DEF 14A of AI Financial Corp
Filed Nov 5, 2024 · FY20230001628280-24-045294
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our property, affairs, and business are managed under the direction of our Board. A board of six directors is to be elected at the Annual Meeting. Unless otherwise instructed, the proxy holders will vote the proxies received by them for our Board’s six nominees. The term of office for each person elected as a director will continue until the next Annual Meeting of Stockholders and until a successor has been elected and qualified, or until such director is removed or resigns. All of the nominees named below are presently our directors, who have served continuously since the year indicated. All nominees have indicated a willingness to serve if elected. We know of no arrangements or understandings between a nominee and any other person pursuant to which the nominee has been selected as a director. All shares represented by proxies that have been properly executed and returned or properly voted will be voted for the election of all of the nominees named below, unless other instructions are indicated thereon. In the event any one or more of such nominees should for any reason not be able to serve as a director, the proxies will be voted for such other person or persons as may be designated by our Board.
Required Vote
Required Vote Assuming that a quorum is present, the affirmative vote of the holders of a plurality of the votes cast at the Annual Meeting is required for the election of the director nominees, i.e., the six director nominees who receive the most votes will be elected. The Board recommends voting “FOR” the election of each of the Director nominees as directors, each of whom shall hold office for a term of one year, expiring at the Annual Meeting in 2024, and until his successor is elected and qualified, or until his earlier death, resignation, or removal.
Nominees for Election to our Board
Nominees for Election to our Board The names of the nominees are set forth in the table below. Following the table is certain information for at least the last five years regarding each nominee.
Nominees for Election to our Board
| Name | Position with Company | Director Since | Age as of October 21, 2024 | | Peter Tassiopoulos | Director (Nominee) and Chief Executive Officer | 2024 | 55 | | Tony Isaac | Director and President | 2015 | 70 | | Richard D. Butler, Jr. | Director | 2015 | 73 | | Ron Pitters | Director | 2024 | 57 | | Nael Hajjar | Director | 2018 | 39 | | John Bitar | Director | 2020 | 61 |
Nominees for Election to our Board
Peter Tassiopoulos has been our Chief Executive Officer since August 2024. Mr. Tassiopoulos has over 30 years of leadership experience across healthcare, finance, and technology sectors. From April 4, 2022, until his appointment as our Chief Executive Officer, Mr. Tassiopoulos had served as an independent mergers and acquisitions (M&A) consultant, consulting for various companies. During that time, he restructured in excess of $150 million in debt and facilitated a $35 million asset purchase for a Canadian public company. Prior to that, from March 2013 through December 1, 1014, Peter served as the Chief Executive Officer of Sphere 3D Corp. (Nasdaq: ANY), and then, from December 1, 2014 until November 14, 2018, as its President, and, from November 14, 2018 to April 2022, as its Chief Executive Officer again. He also served as a director from March 2014 through April 4, 2022. Mr. Tassiopoulos has successfully completed over $1 billion in M&A, divestitures, and financing transactions throughout his career. He has led teams in executing complex transactions with a focus on mergers and acquisitions, capital market strategies, and strategic relationships. His industry experience spans cryptocurrency, technology, IT, healthcare, and gaming. We believe that Mr. Tassiopoulos brings a wealth of experience in finance, mergers and acquisitions and strategic planning to our Board. Tony Isaac has been one of our directors since May 2015, served as our President since May 2015, and served as our Chief Executive Officer from May 2016 until August 2024; he also became our Corporate Secretary in 2021. He served as our Interim Chief Executive Officer from February 2016 until May 2016. Mr. Isaac has served as Financial Planning and Strategist/Economist of Live Ventures Incorporated (“Live Ventures”) (Nasdaq: LIVE), a holding company for diversified businesses, since July 2012. He is the Chairman and Co-Founder of Isaac Organization, a privately held investment company. Mr. Isaac has invested in various companies, both private and public from 1980 to present. Mr. Isaac’s specialty is negotiation and problem-solving of complex real estate and business transactions. Mr. Isaac has served as a director of Live Ventures since December 2011. Mr. Isaac graduated from Ottawa University in 1981, where he majored in Commerce and Business Administration and Economics. We believe that Mr. Isaac brings to our Board significant investment and financial expertise and public board experience. Richard D. Butler, Jr. has been one of our directors since May 2015. Mr. Butler is the owner of an advisory firm that provides real estate, corporate, and financial