None of the directors on our Compensation Committee
currently is or was formerly an officer or employee of the Company or had any relationship or related party transaction with the Company
requiring disclosure under Item 404 of Regulation S-K of the Securities Exchange Act of 1934, as amended. During 2020, none of our executive
officers served on the board of directors or the compensation (or equivalent) committee of any other entity that has officers that serve
on our Board or on our Compensation Committee. In addition, none of the members of our Compensation Committee were formerly, or during
2020, employed by us in the capacity as an officer or otherwise.
The members of our Compensation Committee currently
are Messrs. Barnes, Cohen and Marcum, each of whom is an independent director within the meaning of director independence standards applicable
to members of a compensation committee pursuant to the applicable Nasdaq and SEC rules. Mr. Cohen currently serves as its Chairperson.
To accomplish our compensation objectives, our
compensation program for 2020 for our named executive officers consisted of (i) base salary, (ii) participation in our 2020 Annual Incentive
Plan (“AIP”), which is the Company’s plan for annual, performance-based cash bonuses, as described below, (iii) awards
under the 2020 Long-Term Incentive Plan (the “2020 LTIP”), which was the Company’s plan for performance-based, long-term
incentive compensation for 2020, as described below and (iv) participation in our broad-based employee benefit plans for other employees,
such as our 401(k) plan and our health and welfare plans. All such elements were designed to provide a competitive mix of compensation
that balanced retention and performance in a simple and straightforward manner. The compensation program was designed to ensure that the
named executive officers’ annual target total direct compensation was tied to the Company’s long-term and short-term performance.
The Company has no supplemental retirement plan.
SUMMARY
COMPENSATION TABLE
The following table includes information for 2020
and 2019 with respect to our named executive officers.
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(a)
|
|
|
Stock
Awards
($) (b)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($) (c)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Robert C. Galvin
|
|
|
2020
|
|
|
|
850,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,253,750
|
|
|
|
—
|
|
|
|
2,130,750
|
|
|
President and Chief Executive Officer (principal executive officer)
|
|
|
2019
|
|
|
|
850,000
|
|
|
|
|
|
|
|
573,750
|
|
|
|
1,001,375
|
|
|
|
—
|
|
|
|
2,425,125
|
|
|
John T. McClain(1)
|
|
|
2020
|
|
|
|
525,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
709,000
|
|
|
|
—
|
|
|
|
1,234,000
|
|
|
Executive Vice President and Chief Financial Officer (principal financial officer)
|
|
|
2019
|
|
|
|
525,000
|
|
|
|
50,000
|
|
|
|
525,000
|
|
|
|
411,469
|
|
|
|
—
|
|
|
|
1,511,469
|
|
|
(a)
|
The amount in this column in respect of Mr. McClain includes the full amount of an inducement bonus paid to Mr. McClain in March 2019.
|
|
(b)
|
The amounts shown in this column represent the aggregate grant date fair value with respect to PSUs and RSUs granted in 2019, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) (without regard to the effect of estimated forfeitures), assuming target performance for the PSUs was achieved. In respect of 2019, assuming maximum performance of the PSUs had been achieved, the aggregate grant date fair value for each of the named executive officers would be $850,001 in 2019 for Mr. Galvin, and $787,500 for Mr. McClain in 2019. See Note 10 to Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for a discussion for the relevant assumptions used in calculating grant date fair value.
|
|
(c)
|
Non-equity incentive plan compensation represents
the dollar value of all amounts earned during the applicable fiscal year pursuant to non-equity incentive plans. Beginning in 2016, following
its previously disclosed commitment to do so, the Compensation Committee eliminated the practice of granting bonuses on a solely discretionary
basis and granted performance-based cash bonus awards instead (with guaranteed minimum bonus amounts for certain new hires).
The amount reflected in 2020 for Mr. Galvin is
equal to his earned 2020 annual bonus of $722,500, which equals 85% of the target annual bonus set forth in his employment agreement (which
target annual bonus was equal to 100% of his then-current base salary), plus the earned 2020 portion of his 2020 long-term cash award,
totaling $531,250, as described above in the Section titled “Elements of Compensation—Long-term incentives.”
