DEF 14A of Inuvo, Inc.
Filed Apr 29, 2024 · FY20230001654954-24-005169
PROPOSAL 1 – ELECTION OF DIRECTORS PROPOSAL
PROPOSAL 1 – ELECTION OF DIRECTORS PROPOSAL
ELECTION OF CLASS I DIRECTORS
ELECTION OF CLASS I DIRECTORS The Board, upon recommendation by the Nominating and Corporate Governance Committee, has nominated Richard K. Howe and Gordon J. Cameron for election as Class I directors, to hold office until the 2027 annual meeting of stockholders or until their successors have been duly elected and qualified. In the event either of Messrs. Howe or Cameron is unable or unwilling to serve as a director, the individuals named as proxy on the proxy card will vote the shares that he represents for election of such other person or persons as the Board may recommend. The Board has no reason to believe that Messrs. Howe and Cameron will be unable or unwilling to serve. The following is biographical information on the current members of our Board:
Directors Standing for Election as Class I Directors
Directors Standing for Election as Class I Directors
Directors Standing for Election as Class I Directors
| Name | Age | Positions | Director Since | | Richard K. Howe | 61 | Executive Chairman of the Board and Chief Executive Officer; Class I Director | 2008 | | Gordon J. Cameron | 59 | Class I Director | 2016 |
Directors Standing for Election as Class I Directors
Richard K. Howe – Mr. Howe has been a member of our Board since November 2008 and has served as Executive Chairman of the Board since March 2012 and as our Chief Executive Officer since December 2012. Previously, he served as our President and Chief Executive Officer from November 2008 until March 2012. Prior to joining Inuvo, Mr. Howe served as Chief Marketing, Strategy and M&A Officer at the billion dollar multi-channel marketing services leader Acxiom Corporation (NasdaqGS: ACXM) where, since 2004, he led the company’s transition to online marketing services, the expansion into China and the development of the big data consulting services group. From 2001 to 2004, he served as general manager of Global Marketing Services (GMS) at Fair Isaac & Company (NYSE: FICO), a leading provider of analytics products and services where he drove the company’s online initiatives. Between 1999 and 2001, Mr. Howe started, grew and sold private Internet search innovator, ieWild. Mr. Howe has over his career led the acquisition, merger or divestiture of a dozen companies on three continents worth many hundreds of millions of dollars to shareholders. Mr. Howe earned a bachelor’s degree with distinction in engineering from Concordia University, Canada, and he earned his master’s degree in engineering from McGill University, Canada. Gordon J. Cameron – Mr. Cameron has been a member of our Board since November 2016. He is a business transformation executive with three decades of success in growing businesses while managing risk. Mr. Cameron is currently Chief Consumer Credit Risk Officer at Fifth Third Bank. Prior to Fifth Third, Mr. Cameron was EVP of consumer risk at PNC Financial Services from 2008 until 2019. He was the Chief Credit Officer, Retail and Small Business Lending, at Canadian Imperial Bank of Commerce from 2005 to 2008. Mr. Cameron was the Chief Scientist Transaction Analytics, Global Account Management Solutions at Fair Isaac Corporation FICO from 2001 to 2005. Prior to his tenure with Fair Isaac Corporation, Mr. Cameron held executive positions at IeWild Inc., HNC Software Inc., Advanta National Bank/Fleet, The Campbell Group LTD and Fidelity Bank N.A. Mr. Cameron received a MBA from Widener University School of Management and a B.S. in Finance from Pennsylvania State University. OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” ELECTION OF THE CLASS I DIRECTOR NOMINEES.
