0001136294
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--12-31
2022
FY
On March 31, 2023, Williams Industrial Services Group Inc. ("Williams," the "Company," "we," "us," or "our") filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "Original Form 10-K") with the U.S. Securities and Exchange Commission (the "SEC"). We are filing this Annual Report on Form 10-K/A (this "Amendment") as Amendment No. 1 to the Original Form 10-K for the purposes of amending Part III, Items 10, 11, 12, 13 and 14 of the Original Form 10-K to include the information required by such Items. This information was previously omitted from the Original Form 10-K in reliance on General Instruction G(3) to Form 10-K. This Amendment amends and restates in their entirety Items 10, 11, 12, 13 and 14 of Part III of the Original Form 10-K.
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0001136294
2022-01-01
2022-12-31
0001136294
2022-07-01
0001136294
2023-03-27
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Securities registered pursuant to Section 12(g) of
the Act: None.
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act:
As of July 1, 2022, the last business day
of our most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates
was approximately $23,197,687 (based upon the closing price on July 1, 2022 of $1.34 per share).
None.
On March 31, 2023, Williams Industrial
Services Group Inc. (“Williams,” the “Company,” “we,”
“us,” or “our”) filed its Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 (the “Original Form 10-K”) with the U.S. Securities and Exchange Commission (the
“SEC”). We are filing this Annual Report on Form 10-K/A (this “Amendment”) as Amendment
No. 1 to the Original Form 10-K for the purposes of amending Part III, Items 10, 11, 12, 13 and 14 of the
Original Form 10-K to include the information required by such Items. This information was previously omitted from the Original
Form 10-K in reliance on General Instruction G(3) to Form 10-K. This Amendment amends and restates in their entirety Items
10, 11, 12, 13 and 14 of Part III of the Original Form 10-K.
In addition, pursuant to the rules of the
SEC, we have also included as exhibits currently dated certifications required under Section 302 of the Sarbanes-Oxley Act of 2002.
We are amending Item 15 of Part IV to reflect the inclusion of those certifications. Because no financial statements are contained
within this Amendment, we are not including certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Except as described above, no other changes have
been made to the Original Form 10-K, and this Amendment does not amend, update or change the financial statements or any other items
or disclosures contained in the Original Form 10-K and does not otherwise reflect events occurring after the original filing date
of the Original Form 10-K. The filing of this Amendment is not a representation that any statements contained in items of the Original
Form 10-K other than Part III, Items 10 through 14, are true or complete as of any date subsequent to the Original Form 10-K.
This Amendment should be read in conjunction with the Original Form 10-K and with our filings with the SEC subsequent to our Original
Form 10-K.
Part III
Item 10. Directors, Executive Officers
and Corporate Governance.
Information about our Board of Directors
Set forth below are the name,
age, and position of each member of the Board of Directors of the Company (the “Board” or “Board of Directors”)
as of April 24, 2023:
| Directors |
|
Age |
|
Position(s) and
Office(s) Held with the Company |
| Robert
B. Mills |
|
73 |
|
Chairman
of the Board of Directors |
| David
A. B. Brown |
|
79 |
|
Director |
| Steven
D. Davis |
|
67 |
|
Director |
| Linda
A. Goodspeed |
|
61 |
|
Director |
| Nelson
Obus |
|
76 |
|
Director |
| Tracy
D. Pagliara |
|
60 |
|
President,
Chief Executive Officer and Director |
| Mitchell
I. Quain |
|
71 |
|
Director |
The term for each of our
current directors expires at the next annual meeting of stockholders. All directors are elected to serve until their respective successors
are duly elected and qualified at the next annual meeting of stockholders, or until the earlier of his or her death, resignation, retirement
or removal from such position. There are no family relationships among any of our directors or executive officers.
Set forth below is the specific
experience, qualifications and background of each of the individuals listed above.
Robert
B. Mills has served as a member of the Board of Directors since October 2015 and was appointed Chairman of the Board
of Directors in March 2021. From June 2011 through March 2015, Mr. Mills served as the Chief Operating Officer of
Assured Guaranty, Ltd. (NYSE: AGO), a publicly traded financial guaranty insurance company. Prior to his role as Chief Operating
Officer, Mr. Mills served as Chief Financial Officer of Assured Guaranty, Ltd. from January 2004 to June 2011. In
connection with his role as Chief Operating Officer of Assured Guaranty, Ltd., Mr. Mills chaired the management committee,
which established corporate policy and the strategic and tactical direction for the business, and served as a member of the board of
directors of each of Assured Guaranty, Ltd.’s five separately regulated insurance companies. Prior to his time at Assured
Guaranty, Mr. Mills served as Chief Operating Officer and Chief Financial Officer of the Americas Region of UBS AG, an investment
bank and financial services company, from 1994 to 2004. From 1971 to 1994, Mr. Mills worked for KPMG and was elected to the partnership
in 1981. Mr. Mills previously served as Executive Chairman of the board of directors of Continental General Insurance Company, a
private insurance company, from April 2020 to October 2020, and as a member of the board of directors of Syncora Holdings Ltd.
(n/k/a SHL Holdings Ltd.) (formerly OTC: SYCRF), a financial guaranty insurance company, from 2016 until February 2020. He is a
Certified Public Accountant and a Certified Global Management Accountant.
Director
Qualifications. Mr. Mills is a Certified Public Accountant and has experience serving as Chief Financial Officer
and Chief Operating Officer, most recently for Assured Guaranty, Ltd., a public company. Mr. Mills has extensive financial
expertise and a thorough understanding of financial statements, corporate finance and accounting and provides financial and accounting
expertise to the Board of Directors.
David
A. B. Brown has served as a member of the Board of Directors since May 2016. Mr. Brown previously served on
the board of directors of Concrete Pumping Holdings, Inc. (Nasdaq: BBCP), a provider of concrete pumping services and concrete waste
management services in the U.S. and U.K. markets, from July 2017 through April 2021, where he served as non-executive chairman,
chair of the corporate governance and nominating committee and as a member of the audit committee. Mr. Brown also previously served
on the board of directors of EMCOR Group, Inc. (NYSE: EME), one of the largest electrical and mechanical construction and facilities
services firms in the U.S., where he served as chair of the audit committee and as a member of the nominating and corporate governance
committee, from December 1994 to June 2020; on the board of directors of Layne Christensen Company (then Nasdaq: LAYN), a global
water management, construction, and drilling company, from 2003 through June 2018, including as chairman beginning in 2005, and,
from June 2014 to January 2015, as its President and Chief Executive Officer; and as a member of the board of directors of
Hercules Offshore, Inc. (then OTC: HERO) from November 2015 to December 2016. Mr. Brown was the chairman of the board
of directors of Pride International, Inc., a leading provider of offshore contract drilling and related services to oil and natural
gas companies worldwide, from May 2005 to May 2011, and, after Pride’s acquisition by Ensco plc (now Valaris plc) (NYSE:
VAL), Mr. Brown served as a director of Ensco plc from May 2011 to May 2014. Mr. Brown also previously served as
the co-founder and President of The Windsor Group, Inc., and a director of numerous other companies in the energy industry. Mr. Brown
is a member of the National Association of Corporate Directors.
Director
Qualifications. Mr. Brown has extensive financial and management experience. He is a Chartered Public Accountant
and a Chartered Accountant and has served in multiple roles for public companies. Mr. Brown has financial expertise, a thorough
understanding of financial statements, corporate finance and accounting and extensive experience with public companies, all of which
makes him a valued member of the Board of Directors.
Steven
D. Davis has served as a member of the Board of Directors since June 2019. Mr. Davis previously served in a
variety of positions at Sempra Energy (NYSE: SRE), a Fortune 500 energy-infrastructure and public utility holding company, and its indirect
subsidiaries, Southern California Gas Company (“SCGC”) (OTC: SOCGM) and San Diego Gas & Electric Company
(“SDG&E”), from 1980 until his March 2018 retirement. He served as Corporate Group President—Utilities
of Sempra Energy, from January 2017 through his retirement in March 2018; Executive Vice President—External Affairs and
Corporate Strategy of Sempra Energy, from September 2015 through December 2016; President and Chief Operating Officer of SDG&E,
from January 2014 through September 2015; and Senior Vice President of External Affairs for Sempra Energy, from March 2012
to December 2013. Prior to that, he held other senior level positions, including Vice President—Investor Relations of Sempra
Energy, from May 2010 to March 2012; Vice President—Communications and Community Partnerships of Sempra Energy, from
2006 to 2010; and Senior Vice President—External Relations and Chief Financial Officer for SCGC and SDG&E, from 2004 to 2006.
Mr. Davis served as a director of SCGC from September 2011 through December 2013, and again from November 2015 through
March 2018, including as its non-executive chairman from January 2017. Mr. Davis also served as a director of SDG&E
from 2011 to March 2018, including as its non-executive chairman from January 2017. Mr. Davis has served as a member of
the board of directors of American States Water Company (NYSE: AWR), a parent company of water utility, electric utility and contracted
services subsidiaries, since May 2021, where he serves on the audit and finance committee and nominating and governance committee.
Mr. Davis previously served on the boards of directors of the U.S. Chamber of Commerce and the Edison Electric Institute.