In respect of the 2020 bonus for Mr. McClain is
equal to his earned 2020 annual bonus of $446,500, the amount reflected is equal to 85% of the target bonus set forth in his employment
agreement (which target annual bonus was equal to 75% of his then-current base salary), plus the earned 2020 portion of his 2020 long-term
cash award, totaling $262,500, as described above in the Section titled “Elements of Compensation—Long-term incentives.”
Approximately 38.2 percent of the 2020 earned
annual bonus (which does not include each named executive officer’s 2020 long-term cash award) for each of our named executive officers
was paid during 2020 and the remainder was paid in March 2021.
The amount reflected in 2019 for Mr. Galvin is
equal to his earned 2019 annual bonus of $882,250, which equals 104.5% of the target annual bonus set forth in his employment agreement
(which target annual bonus was equal to 100% of his then-current base salary), plus the earned 2019 portion of his 2019 long-term cash
award that is not subject to reduction based on TSR, totaling $113,125, as described above in the Section titled “Elements of Compensation—Long-term
incentives.”
In respect of the 2019 bonus for Mr. McClain,
the amount reflected is equal to 104.5% of the target bonus set forth in his employment agreement (which target annual bonus was equal
to 75% of his then-current base salary).
Fifty percent of the 2019 earned annual bonus
(which does not include Mr. Galvin’s 2019 long-term cash award) for each of our named executive officers was paid in March 2020
and the remaining fifty percent was paid in September 2020.
|
|
(1)
|
Mr. McClain became our Executive Vice President and Chief Financial Officer on February 11, 2019.
|
Employment Agreements
The summaries below relate to the employment agreements
for our named executive officers who were employed by us on December 31, 2020.
Robert C. Galvin
2018 Employment Agreement
On October 15, 2018, the Company entered into
an employment agreement with Mr. Galvin in connection with the Company’s employment of Mr. Galvin as its President and Chief Executive
Officer. Mr. Galvin was also appointed to the Company’s Board of Directors. The employment agreement provides that Mr. Galvin will
be employed for a term ending on December 31, 2021, subject to earlier termination or extension as specified in the employment agreement.
The employment agreement provides for Mr. Galvin to receive an annual base salary of not less than $850,000 per year and for certain other
employee benefits consistent with those generally available to other executive officers of the Company, including, major medical, dental,
life insurance, short-term disability insurance, long-term disability insurance, and retirement. In addition, Mr. Galvin is eligible to
earn annual cash bonuses, with target and maximum bonus opportunities of 100% and 150% of his annual base salary, respectively, subject
to the achievement of the applicable performance goals. Additionally, the employment agreement provides for the grant to Mr. Galvin of
certain equity compensation, as set forth below.
The employment agreement also provides for
Mr. Galvin to receive certain severance payments if the Company terminates his employment other than for cause (and not by reason of
his death or disability) or if Mr. Galvin terminates his employment for good reason, in any case, subject to his execution and
non-revocation of a general release of claims. These severance payments include (i) 24 months of base salary continuation, (ii) any
earned but unpaid annual bonus for the calendar year preceding the calendar year in which such termination of employment occurs,
(iii) a prorated annual bonus for the calendar year in which such termination of employment occurs, based on the number of days of
his employment during such calendar year, and assuming target performance for such calendar year, (iv) up to 18 months of
Company-subsidized COBRA continuation coverage, and (v) vesting of unvested equity awards, if and to the extent provided for in the
applicable equity award agreement. In the event that Mr. Galvin’s employment with the Company terminates under the
circumstances described above but within 18 months after a “change in control” of the Company (as defined in the
employment agreement), then Mr. Galvin will be entitled to a lump sum payment equal to two times the sum of (a) the annual base
salary and (b) the average annual bonus paid to him for the two calendar years immediately prior to such change in control (or, if
such change in control had occurred in 2018 or 2019, an amount equal to 100% of his annual base salary), in addition to the other
severance payments described in the foregoing clauses (ii), (iv) and (v). The employment agreement also contains certain
confidentiality, non-disparagement and cooperation obligations for an indefinite period of time, and certain non-competition and
non-solicitation obligations during employment and for 24 months thereafter.
