DEF 14A of CPI Card Group Inc.
Filed Apr 29, 2024 · FY20230001558370-24-006124
Director Nominee Biographical Information and Qualifications
Director Nominee Biographical Information and Qualifications Set forth below is a description of the business experience of each director nominee, as well as their relevant qualifications, skills and experiences. Each director nominee listed below, other than Ms. Oleson, is a current director nominated for re-election to the Board for a term expiring at the annual meeting of stockholders in 2025. See “Election of Directors (Proposal No. 1).” Thomas Furey, 59, has served on our Board of Directors since May 2021. Mr. Furey currently serves as the Chairman and Chief Executive Officer of Sagetech Avionics, Inc. (“Sagetech”), a privately held aerospace electronics company. Sagetech was incorporated in 2019 after a divisional carve out from Sagetech Corporation, for which Mr. Furey held the position of Chief Operating Officer since 2015. From 2014 to 2015, Mr. Furey served as Vice President of manufacturing and engineering at Unitec, Inc., a point-of-sale payments equipment company, before which he ran his own operations consultancy firm from 2012 to 2013. From 2004 to 2012, Mr. Furey held various executive positions at Standard Register Company, including Vice President of manufacturing, Chief Supply Chain Officer and President of Standard Register’s industrial business. From 2001 to 2004, Mr. Furey was in charge of North American operations for Avery Dennison Corporation (NYSE:AVY), a label materials manufacturer. Mr. Furey also held positions of increasing responsibility in manufacturing leadership at AlliedSignal, Inc. (which acquired Honeywell Inc. in 1999 and took its name) from 1994 to 2001 and was selected as the AlliedSignal fellow to the “Leaders for Manufacturing” program at the Massachusetts Institute of Technology (“MIT”) from 1997 to 1999. He began his career as a Naval Flight Officer in the U.S. Navy. Mr. Furey holds a Bachelor of Science degree in Mathematics from the U.S. Naval Academy, a Master of Science degree in Industrial Engineering from California State University Northridge, as well as a Master of Science degree in Mechanical Engineering and a Master of Business Administration degree from MIT. Mr. Furey brings to the Board extensive experience in high volume manufacturing, operations and executive leadership. John Lowe, 47, was appointed President and Chief Executive Officer of the Company and was appointed to the Board of Directors in January 2024. Prior to that, he served as our Executive Vice President, End-to-End Payment Solutions since December 2022. He served as our Senior Vice President and General Manager, Secure Card from October 2021 to December 2022. From July 2018 to October 2021, Mr. Lowe served as the Company’s Chief Financial Officer. Prior to joining the Company, Mr. Lowe served as Chief Financial Officer of SquareTwo Financial Corporation, a financial services company, from August 2014 until June 2017. Prior to August 2014, Mr. Lowe held various leadership roles of increasing responsibility at SquareTwo Financial Corporation, including serving as Treasurer, Vice President of Finance and Vice President of External Reporting. Mr. Lowe’s employment with SquareTwo Financial Corporation commenced in 2009. SquareTwo Financial Corporation filed for Chapter 11 bankruptcy protection in March 2017 in connection with a strategic sale of the Company. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University. He brings to the Board significant experience in the areas of finance, accounting, investor relations, operations and executive leadership, including over 20 years of experience in the financial services industry. Ravi Mallela, 54 has served on our Board of Directors since November 2023. Since January 2022, he has served as Executive Vice President and Chief Financial Officer of National Mortgage Insurance Holdings Inc. (NASDAQ:NMIH), the parent company of National Mortgage Insurance Corporation, a U.S.-based, private mortgage insurance company, and on its Executive Committee. Prior to joining NMIH, Mr. Mallela served as Executive Vice President and Chief Financial Officer, Finance Group, of First Hawaiian, Inc., a bank holding company, and First Hawaiian Bank (NASDAQ:FHB), a financial institution, (together, “First Hawaiian”) from September 2018 until January 2022. Prior to joining First Hawaiian, Mr. Mallela served as Senior Vice President, Head of Finance and Treasury of First Republic Bank (OTC:FRCB) from 2013 to 2018. He holds an MBA from UCLA Anderson School of Management and a Bachelor of Science degree in Economics from the University of San Francisco. Mr. Mallela has public company executive leadership experience including significant experience in managing finance operations, risk management frameworks, data strategies and technical applications at large and mid-sized financial institutions. Nicholas Peters, 51, has served on our Board of Directors since 2007. Mr. Peters is a Managing Director at Parallel49 Equity (formerly Tricor Pacific Capital), a private equity firm that makes control investments in lower middle market companies in the United States and Canada, which he joined in 2002, and also began serving as Parallel49 Equity’s Chief Financial Officer in 2012. Prior to joining Parallel49 Equity, Mr. Peters was a Senior Manager at Arthur Andersen LLP in Chicago. Mr. Peters is the Chairman of the Questco Companies and serves on the board of several other Parallel49 Equity investment companies as well as non-Parallel49 Equity investment companies. Mr. Peters holds a Bachelor of Science degree in Business Administration from the University of Dayton in Ohio. He was a Certified Public Accountant (inactive) (“CPA”) and is affiliated with the American Institute of CPAs and the Ohio Society of CPAs. Mr. Peters brings to the Board strong finance and accounting skills, as well as valuable experience from his oversight of the management and operations of several of Parallel49 Equity’s investment companies. H. Sanford “Sandy” Riley, 73, has served on our Board of Directors since May 2023. He has served as President and CEO of Richardson Financial Group Limited, a specialized financial services company, since 2003. Previously, he served for 10 years as President and CEO and later Chairman of Investor Group, Inc., one of Canada’s largest mutual fund companies. Mr. Riley has served as a member the board of directors of Molson Coors (NYSE:TAP) since 2015 and RF Capital Group Inc. (TSX:RCG) since 2021. In addition, Mr. Riley previously served as a director of Canadian Western Bank (TSX:CWB) from 2011 to 2022, The North West Company (TSX:NWC) from 2002 to 2022, and Manitoba Hydro, where he also served as Chairman of the board of directors from 2016 to 2018. Mr. Riley is also involved with various community organizations, including serving as Chairman of the University of Winnipeg Foundation, past Chancellor of the University of Winnipeg and past Chairman of the Manitoba Business Council. Mr. Riley holds a J.D. from Osgoode Hall Law School, a Bachelor of Arts degree from Queen’s University and is a Member of the Order of Manitoba and the Order of Canada. He brings extensive board-level experience having served on numerous public company boards and committees in various industries, with leadership in areas of risk management, corporate governance and executive compensation, as well as executive leadership experience in financial services, including such areas as operations, management, strategy and corporate development.