Director
Qualifications. Mr. Davis brings a multi-faceted perspective and in-depth industry understanding to the Board through
his extensive experience in the energy services industry, including decades of experience in utility and energy infrastructure operations,
and his prior service in executive management of a public company and as a board member of leading utility and business organizations.
Linda
A. Goodspeed has served as a member of the Board of Directors since November 2021. Ms. Goodspeed is the retired
Chief Operating Officer and a Managing Partner at WealthStrategies Financial Advisors, a registered investment advisory firm, positions
she held from 2008 until her retirement in 2017. Ms. Goodspeed previously served as Senior Vice President and Chief Information
Officer of The ServiceMaster Company, a provider of home services, from 2011 to 2015. From 2008 to September 2011, Ms. Goodspeed
served as Vice President, Information Systems and Chief Information Officer for Nissan North America, Inc., a subsidiary of
Nissan Motor Company, a global manufacturer of vehicles. From 2001 to 2008, Ms. Goodspeed served as Executive Vice President at
Lennox International Inc., a global manufacturer of air conditioning, heating and commercial refrigeration equipment. Ms. Goodspeed
currently serves as a member of the board of directors of each of the following companies: American Electric Power Company, Inc.
(Nasdaq: AEP), a public utility holding company, where she serves on the audit, nuclear oversight and policy committees and as chair
of the technology committee; AutoZone, Inc. (NYSE: AZO), a retailer and distributor of automotive replacement parts and accessories
in the Americas, where she serves on the audit and compensation committees; and Darling Ingredients Inc. (NYSE: DAR), which turns edible
by-products and food waste into sustainable products and produces renewable energy, where she serves as chair of the compensation committee
and as a member of the nominating and corporate governance committee. She previously also served on our Board of Directors from May 2016
to April 2018 and on the board of directors of Columbus McKinnon Corp. from October 2004 to May 2017.
Director
Qualifications. Ms. Goodspeed’s extensive experience in management roles and as a member of the board of director
of public companies makes her well qualified to serve as a director of the Company. She has held multiple key strategic and operational
roles with several large global companies and in information technology and currently serves on the boards of three other spublic companies.
Ms. Goodspeed’s experience in information technology roles and with cybersecurity, including having completed the National
Association of Corporate Directors’ certification in cybersecurity oversight, brings valuable experience to the Board of Directors.
Ms. Goodspeed is also a registered investment advisor.
Nelson
Obus has served as a member of the Board of Directors since June 2016. Mr. Obus has served as president of
Wynnefield Capital, Inc. since November 1992 and as the managing member of Wynnefield Capital Management, LLC since January 1997.
Wynnefield Capital Management, LLC manages two partnerships and Wynnefield Capital, Inc. manages one partnership, all three of which
invest in small-cap value U.S. public equities. Since October 2018, Mr. Obus has served on the board of directors of Lifecore
Biomedical, Inc. (f/k/a Landec Corporation) (Nasdaq: LFCR), a contract development and manufacturing organization that provides
services for injectable pharmaceuticals and medical devices, where he serves as a member of the nominating and corporate governance committee
and the compensation committee. Mr. Obus previously served as a member of the board of directors of Jason Industries Inc. (then
OTC: JASN) (n/k/a Jason Holdings Inc.), the parent company of manufacturing subsidiaries within the finishing and seating markets, from
June 2018 to August 2020, upon its emergence from bankruptcy; Layne Christensen Company (then Nasdaq: LAYN) from 2004 to June 2018;
Breeze-Eastern Corporation, a company that designs, develops, manufactures, sells and services sophisticated mission equipment for helicopters,
from January 2012 to December 2015; Gilman Ciocia, Inc., a company that provides income tax preparation, accounting and
financial planning services, from September 2007 to January 2012; and Sylvan, Inc., a formerly Nasdaq-listed company specializing
in producing and distributing mushroom spawn, from 2001 to 2006.
Director
Qualifications. Mr. Obus’s pertinent experience, qualifications, attributes and skills include his financial
literacy and expertise, capital markets expertise and managerial experience gained through his leadership roles and ownership interest
in related investment management companies, Wynnefield Capital Management, LLC and Wynnefield Capital, Inc., and the knowledge and
experience he has attained from service on other public company boards. He also brings to the Board the perspective of the Company’s
most significant stockholder.
Tracy
D. Pagliara has served as a member of our Board of Directors since July 2017 and as our President and Chief Executive
Officer starting in April 2018, having previously served as Co-President and Co-CEO from July 2017 through April 2018.
Prior to July 2017, he served as our Chief Administrative Officer, General Counsel and Secretary from January 2014, and also
as Senior Vice President from November 2015. He previously served as our General Counsel, Secretary and Vice President of Business
Development from April 2010 through December 2013. Prior to joining the Company in April 2010, Mr. Pagliara served
as the Chief Legal Officer of Gardner Denver, Inc., a leading global manufacturer of highly engineered compressors, blowers, pumps
and other fluid transfer equipment, from August 2000 through August 2008. He also had responsibility for other roles during
his tenure with Gardner Denver, including Vice President of Administration, Chief Compliance Officer and Corporate Secretary. Prior to
joining Gardner Denver, Mr. Pagliara held positions of increasing responsibility in the legal departments of Verizon Communications/GTE
Corporation from August 1996 to August 2000 and Kellwood Company from May 1993 to August 1996, ultimately serving
in the role of Assistant General Counsel for each company. Mr. Pagliara currently serves on the board of directors and audit, compensation
and nominating and corporate governance committees of Westwater Resources, Inc. (NYSE American: WWR), a diversified energy materials
developer, where he has served since July 2017. He is a member of the Missouri and Illinois State Bars and a Certified Public Accountant.
In addition, in accordance with customary practice, Mr. Pagliara and other officers of the Company have served as officers of the
Company’s various subsidiaries, although not acting in an executive role for the relevant subsidiary. As previously disclosed,
such subsidiaries included Koontz-Wagner Custom Controls Holdings LLC, which filed a voluntary petition for relief under Chapter 7 of
the U.S. Bankruptcy Code in July 2018 and ceased operations at such time.
Director
Qualifications. Mr. Pagliara has a deep understanding of the Company and its business, having been with the Company
since 2010. He has worked in the industry for nearly 20 years and has extensive experience advising public companies. His executive compensation,
human resources, governance, legal and accounting background further add to his value as a member of the Board of Directors.
Mitchell
I. Quain has served as a member of our Board of Directors since September 2020. Mr. Quain has served on
the Executive Council of American Securities LLC, a private equity firm, since January 2020. From December 2011 to December 2019,
Mr. Quain was a Senior Advisor at the private equity firm Carlyle Group. From January 2010 through December 2011, Mr. Quain
was a Partner at One Equity Partners, a private investment firm. From 2006 through 2009, he was a Senior Director and then Managing Director
of ACI Capital Corp., a private equity investment firm. From 2002 through 2005, Mr. Quain served as Chairman of Register.com, Inc.,
a provider of domain name registration and internet services, and, from 1997 to 2001, he was employed with ABN AMRO Bank N.V. and its
predecessors in several capacities, including Vice Chairman of Investment Banking. Mr. Quain has served on the board of directors
of AstroNova, Inc. (Nasdaq: ALOT), a global leader in data visualization technologies, where he serves on the compensation and nominating
and governance committees and as chair of the audit committee, since 2011; Star Equity Holdings, Inc. (Nasdaq: STRR), a diversified
holding company with three divisions: Healthcare, Construction, and Investments, where he serves as lead independent director and as
chair of the corporate governance committee, since 2019; and Kensington Capital Acquisition Corp. V (NYSE: KCGI), a special purpose acquisition
company formed for the purpose of effecting a merger, stock purchase or similar business combination with a business in the automotive
and industrial sectors, since August 2021, where he serves on the audit committee and as chair of the nominating and corporate governance
committee. Mr. Quain previously served on the boards of multiple other public and private companies, including Kensington Capital
Acquisition Corp. IV from March 2022 to September 2022, upon the completion of its initial business combination (now Amprius
Technologies, Inc.), Kensington Capital Acquisition Corp. from June 2020 to November 2020, upon the completion of its
initial business combination (now QuantumScape Corporation), Kensington Capital Acquisition Corp. II from February 2020 to October 2021,
upon the completion of its initial business combination (now Wallbox N.V.), Jason Industries, Inc. (n/k/a Jason Holdings Inc.),
DeCrane Aircraft Holdings, Inc., Handy & Harman Ltd., Hardinge Inc., HEICO Corporation, Magnetek, Inc., Mechanical
Dynamics, Inc., RBC Bearings Incorporated, Register.com, Inc., Strategic Distribution, Inc., Tecumseh Products Company,
Titan International, Inc., and Xerium Technologies, Inc. He is also a Chartered Financial Analyst.
Director
Qualifications. Mr. Quain’s substantial public company board and governance experience, as well as his history
in private equity and his designation as a Chartered Financial Analyst, bring a valuable perspective to the Board.