Mr. Galvin received an inducement award of 231,161
PSUs (the “Galvin Inducement PSUs”), which equals the number of shares of Common Stock with an aggregate fair market value
on October 15, 2018 of approximately $500,000. The employment inducement PSUs cliff vest at the end of a three-year performance period
ending on October 15, 2021 based on the percentile ranking of the Company’s total shareholder return (“TSR”) relative
to its peer companies for such performance period. 100% of such PSUs will vest if the Company’s TSR ranks 75% or higher, 50% of
the PSUs will vest if the Company’s TSR ranks 50%, and 25% of the PSUs will vest if the Company’s TSR ranks 35% (additional
PSUs will vest proportionally if the Company’s TSR is between 35% and 50% and between 50% and 75%, respectively), and no PSUs will
vest if the Company’s TSR is below 35%, in all events, subject to Mr. Galvin’s continued employment with the Company on the
applicable vesting date; provided that, if Mr. Galvin’s employment is terminated by the Company without cause (and not due to his
death or disability) or by him for good reason, then he will remain eligible to earn a pro rata number of the PSUs, based on the percentage
of the performance period during which he was employed by the Company, provided that the applicable TSR ranking is achieved on the termination
date as if the termination date had been the last day of the performance period. The pro rata number of PSUs that would be earned by Mr.
Galvin in accordance with the prior sentence will become vested at the end of the three year performance period, subject to Mr. Galvin’s
continued compliance with the restrictive covenants contained in his employment agreement. If, during the performance period, a “change
in control” (as defined in Mr. Galvin’s employment agreement with the Company) occurs, then the unvested employment inducement
PSUs will be converted to a number of RSUs equal to the number of PSUs that would have vested on the date of such change in control based
on the applicable TSR ranking if the date of such change in control had been the last day of the performance period, and such RSUs will
vest on the last day of the performance period, subject to Mr. Galvin’s continued employment with the Company and his compliance
with the restrictive covenants contained in his employment agreement through the last day of the performance period (except as described
below). Notwithstanding the foregoing, if the employment inducement PSUs are not assumed, substituted with a similar award,
or otherwise continued in such change in control, then such converted RSUs shall vest immediately prior to such change in control. In
the event that Mr. Galvin is terminated by the Company without cause (and not due to his death or disability) or by him with good reason,
in either case, during the performance period, which termination occurs within 24 months after a change in control, then the RSUs into
which the PSUs have converted upon such change in control will immediately vest on the date of termination (provided Mr. Galvin is in
continued compliance with the restrictive covenants contained in his employment agreement through the date of termination), and such RSUs
generally will be settled within thirty (30) days after the termination date.
On October 15, 2018, Mr. Galvin received an inducement
award of 231,161 RSUs, which equals the number of shares of Common Stock with an aggregate fair market value as of October 15, 2018 of
approximately $500,000. One-third of such employment inducement RSUs vested on October 15, 2018, and the remaining two-thirds of such
employment inducement RSUs vested on October 15, 2019.
Pursuant to the employment agreement, on October
15, 2018, Mr. Galvin also received an award of 83,217 RSUs under the 2016 Plan, having an aggregate fair market value of approximately
$180,000 as of the date of grant. Approximately one-third of the RSUs vested on each of March 31, 2019, March 31, 2020 and March 31, 2021.
On April 16, 2019, as required by the terms of
his employment agreement, Mr. Galvin was granted an award of 143,135 PSUs under the 2016 Plan, subject to earning more or less PSUs based
on performance (the maximum number of PSUs that can be earned is 286,270). Approximately fifty percent of the target number of PSUs were
subject to the achievement of an adjusted EBITDA goal during the 2019 calendar year, and approximately fifty percent of the target number
of PSUs were subject to the achievement of a financial or other corporate achievement metric to be determined by the Compensation Committee
for 2020, provided that the earned award for both the 2019 and 2020 calendar years is subject to modification based on total stockholder
return (“TSR”) goals. Earned PSUs equal to 184,899 shares of common stock became vested on March 5, 2021.
On April 16, 2019, pursuant to his
employment agreement, Mr. Galvin was granted an award of 154,145 RSUs under the 2016 Plan (having an aggregate fair market value of
approximately $297,500 as of the date of grant). One-third of the RSUs vested on each of March 31, 2020 and March 31, 2021, and the
remaining RSUs will vest on March 31, 2022. Vesting generally is contingent on Mr. Galvin’s continued employment with the
Company on the applicable vesting date. In the event that Mr. Galvin’s employment is terminated by the Company without cause
or by him for good reason, then a pro-rata number of the RSUs that were scheduled to vest on the vesting date immediately following
his termination of employment will remain eligible to vest on such date, subject to his compliance with certain restrictive
covenants contained in his employment agreement. The pro-rata number of RSUs vesting is based on the number of days he was employed
from the vesting date of the RSUs immediately prior to his termination of employment to the date of his termination of employment in
relation to the total number of days in the applicable vesting tranche. These RSUs do not automatically vest as the result of a
change in control.