Director Nominee Biographical Information and Qualifications
Marc Sheinbaum, 66, has served on our Board of Directors since November 2019. Since January 2017, Mr. Sheinbaum has been an advisor to venture capital and private equity firms. From April 2014 to August 2016, he was the President, Chief Executive Officer and a director of Higher One Holdings, Inc. (NYSE:ONE), a payments technology provider for higher education. From February 2007 through March 2013, Mr. Sheinbaum was the Senior Vice President and Chief Executive Officer of Retail, Auto and Education Finance at JPMorgan Chase & Co. (NYSE:JPM). Earlier in his career, Mr. Sheinbaum held positions at GE Capital Corporation and American Express Company (NYSE:AXP), as well as Coopers & Lybrand Management Consulting. Mr. Sheinbaum holds a Bachelor of Science degree in Management Science from State University of New York at Albany and a Master of Business Administration degree from New York University. He brings considerable experience in payments and consumer financial services as well as public company leadership. Valerie Soranno Keating, 60, has served on our Board of Directors since May 2018. Ms. Soranno Keating has been senior advisor to a number of private equity firms in the U.S. and Europe since 2017. From November 2009 through May 2015, she was the Chief Executive Officer of Barclaycard, the global payments division of Barclays PLC (NYSE:BCS), with $60 billion in assets and over 30 million customers throughout the U.S., Europe and South Africa. Before joining Barclays PLC, Ms. Soranno Keating held a variety of executive positions at American Express Company (NYSE:AXP) from May 1993 through May 2009, including President, Travelers Cheques & Prepaid Services, Executive Vice President Global Commercial Services, Executive Vice President Global Merchant Services, Emerging Global Businesses & Network Expansion, and Vice President Corporate Strategic Planning. Ms. Soranno Keating also serves as a director on the boards of other public and private companies, including One Main Financial (NYSE:OMF), FinServ Acquisition Corp. II (Nasdaq: FSRX), Engage People Inc. and Billhighway Management LLC. Ms. Soranno Keating holds a Bachelor of Science degree in Business Administration from Lehigh University. She brings to the Board wide-ranging experience in both executive and board roles across a broad spectrum of payments and related businesses. Lisa Oleson, 44, is nominated by Tricor Funds to stand for election to our Board of Directors. Since 2016, Ms. Oleson has served as the Chief Financial Officer at Tricor Pacific Capital Inc., a Canadian Single-Family Office that makes control investments in middle market companies, commercial real estate, and land development, among other asset classes. Ms. Oleson currently serves on the board of directors of Dinoflex Group LP, a manufacturer of premium recycled rubber flooring with distribution across North America. Prior to joining Tricor, Ms. Oleson held progressively senior finance roles in financial services, recycling, franchising, and heavy equipment. Ms. Oleson is a CGA CPA in British Columbia, and holds a Bachelor of Business Administration degree with Honors from Laurentian University. Ms. Oleson brings strong finance and accounting skills, as well as diverse operating experience from her time in various industries. Mr. Scott Scheirman, Mr. Robert Pearce and Mr. Bradley Seaman each served on the Board during 2023. Mr. Scheirman retired from the Board, effective as of January 25, 2024, Mr. Pearce resigned from the Board, effective as of March 22, 2023 and Mr. Seaman resigned from the Board, effective as of June 15, 2023. The Company thanks each of Messrs. Scheirman, Pearce and Seaman for their contributions as directors during their tenure.