Directors Standing for Election as Class I Directors
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Directors Not Standing For Election
Directors Not Standing For Election
Directors Not Standing For Election
| Name | Age | Positions | Director Since | | Jonathon Bond | 66 | Class II Director | 2022 | | Charles D. Morgan | 81 | Lead Independent Director; Class III Director | 2009 | | Kenneth E. Lee | 53 | Class III Director | 2022 |
Class III Directors
Class III Directors
Terms Expire at the 2026 Annual Meeting
Terms Expire at the 2026 Annual Meeting Charles D. Morgan – Mr. Morgan has been a member of our Board since June 2009. Since 2008, he has been the Chief Executive Officer of First Orion Corp., a private company that developed and markets PrivacyStar, an application that helps protect the mobile phone users’ privacy. He also serves as a member and is the past Chairman of the Board of Trustees of Hendrix College. Mr. Morgan has extensive experience managing and investing in both private and public companies including Acxiom Corporation (NasdaqGS: ACXM), an information services company he helped grow from an early stage company to $1.4 billion in revenues during his tenure as Chief Executive Officer from 1975 to 2008. Mr. Morgan has served on the board and in various leadership roles with the Direct Marketing Association (DMA) throughout his career, serving in 2001 as chairman of the DMA board. Mr. Morgan was employed by IBM as a systems engineer for six years prior to joining Acxiom, and he holds a mechanical engineering degree from the University of Arkansas. Kenneth E. Lee – Mr. Lee has been a member of our Board since March 2022. Mr. Lee is a Senior Vice President at Ingalls & Snyder in New York, where he manages and co-manages customized portfolios for private clients, investment partnerships and institutions. Mr. Lee came to Ingalls in 2018 with a group of clients that trace back to Bridgehampton Capital Management LLC, which Mr. Lee founded in 2006, and merged into Tocqueville Asset Management in 2014. Prior to starting his own firm, Mr. Lee joined Salomon Brothers Asset Management (SBAM) in 1998 where he managed over $1 billion in convertible and corporate bonds in a multi-strategy hedge fund setting within SBAM. Prior to SBAM, Mr. Lee worked for Brown Brothers Harriman in sell-side equity research focusing on technology and financial services firms. In addition, he has had multiple leadership roles on non-profit boards and is a member of the board of directors of CCX Network, Inc., a private telecommunications identity startup. Mr. Lee has a B.A. in History from Wesleyan University and an M.B.A. in Finance and Management from the Stern School of Business, New York University.
Board of Directors
Board of Directors The Board oversees our business affairs and monitors the performance of management. In accordance with our corporate governance principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Executive Chairman and Chief Executive Officer and our Chief Financial Officer and by reading the reports and other materials that we send them and by participating in Board and committee meetings. Commencing with our 2008 annual meeting, our directors were divided into three classes and designated Class I, Class II and Class III. Directors may be assigned to each class in accordance with a resolution or resolutions adopted by the Board. Directors are elected for a full term of three years. Our directors hold office until their successors have been elected and duly qualified unless the director resigns or by reason of death or other cause is unable to serve in the capacity of director. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the Board increases the number of directors, the Board may fill any vacancy by a vote of a majority of the directors then in office, although less than a quorum exists. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the removal of directors without cause may only be filled by vote of the stockholders. A total of five formal meetings of the Board were held during 2023 and the Board took action by unanimous written consent four times. No director attended less than 75% of the aggregate of (i) the total number of meetings of the Board held during the time in which such director was a member of the Board and (ii) the total number of meetings held by all committees of the Board on which such director served during the period such director served as a member of such committee. There are no family relationships between any of the directors and executive officers.
Board of Directors
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Board of Directors
We do not have a formal policy regarding director attendance at annual meetings of stockholders. All of our directors are stockholders and are invited to attend our stockholder meetings. Last year, one of our directors attended the 2023 annual meeting of stockholders.
Class I Directors
Class I Directors Richard K. Howe - Mr. Howe’s track record as a successful high-technology operating and marketing executive in data, analytics and marketing services as a result of building and/or running over a dozen businesses in five countries were factors considered by the Nominating, Corporate Governance and Compensation Committee and the Board. Specifically, the Nominating, Corporate Governance and Compensation Committee and the Board viewed favorably his position at companies that include Inuvo, Acxiom Corporation, where he served as chief marketing, business strategy and M&A officer, Fair Isaac & Company, where he served as general manager, and ieWild, Inc., where he was co-founder and chairman and CEO, together with his service as a board member for the non-profit organization Business for Diplomatic Action and his academic achievements at Concordia University and McGill University in making their recommendation. Gordon J. Cameron - Mr. Cameron’s track record as a senior executive in a variety of business segments and his in excess of three decades of experience in building successful businesses were factors considered by the Nominating, Corporate Governance and Compensation Committee and the Board. Specifically, the Nominating, Corporate Governance and Compensation Committee and the Board viewed favorably his position as Executive Vice President in Retail Lending at PNC Financial Services, one of the largest diversified financial services institutions in the United States, as well as his positions with companies such as Canadian Imperial Bank of Commerce, Fair Isaac Corporation FICO, IeWild Inc., HNC Software Inc., Advanta National Bank/Fleet, The Campbell Group LTD and Fidelity Bank N.A. together with and his academic achievements at Widener University School of Management and Pennsylvania State University in making their recommendation.