In addition to the annual awards of PSUs and RSUs
described above, after 2019, the Company is required to grant PSUs and/or RSUs or other cash or equity-based long-term incentives to Mr.
Galvin during the term of his employment agreement, with an aggregate target of 125% of Mr. Galvin’s then-current base salary serving
as the annual guideline for the aggregate fair market value of such grants, with a maximum aggregate annual payout of 200% of Mr. Galvin’s
then-current base salary if applicable performance targets are achieved, subject to approval by the Compensation Committee.
John T. McClain
2019 Employment Agreement
On January 28, 2019, the Company entered into
an employment agreement with John T. McClain in connection with the Company’s employment of Mr. McClain as its Executive Vice President
and Chief Financial Officer commencing as of February 11, 2019. The employment agreement provides that Mr. McClain will be an at-will
employee and will receive an annual base salary of not less than $525,000 per year (to be prorated for any partial calendar year of employment)
and certain other benefits consistent with those provided to other senior executives of the Company, including major medical, dental,
life insurance, short-term disability insurance, long-term disability insurance, and retirement. In addition, Mr. McClain is eligible
to earn an annual bonus, with a target bonus opportunity of at least 75% of his base salary and an annual maximum bonus opportunity of
150% of his base salary. In addition, pursuant to the employment agreement, the Company paid Mr. McClain an inducement cash bonus of fifty
thousand dollars ($50,000) as a result of the Company timely filing its annual report in respect of the Company’s 2018 financial
year on Form 10-K with the SEC.
The employment agreement also provides for Mr.
McClain to receive certain severance payments if the Company terminates his employment other than for cause (and not by reason of his
death or disability) or if Mr. McClain terminates his employment for good reason, in any case, subject to his execution and non-revocation
of a general release of claims. These severance payments include (i) an amount equal to fifteen months of Mr. McClain’s base salary
(payable semi-monthly in equal installments), (ii) any earned but unpaid annual bonus for the calendar year preceding the calendar year
in which such termination of employment occurs, (iii) a prorated annual bonus for the calendar year in which such termination of employment
occurs, based on the number of days of his employment during such calendar year, and assuming target performance for such calendar year,
(iv) Company-subsidized COBRA continuation coverage for Mr. McClain and his eligible dependents until the earliest of (x) Mr. McClain
or his eligible dependents, as the case may be, ceasing to be eligible under COBRA, (y) 15 months following the date of termination, and
(z) Mr. McClain becoming eligible for coverage under the health insurance plan of a subsequent employer, and (v) vesting of unvested equity
awards, if and to the extent provided for in the applicable equity award agreement. In the event that Mr. McClain’s employment with
the Company terminates under the circumstances described above but within 18 months after a “change in control” of the Company
(as defined in Mr. McClain’s employment agreement with the Company), then Mr. McClain will be entitled to a lump sum payment equal
to two times the sum of (a) the annual base salary and (b) the average annual bonus paid to him for the two calendar years immediately
prior to such change in control (or if the “change in control” of the Company occurred during 2019, the amount of clause (b)
above would have equaled 75% of Mr. McClain’s base salary), in addition to the other severance payments described in the foregoing
clauses (ii), (iv) and (v). The employment agreement also contains certain confidentiality, non-disparagement and cooperation obligations
for an indefinite period of time, and certain non-competition and non-solicitation obligations during employment and for 15 months thereafter.
The employment agreement provides for the grant
to Mr. McClain of certain PSUs and RSUs as employment inducement awards and in lieu of Mr. McClain’s eligibility to participate
in the Company’s 2019 long-term incentive plan. Pursuant to the employment agreement, on February 11, 2019, Mr. McClain received
a grant of 175,000 PSUs, subject to earning more or less PSUs based on performance (the maximum number of PSUs that can be earned is 350,000).
Fifty percent of the target number of PSUs were subject to the achievement of an adjusted EBITDA goal during the 2019 calendar year, and
fifty percent of the target number of PSUs were subject to the achievement of a financial or other corporate achievement metric determined
by the Compensation Committee for 2020, provided that the earned award for both the 2019 and 2020 calendar years is subject to modification
based on TSR goals. Earned PSUs equal to 151,232 shares of common stock became vested on March 5, 2021.