Director Compensation
Director Compensation The director compensation program remained unchanged in 2023 from 2022 and consisted of a mix of cash retainers and equity awards in the form of stock-settled restricted stock units, which are scheduled to vest on the first anniversary of the grant date. All cash fees are paid to directors on a quarterly basis unless otherwise indicated and are prorated for any partial service periods. The following table sets forth our compensation program for our non-employee directors in 2023:
Director Compensation
| Compensation Element | Value | | Annual Cash Retainer | $50,000 | | Annual Equity Award | $100,000 | | Chairman of the Board Annual Cash Fee | $30,000 | | Committee Chair Annual Cash Fee | $15,000 | | Committee Member Annual Cash Fee | $7,500 |
Director Compensation
The following table summarizes the annual compensation for our non-employee directors received during 2023. Mr. Scheirman, our former President and Chief Executive Officer and Director, did not receive any additional compensation for his service on the Board. Please see the “2023 Summary Compensation Table” for a summary of the compensation received by Mr. Scheirman with respect to 2023. As noted above, Messrs. Pearce and Seaman departed the Board in March 2023 and June 2023, respectively, and Messrs. Riley and Mallela joined the Board in May 2023 and November 2023, respectively. Each of these director’s compensation has been prorated to reflect their length of service during 2023 and shown in the table below:
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
| | Fees | | | | | Earned | | | | | Or Paid | | | | Name | In Cash | Stock Awards(1) | Total | | Thomas Furey | $63,125 | $101,239 | $164,364 | | Ravi Mallela(2) | $9,583 | $28,233 | $37,816 | | Robert Pearce(3) | $18,125 | $— | $18,125 | | Nicholas Peters | $72,500 | $101,239 | $173,739 | | H. Sanford Riley(2) | $60,000 | $73,017 | $133,017 | | Bradley Seaman(2) | $43,750 | $50,041 | $93,791 | | Marc Sheinbaum | $76,875 | $101,239 | $178,114 | | Valerie Soranno Keating | $73,750 | $101,239 | $174,989 |
2023 DIRECTOR COMPENSATION
| (1) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB Topic 718”), valued based on the closing stock price on the date of grant. The number of shares awarded were determined with reference to the average closing price of the Company’s common stock for the month in which the date of grant occurred. Each of the then-serving non-employee directors received RSU awards granted on a quarterly basis with each RSU awarded scheduled to vest one year from the date of grant. Each of the non-employee directors that served on our Board during 2023 had the following number of outstanding RSUs and no other equity awards outstanding as of December 31, 2023: Mr. Furey, 4,145 RSUs; Mr. Mallela,1,587 RSUs; Mr. Pearce, 0 RSUs; Mr. Peters, 4,145 RSUs; Mr. Riley, 3,518 RSUs; Mr. Seaman, 0 RSUs; Mr. Sheinbaum, 4,145 RSUs; and Ms. Soranno Keating, 4,145 RSUs. |
2023 DIRECTOR COMPENSATION
| (2) Messrs. Mallela, Seaman and Riley each received fees and stock awards prorated based on a partial year of service as a Director. The RSUs awarded to Mr. Seaman in 2023 were forfeited when he departed the board in June 2023. |
2023 DIRECTOR COMPENSATION
| (3) Mr. Pearce received fees prorated based on a partial year of service as a Director and he stepped down from the Board prior to the award of any non-cash equity compensation in 2023 and thus did not receive any Stock Awards compensation for the year. |
2023 performance ($ in millions)
| (1) The term Net Sales, as defined in the STIP (as defined below), is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements. |
Summary of Our 2023 Compensation Decisions
Summary of Our 2023 Compensation Decisions The principal components of our 2023 executive compensation program consisted of (i) base salary, (ii) short-term incentives delivered in the form of quarterly cash payments and (iii) long-term incentives delivered entirely in the form of equity awards. We believe these components provide the appropriate mix of compensation to recruit and retain top-level talent, motivate our executive team to achieve the Company’s near-term financial objectives, and align compensation with stockholder value, all of which incentivize our executive team to continue improving business performance. Part of this strategy involves utilizing a short-term incentive plan (“STIP”) that rewards short-term incentive goal achievement with cash payments, as well as a long-term incentive plan (“LTIP”) which utilizes the Company’s 2021 Omnibus Incentive Plan ("Omnibus Incentive Plan”) to grant stock options (“Options”) and restricted stock units (“RSUs”). As noted above, Mr. Scheirman announced in June 2023 his intention to retire, which led to the decision to incentivize key personnel to remain with the Company for business continuity purposes. Mr. Scheirman also received a modified compensation package, including changes to his equity award schedule, as discussed in more detail below. In 2023, the Company instituted a quarterly grant program for the LTIP portion of compensation with grants scheduled to coincide with and occur in the month of the Company’s quarterly earnings release. The quarterly timing of the awards was determined in an effort to mitigate the impact of significant volatility in the Company’s stock price over time, which has historically made it difficult to achieve the goal of effectively incentivizing and retaining employees. These grants consisted of RSUs and Options, each of which vest in equal annual installments on the first and second anniversaries of the grant date, respectively. In addition, in connection with the anticipated leadership transition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. Each tranche of the awards will vest in three equal installments over three years, beginning on the first anniversary of the grant date. To incentivize Mr. Scheirman to remain with the Company to allow for the orderly transition of his duties, Mr. Scheirman received an additional grant on June 9, 2023 in conjunction with the announcement of his intention to retire, which was made in the form of RSUs and Options, vesting 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. The Compensation Committee makes all decisions regarding our NEOs’ total compensation (base salary, short-term incentives and long-term incentives).