Class II Director
Class II Director Jonathan Bond - Mr. Bond’s successful track record as an executive in the marketing services industry and his deep industry experience were factors considered by the Nominating, Corporate Governance and Compensation Committee and the Board. Specifically, the Nominating, Corporate Governance and Compensation Committee and the Board viewed favorably his position at companies such as Kirshenbaum Bond Senecal & Partners LLC (“KBP”), Big Fuel (now part of Publicis), iballs, Media Kitchen and Varick under the KBP umbrella, Tomorro LLC, SITO Mobile, Ltd, Blue Bear Protection, Lacure and Halo Collar, where he was either a founder or high-level executive at each, his service on the board of directors of Sonobi, Inc. and Kubient, his investment background, and his academic achievement at Washington University (St. Louis) in making their recommendation.
Class III Directors
Class III Directors Charles D. Morgan - Mr. Morgan’s successful track record as a high-technology executive in data, analytics, outsourcing and marketing services with a network of relationships worldwide as a result of building a billion dollar annual revenue enterprise as chairman and chief executive officer were factors considered by the Nominating, Corporate Governance and Compensation Committee and the Board. Specifically, the Nominating, Corporate Governance and Compensation Committee and the Board viewed favorably his experience at companies such as Acxiom Corporation as Chairman and CEO and IBM as a systems engineer; his role as an equity owner of Bridgehampton Capital Management LLC and a significant investor in its funds; his service as Chairman of the Advisory Board and co-manager of investments for Bridgehampton Capital Management LLC; his leadership on the Board and in various leadership roles with the Direct Marketing Association (DMA) including his service as chairman of the DMA in 2001; his service as a member and past chairman of the board of trustees of Hendrix College; and his academic achievements at the University of Arkansas in making their recommendation.
Class III Directors
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Class III Directors
Kenneth E. Lee - Mr. Lee’s successful track record in the financial advisory industry was a factor considered by the Nominating, Corporate Governance and Compensation Committee and the Board. Specifically, the Nominating, Corporate Governance and Compensation Committee and the Board viewed favorably his financial experience and sophistication achieved at Ingalls & Snyder in New York, Bridgehampton Capital Management LLC, Tocqueville Asset Management, Salomon Brothers Asset Management (SBAM), and Brown Brothers Harriman, where he served in leadership roles and was entrusted with management over large amounts of funds, his multiple leadership roles on non-profit boards, and his academic achievements at Wesleyan University and the Stern School of Business, New York University in making their recommendation. In addition to the each of the individual skills and background described above, the Nominating and Corporate Governance Committee and Board also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and on the development and execution of our strategy.
Compensation of Directors
Compensation of Directors During 2023, at the recommendation of our Nominating and Corporate Governance Committee, each independent member of our Board received a combination of a cash retainer and restricted stock units.
Compensation of Directors
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Compensation of Directors
The following table provides information concerning the compensation paid to our independent directors for their services as members of our Board for 2023. The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid.
Compensation of Directors
| | Director Compensation | | | | | | | | Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | | Charles D. Morgan | 30,000 | 8,100 | — | — | — | — | 38,100 | | Gordon J. Cameron | 30,000 | 8,100 | — | — | — | — | 38,100 | | Jonathan Bond | 30,000 | 8,100 | — | — | — | | 38,100 | | Kenneth E. Lee | 30,000 | 8,100 | — | — | — | — | 38,100 |
2024 Director Compensation Policy
2024 Director Compensation Policy In December 2020, our Board modified independent director compensation so that independent directors are provided an annual restricted stock unit grant of 30,000 restricted stock units on January 1 of each year vesting on the first anniversary of each grant and an annual retainer of $30,000, payable quarterly.