Information about
our Executive Officers
The
following sets forth information regarding our executive officers as of April 24, 2023. Executive officers are appointed by, and
hold office at the discretion of, our Board of Directors, subject to the terms of any employment agreements. Mr. Pagliara’s
background is described above.
| Name |
|
Position |
| Tracy D. Pagliara |
|
President and Chief Executive
Officer and Director |
| Randall R. Lay |
|
Executive Vice President
and Chief Operating Officer |
| Charles E. Wheelock |
|
Senior Vice President,
Chief Administrative Officer, General Counsel and Secretary |
| Damien A. Vassall |
|
Vice President and Chief
Financial Officer |
| Dawn A. Jenkins |
|
Vice President, Human Resources |
| Michael J. Bruno |
|
Executive Vice President,
Business Development |
Randall
R. Lay, 68, was appointed to serve as our Executive Vice President, Chief Operating Officer in November 2021. He previously
served as our Senior Vice President, Chief Financial Officer and our principal financial and accounting officer from September 2019
until November 2021. Prior to joining the Company, Mr. Lay served as Executive Vice President, Chief Financial Officer, Secretary
and Treasurer of GEO Specialty Chemicals, Inc., a supplier of specialty chemicals and materials to the coatings, adhesives, medical,
water treatment and construction markets, from December 2017 to August 2019, when it was acquired by CPS Performance Materials.
From 2007 to June 2017, Mr. Lay served as Vice President and Chief Financial Officer of Lazy Days’ R.V. Center, Inc.
(now a subsidiary of Lazydays Holdings, Inc.), which operates RV dealerships. From 2006 through 2007, Mr. Lay served as Senior
Vice President of Buccino & Associates, Inc., a financial advisory and turnaround firm. Prior to that, Mr. Lay served
at Universal Access Global Holdings Inc., a communications network integrator, from 2002 to 2006, including as Chief Financial Officer
from June 2002 to July 2003; director and Chief Executive Officer from July 2003; and additionally, as President from
November 2003 until June 2006. From October 2001 to April 2002, Mr. Lay served as Senior Vice President and
Chief Financial Officer of Metromedia Fiber Networks, Inc., a telecommunications company. From September 1993 to September 2001,
Mr. Lay was employed by International Specialty Products Inc., a global supplier of specialty chemicals, most recently as Executive
Vice President and Chief Financial Officer.
Charles
E. Wheelock, 54, has served as our Senior Vice President, Chief Administrative Officer, General Counsel and Secretary since
August 2019. He previously served as our Vice President, Administration, General Counsel and Secretary beginning July 2017.
He joined the Company in September 2011 as Associate General Counsel and thereafter assumed roles of increasing responsibility,
including Vice President, Deputy General Counsel and Chief Compliance Officer. He led the human resources, recruiting and labor relations
groups in our Tucker, Georgia office prior to his July 2017 appointment. Prior to joining the Company, Mr. Wheelock spent 10
years at General Electric Company, serving in a variety of roles in its Energy Services and Power Generation businesses. Mr. Wheelock
is a member of the State Bar of Georgia.
Damien
A. Vassall, 46, was appointed Vice President, Chief Financial Officer and principal financial and accounting officer in November 2021.
He previously served in a variety of financial roles for the Company, including our Vice President and Controller from February 2020
until November 2021, a consultant for the Company from June 2019 to February 2020, Chief Financial Officer of our Services
division from October 2015 until November 2018, and our Controller of the Services division from October 2010 to October 2015.
Prior to joining the Company, Mr. Vassall served at Delta Apparel, Inc., an apparel company, as a division controller from
June 2008 until October 2010 and as manager of accounting and financial reporting from November 2006 through May 2008.
Previously, he also served as senior associate at both Grant Thornton LLP and KPMG LLP.
Dawn
A. Jenkins, 51, has served as our Vice President, Human Resources since August 2021. She has served in a variety
of roles at the Company and its subsidiaries since January 2007, including as our Vice President, Treasurer from December 2020
to August 2021, as Treasurer from January 2019 until December 2020, as Director, Transactional Accounting from August 2018
to January 2019, as Director ERP, Operations Support and Trade Compliance from November 2013 to August 2018, and as Assistant
Director Supply Chain of a former subsidiary from January 2007 to November 2013.
Michael
J. Bruno, 56, has served as our Executive Vice President of Business Development since May 2022. He previously served
as Senior Vice President, Energy and Industrial and Vice President, Business Development from December 2020 to May 2022. Mr. Bruno
previously worked for the Company, from 2009 to 2015, holding several roles of increasing responsibility including Operations Manager,
Operations Director, General Manager, and Vice President in our Williams Industrial Services division, including five years within the
nuclear power market. Prior to returning to the Company in 2020, he served as Fleet Director of Maintenance Services at Day &
Zimmermann, a family-owned company specializing in construction and engineering, operations and maintenance, staffing, security and defense,
with overall responsibility for nuclear project services at multiple facilities, as well as Director of Projects. Additionally, Mr. Bruno
served in a variety of roles at General Electric in combustion turbines and plant management, domestically and internationally.
Delinquent Section 16(a) Reports
Section 16(a) of
the Exchange Act requires all persons subject to such reporting requirements to file initial reports of ownership and reports of changes
in ownership with the SEC. To our knowledge, based solely on a review of these reports filed with the SEC and certain written representations
furnished to us, we believe that all persons subject to these reporting requirements timely complied with such requirements during 2022,
except that previously granted performance-based restricted stock units were inadvertently omitted from previous filings by Mr. Pagliara
and Mr. Wheelock and were included in their respective Form 4 filings filed on April 4, 2022.
Code of Business Conduct and Ethics
The Board has adopted a Code
of Business Conduct and Ethics, which outlines the principles of legal and ethical business conduct under which we do business. The Code
of Business Conduct and Ethics is applicable to all of our directors, officers and employees. The Code of Business Conduct and Ethics
is available under the heading “Governance—Governance Documents” of the Investor Relations section of our website at
www.wisgrp.com. Upon written request to our Corporate Secretary mailed to our principal executive offices, we will provide a copy of
the Code of Business Conduct and Ethics free of charge. Any substantive amendment of the Code of Business Conduct and Ethics, and any
waiver of the Code of Business Conduct and Ethics for executive officers or directors, will be made only after approval by the Board
or a committee of the Board, and will be disclosed on our website. In addition, any such amendment or waiver will be disclosed within
four days on a Form 8-K filed with the SEC if then required by applicable rules and regulations, including the rules of
the NYSE American LLC (“NYSE American”), which currently require a Form 8-K to be filed disclosing any waiver
of the Code of Business Conduct and Ethics for directors and officers.
Audit Committee
The Board of Directors has
a standing Audit Committee, the members of which are Robert B. Mills, the committee chairperson, David A. B. Brown, Steven D. Davis and
Linda A. Goodspeed. Our Board of Directors has determined that each of member of the Audit Committee meets applicable SEC and NYSE American
rules and regulations regarding independence, qualifies as an “audit committee financial expert,” as defined under the
applicable rules of the SEC, and is financially sophisticated, as defined under the applicable rules and regulations of the
NYSE American.
Item 11. Executive Compensation.
Executive Compensation
This section describes the
2022 compensation program established by the Compensation Committee for our named executive officers. Our named executive officers for
2022 were as follows:
| • | Tracy
D. Pagliara, President and Chief Executive Officer; |
| • | Randall
R. Lay, Executive Vice President, Chief Operating Officer; and |
| • | Charles
E. Wheelock, Senior Vice President, Chief Administrative Officer, General Counsel and Secretary. |
2022 Summary Compensation Table
The following table presents
information regarding the compensation earned by our named executive officers in each of 2022 and 2021.
| Name
and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($)
| | |
Stock
Awards ($)(1) | | |
Non-Equity
Incentive Plan
Compensation ($)(2) | | |
All
Other
Compensation ($)
| | |
Total ($)
| |
| Tracy D. Pagliara | |
2022 | | |
| 562,500 | | |
| — | | |
| 547,248 | | |
| 63,250 | | |
| 112,645 | (3) | |
| 1,285,643 | |
| President and Chief Executive Officer | |
2021 | | |
| 541,057 | | |
| — | | |
| 2,069,650 | | |
| — | | |
| 48,596 | | |
| 2,659,303 | |
| Randall R. Lay | |
2022 | | |
| 425,000 | | |
| — | | |
| 334,320 | | |
| 32,250 | | |
| 92,421 | (4) | |
| 883,991 | |
| Executive Vice President, Chief Operating Officer | |
2021 | | |
| 391,701 | | |
| — | | |
| 848,809 | | |
| — | | |
| 47,058 | | |
| 1,287,568 | |
| Charles E. Wheelock | |
2022 | | |
| 313,000 | | |
| — | | |
| 163,974 | | |
| 17,435 | | |
| 35,877 | (5) | |
| 530,286 | |
| Senior Vice President, Chief Administrative Officer,
General Counsel and Secretary | |
2021 | | |
| 308,494 | | |
| — | | |
| 635,391 | | |
| — | | |
| 9,994 | | |
| 953,879 | |
| (1) | This
column does not reflect the value of stock awards that were earned by the named executive
officers during each of the years listed above. Rather, as required by applicable SEC rules,
this column reflects (i) the aggregate grant date fair value of time-based restricted
stock units (sometimes referred to as “RSUs”) and performance-based awards
granted to our named executive officers in the applicable year, computed in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“Topic
718”), and (ii) for 2021, the incremental fair value for financial accounting
purposes of stock awards that were granted prior to 2021 and that were modified in 2021,
as set forth in more detail in our 2021 proxy statement. |
The grant date fair value of the performance-based
awards was based on the probable outcome of the applicable performance conditions as of the date of grant. The grant date fair value
of the performance-based awards for 2022, assuming that the maximum level of performance would be achieved, was as follows: for Mr. Pagliara,
$729,665; for Mr. Lay, $445,760; and for Mr. Wheelock, $218,633. For a discussion of the assumptions that we used to value
the time-based RSUs and performance-based awards for financial accounting purposes, please refer to “Note 13—Stock-Based
Compensation” in the notes to our consolidated financial statements contained in our Original Form 10-K.
| (2) | This column reflects amounts earned by our
named executive officers under our short-term incentive (“STI”) plan for
the applicable year based on achievement of the applicable performance goals. |
| (3) | Pursuant to his employment agreement, Mr. Pagliara was required to perform his duties and responsibilities
as Chief Executive Officer in Tucker, Georgia commencing September 1, 2018. In exchange, the Company agreed, under his employment agreement,
to reimburse Mr. Pagliara for the following expenses: (i) the costs of airline tickets (and related ground transportation and parking)
for trips from Atlanta, Georgia to visit his family ($12,143 in 2022); (ii) the costs of renting an apartment in Atlanta and the related
utilities ($30,424 in 2022); and (iii) the aggregate incremental costs of providing an automobile for business use ($12,725 in 2022).