Summary of Our 2023 Compensation Decisions
| | ● ● ● ● ● | | Factors that Guided 2023 Compensation Decisions | ● Our executive compensation philosophy ● Degree of achievement of key financial goals for 2023 ● Anticipation of Company leadership changes ● Recommendations of our CEO (other than with respect to his own compensation) ● Advice of the Compensation Committee’s independent compensation consultant ● Market pay and governance best practices ● Historical CPI compensation | | 2023 Compensation Program Changes and Key Decisions | Base Salary In December 2022 and February 2023, the Compensation Committee approved the following increases in base salaries in consideration of our NEOs’ performance, review of competitive market data and internal pay equity: ● CEO: Mr. Scheirman received a base salary increase of 4.5%, effective March 1, 2023, approved in February 2023. ● Other NEOs: In connection with their promotions to the EVP level of the organization, Mr. Dubin received a base salary increase of 20.1%, and. Mr. Lowe received a base salary increase of 19.0%, each effective January 1, 2023, both were approved in December 2022. See “Elements of the 2023 Executive Compensation Program — Base Salary” for more information. 2023 Short-Term Incentive Plan (“2023 STIP”) The 2023 STIP emphasizes pay-for-performance and the achievement of critical near-term performance milestones. Under the 2023 STIP, the NEOs were eligible to earn quarterly cash bonus awards based on the achievement of pre-established financial goals (specifically the metrics were based on a weighting of 70% for Adjusted EBITDA and 30% for Net Sales). Each NEO’s individual incentive opportunity is determined by the Compensation Committee following a review of competitive market data and internal pay equity. Messrs. Scheirman’s and Dubin’s targets did not increase from 2022. Mr. Lowe’s target increased by 12.0% over 2022, which reflected his increased responsibilities for revenue as EVP, End-to-End Payment Solutions. Based on the Company’s performance during 2023, the 2023 STIP payouts were 49.4% of target for the NEOs, primarily due to outsized performance during the first quarter of 2023. See “Elements of the 2023 Executive Compensation Program — Short-Term Incentives” for more information. 2023 Long-Term Incentive Plan Throughout 2023, the Compensation Committee granted quarterly equity awards under the Omnibus Incentive Plan to select employees of the Company, including the NEOs. These equity awards were granted in the form of RSUs and Options, with awards vesting in equal annual installments on the first and second anniversaries of the grant date. These awards were determined in consideration of our NEOs’ performance and a review of competitive market data. In addition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. Each tranche of the award will vest in three equal installments over three years, beginning on the first anniversary of the grant date. Mr. Scheirman received an additional grant on June 9, 2023, in conjunction with the announcement of his intention to retire, which was in the form of RSUs and Options, vesting 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date. See “Elements of the 2023 Executive Compensation Program — Long-Term Incentives” for more information. |
Summary of Our 2023 Compensation Decisions
| Compensation Peer Group The Compensation Committee reviewed and modified our compensation peer group in 2023, which resulted in removing 10 companies and adding 13 new companies to the peer group. The compensation peer group is comprised of companies that meet at least one of the following criteria: ● Similar in size and complexity to CPI (primarily based on revenue and EBITDA); ● In a similar or related technology-oriented industry; or ● In competition with CPI for executive talent. See “Role of Market Data and the Peer Group” for more information. |
Executive Compensation Governance Highlights
| What We Do | What We Don’t Do | | ✓ Deliver a significant portion of compensation through performance-based, at-risk pay ✓ Maintain a peer group for evaluating competitive market practices ✓ Set pre-established performance targets designed to be challenging ✓ Regularly review risks associated with compensation ✓ Consult with an independent consultant on compensation levels and practices ✓ Provide no executive perquisites ✓ Annual say-on-pay vote | X Provide automatic, annual increases in executive salaries X Maintain uncapped executive incentive plans X Award single-trigger cash severance in connection with a change in control X Re-price stock options without the prior approval of our stockholders X Permit hedging or pledging of equity X Enter into supplemental executive retirement plans X Provide excise tax gross-ups on termination-related payments |
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant Since 2018, the Compensation Committee has engaged WTW as its independent compensation consultant. WTW is engaged by and reports directly to the Compensation Committee. The Compensation Committee has the sole authority to approve the scope and terms of the engagement of WTW and to terminate such engagement. In 2023, WTW assisted the Compensation Committee with the development of competitive market data, compensation program design and related assessments of the Company’s executive and director compensation levels, evaluation of short-term and long-term incentive compensation strategy, and compilation and review of total compensation data for the Company’s NEOs and provided ongoing evaluation of the compensation program. The Compensation Committee has reviewed the independence of WTW in light of SEC rules regarding compensation consultants and has concluded that WTW is independent and its work for the Compensation Committee does not raise any conflict of interest.