Compensation Philosophy
| ● | Alignment with stockholder interests: Compensation should be tied, in part, to our stock performance through the granting of equity awards to align the interests of executive officers with those of our stockholders; |
Compensation Philosophy
| ● | Competition: Compensation should generally reflect the competitive marketplace and be consistent with that of other well-managed companies in our peer group. In implementing this compensation philosophy, the Compensation Committee takes into account the compensation amounts from the previous years for each of the named executive officers, and internal compensation equity between the named executive officers and other employees. |
2023 Compensation Determination Process
| ● | discretionary bonuses; |
2023 Compensation Determination Process
The Compensation Committee believes that our executive compensation package consists of elements of compensation that are typically used to incentivize and reward executive management at other companies of our size, in our geographic area or in our industry. Each of these components is designed to meet the program’s objectives of providing a combination of fixed and variable, performance-based compensation linked to individual and corporate performance. In the course of setting the initial compensation level for new hires or adjusting the compensation of existing employees, the Compensation Committee considered the advice and input of our management. Our Chief Executive Officer typically makes recommendations to the Compensation Committee for any proposed changes in salary, as well as performance-based awards and equity award grants, for the other named executive officers. The Compensation Committee decides any salary change, as well as performance-based awards and equity award grants, for the Chief Executive Officer.
Discretionary Bonus Awards
Discretionary Bonus Awards From time to time, we utilize discretionary signing, promotion, retention or other bonus awards as compensation tools that provide incentives for executives to accept employment offers, to reward outstanding performance by executives and to retain key executives. We believe that these bonus awards are consistent with our overall executive compensation philosophy to achieve our recruiting and retention objectives as well as to allow discretion to address the needs of our businesses, which operate in a constantly evolving and highly competitive environment. Bonus recommendations are not determined on a formulaic basis, and no particular weight is assigned to any of the factors considered in determining discretionary bonuses. In April 2024, the Compensation Committee set the value of discretionary bonuses to be paid in our common stock with an equivalent value of $312,813 to Mr. Howe, $95,878 to Mr. Ruiz and $81,981 to Mr. Lowenthal, for retention and as a reward for performance. As of the date of this Proxy Statement the bonuses have been accrued but have not been paid in stock.
Discretionary Bonus Awards
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Plan Awards
Plan Awards The objective of our long-term incentive program is to provide a long-term retention incentive for the named executive officers and others and to align their interests directly with those of our stockholders by way of stock ownership. Under our 2017 Plan, the Board or the Compensation Committee has the discretion to determine whether equity awards will be granted to named executive officers and if so, the number of shares subject to each award. The 2017 Plan allows the Board or the Compensation Committee to grant options and restricted stock and other stock-based awards with respect to the amount authorized, valued in whole or in part by reference to the fair market value of the stock. In most instances, these long-term grants vest over a multi-year basis. The Board or the Compensation Committee determines the recipients of long-term incentive awards based upon such factors as performance, the length of continuous employment, managerial level, any prior awards, and recruiting and retention demands, expectations and needs. All our employees are eligible for awards. The Board or the Compensation Committee grants such awards by formal action, which awards are not final until an award agreement is delivered by us and executed by both the Company and the employee. There is no set schedule for the Board or the Compensation Committee to consider and grant awards. The Board and the Compensation Committee have the discretion to make grants whenever it deems it appropriate in our best interests. The Compensation Committee has discretion to grant equity awards at any time. We do not have any program, plan or practice in place to time option or other award grants with the release of material, non-public information and does not release such information for the purpose of affecting the value of executive compensation. The exercise price of stock subject to options awarded under our plans is the fair market value of the stock on the date the grant is approved by the Board or the Compensation Committee. Under the terms of each plan, the fair market value of the stock is the closing sales price of the stock on the date the grant is approved by the Board or the Compensation Committee as reported by the NYSE American.
Retirement and Other Post-Termination Benefits
Retirement and Other Post-Termination Benefits Other than our 401(k) plan, employment agreements with our named executive officers and certain other employment agreements which provide for severance for termination without cause, we have not entered into any employment agreements that provide for a continuation of post-employment benefits. Our benefits plans are generally the same for all employees, and so as of the date of this proxy statement, the Compensation Committee does not believe that any such plans in their present forms would continue post-employment, except as required by law (including with respect to COBRA), or otherwise set forth in our 2023 10-K. We do not currently maintain any other retirement or post-termination benefits plans.
Change in Control Severance Policy
Change in Control Severance Policy We do not currently maintain any change in control severance plans or severance policies, except as provided in the executive employment agreements and the 2017 Plan, both of which are discussed in this section. Therefore, none of our named executive officers will receive any cash severance payments in the event we undergo a change in control, unless their employment agreement otherwise provides.