In addition, Mr. Pagliara received 401(k) matching contributions of $10,800, premiums for additional group-term life insurance coverage
of $2,322 for 2022, and payout of accrued but unused vacation of $44,231 in 2022. |
| (4) | Pursuant to his employment agreement, Mr. Lay was required to perform his duties and responsibilities
as Chief Financial Officer in Tucker, Georgia. In exchange, the Company agreed, under his employment agreement, to reimburse Mr. Lay for
the following expenses: (i) the costs of airline tickets (and related ground transportation and parking) for trips from Atlanta, Georgia
to his residence ($0 in 2022); (ii) the costs of renting an apartment in Atlanta and the related utilities ($27,102 in 2022); and (iii)
the aggregate incremental costs of providing an automobile for business use ($11,884 in 2022). In addition, Mr. Lay received 401(k) matching
contributions of $13,500, premiums for additional group-term life insurance coverage of $6,858 for 2022, and payout of accrued but unused
vacation of $33,077 in 2022. |
| (5) | For Mr. Wheelock, reflects 401(k) matching contributions of $10,250, premiums for additional group-term
life insurance coverage of $1,242 for 2022, and payout of accrued but unused vacation of $24,385 in 2022. |
Employment and Separation Arrangements
Employment Agreements
On June 20, 2018, in
connection with Mr. Pagliara’s appointment as President and Chief Executive Officer of the Company on April 13, 2018,
Mr. Pagliara entered into a new employment agreement with the Company (the “Pagliara Employment Agreement”),
which replaced the Co-CEO employment agreement that was previously in place. The Pagliara Employment Agreement provides for an initial
term of one year with automatic one-year renewals unless earlier terminated pursuant to the provisions of the Pagliara Employment Agreement
or written notice of non-renewal is delivered by either party at least 90 days prior to the expiration of the then-current term. Under
the agreement, Mr. Pagliara’s annual base salary was set at $500,000 and his STI bonus opportunity target was set at 80% of
his annual base salary and his long-term incentive (“LTI”) opportunity target was set at 125% of his annual base salary.
The Pagliara Employment Agreement
entitles Mr. Pagliara to certain severance benefits if the Company terminates his employment other than for disability or cause
(including by reason of the Company not renewing the term), or if he terminates his employment for good reason (each a “Qualified
Termination”). In such event, subject to Mr. Pagliara signing and not revoking a release of claims in favor of the Company,
the Company would pay him, among other things, continued annual base salary for an 18-month period, subsidized health insurance premiums
for 12 months, STI earned for the prior year, if not paid, and, if terminated on or after April 1, a pro-rated STI based on actual
results. If the Qualified Termination occurred within 90 days before or two years after a Change in Control of the Company (as defined
in the Pagliara Employment Agreement), then the Company would pay or cause to be paid to Mr. Pagliara the following additional benefits:
(i) his target STI for the fiscal year in which the termination occurs (without pro-ration), and (ii) his then-outstanding
equity incentive awards would become vested in full (without pro-ration), with any specified performance objectives deemed to be satisfied
at the “target” level. The Company would pay lower amounts of severance benefits if Mr. Pagliara’s employment
were terminated due to death or disability. The Company also agreed to reimburse Mr. Pagliara for certain reasonable travel and
other out-of-pocket expenses, including certain costs associated with his relocation from Dallas, Texas to the Company’s headquarters
office in Georgia. The Pagliara Employment Agreement additionally contains standard restrictive covenants.
On September 30, 2019,
in connection with Mr. Lay’s appointment as Senior Vice President and Chief Financial Officer, the Company entered into an
employment agreement (the “Lay Employment Agreement”) with Mr. Lay. The Lay Employment Agreement provides for
an initial term of one year with automatic one-year renewals unless earlier terminated pursuant to the provisions of the Lay Employment
Agreement or written notice of non-renewal is delivered by either party at least 90 days prior to the expiration of the then-current
term. Under the agreement, Mr. Lay’s annual base salary was set at $325,000, which was to be increased to $350,000, effective
as of April 1, 2020 (subject to a satisfactory performance review by the Board of Directors of the Company). Mr. Lay’s
STI bonus opportunity target was set at 65% of his annual base salary, and he additionally received an LTI award as an employment inducement
award, granted outside of the Company’s 2015 Equity Incentive Plan (as amended and restated, the “2015 Plan”),
comprised of RSUs in respect of 150,000 shares. Of those, 100,000 RSUs were subject to time-based vesting conditions (with vesting in
three equal annual installments on each of March 31, 2020, 2021 and 2022) and 50,000 were subject to performance-based vesting conditions
(with vesting in two equal annual installments on each of March 31, 2021 and 2022, subject to achievement of the performance metrics
to be established by the Board of Directors for the years ended December 31, 2020 and 2021). Such awards were subject to the terms
and conditions of the respective award agreements.
The Lay Employment Agreement
entitles Mr. Lay to certain severance benefits if he incurs a Qualified Termination. In such event, subject to Mr. Lay signing
and not revoking a release of claims in favor of the Company, the Company would pay him, among other things, continued annual base salary
for a 12-month period, subsidized health insurance premiums for 12 months, STI earned for the prior year, if not paid, and, if terminated
on or after April 1, a pro-rated STI based on actual results. If the Qualified Termination occurred within 90 days before or two
years after a Change in Control of the Company (as defined in the Lay Employment Agreement), then the Company would pay or cause to be
paid to Mr. Lay the following additional benefits: (i) his target STI for the fiscal year in which the termination occurs (without
pro-ration), and (ii) his then-outstanding equity incentive awards would become vested in full (without pro-ration), with any specified
performance objectives deemed to be satisfied at the “target” level. The Company would pay lower amounts of severance benefits
if Mr. Lay’s employment were terminated due to death or disability. The Company has also agreed to reimburse Mr. Lay
for certain reasonable travel and other out-of-pocket expenses, including certain costs associated with his travel to the Company’s
headquarters in Georgia. The Lay Employment Agreement additionally contains standard restrictive covenants.
On August 12, 2019,
in connection with Mr. Wheelock’s appointment as Senior Vice President, Chief Administrative Officer, General Counsel and
Secretary, the Company entered into an employment agreement (the “Wheelock Employment Agreement”) with Mr. Wheelock.
The Wheelock Employment Agreement provides for an initial term of one year with automatic one-year renewals unless earlier terminated
pursuant to the provisions of the Wheelock Employment Agreement or written notice of non-renewal is delivered by either party at least
90 days prior to the expiration of the then-current term. Under the agreement, Mr. Wheelock’s annual base salary was set at
$267,800 and his STI bonus opportunity target was set at 50% of his annual base salary. The Wheelock Employment Agreement entitles Mr. Wheelock
to certain severance benefits if he incurs a Qualified Termination. In such event, subject to Mr. Wheelock signing and not revoking
a release of claims in favor of the Company, the Company would pay him, among other things, continued annual base salary for a 12-month
period, subsidized health insurance premiums for 12 months, STI earned for the prior year, if not paid, and, if terminated on or after
April 1, a pro-rated STI based on actual results. If the Qualified Termination occurred within 90 days before or two years after
a Change in Control of the Company (as defined in the Wheelock Employment Agreement), then the Company would pay or cause to be paid
to Mr. Wheelock the following additional benefits: (i) his target STI for the fiscal year in which the termination occurs (without
pro-ration), and (ii) his then-outstanding equity incentive awards would become vested in full (without pro-ration), with any specified
performance objectives deemed to be satisfied at the “target” level. The Company would pay lower amounts of severance benefits
if Mr. Wheelock’s employment were terminated due to death or disability. The Wheelock Employment Agreement additionally contains
standard restrictive covenants.
Elements of Total Direct Compensation
The overriding objective
of our compensation program in 2022 was to attract and retain a quality management team capable of re-establishing a solid foundation
for our business through process discipline, operating rigor and accountability, while continuing to provide our customers with high
quality services.
A brief summary of our total
direct compensation—consisting of base salary, STI opportunities and LTI opportunities—for our named executive officers is
set forth below.