Role of Market Data and the Peer Group
Role of Market Data and the Peer Group In order to gauge the competitiveness of our compensation program and to provide our NEOs with fair and market-competitive compensation, the Compensation Committee reviewed compensation practices and pay opportunities from general industry survey data as well as from a selection of publicly traded peer companies, as provided by WTW. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant labor markets, and we design our compensation practices with this goal in mind. Specifically, in 2023, WTW analyzed information regarding the pay practices of a compensation peer group (as described below) to assist the Compensation Committee in determining pay for our CEO and CFO. WTW also advised the Company with respect to the letter agreement with Mr. Scheirman pertaining to retention compensation adjustments. In addition, the Company analyzed the pay practices of similarly sized general industry companies identified by WTW to assist the Compensation Committee in determining pay for our other executive officers. The compensation data resulting from this analysis was considered by the Compensation Committee in making 2024 executive compensation decisions including the executive leadership transition in early 2024. The Compensation Committee reviewed and modified our compensation peer group in 2023. WTW made recommendations to update the peer group based on changes in Revenue and EBITDA as well as identifying public companies operating in a similar industry. As a result, 10 companies were removed from and 13 companies were added to the peer group. The compensation peer group is comprised of companies that meet at least one of the following criteria:
Role of Market Data and the Peer Group
| ● | Similar in size and complexity to CPI (primarily based on revenue and EBITDA); |
Role of Market Data and the Peer Group
| ● | In a similar or related technology-oriented industry; or |
Role of Market Data and the Peer Group
| ● | In competition with CPI for executive talent. |
Role of Market Data and the Peer Group
The following peer group was used for 2023 compensation benchmarking purposes:
Role of Market Data and the Peer Group
| Executive Compensation Peer Group | | | | Axcelis Technologies, Inc | EVERTEC, Inc. | Qualys, Inc. | | Badger Meter, Inc. | FormFactor, Inc. | Repay Holdings Corporation | | CompoSecure, Inc. | International Money Express, Inc. | Veeco Instruments, Inc. | | CTS Corporation | MeridianLink, Inc. | Verra Mobility Corporation | | Ennis, Inc. | Mirion Technologies, Inc. | Vishay Precision Group, Inc. |
Short-Term Incentives
Short-Term Incentives The Company believes that establishing cash incentive opportunities is an important factor in both attracting and retaining qualified and highly skilled executives and in motivating our executives to achieve the Company’s near-term financial objectives. To achieve these objectives, the Company maintains a quarterly short-term incentive plan with an annual component, or the “STIP.” The quarterly design of the STIP is intended to reward the achievement of critical quarterly financial performance objectives and the annual component is tied to annual financial performance objectives. As such, payments may vary quarter to quarter. To determine payouts under the STIP, the Company measures performance for each metric on both a quarterly and an annual basis. Each quarterly payment is “capped” at 125% of target, amounts that exceed the quarterly cap are subject to a year-end “true-up,” and each quarterly award is eligible for a “catch-up” payment for cumulative performance to-date. This design was implemented to further enhance the motivational effect of the STIP and provide a continual incentive to improve performance throughout the year. Under the 2023 STIP, executives were eligible to earn quarterly cash bonuses based on the achievement of the following metrics:
Short-Term Incentives
| | Description | | Metrics | 70% based on achievement of Adjusted EBITDA (1) 30% based on achievement of Net Sales (2) | | Corporate Executive Measurement | 100% based on Company-wide achievement |
Short-Term Incentives
| (1) “Adjusted EBITDA” is a financial measure that is not calculated according to GAAP. For purposes of the STIP, we define Adjusted EBITDA as EBITDA (which represents earnings before interest, taxes, depreciation and amortization, all on a continuing operations basis) adjusted for (i) stock compensation expense, (ii) foreign currency changes, (iii) impairments, (iv) restructuring charges, (v) severance and other charges, (vi) loss on debt extinguishment, (vii) amounts related to a sales tax contingency liability, and (viii) other items that are unusual in nature, infrequently occurring or not considered part of core operations. |
Short-Term Incentives
| (2) The term Net Sales, as defined in the STIP, is consistent with “Total Net Sales,” as included in the Company’s consolidated financial statements, for all references contained herein. |
Short-Term Incentives
Our STIP Net Sales and Adjusted EBITDA goals are defined on a quarterly basis for purposes of calculating the quarterly STIP payments. The quarterly goals align to the Company’s annual operating plan and reflect the planned seasonality of our business and operations. Achievement of performance goals is calculated on the basis of straight-line interpolation between the threshold, target and maximum bonus opportunities for each applicable metric underlying the performance goal. Quarterly and annual payouts under the STIP can range from 0% to 200%, based on Company performance; however, any payment made under the STIP with respect to each quarter is capped at 125% of the quarterly target incentive, with amounts in excess of the cap, up to 200%, payable with the annual payout. The targeted cumulative Adjusted EBITDA metric also serves as a trigger as CPI must achieve the overall Adjusted EBITDA threshold performance in order for any year-end STIP payments to fund. The Compensation Committee kept Messrs. Scheirman’s and Dubin’s 2023 STIP targets flat as compared to their respective 2022 STIP targets. Mr. Lowe’s 2023 STIP target increased 12.0% over 2022, which reflected an adjustment based on his increasing responsibilities for revenue in connection with his 2022 promotion. For the 2023 performance year, our NEOs were eligible to receive the following target bonus opportunities under the 2023 STIP:
Short-Term Incentives
| Executive | Target Annual STIP Payment Opportunity | | Scott Scheirman | $1,379,800 | | Lane Dubin | $408,000 | | John Lowe | $400,000 |
Short-Term Incentives
Actual 2023 Payouts Based on Company performance in 2023, our 2023 STIP paid out at 49.4% of target under the plan overall, primarily due to outsized performance in the first quarter of 2023. Therefore, Messrs. Scheirman, Dubin and Lowe received 2023 STIP payments of $682,173, $201,715, and $197,760, respectively.
