne, and Michael J. Yates | | 2021 | Warren B. Kanders | John C. Walbrecht and Aaron J. Kuehne | | 2020 | Warren B. Kanders | John C. Walbrecht and Aaron J. Kuehne |
Pay Versus Performance Table
Compensation actually paid to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as follows:
Pay Versus Performance Table
| | | Starting | | | | | Adjusted | | | | Amount: | Deducted: | Added: | Added: | Added | Amount: | | | | | | | | The change | | | | | | | | The change | (positive or | | | | | | | | (positive or | negative) as of | | | | | | | | negative) as of | the vesting date | | | | | | | | the end of the | (from the end | | | | | | | The fair value | covered fiscal | of the prior | | | | | | | as of the end of | year (from the | fiscal year) in | | | | | | | the covered | end of the prior | fair value of | | | | | | | fiscal year of all | fiscal year) in | any stock | | | | | | | stock awards | fair value of any | awards granted | | | | | | The grant date | granted during | stock awards | in any prior | | | | | | fair value of all | the covered | granted in any | fiscal year for | | | | | | stock awards | fiscal year | prior fiscal | which all vesting | | | | | | granted in the | that were | year that are | conditions were | | | | | | applicable year, | outstanding and | outstanding and | satisfied at the | | | | | | as reported in | unvested as of | unvested as of | end of or | | | | Named | Summary | the Summary | the end of the | the end of the | during the | Compensation | | | Executive | Compensation | Compensation | covered | covered | covered | Actually | | Year | Officers | Table Total | Table | fiscal year | fiscal year | fiscal year | Paid | | 2023 | PEO | 4,724,110 | 4,045,819 | 2,509,095 | (379,217) | 165,131 | 2,973,299 | | | Non-PEO NEOs | 443,435 | — | — | (290,994) | 55,845 | 208,285 | | 2022 | PEO | 8,314,008 | 7,686,720 | 1,532,741 | (15,549,564) | (3,959,767) | (17,349,302) | | | Non-PEO NEOs | 1,662,173 | 1,128,981 | 210,784 | (2,634,635) | (1,383,308) | (3,273,967) | | 2021 | PEO | 7,721,987 | 7,230,085 | 9,656,730 | 4,306,153 | 2,405,655 | 16,860,440 | | | Non-PEO NEOs | 2,016,345 | 1,176,020 | 3,040,100 | 3,438,208 | 1,763,161 | 9,081,793 | | 2020 | PEO | 5,167,252 | 4,750,626 | 1,608,634 | 830,665 | 3,302,681 | 6,158,606 | | | Non-PEO NEOs | 1,755,471 | 1,144,187 | 1,565,179 | 213,150 | 113,910 | 2,503,523 |
Pay Versus Performance Table
| (2) Cumulative Total Shareholder Return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and 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. |
Pay Versus Performance Table
| (3) Represents the peer group Total Shareholder Return of the companies included in the NASDAQ Global Select Market Composite and the Russell 2000 Index. |
Pay Versus Performance Table
| (4) Represents the amount of net income reflected in the Company’s audited financial statements for the applicable year. On February 29, 2024, the Company completed the sale of the Company’s Precision Sport segment. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for the year ended December 31, 2023, and as a result are excluded from net income for the 2023 fiscal year. |
Pay Versus Performance Table
| (5) Adjusted EBITDA is a non-GAAP measure. We define “EBITDA” as earnings before interest, taxes, other income or expense, depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted for the impact of certain noncash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, transaction costs, contingent consideration, inventory fair value of purchase accounting, impairment of goodwill and indefinite-lived intangible assets, stock-based compensation, and other one-time items. For a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, see our press release announcing the Company’s results for the fourth quarter and year ended December 31, 2023, attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on March 7, 2024. We selected Adjusted EBITDA as the Company-selected measure due to it being an important financial performance measure that helps link compensation actually paid to the Company’s NEOs to the Company’s performance for the most recently completed fiscal year. In particular, Adjusted EBITDA is utilized by the Compensation Committee and the Board of Directors as part of their evaluation and consideration to award annual performance-based compensation to our NEOs. On February 29, 2024, the Company completed the sale of the Company’s Precision Sport segment. The activities of |
Pay Versus Performance Table
| the Precision Sport segment have been segregated and reported as discontinued operations for the year ended December 31, 2023, and as a result are excluded from Adjusted EBITDA for the 2023 fiscal year. |
Relationship between Performance Measures and Compensation Actually Paid
Relationship between Performance Measures and Compensation Actually Paid The following graphs represent the relationship between “compensation actually paid,” as reflected in the Pay Versus Performance Table, to the Company’s PEO and other Named Executive Officers (expressed as an average) and the performance measures included in the Pay Versus Performance Table (Total Shareholder Return, Peer Group Total Shareholder Return, Net Income and Adjusted EBITDA).