2022 Annual Base Salaries
The Compensation Committee
intends to provide our named executive officers with competitive base salaries that are commensurate with their job responsibilities,
experience and performance. During the annual performance review process in 2022, the base salaries for our named executive officers
were increased. The adjustments generally were intended to bring the base salaries closer to the market median of the compensation peer
group.
| Named Executive Officer | |
2021 Annual
Base Salary | | |
2022 Annual
Base Salary | |
| Mr. Pagliara | |
$ | 550,000 | | |
$ | 575,000 | |
| Mr. Lay | |
$ | 380,000 | | |
$ | 430,000 | |
| Mr. Wheelock | |
$ | 309,000 | | |
$ | 317,000 | |
On December 12, 2022, the
Board authorized (i) a 10% reduction in the annual base salary for each of the named executive officers, commencing on January 2, 2023,
which amount shall be reinstated, and the reduced amount repaid to each officer, on the first to occur of January 1, 2024 or a change
in control of the Company, provided that the named executive officer remains employed through the applicable vesting date, and (ii) an
accelerated payment of the accrued but unpaid vacation of each named executive officer by the end of 2022.
2022 Short-Term Incentive Compensation
The Company maintains the
STI plan, under which our named executive officers are eligible to receive annual cash payments based on the extent to which certain
operational goals are achieved. The STI plan is designed to motivate our named executive officers to achieve each year’s business
plan objectives. During the annual performance review process in March 2022, the Compensation Committee did not make any changes
to the STI opportunities for the named executive officers. The target STI opportunities, expressed as a percentage of annual base salary,
were increased for Mr. Pagliara and Mr. Lay to bring them closer to the market median of the peer group.
| Named Executive Officer | |
2022 Target
STI Opportunity
(as a % of Annual Base Salary) | |
| Mr. Pagliara | |
| 110 | % |
| Mr. Lay | |
| 75 | % |
| Mr. Wheelock | |
| 55 | % |
The 2022 STI program for
the named executive officers was weighted 65% Consolidated Adjusted EBITDA, 25% pre-STI free cash flow and 10% safety. Each performance
goal had a threshold, target and maximum performance target, with payout levels equal to 50% of a participant’s award opportunity
“apportioned” to that goal (i.e., his target STI percentage, multiplied by annual base salary, multiplied by the allocation
percentage for the goal) for threshold performance, 100% for target performance and 200% for maximum performance. If actual performance
for a goal fell below the threshold level, then no payout would be earned for that goal. The following chart sets forth the performance
goals and targets under the 2022 STI program, along with the actual results and payout percentage.
Goal |
|
Weight |
|
|
Threshold
(50% payout) |
|
|
Target
(100% payout) |
|
|
Maximum
(200% payout) |
|
|
Actual
Results |
|
|
Payout Percentage |
|
| Consolidated Pre-STI EBITDA |
65% |
$12,778,200
|
$14,198,000
|
$17,037,600
|
$(3,519,750) |
0% |
Pre-STI Free Cash Flow
|
25% |
$6,326,100
|
$7,029,000 |
$8,434,800
|
$(10,144,655) |
0% |
| Safety |
5% |
RIR
< 0.5 |
RIR
< 0.4 |
RIR
< 0.3
|
0.4 |
10% |
| 5% |
LTIR 0.08 |
LTIR 0.04 |
LTIR 0.00
|
0.04 |
| Override |
Recordable Injury
Rate (RIR) < 0.3 results in maximum payout for entire safety metric
|
0.4 |
| Hurdle |
SIR = 0 (SIR
> 0 results in no payout, regardless of achievement of the other safety metrics.) SIR is an injury result that is considered life
altering.
|
0 |
Adjusted
EBITDA is defined in our earnings releases and equals the sum of our income (loss) from continuing operations before interest expense,
net, and income tax (benefit) expense and unusual gains or charges, and is calculated prior to the accrual for the STI program. Pre-STI
free cash flow is defined as Adjusted EBITDA less interest, capital expenditures and cash taxes, and is calculated prior to the accrual
for the STI program. The financial results for both goals are adjusted to exclude stock compensation expense under any outstanding
LTI program for current or future years.
Based on the above, the weighted
average payout level for each named executive officer under the 2022 STI program was 10%.
2022 Long-Term Incentive Compensation
As part of its annual performance
evaluation, the Compensation Committee reviewed the LTI award levels for 2022 for our named executive officers. When considering appropriate
award levels, the Compensation Committee considered its assessment of each executive’s general performance during the year, as
well as his relative roles and responsibilities and potential within the Company, our burn rate, the potential dilution that will occur
to our stockholders and the median levels of market surveys. Based on this information, the Compensation Committee adjusted the LTI opportunities
for Mr. Pagliara and Mr. Lay to bring their total direct compensation opportunity closer to the market median of the compensation
peer group.
| Named Executive Officer | |
2022 Target
LTI Opportunity
(as a % of Annual Base Salary) | |
| Mr. Pagliara | |
| 150 | % |
| Mr. Lay | |
| 120 | % |
| Mr. Wheelock | |
| 80 | % |
Under the 2022 LTI program, the LTI target opportunity
was allocated between performance-based awards and time-based restricted share units as follows:
| Award
Type |
|
Allocation |
|
Brief
Summary |
| Performance-Based Award |
|
2/3 |
|
• The
award is earned based on the extent to which we achieve two equally weighted performance goals for each of the 2022, 2023 and 2024
fiscal years.
• If
earned, the award becomes vested if the executive remains employed through March 31, 2025, with pro-rated vesting upon an earlier
termination of employment without cause or by reason of death or disability, or upon a resignation for good reason.
• To
the extent vested, the award is payable in shares of our common stock, or at the election of the Compensation Committee, in cash
(without interest). |
| Time-Based Restricted Share Units |
|
1/3 |
|
• The
award vests in three equal installments on each of March 31, 2023, 2024, and 2025 if the executive remains employed through the
applicable vesting date, with pro-rated vesting upon an earlier termination of employment without cause or by reason of death or disability,
or upon a resignation for good reason.
• To
the extent vested, the award is payable in shares of our common stock, or at the election of the Compensation Committee, in cash
(without interest). |
The
performance-based awards had three annual performance periods (fiscal years 2022, 2023 and 2024), with operating income and free cash
flow goals (equally weighted) for each year established on the date of grant. The annual achievement levels are accumulated over the
three-year performance period and the earned amounts, if any, vest on March 31, 2025. The performance goals and payout formulas
for 2022 were as follows (with the target levels for each of 2023 and 2024 reset annually based on prior year actual results, plus 25%
growth):
| Performance Objective | |
Weight | | |
Performance
Cycle = Fiscal Year | | |
Threshold (50%
payout) | | |
Target (100%
payout) | | |
Maximum (200%
payout) | |
| Operating Income | |
| 50 | % | |
| 2022 | | |
$ | 6,944,226 | | |
$ | 8,680,283 | | |
$ | 10,416,339 | |
| Free Cash Flow | |
| 50 | % | |
| 2022 | | |
$ | 7,809,969 | | |
$ | 9,762,461 | | |
$ | 11,714,954 | |
Straight line interpolation
is used for performance between threshold, target and maximum levels. The three-year average payout level for each performance objective
replaces the actual payout level for any fiscal year where the actual payout is less than the three-year average.
For
purposes of the 2022 fiscal year, operating income was defined as gross margin less selling, general and administrative expenses. Free
cash flow was defined as Adjusted EBITDA less interest, capital expenditures and cash taxes. The financial results for both goals are
adjusted to exclude stock compensation expense under any outstanding LTI program for current or future years. The Company’s
operating income and free cash flow for 2022 were below the applicable threshold levels, which resulted in an achievement level of 0%
for the 2022 fiscal year.
2021 Long-Term Incentive Program
Our 2021 LTI program consists
of performance-based awards (2/3 value) and time-based restricted stock unit awards (1/3 value). The Compensation Committee has the discretion
to pay the awards in cash or shares.
The
performance-based awards had three annual performance periods (fiscal years 2021, 2022 and 2023), with operating income and free cash
flow goals (equally weighted) for each year established on the date of grant. The annual achievement levels are accumulated over the
three-year performance period and the earned amounts, if any, vest on March 31, 2024. As noted above, the Company’s
operating income and free cash flow for 2022 were below the applicable threshold levels, which resulted in an achievement level of 0%
for the 2022 fiscal year.
2020 Long-Term Incentive Program
Our 2020 LTI program consists
of performance-based awards (2/3 value) and time-based restricted stock unit awards (1/3 value). The Compensation Committee has the discretion
to pay the awards in cash or shares; provided that the first tranche of the time-based awards would be paid in shares.
The
performance-based awards had three annual performance periods (fiscal years 2020, 2021 and 2022), with operating income and free cash
flow goals (equally weighted) for each year established on the date of grant. The annual achievement levels are accumulated over the
three-year performance period and the earned amounts, if any, vest on March 31, 2023. As noted above, the Company’s
operating income and free cash flow for 2022 were below the applicable threshold levels, which resulted in an achievement level of 0%
for the 2022 fiscal year.
2018 Long-Term Incentive Program
The Company previously granted
performance-based restricted stock units under the 2018 LTI program to Mr. Pagliara and Mr. Wheelock, which vested if the Company
achieved a per share stock price of $5.00 for 30 consecutive trading days prior to December 31, 2022, provided that the executive
remains employed through that date. We achieved the stock price goal as of July 16, 2021, and therefore these awards vested as of
December 31, 2022.