Long-Term Incentives
Long-Term Incentives Together with STIP awards, the long-term incentive equity awards are designed to balance the achievement of critical near-term performance objectives with long-term strategic goals and the retention of our high performing executive team. We believe such awards also allow us to continue to recruit top-level talent and align compensation with stockholder value, all of which incentivize our executive team to continue improving our business. Generally, long-term incentive equity awards granted by the Company are subject to various conditions, including the executive’s continued service to the Company, time-based vesting conditions, and acceleration of vesting in the event of the executive’s death, termination due to disability, retirement or in connection with a change in control of the Company. Throughout 2023, the Compensation Committee granted equity awards under the Omnibus Incentive Plan comprised of RSUs and Options to select employees of the Company, including the NEOs, on a quarterly basis with such grants scheduled to coincide with and occur in the month of the Company’s quarterly earnings release. In addition, a special equity award was approved to retain and incentivize executive officers and certain key employees, excluding the Chief Executive Officer. As described above, Mr. Scheirman received an additional grant on June 9, 2023 to induce him to remain employed with the Company to support an orderly transition of duties, which was made in the form of RSUs and Options. This award was granted in the form of RSUs and made in three separate tranches on June 9, 2023, August 31, 2023, and November 30, 2023. The following table sets forth the details of the RSUs and Options granted to our NEOs in 2023:
Long-Term Incentives
| | | | | | Option Grant | | | | | # RSUs | RSU Grant Date | # Options | Date Stock | Aggregate | | | Grant Date | Granted | Fair Value | Granted | Price | Value | | Scott Scheirman | 3/31/2023(1) | 3,829 | $172,343 | 5,519 | $45.01 | $324,250 | | Scott Scheirman | 5/31/2023(1) | 7,506 | 199,735 | 4,667 | 26.61 | 275,993 | | Scott Scheirman | 6/9/2023(1) | 31,633 | 728,508 | 27,502 | 23.03 | 1,004,353 | | Scott Scheirman | 8/31/2023(1) | 36,778 | 760,201 | 30,585 | 20.67 | 1,036,078 | | Scott Scheirman | 11/30/2023(1) | 52,538 | 934,651 | 35,833 | 17.79 | 1,210,565 | | Lane Dubin | 3/31/2023(1) | 889 | $40,014 | 427 | $45.01 | $51,767 | | Lane Dubin | 5/31/2023(1) | 1,162 | 30,921 | 723 | 26.61 | 42,735 | | Lane Dubin | 6/9/2023(2) | 7,225 | 166,392 | — | — | 166,392 | | Lane Dubin | 8/31/2023(1) | 1,575 | 32,555 | 922 | 20.67 | 44,366 | | Lane Dubin | 8/31/2023(2) | 8,400 | 173,628 | — | — | 173,628 | | Lane Dubin | 11/30/2023(1) | 2,249 | 40,010 | 1,073 | 17.79 | 51,813 | | Lane Dubin | 11/30/2023(2) | 11,999 | 213,462 | — | — | 213,462 | | John Lowe | 3/31/2023(1) | 1,257 | $56,578 | 603 | $45.01 | $73,175 | | John Lowe | 5/31/2023(1) | 1,642 | 43,694 | 1,021 | 26.61 | 60,377 | | John Lowe | 6/9/2023(2) | 10,206 | 235,044 | — | — | 235,044 | | John Lowe | 8/31/2023(1) | 2,225 | 45,991 | 1,302 | 20.67 | 62,669 | | John Lowe | 8/31/2023(2) | 11,866 | 245,270 | — | — | 245,270 | | John Lowe | 11/30/2023(1) | 3,178 | 56,537 | 1,516 | 17.79 | 73,213 | | John Lowe | 11/30/2023(2) | 16,952 | 301,576 | — | — | 301,576 |
Long-Term Incentives
| (1) The RSUs and Options vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date, or otherwise as provided by the NEO’s employment agreement. The RSUs and Options are both stock-settled awards. |
Long-Term Incentives
| (2) The RSUs vest 33.4% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date and 33.3% on the third anniversary of the grant date, subject to the NEO’s continued employment through the applicable vesting date. The RSUs are stock-settled awards. |
Termination or Change in Control
Termination or Change in Control Pursuant to their respective employment or post-termination arrangements, each of our NEOs may be entitled to certain payments and benefits in certain termination situations or upon a change in control. We believe that our severance arrangements would help facilitate an orderly transition in the event of changes in management. For further discussion of severance payments and benefits, see “Employment and Post-Termination Arrangements.”
2023 Summary Compensation Table
2023 Summary Compensation Table The 2023 Summary Compensation Table discloses the compensation information for fiscal year 2023 and, to the extent required by applicable SEC disclosure rules, fiscal year 2022, for the principal executive officer and our two other most highly compensated executive officers who were serving as executive officers at the end of the last completed fiscal year.