Summary Compensation Table
Summary Compensation Table The following table summarizes all compensation recorded by us in each of the last two completed fiscal years for the following persons (our “named executive officers” or “NEOs”):
Summary Compensation Table
| ● | all individuals serving as our principal executive officer or acting in a similar capacity during the year ended December 31, 2023; |
Summary Compensation Table
| ● | our two most highly compensated executive officers at December 31, 2023 whose annual compensation exceeded $100,000; and |
Summary Compensation Table
| ● | up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at December 31, 2023. |
Summary Compensation Table
| Name and principal position | Year | Salary ($) | Bonus (1) ($) | Stock Awards (2) ($) | Option Awards ($) | Nonequity incentive plan compen-sation ($) | Non-qualified deferred compen-sation earnings ($) | All other compen-sation ($) | Total ($) | | Richard K. Howe, | 2023 | 425,000 | 312,813 | 330,000 | — | — | — | 7,822 | 1,075,635 | | Executive Chairman and Chief Executive Officer | 2022 | 425,000 | 200,000 | 429,110 | — | — | — | 7,822 | 1,061,932 | | Barry Lowenthal, | 2023 | 183,333 | 81,981 | 462,500 | — | — | — | 4,500 | 732,314 | | President | 2022 | — | — | | — | — | — | — | — | | Wallace D. Ruiz, | 2023 | 275,000 | 95,878 | 67,500 | — | — | — | 20,234 | 458,612 | | Chief Financial Officer | 2022 | 275,000 | 70,000 | 87,773 | — | — | — | 20,906 | 453,679 |
Summary Compensation Table
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Summary Compensation Table
| (1) Amounts for 2023 have been accrued, but have not yet been paid. | | (2) The value attributable to any stock awards is computed in accordance with FASB ASC Topic 718. The 2023 awards were valued as of the date of grant when the closing price of each share of our Common Stock was $0.30 for Messrs. Howe and Ruiz and $0.37 for Mr. Lowenthal. The stock awards are time-based RSUs vesting over three years from the grant date. The assumptions made in the valuations of the stock awards are included in Note 11 of the notes to our consolidated financial statements for the year ended December 31, 2023 appearing in our 2023 10-K. |
Summary Compensation Table
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Outstanding equity awards at year end
Outstanding equity awards at year end The following table provides information concerning unexercised options, restricted stock units that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2023.
Outstanding equity awards at year end
| | OPTION AWARDS | | | | | | STOCK AWARDS | | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (1) (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (2) (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | | Richard K. Howe | — | — | — | — | — | 1,833,334 | 788,334 | 250,000 | 107,500 | | Barry Lowenthal | — | — | — | — | — | 1,250,000 | 537,500 | — | — | | Wallace D. Ruiz | — | — | — | — | — | 375,000 | 161,250 | — | — |
Outstanding equity awards at year end
____________ (1) For Mr. Howe, 366,667 of the restricted stock units reported in this column vested on February 3, 2024 and 366,667 will vest on February 3, 2025. Of the balance of 1,100,000 restricted stock units reported in this column, thirty-three and one-third percent (33.33%) of the units vested on April 1, 2024 and the remaining sixty-six and two-thirds percent (66.67%) of the restricted stock units will vest in two equal installments on April 1, 2025 and April 1, 2026. For Mr. Lowenthal, thirty-three and one-third percent (33.33%) of the restricted stock units reported in this column will vest on each of May 22, 2024, May 22, 2025 and May 22, 2026. For Mr. Ruiz, 75,000 of the restricted stock units reported in this column vested on February 3, 2024 and 75,000 will vest on February 3, 2025. Of the balance of 225,000 restricted stock units reported in this column, thirty-three and one-third percent (33.33%) of the units vested on April 1, 2024 and the remaining sixty-six and two-thirds percent (66.67%) of the restricted stock units will vest in two equal installments on April 1, 2025 and April 1, 2026 (2) One hundred percent of the restricted stock units reported in this column vested on March 1, 2024 upon the satisfaction of performance conditions.
PAY-VERSUS-PERFORMANCE TABLE
| Year | Summary Compensation Table Total for Richard Howe ($) | Compensation Actually Paid to Richard Howe(1)(2) ($) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers ($) | Average Compensation Actually Paid to Non-CEO Named Executive Officers ($) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) | Net Income (in thousands) ($) | | 2023 | 1,075,635 | 1,431,660 | 595,463 | 791,588 | 94.1 | (10,390) | | 2022 | 1,061,932 | 548,322 | 439,635 | 325,131 | 48.9 | (13,107) | | 2021 | 2,762,811 | 1,569,486 | 853,283 | 577,993 | 117.8 | (7,601) |