Compensation Policies
We maintain compensation
policies and practices that are designed to align the interests of our named executive officers with our stockholders.
| • | Stock
Ownership Guidelines. Our stock ownership guidelines require the officers of the Company
to hold a minimum level of the Company’s shares of common stock: for the Chief Executive
Officer position, the lesser of three times his or her base salary or 75,000 shares, and
for the other named executive officers, the lesser of two times his or her base salary or
40,000 shares. These guidelines are designed so that each executive has personal wealth tied
to the long-term success of the Company and is therefore aligned with stockholder interests.
The target date for named executive officers to meet these stock ownership guidelines is
five years from the date of his or her appointment. As of April 24, 2023, each current
named executive officer who was required to meet the ownership requirements met or exceeded
the minimum ownership requirement. |
| • | No
Hedging or Pledging of Company Stock. Our insider trading policy prohibits our employees,
officers and directors from engaging in hedging transactions involving Company stock or,
unless approved in writing by the Company’s general counsel, holding Company stock
in a margin account. Additionally, our officers and directors may only pledge securities
with the consent of the Company. No named executive officer or director has pledged securities. |
| • | Claw
Back Policy. We maintain a “claw back” policy, under which our Board has
the ability to require our executive officers to forfeit or repay STI awards and other performance-based
compensation if: (i) the payment, grant or vesting of the compensation was based upon
financial results that were subsequently restated; (ii) the Board determines, in its
sole discretion, that the officer engaged in fraud or misconduct that caused or contributed
to the need for the restatement; (iii) the officer received more compensation than he
or she would have received if the financial results had been properly reported; and (iv) the
Board determines, in its sole discretion, that forfeiture or repayment of all or a portion
of the officer’s performance-based compensation is in the best interest of the Company
and its stockholders. |
| • | No
Excise Tax Gross Ups. We do not provide excise tax gross ups for severance benefits received
in connection with a change in control of the Company. |
| • | Double
Trigger Vesting. Our 2015 Plan provides for “double trigger” vesting of equity
awards assumed in a change in control transaction, so that the awards will not automatically
vest on a change in control. Instead, the awards assumed in a transaction will continue to
vest on their regularly-scheduled vesting date or, if earlier, upon a termination without
cause or resignation for good reason within two years after a change in control. |
| • | No
Supplemental Executive Retirement Plan. We do not maintain a supplemental executive retirement
plan or any other type of defined benefit retirement plan. |
| • | Risk
Assessment. We believe that our compensation policies and practices for all employees,
including executive officers, do not create risks that are reasonably likely to have a material
adverse effect on us. Although a significant portion of our executive compensation program
traditionally has been performance-based, we have focused on aligning our compensation policies
with the long-term interests of our stockholders and avoiding rewards that could create excessive
or inappropriate risks to the Company. |
| • | Consideration
of “Say-on-Pay” Vote. At the 2022 Annual Meeting of Stockholders, stockholders
showed support for our executive compensation program by approving the compensation of our
named executive officers by approximately 80% of the votes cast. The Compensation Committee
views the support of our stockholders as a strong endorsement of our compensation program
and objectives. |
Compensation Consultant
Competitive Market Practices
We believe that each element
of our compensation program should remain competitive to attract and retain experienced, high-caliber executives.
When
setting 2022 compensation levels for the named executive officers, the Compensation Committee reviewed materials prepared by Meridian
Compensation Partners (“Meridian”) as its independent compensation consultant, reporting directly to the Compensation
Committee and serving at the sole discretion of the Compensation Committee. During its engagement, Meridian was asked to review competitive
compensation data, including pay mix and compensation levels. The compensation data was derived from several sources, including the companies
in a compensation peer group established by the Compensation Committee, with the advice of Meridian, and selected compensation surveys.
Each of these sources is described below. In general, the market data was regressed to match our projected revenue.
The Compensation Committee
generally attempts to structure total cash compensation for named executive officers at approximately +/-10% of the market median, and
LTI and total target pay within +/-15% of the market median. The Compensation Committee, however, retains discretion to adjust specific
compensation elements and levels above or below these guidelines in order to respond to market conditions, promotions, new hires, individual
performance or other circumstances.
Compensation Peer Group
Our compensation peer group
consists of 14 companies in the construction, energy and industrial products and machinery industries. The members of the compensation
peer group are as follows:
| Compensation
Peer Group |
| Ameresco, Inc. | |
Infrastructure and Energy Alternatives, Inc. |
| Argan, Inc. | |
Limbach Holdings, Inc. |
| AZZ Inc. | |
Matrix Service Company |
| Charah Solutions, Inc. | |
Nuverra Environmental Solutions, Inc. |
| Hudson Technologies, Inc. | |
Orion Group Holdings, Inc. |
| IES Holdings, Inc. | |
Ranger Energy Services, Inc. |
| Independence Contract Drilling, Inc. | |
Smart Sand, Inc. |
The Compensation Committee
also reviews market data from a special cut of an Equilar Top 25 Survey, focusing on companies with $50 million to $1 billion in annual
revenues in the construction, energy and industrial products and machinery industries.
Retirement and Welfare Benefits
We make available to each
of our named executive officers certain benefits that are generally available to all salaried employees, including medical, dental, vision,
life, accidental death and dismemberment, travel accident and short- and long-term disability insurance. All of our named executive officers
are entitled to participate in our 401(k) plan and its flexible spending benefit plan and are entitled to four weeks of paid vacation
each year. These benefits are made available so that we can provide competitive compensation to our salaried employees and our named
executive officers.
2022 Outstanding Equity Awards at Fiscal Year-End
The following table sets
forth information regarding unvested equity awards held by each of our named executive officers as of December 31, 2022.
| | |
| Stock Awards | |
| Name | |
| Number
of Shares or Units of Stock That Have Not Vested(1)(2) (#)
| | |
| Market
Value of Shares or Units of Stock That Have Not Vested(3) ($)
| | |
| Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(4) (#)
| | |
| Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That
Have Not Vested(3) ($)
| |
| Tracy D. Pagliara | |
| 207,319 | | |
$ | 211,465 | | |
| 453,237 | | |
$ | 462,302 | |
| Randall R. Lay | |
| 114,244 | | |
$ | 116,529 | | |
| 251,969 | | |
$ | 257,008 | |
| Charles E. Wheelock | |
| 64,551 | | |
$ | 65,842 | | |
| 142,585 | | |
$ | 145,437 | |
| (1) | This column reflects the sum of unvested time-based
RSUs held by each named executive officer as of December 31, 2022. |
| (2) | The following table shows the vesting schedules
for the unvested time-based RSUs outstanding as of December 31, 2022: |
| Name | |
March 31,
2023 | | |
March 31,
2024 | | |
March 31,
2025 | |
| Tracy D. Pagliara | |
| 76,128 | | |
| 100,636 | | |
| 30,555 | |
| Randall R. Lay | |
| 40,569 | | |
| 55,009 | | |
| 18,666 | |
| Charles E. Wheelock | |
| 23,483 | | |
| 31,913 | | |
| 9,155 | |
| (3) | The market value is based on the closing market
price of our common stock on the last trading day of 2022 ($1.02). |
| (4) | This column reflects the sum of the unvested
performance-based awards held by each named executive officer as of December 31, 2022
under our 2021 and 2022 LTI programs, assuming “target” performance. To the extent
earned, these awards generally vest on March 31 of the year following the end of the
applicable three-year performance period. The 2021 performance-based awards are denominated
in cash but payable in cash or shares at the election of the Company. For purposes of this
table, the cash amount under the 2021 awards are expressed in shares using the closing market
price of our common stock on the last trading day of 2022 ($1.02). |
Director Compensation
Director compensation is
determined by the Nominating and Corporate Governance Committee, subject to approval by the entire Board of Directors. Directors who
are employed by our Company or any of our subsidiaries do not receive compensation for serving as directors. The objectives for our non-employee
director compensation program are to attract highly qualified individuals to serve on the Board of Directors and align directors’
interests with the interests of our stockholders. The Nominating and Corporate Governance Committee reviews the program annually to confirm
that it continues to meet these objectives.
To determine whether the
director compensation program is competitive, the Nominating and Corporate Governance Committee considers general market information
on program design and the advice of Meridian, the Compensation Committee’s independent compensation consultant. In recommending
director compensation levels, the Nominating and Corporate Governance Committee also considers the significant amount of time that directors
expend in fulfilling their duties to the Company, as well as the skill level required by the Company of members of the Board of Directors.
The Nominating and Corporate Governance Committee recommends any change it considers appropriate to the full Board of Directors for its
review and approval.
Upon conclusion of the most
recent annual review, the Nominating and Corporate Governance Committee determined that the director compensation program was reasonable
and within market median levels and, therefore, no changes were made to the director compensation levels.