2023 Summary Compensation Table
| | | | | | | | Nonqualified | | | | | | | | | | Non-Equity | Deferred | | | | | | | | | | Incentive Plan | Compensation | All Other | | | Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards (2) | Compensation (3) | Earnings | Compensation (4) | Total | | Scott Scheirman, President, Chief Executive Officer and Director (5) | 2023 | $695,157 | $— | $3,370,000 | $1,312,037 | $682,173 | $— | $13,200 | $6,072,567 | | | 2022 | $659,634 | $— | $— | $— | $2,759,600 | $— | $12,200 | $3,431,434 | | Lane Dubin, EVP and Chief Development and Digital Officer | 2023 | $605,000 | $— | $696,982 | $47,181 | $201,715 | $— | $13,200 | $1,564,078 | | | 2022 | $500,486 | $— | $— | $— | $815,360 | $— | $12,200 | $1,328,046 | | John Lowe, EVP, End-to-End Payment Solutions | 2023 | $500,000 | $— | $984,689 | $66,635 | $197,760 | $— | $13,200 | $1,762,284 | | | 2022 | $420,000 | $— | $— | $— | $714,000 | $— | $12,200 | $1,146,200 |
2023 Summary Compensation Table
| (1) The amounts reported in this column represent the grant date fair value of the RSU awards as calculated in accordance with FASB Topic 718, valued based on the closing stock price on the date of grant. |
2023 Summary Compensation Table
| (2) The amounts reported in this column represent the grant date fair value of Option awards, calculated in accordance with FASB Topic 718. See Note 16 of the Company’s audited consolidated financial statements included in our Form 10-K for the fiscal year ended December 31, 2023 for a discussion of the relevant assumptions used in calculating these amounts. |
2023 Summary Compensation Table
| (3) Represents performance-based bonuses earned under the Company’s STIP for the applicable year. Please see the section entitled “Elements of the 2023 Executive Compensation Program — Short-Term Incentives” above for further information regarding the 2023 STIP. |
2023 Summary Compensation Table
| (4) Represents matching contributions under the Company’s 401(k) plan. |
2023 Summary Compensation Table
| (5) In connection with the leadership transition and as part of the CEO’s retention arrangement, the requisite service and exercise periods for 2023 LTIP awards granted prior to June 2023 were modified. The incremental fair value associated with the modification of his 2023 LTIP awards was $830,810 and which is reflected in the stock awards and option awards columns. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | | Number of | Number of | | | | | | | Securities | Securities | | | Number of | Value of | | | Underlying | Underlying | | | Shares of | Shares of | | | Unexercised | Unexercised | Option | | Stock that | Stock that | | | Options | Options | Exercise | Option | Have Not | Have Not | | | (Exercisable) | (Unexercisable) | Price | Expiration | Vested | Vested (3) | | Name | (#) | (#) | ($) | Date | (#) | ($) | | Scott Scheirman | 280,000(1) | — | $5.25 | 2/28/2027 | — | — | | | 32,893(1) | — | $29.62 | 2/28/2027 | — | — | | | — | 2,760(2) | $45.01 | 3/31/2027 | 3,829 | $73,479 | | | | 2,759(2) | $45.01 | 3/31/2028 | — | — | | | — | 2,334(2) | $26.61 | 5/31/2027 | 7,506 | $144,040 | | | | 2,333(2) | $26.61 | 5/31/2028 | — | — | | | — | 13,751(2) | $23.03 | 6/9/2027 | 31,633 | $607,037 | | | — | 13,751(2) | $23.03 | 6/9/2028 | — | — | | | — | 15,293(2) | $20.67 | 8/31/2027 | 36,778 | $705,770 | | | — | 15,292(2) | $20.67 | 8/31/2028 | — | — | | | — | 17,917(2) | $17.79 | 11/30/2027 | 52,538 | $1,008,204 | | | — | 17,916(2) | $17.79 | 11/30/2028 | — | — | | Lane Dubin | 22,500 | — | $27.60 | 9/1/2026 | — | — | | | 11,885 | — | $21.75 | 3/22/2027 | — | — | | | 25,000 | — | $5.25 | 9/25/2027 | — | — | | | 8,932 | — | $29.62 | 9/21/2028 | — | $— | | | — | 427 | $45.01 | 3/31/2030 | 889 | $17,060 | | | — | 723 | $26.61 | 5/31/2030 | 1,162 | $22,299 | | | — | — | — | — | 7,225 | $138,648 | | | — | 922 | $20.67 | 8/31/2030 | 1,575 | $30,224 | | | — | — | — | — | 8,400 | $161,196 | | | — | 1,073 | $17.79 | 11/30/2030 | 2,249 | $43,158 | | | — | — | — | — | 11,999 | $230,261 | | John Lowe | 75,000 | — | $1.98 | 7/2/2028 | — | — | | | 7,885 | — | $29.62 | 9/21/2028 | — | — | | | 253 | — | $30.53 | 10/5/2028 | — | — | | | — | 603 | $45.01 | 3/31/2030 | 1,257 | $24,122 | | | — | 1,021 | $26.61 | 5/31/2030 | 1,642 | $31,510 | | | — | — | — | — | 10,206 | $195,853 | | | — | 1,302 | $20.67 | 8/31/2030 | 2,225 | $42,698 | | | — | — | — | — | 11,866 | $227,709 | | | — | 1,516 | $17.79 | 11/30/2030 | 3,178 | $60,986 | | | — | — | — | — | 16,952 | $325,309 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Pursuant to the terms of the Letter Agreement with Mr. Scheirman (as defined below), the Option expiration date was modified to February 28, 2027. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) Pursuant to the terms of the Letter Agreement with Mr. Scheirman (as defined below) the Options granted on each of March 31, 2023, May 31, 2023, June 9, 2023, August 31, 2023, and November 30, 2023 vest and become exercisable ratably over a two-year period from the grant date and expire on the third anniversary of the date of vesting. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) Represents RSUs, the market value of which is based on the $19.19 closing price of a share of our Common Stock on December 29, 2023 (the last trading day of 2023). |
Pay vs. Performance
Pay vs. Performance
Pay vs. Performance