advisory services since 1999, and is the co-Founder, Managing Director, and, since 2005, a major stockholder of Ref-Razzer Company, a whistle manufacturing and vending company. Prior to this, Mr. Butler was the Co-Founder and Executive Vice President of Aspen Healthcare, Inc. from 1996 to 1999. From 1993 to 1996, Mr. Butler was a Managing Director at Landmark Financial and from 1989 to 1993 he was a Partner at Cal Ventures Real Estate Investment Group. Prior to this, Mr. Butler also served as the President and Chief Executive Officer of Mt. Whitney Savings Bank, Chief Executive Officer of First Federal Mortgage Bank, Chief Executive Officer of Trafalgar Mortgage, and Executive Officer and Member of the President’s Advisory Committee at State Savings & Loan Association (peak assets $14 billion) and American Savings & Loan Association (NYSE: FCA; peak assets $34 billion). Mr. Butler has served on the Board of Directors of Live Ventures (Nasdaq: LIVE) since August 2006. Mr. Butler attended Bowling Green University in Ohio, San Joaquin Delta College in California, and Southern Oregon State College. We believe that Mr. Butler brings to our Board extensive experience in financial management and executive roles, which enable him to provide important expertise in financial, operating, and strategic matters that impact our Company. John Bitar has been one of our directors since January 2020. Since 2012, Mr. Bitar has been providing consulting services to companies and clients on business and legal strategies, management, operations, and cost controls. From 2007 to 2012, Mr. Bitar co-founded and was Managing Partner of a worker’s compensation law firm. Mr. Bitar has been an attorney admitted to the California State Bar since 1999. Mr. Bitar graduated from the University of Southern California in 1996 and earned his Juris Doctorate Degree in 1999 from University of the Pacific, McGeorge School of Law. We believe that Mr. Bitar brings to our Board significant business experience and brings operational expertise. Ron Pitters has been one of our directors since November 2024. For more than the past five years, Ron has held executive positions with Axos Financial, Inc., and various of its operating units. He currently serves as Axos Bank’s Chief Information Officer, having previously served as President and Chief Operating Officer of Axos Digital Assets, LLC, Business Unit Leader and Chief Operating Officer of Axos Securities, LLC, and President and Chief Operating Officer of Axos Business Center, Inc. (Philippines). Prior to his service with Axos Bank, Mr. Pitters founded and was managing director of MindAlign, LLC. He also has served as the Head of Technology & Transformation (Global Markets & Risk) for OCBC Singapore; Group CIO at the Commercial Bank of Qatar; Business Unit CIO for ABN AMRO Global Markets in Chicago, London, Amsterdam; and Head of Trading (FX/Futures Arbitrage) for ABN AMRO Global Markets. He also currently is an independent director of Cozera, Inc. Ron is an accomplished C-level executive, with over 20 years of experience generating and delivering revenue opportunities, and working in business and corporate development, regulatory compliance, credit and risk management, strategy and architecture and delivery management and has held varying leadership roles, including technology, management consulting, business turnarounds, corporate transformations, and start-ups. His most recent accomplishments include successful start-ups in the captive offshore space, self-direct trading, and digital assets business. Mr. Pitters has completed business turnarounds of a securities clearing firm and a digital robo-advisory business. We believe that Mr. Pitters brings to our Board a broad range of experience that will prove invaluable as we continue to expand our fintech operations. Nael Hajjar has been one of our directors since August 2018. Mr. Hajjar is currently the Unit Head for the Annual Wholesale Trade Survey in Statistics Canada’s Manufacturing and Wholesale Trade Division. From March 2011 through May 2016, Mr. Hajjar was a Senior Analyst — Economist of Statistics Canada’s Producer Prices Division, where he developed Canada’s first ever Investment Banking Services Price Index while leading the development of a variety of Financial Services Price Index development projects. We believe that Mr. Hajjar brings to our Board extensive experience in research and analysis of financial statistics, economics, and business practices in a variety of industries, including manufacturing, logging, Wholesale Trade, and financial services. We believe that Mr. Hajjar also has extensive experience in project management, and he holds a Bachelor of Social Science, Honors in Economics (which he earned in 2006), and Bachelor of Commerce, Option in Finance (which he earned in 2008), both from the University of Ottawa.
Director Independence
Director Independence There are no family relationships among any of the directors or executive officers of the Company. Of the current directors, each of Messrs. Butler, Bitar, Hajjar, and Pitters is an “independent” director, as defined under the rules of The Nasdaq Stock Market (“Nasdaq”) and each has been an independent director since each joined our Board.