For 2022, the non-employee
director program consisted of the following annual cash retainers, which were unchanged from the levels in 2021:
| • | $65,000
for each non-employee director; |
| • | $50,000
for the Board of Directors Chairperson; |
| • | $20,000
for the Audit Committee Chairperson; |
| • | $13,750
for the Compensation Committee Chairperson; and |
| • | $10,000
for the Nominating and Corporate Governance Committee Chairperson. |
The Board recognizes that
ownership by the non-employee directors of our common stock will align their interests with the interests of our stockholders. As a result,
each non-employee director is required to own a certain number of shares. In 2022, each non-employee Board member was required to own
the lesser of (i) shares with a value of three times his or her annual cash retainer or (ii) 30,000 shares. The target date
for the existing directors to meet these stock ownership guidelines is five years from the date of his or her appointment. For purposes
of these guidelines, the director will be deemed to “own” the Company’s shares that are beneficially owned by such
person, including equity awards that will pay out within 60 days of the applicable measuring date. As of April 24, 2023, each non-employee
director who was required to meet the ownership requirements met or exceeded the minimum ownership requirement.
On December 12, 2022, the
Board approved an amendment to the non-employee director compensation program to reduce the 2023 annual cash retainers by 20%. This reduction
will be reinstated, and the reduced amount repaid to each non-employee director, on the first to occur of January 1, 2024 or a change
in control of the Company, provided that the non-employee director remains a director through the applicable vesting date.
2022 Director Compensation
The following table provides
information on the compensation awarded to, earned by or paid to each person who served as a non-employee director during 2022.
| Name | |
Fees Earned
or
Paid in Cash
($) | | |
Stock
Awards
($)(1) | | |
Total
($) | |
| David
A. B. Brown | |
$ | 78,750 | | |
$ | 90,000 | | |
$ | 168,750 | |
| Steven D. Davis | |
$ | 75,000 | | |
$ | 90,000 | | |
$ | 165,000 | |
| Linda A. Goodspeed | |
$ | 65,000 | | |
$ | 90,000 | | |
$ | 155,000 | |
| Robert B. Mills | |
$ | 135,000 | | |
$ | 90,000 | | |
$ | 225,000 | |
| Nelson Obus | |
$ | 65,000 | | |
$ | 90,000 | | |
$ | 155,000 | |
| Mitchell I. Quain | |
$ | 65,000 | | |
$ | 90,000 | | |
$ | 155,000 | |
| (1) | The amounts in this column represent the aggregate
grant date fair value of restricted shares granted to non-employee directors in 2022 computed
in accordance with Topic 718. For a discussion of the assumptions we made in valuing the
stock awards, see “Note 13—Stock-Based Compensation” in the notes to our
consolidated financial statements contained in our Original Form 10-K. The total number
of unvested restricted shares held by each non-employee director as of December 31,
2022 was as follows: |
| Name | |
Unvested
Restricted Shares (#) | |
| David
A. B. Brown | |
| 56,813 | |
| Steven D. Davis | |
| 53,405 | |
| Linda A. Goodspeed | |
| 48,649 | |
| Robert B. Mills | |
| 56,813 | |
| Nelson Obus | |
| 56,813 | |
| Mitchell I. Quain | |
| 48,649 | |
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table provides
information as of December 31, 2022 about the Company’s equity compensation plans under which shares of the Company’s
common stock are authorized for issuance.
| Plan Category | |
Number
of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | |
Weighted-average
exercise price of outstanding options, warrants and rights (b) | |
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c) | |
| Equity compensation plans approved by security
holders | |
| 2,130,939 | (1) | |
N/A | |
| 1,841,944 | (2) |
| Equity
compensation plans not approved by security holders(3) | |
| 10,486 | (3) | |
N/A | |
| — | |
| Total | |
| 2,141,425 | | |
N/A | |
| 1,841,944 | |
| (1) | Represents
time-based RSUs and performance-based awards (assuming “target” performance)
outstanding under the 2015 Plan as of December 31, 2022. The 2021 performance-based
awards are denominated in cash but payable in cash or shares at the election of the Company.
For purposes of this table, the cash amount under the 2021 awards are expressed in shares
using the closing market price of our common stock on the last trading day of 2022 ($1.02). |
| (2) | Represents the number of available shares
under the 2015 Plan as of December 31, 2022. The Company is authorized to issue up to
4,500,000 shares of common stock under the 2015 Plan. As of December 31, 2022, 1,841,944
shares remained available to settle (i) outstanding time-based RSUs and performance-based
awards and (ii) future equity awards. The Company acknowledges that the aggregate number
of shares of common stock subject to outstanding awards under the 2015 Plan may exceed the
maximum number of shares authorized for issuance under such plan, as it is anticipated and
expected that as a result of withholdings, forfeitures and the settlement of awards in cash,
the number of share awards actually issued will not exceed the maximum number of shares available
under the 2015 Plan. Therefore, it is anticipated and expected that the Company’s share
reserve will fluctuate under the 2015 Plan when shares are issued upon vesting of awards,
net of shares that are forfeited or shares withheld for applicable taxes. As is provided
for in the awards, the Company will settle in cash outstanding awards under the 2015 Plan
to the extent the settlement of such awards in shares would decrease the share reserve below
zero. |
| (3) | Represents performance-based awards (assuming “target” performance)
outstanding pursuant to inducement awards granted under the 2021 LTI program. |
Security Ownership of Certain Beneficial
Owners and Management
Except as indicated otherwise,
the following table sets forth certain information, as of April 24, 2023, regarding the beneficial ownership of our common stock
by holders of greater than 5% of our common stock that have filed ownership reports with the SEC, each of our directors, each of our
named executive officers named in the Summary Compensation Table included in “Item 11. Executive Compensation” of this Amendment,
and all of our current directors and executive officers as a group. Except as otherwise indicated, addresses are c/o Williams Industrial
Services Group Inc., 200 Ashford Center North, Suite 425, Atlanta, Georgia 30338.
| | |
| Common
Stock Beneficially
Owned | |
| Name
of Beneficial Owner | |
| Number
of
Shares (#) | | |
| Percentage
of
Class (%)(1) | |
| Greater than 5% Holders: | |
| | | |
| | |
| Wynnefield
Affiliates(2) | |
| 6,461,332 | | |
| 23.5 | % |
| Emancipation
Management LLC(3) | |
| 2,321,404 | | |
| 8.4 | % |
| Minerva
Advisors LLC(4) | |
| 1,885,277 | | |
| 6.8 | % |
| | |
| | | |
| | |
| Directors and Named Executive Officers: | |
| | | |
| | |
| Robert
B. Mills(5) | |
| 487,284 | | |
| 1.8 | % |
| David
A. B. Brown(5) | |
| 936,576 | | |
| 3.4 | % |
| Steven
D. Davis(5) | |
| 259,442 | | |
| * | |
| Linda
A. Goodspeed(5) | |
| 134,470 | | |
| * | |
| Nelson
Obus(2)(5) | |
| 6,843,038 | | |
| 24.9 | % |
| Mitchell
I. Quain(5) | |
| 182,168 | | |
| * | |
| Tracy
D. Pagliara(6) | |
| 681,084 | | |
| 2.5 | % |
| Randall
R. Lay(6) | |
| 163,339 | | |
| * | |
| Charles
E. Wheelock(6) | |
| 140,186 | | |
| * | |
| Directors
and Current Executive Officers as a Group (12 persons)(7) | |
| 9,928,051 | | |
| 36.1 | % |
* Less
than 1%.
| (1) | Based upon 27,532,064 shares of our common
stock issued and outstanding as of April 24, 2023. Each named person is deemed to be
the beneficial owner of shares of common stock that may be acquired within 60 days of April 24,
2023, upon the scheduled vesting of time-based RSUs. Accordingly, the number of shares and
percentage set forth next to the name of such person, and all directors and current executive
officers as a group, includes shares of directly owned common stock (including unvested restricted
shares) and shares of common stock potentially issuable pursuant to time-based RSUs that
will vest within 60 days of April 24, 2023. However, the shares of common stock that
may be issued upon the vesting of time-based RSUs held by any such person are not included
in calculating the percentage of common stock beneficially owned by any other stockholder.
We have excluded shares of common stock issuable upon vesting of outstanding performance-based
awards, due to the variable nature of such awards. We have determined beneficial ownership
in accordance with the rules of the SEC. Unless otherwise indicated in the footnotes
to this table, each stockholder named in the table has sole voting and investment power with
respect to all shares shown as beneficially owned by that stockholder. |
| (2) | Based on a Form 4 filed with the SEC
on September 2, 2022 and a Schedule 13D/A filed August 31, 2020. The shares reported
include (i) 2,119,632 shares of common stock (the “Partner Shares”) held
by Wynnefield Partners Small Cap Value, L.P., of which Wynnefield Capital Management, LLC
is the sole general partner and, accordingly, may be deemed to beneficially hold the Partner
Shares; (ii) 2,509,488 shares of common stock (the “Partner I Shares”) held
by Wynnefield Partners Small Cap Value, L.P. I, of which Wynnefield Capital Management, LLC
is the sole general partner and, accordingly, may be deemed to beneficially hold the Partner
I Shares; (iii) 1,576,936 shares of common stock (the “Offshore Shares”)
held by Wynnefield Small Cap Value Offshore Fund, Ltd., of which Wynnefield Capital, Inc.
is the sole investment manager and, accordingly, may be deemed to beneficially hold the Offshore
Shares; and (iv) 255,276 shares of common stock (the “Plan Shares”) held
by Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan (the “Wynnefield
Plan”), an employee profit sharing plan. Each of the entities directly holding common
stock reported sole voting and sole dispositive power over such shares. Wynnefield Capital
Management, LLC reported sole voting and sole dispositive power over the Partner Shares and
the Partner I Shares. Nelson Obus and Joshua Landes are the co-managing members of Wynnefield
Capital Management, LLC and, accordingly, may be deemed to beneficially hold the Partner
Shares and the Partner I Shares and share the power to direct the voting and disposition
of such shares. Wynnefield Capital, Inc. reported sole voting and sole dispositive power
over the Offshore Shares. Mr. Obus and Mr. Landes are executive officers of Wynnefield
Capital, Inc. and, accordingly, may be deemed to beneficially hold the Offshore Shares
and share the power to direct the voting and disposition of such shares. Mr. Obus and
Mr. Landes are co-trustees of the Wynnefield Plan and, accordingly, may be deemed to
beneficially hold the Plan Shares and share the power to direct the voting and disposition
of such shares. The principal business address of the reporting persons is 450 Seventh Avenue,
Suite 509, New York, New York 10123. |
| (3) | The shares listed were reported on a Schedule
13G/A filed with the SEC on February 1, 2023, with respect to shares of common stock
held in accounts managed by Circle N Advisors, LLC (“Circle N”), as of December 31,
2022. The report was filed by (1) Emancipation Management LLC (“EM”), which
owns Circle N, (2) Circle N and (3) Charles Frumberg, the managing member of EM.