| | | | | | Value of Initial Fixed $100 | | | | Summary | Compensation | Average Summary | Average Compensation | Investment Based On: | | | | Compensation Table | Actually Paid | Compensation Table Total | Actually Paid | Total | Net Income | | Year (1) | Total for PEO ($) (2) | to PEO ($) (3) | for Non-PEO NEOs ($) (2) | for Non-PEO NEOs ($) (3) | Shareholder Return ($) (4) | (in thousands) ($) | | 2023 | 6,072,567 | 5,292,252 | 1,663,181 | 1,489,262 | 437.13 | 23,985 | | 2022 | 3,431,434 | 3,621,040 | 1,237,123 | 1,286,687 | 821.87 | 36,540 | | 2021 | 4,288,431 | 4,565,532 | 1,423,053 | 1,672,791 | 422.55 | 15,941 |
Pay vs. Performance
| (1) Scott Scheirman served as the Company’s PEO and Lane Dubin and John Lowe served as the other NEOs for the entirety of 2023, 2022 and 2021. |
Pay vs. Performance
| (2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Mr. Scheirman and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year in the case of the other NEOs. |
Pay vs. Performance
| (3) To calculate “Compensation Actually Paid” (“CAP”), adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Mr. Scheirman and for the average of the other NEOs is set forth following the footnotes to this table.* |
Pay vs. Performance
| (4) Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2020 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. |
*Compensation Actually Paid Adjustments (see FN 3 above)
*Compensation Actually Paid Adjustments (see FN 3 above)
*Compensation Actually Paid Adjustments (see FN 3 above)
| | | Minus | Plus | Plus (Minus) | Plus | Plus (Minus) | Minus | Plus | Equals | | | | | | | | Change in Fair | | | | | | | | | | | Value as of | Fair Value as | | | | | | | | | | Vesting Date of | of Prior Fiscal | | | | | | | Fair Value at | | | Stock Option and | Year-End of | | | | | | | Fiscal Year-End | Change in Fair | Fair Value at | Stock Awards | Stock Option and | Changes in | | | | | Grant Date | of Outstanding | Value of | Vesting of Stock | Granted in | Stock Awards | Fair Value to | | | | | Fair Value of | and Unvested | Outstanding and | Option and Stock | Prior Fiscal Years | Granted in Prior | Reflect Excess | | | | | Stock Option | Stock Option | Unvested Stock | Awards Granted | for which Applicable | Fiscal Years that | Fair Value | | | | | and Stock | and Stock | Option and Stock | in Fiscal Year | Vesting Conditions | Failed to Meet | Resulting from | | | | Summary | Awards Granted | Awards Granted | Awards Granted | that Vested | Were Satisfied | Applicable Vesting | Modifications to | | | | Compensation Table | in Fiscal | in Fiscal | in Prior Fiscal | During Fiscal | During Fiscal | Conditions During | Stock Option and | Compensation | | Year | Total ($) (a) | Year ($) (b) | Year ($) (c) | Years ($) (d) | Year ($) (e) | Year ($) (f) | Fiscal Year ($) (g) | Stock Awards($) (h) | Actually Paid ($) | | Scott Scheirman | | | | | | | | | | | 2023 | 6,072,567 | (4,682,037) | 3,421,712 | - | - | (350,800) | - | 830,810 | 5,292,252 | | 2022 | 3,431,434 | - | - | 321,862 | - | (132,256) | - | - | 3,621,040 | | 2021 | 4,288,431 | (1,148,010) | 649,752 | 775,359 | - | - | - | - | 4,565,532 | | Average Other NEOs(i) | | | | | | | | | | | 2023 | 1,663,181 | (897,743) | 814,865 | - | - | (91,041) | - | - | 1,489,262 | | 2022 | 1,237,123 | - | - | 83,413 | - | (33,849) | - | - | 1,286,687 | | 2021 | 1,423,053 | (298,022) | 168,734 | 198,212 | - | 180,814 | - | - | 1,672,791 |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other NEOs, amounts shown represent averages. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (b) Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (c) Represents the fair value at fiscal year-end of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (d) Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (e) Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (f) Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (g) Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (h) Represents the incremental fair value associated with the modification of Mr. Scheirman’s 2023 LTIP awards. |
*Compensation Actually Paid Adjustments (see FN 3 above)
| (i) See footnote 1 above for the NEOs included in the average for each year. |
*Compensation Actually Paid Adjustments (see FN 3 above)
Relationship Between Pay and Performance We believe the CAP in each of the years reported above and over the three-year cumulative period are generally reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the CAP amount captures the amounts awarded under the STIP that related to the Company’s financial performance in each year as demonstrated in the chart below. The total CAP amounts for each of the PEO and NEOs fluctuated year-over-year, primarily due to fluctuations in equity award grant timing and amounts. No equity awards were granted in 2022 as the equity awards granted in 2021 were designed to compensate for an 18-month period; however, maximum amounts under the STIP were awarded in 2022 and 2021 as a result of the Company’s outstanding financial performance during those years. In 2023, amounts awarded under the STIP were below target consistent with the decline in Company performance and equity awards resumed as a component of the NEO’s annual compensation package. The additional equity-based retention awards granted in 2023 in connection with the leadership transition are not expected to be a recurring item for compensation purposes.