Summary Compensation Table for Fiscal Year Ended December 30, 2023
Summary Compensation Table for Fiscal Year Ended December 30, 2023
Summary Compensation Table for Fiscal Year Ended December 30, 2023
| Name and principal Position (1) | Year | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation | Total | | Tony Isaac | 2023 | $617,709 | $— | $200,000 | $— | $— | $817,709 | | President, Chief Executive Officer, and Secretary | 2022 | $550,324 | $75,000 | $— | $— | $— | $625,324 | | Virland A. Johnson | 2023 | $224,346 | $— | $125,000 | $— | $— | $349,346 | | Chief Financial Officer | 2022 | $250,324 | $— | $— | $— | $— | $250,324 |
Summary Compensation Table for Fiscal Year Ended December 30, 2023
(1) We had two executive officers for the fiscal year ended December 30, 2023. Pay vs Performance. In August 2022, the SEC adopted amendments to its rules to require companies to disclose information reflecting the relationship between executive compensation actually paid by a company and the company’s financial performance. In accordance with the new SEC rules, the table below specifies executive compensation paid to Tony Isaac, the Company’s Principal Executive Officer (“PEO”), and the other NEOs for the Company’s two most recently completed fiscal years, and financial performance measures for the Company’s two most recently completed fiscal years. The methodology for calculating amounts presented in the columns “Compensation Actually Paid to PEO” [column (4)] and “Average Compensation Actually Paid to Non-PEO NEOs” [column (6)], including details regarding the amounts that were deducted from, and added to, the Summary Compensation Table totals to arrive at the values presented for Compensation Actually Paid, are provided in the footnotes to the table. With respect to the measures of performance, the table includes the Company’s cumulative Total Shareholder Return (TSR) and Net Income as noted in the Company’s audited financial statements. Also, below is a description of the relationship between the executive compensation actually paid and the Company’s cumulative TSR and Net Income for the periods noted in the Pay vs Performance Table below.
Summary Compensation Table for Fiscal Year Ended December 30, 2023
| Year | PEO | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEO’s | Average Compensation Actually Paid to Non-PEO NEO’s | Value of Initial $100 Investment Based on Total Stockholder Return | Net Income (in $000's) | | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | | 2023 | Tony Isaac | $817,709 | $617,709(a) | $349,346 | $224,346(b) | $40.88(c) | $(7,812) | | 2022 | Tony Isaac | $625,324 | $625,324 | $250,324 | $250,324 | $33.50(d) | $10,992 | | 2021 | Tony Isaac | $550,324 | $550,324 | $149,363 | $149,363 | $83.64(e) | $(16,887) |
Summary Compensation Table for Fiscal Year Ended December 30, 2023
(a)Actual Compensation paid to the PEO in 2023 [column (4)] is less than the Summary Compensation Table (“SCT”) Total [column (3)] resulting from a reduction of Mr. Isaac’s $200,000 in Stock Awards that were granted during fiscal 2023, but not received by Mr. Isaac until fiscal 2024. (b)For the Non-PEO NEOs, Average Compensation Actually Paid in 2023 [column (6)] is less than the Average SCT Total [column (5)] as reported for the corresponding year in the “Total” column of the SCT due to Stock Awards that were granted during fiscal 2023, but not received by Non-PEO NEOs until fiscal 2024. The Non-PEO NEO during 2023 was Virland A. Johnson. (c)Cumulative total stockholder return (TSR) for the period January 1, 2023 through December 31, 2022 was (66.5)%. An investment of $100.00 as of December 30, 2023 would resultingly have a value of $40.88 as of December 30, 2023. (d)Cumulative total stockholder return (TSR) for the period January 1, 2022 through December 31, 2022 was (66.5)%. An investment of $100.00 as of January 1, 2022 would resultingly have a value of $33.50 as of December 31, 2022.. (e)Cumulative total stockholder return (TSR) for the period January 2, 2021 through January 1, 2022 was (16,36)%. An investment of $100.00 as of January 2, 2021 would resultingly have a value of $83.64 as of January 1, 2022.
Relationship Between Compensation Actually Paid (“CAP) and Performance Measures
Relationship Between Compensation Actually Paid (“CAP) and Performance Measures The following charts show graphically the relationships over the past three years of the CAP amounts for the Company’s PEO and Other NEO’s as compared to the Company’s (i) cumulative shareholder return and (ii) net income.
Outstanding Equity Awards at December 30, 2023
Outstanding Equity Awards at December 30, 2023 The following table provides a summary of equity awards outstanding for our Named Executive Officers at December 30, 2023:
Outstanding Equity Awards at December 30, 2023
| Name | Number of Securities Underlying Unexercised Options (in shares) exercisable | Number of Securities Underlying Unexercised Options (in shares) unexercisable | Option Exercise Price ($) | Option Expiration Date | | Tony Isaac | 2,000 | — | $9.90 | 5/18/2025 | | Virland A. Johnson | — | — | $— | — |
Compensation of Non-Employee Directors
Compensation of Non-Employee Directors We use a combination of cash and share-based incentive compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that directors expend fulfilling their duties to the Company, as well as the skill level that we require of members of our Board. The table below presents cash and non-cash compensation paid to non-employee directors during the 2023 fiscal year.
Non-Management Director Compensation for Fiscal Year Ended December 30, 2023
Non-Management Director Compensation for Fiscal Year Ended December 30, 2023
Non-Management Director Compensation for Fiscal Year Ended December 30, 2023
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | John Bitar | 18,000 | — | — | 18,000 | | Richard D. Butler, Jr. | 30,000 | — | — | 30,000 | | Nael Hajjar | 14,400 | — | — | 14,400 |