Each of EM, Circle N and Mr. Frumberg holds shared dispositive power and no voting power
over such shares. The principal business address of the reporting persons is 1065 Main Street,
Suite F, P.O. Box 336, Fishkill, New York 12524. |
| (4) | The shares listed were reported on a Schedule
13G/A filed with the SEC on February 14, 2023, with respect to shares of common stock
beneficially owned as of December 31, 2022. The report was filed by Minerva Advisors
LLC, Minerva Group, LP, Minerva GP, LP, Minerva GP, Inc., and David P. Cohen (collectively,
the “Minerva Reporting Persons”). Minerva Group, LP holds 1,459,276 shares of
common stock, of which each of the Minerva Reporting Persons may be deemed to be a beneficial
owner and over which the Minerva Reporting Persons hold sole voting and dispositive power.
Minerva Advisors LLC beneficially owns 426,001 shares of common stock, of which Mr. Cohen
may be deemed to be a beneficial owner and over which Minerva Advisors LLC and Mr. Cohen
hold shared voting and dispositive power. The principal business address of the reporting
persons is 50 Monument Road, Suite 201, Bala Cynwyd, Pennsylvania 19004. |
| (5) | Each non-employee director holds 85,821 unvested
restricted shares. |
| (6) | No named executive officer had the right to
obtain beneficial ownership of additional shares within 60 days of April 24, 2023. |
| (7) | Represents beneficial ownership of our common
stock held by our directors and current executive officers as a group as of April 24,
2023, including 514,926 unvested restricted shares held by non-employee directors. |
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
Director Independence
Our Board of Directors has reviewed the criteria
for determining the independence of our directors under NYSE American and SEC rules. Of the seven directors, the Board determined each
of Ms. Goodspeed and Messrs. Brown, Davis, Mills, and Quain satisfied such independence criteria. Accordingly, during 2022
and as of April 24, 2023, our Board was comprised of a majority of directors who qualified as independent directors under the rules adopted
by the SEC and NYSE American. In addition, all Board committee members are and, during 2022, were, independent for the purposes of the
committees on which they served during the time of such service.
In assessing the independence of our directors,
the Board of Directors considered the relationships that each non-employee director has with the Company, including those matters disclosed
under “Certain Relationships and Related Transactions” below, and all other facts and circumstances the Board deemed relevant,
including the beneficial ownership of our common stock by each non-employee director, including Mr. Obus’s relationship with
the Company’s largest stockholder.
Certain Relationships and Related Transactions
Approval of Related Party Transactions
The Board has adopted a formal written policy
governing the review and approval of related party transactions, which is posted under the heading “Governance—Governance
Documents” of the Investor Relations section of our website at www.wisgrp.com. For purposes of this policy, the terms “related
party” and “related party transaction” are as defined in Item 404(a) of Regulation S-K. The policy provides that
each director, director nominee and executive officer shall promptly notify the Company’s general counsel of any transaction involving
the Company and a related person. Such transaction will be presented to and reviewed by the Audit Committee for approval, ratification
or such other action as may be appropriate. On an annual basis, the Audit Committee reviews any previously approved related party transaction
that is continuing, as well as any related party transaction disclosed in response to our annual directors’ and officers’
questionnaire, described below. The policy itself is periodically reviewed.
Each director and officer completes and signs
a questionnaire after the end of each fiscal year that requires them to provide information regarding any material relationships or related
party transactions between such individuals and the Company, which helps ensure that all material relationships and related party transactions
are identified, reviewed and disclosed in accordance with applicable policies, procedures and regulations.
Since January 1, 2021, we did not have any
transactions with related persons that were reportable under Item 404 of Regulation S-K, except as disclosed below.
Wynnefield Notes
On January 9, 2023, the Company entered
into the following agreements (together, the “Wynnefield Notes”): (i) an Unsecured Promissory Note by and among
the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small
Cap Value, LP I in the aggregate principal amount of $400,000 and (ii) an Unsecured Promissory Note by and among the Company, as
borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP
(together with Wynnefield Partners Small Cap Value, LP I, the “Wynnefield Lenders”) in the aggregate principal amount
of $350,000. All principal and interest will be due on the maturity date of the Wynnefield Notes, which will be the earliest of (i) December 23,
2025; (ii) a change in control of the Company; (iii) a refinancing or maturity extension of either of the Term Loan, Guarantee
and Security Agreement, dated December 16, 2020, by and among the Company and certain of its subsidiaries as borrowers or guarantors,
EICF Agent LLC, as agent for the lenders, and the lenders party thereto (as amended, the “Term Loan Agreement”) or
the Revolving Credit and Security Agreement, dated December 16, 2020, by and among the Company and certain of its subsidiaries as
borrowers or guarantors, PNC Bank, National Association, as agent for the lenders, and the lenders party thereto (as amended, the “Revolving
Credit Agreement”); or (iv) an acceleration following the occurrence of an event of default (as defined in the Wynnefield
Notes, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Notes bear interest
at the fixed rate of (i) 8.0% per annum from the closing date; (ii) 13.0% per annum from and after the maturity date; and (iii) 13.0%
per annum from and after an event of default (as defined in the Wynnefield Notes, and which includes any default under the Term Loan
Agreement and Revolving Credit Agreement). The Wynnefield Notes are subject to an aggregate exit fee of $100,000, payable upon the earlier
of an event of default or payment in full of all obligations due under the Wynnefield Notes. In connection with the Wynnefield Notes,
the Company, certain of its subsidiaries, the Wynnefield Lenders and the agents under each of the Revolving Credit Agreement and the
Term Loan Agreement have entered into two Subordination and Intercreditor Agreements, pursuant to which the Wynnefield Lenders have agreed,
on the terms and subject to the conditions set forth therein, to subordinate the Wynnefield Notes to the obligations of the Company under
the Revolving Credit Agreement and the Term Loan Agreement.
The Wynnefield Lenders, together with their affiliates,
are the Company’s largest equity investor. Nelson Obus, a member of the Board of Directors, is a managing member of Wynnefield
Capital Management, LLC, the general partner of the Wynnefield Lenders.
Item 14. Principal Accountant Fees and Services.
Audit and Non-Audit Fees
The following table sets
forth the estimated or actual fees paid or accrued by us for professional accounting fees and services rendered for the years ended December 31,
2022 and 2021:
| ($ in thousands) | |
2022 | | |
2021 | |
| Audit
Fees(1) | |
$ | 548 | | |
$ | 739 | |
| Audit-Related
Fees(2) | |
| 35 | | |
| 47 | |
| Tax Fees | |
| — | | |
| — | |
| All
Other Fees(3) | |
| 8 | | |
| — | |
| Total | |
$ | 591 | | |
$ | 786 | |
| (1) | Audit fees are fees that were charged for
the audit of our annual financial statements included in our annual report on Form 10-K
and review of unaudited financial statements included in our quarterly reports on Form 10-Q;
for services that are normally provided by the independent registered public accounting firm
in connection with statutory and regulatory filings or engagements; and all costs and expenses
in connection with the above. For 2022 and 2021, includes fees related to services rendered
in connection with the issuance of consents related to Registration Statements on Form S-8
and standalone reviews for the Company’s subsidiaries. |
| (2) | Audit-related fees consisted of fees related
to contract compliance audits. |
| (3) | Includes fees incurred related to the arbitration
settlement with the Company’s former auditors. |
Audit Committee Pre-Approval of Audit and Non-Audit Services
The Audit Committee’s
policy is to pre-approve all audit and non-audit services provided to the Company by its independent registered public accounting firm
(except for items exempt from pre-approval requirements under applicable laws and rules). All audit and non-audit services included in
the table above were pre-approved by the Audit Committee.
When considered necessary,
management prepares an estimate of fees for the service and submits the estimate to the Audit Committee for its review and pre-approval.
Any modifications to the estimates will be submitted to the Audit Committee for pre-approval at the next regularly scheduled Audit Committee
meeting. All fees paid to our independent registered public accounting firm during the periods covered by the Original Form 10-K
were in accordance with this pre-approval policy.