In addition, pursuant to the employment agreement,
on February 11, 2019, Mr. McClain received an award of 175,000 RSUs. One-third of the RSUs vested on February 11, 2019, and the remaining
two-thirds of the RSUs vested on February 11, 2020.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with
respect to outstanding equity-based awards at December 31, 2020 for our named executive officers, including grant dates and vesting dates
related thereto:
|
Name
|
|
Number of Shares
or Units of Stock
That Have Not Vested
(#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)(1)
|
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)
|
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
|
|
|
Robert C. Galvin
|
|
|
27,739
|
(2)
|
|
|
34,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231,161
|
(3)
|
|
|
291,263
|
|
|
|
|
|
102,763
|
(4)
|
|
|
129,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,567
|
(5)
|
|
|
90,174
|
|
|
|
|
|
71,568
|
(6)
|
|
|
90,176
|
|
|
|
|
|
|
|
|
|
|
John T. McClain
|
|
|
|
|
|
|
|
|
|
|
87,500
|
(7)
|
|
|
110,250
|
|
|
|
|
|
87,500
|
(8)
|
|
|
110,250
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market value is based on our closing stock price of $1.26 on December 31, 2020.
|
|
|
|
(2)
|
On October 18, 2018, Mr. Galvin was granted 83,217 RSUs issued under the 2016 Plan. 27,739 of the RSUs vested on March 31, 2019, 27,739 vested on March 31, 2020 and 27,739 vested on March 31, 2021.
|
|
|
|
(3) On October 18, 2018, Mr. Galvin
was awarded 231,161 PSUs as an inducement grant, subject to the terms and conditions of a performance stock unit award agreement, which
sets forth certain performance targets and a performance period. The PSUs cliff vest at the end of a three-year performance period ending
on October 15, 2021 based on the percentile ranking of the Company’s total shareholder return relative to its peer companies for
such performance period.
(4) On April 16, 2019, Mr. Galvin was
awarded 154,145 RSUs subject to the 2016 Plan. 51,382 of the RSUs vested on March 31, 2020, 51,382 vested on March 31, 2021 and 51,381
vest on March 31, 2022, subject to Mr. Galvin’s continuous employment with the Company through such vesting date.
(5) On April 16, 2019, Mr. Galvin
was awarded a target number of 143,135 PSUs (the “Galvin 2019 PSUs”), subject to the terms and conditions of a performance
stock unit award agreement, which sets forth certain performance targets and a performance period. This number of PSUs represents the
remaining target number of Galvin 2019 PSUs that can be earned based on performance during the 2020 calendar year.
(6) This number of shares represents
the number of Galvin 2019 PSUs that were earned based on 2019 performance and that are not subject to reduction based on TSR, which vested
on March 31, 2021. 2019 performance was determined to be at 110% of target, but subject to reduction to 100% of target based on the Company’s
TSR for 2019 and 2020.
(7) On February 11, 2019, Mr. McClain
was awarded a target number of 175,000 PSUs (the “McClain 2019 PSUs”), subject to the terms and conditions of a performance
stock unit award agreement, which sets forth certain performance targets and a performance period. This number of PSUs represents the
remaining target number of McClain 2019 PSUs that can be earned based on performance during the 2020 calendar year.
(8) This number of PSUs represents the number of
McClain 2019 PSUs that were earned based on 2019 performance and that are not subject to reduction based on TSR, which vested on
March 31, 2021, generally subject to Mr. McClain’s continued employment with the Company on such vesting date. 2019
performance was determined to be at 110% of target, but subject to reduction to 100% of target based on the Company’s TSR for
2019 and 2020.
Director Compensation
For the year ended December 31, 2020, each non-employee
member of the Board of Directors received a cash payment of $60,000 payable one half on January 1st and one half on July 1st.
Although historically prior to 2018 each non-employee director has received an annual equity grant valued at $120,000 based on the closing
price of our stock on the first trading day of the year, with vesting occurring on July 1st of the year of grant, the Compensation Committee
determined that for 2020 our directors would again receive this amount in cash vesting in twelve (12) equal installments.
The following table sets forth compensation information
for 2020 for each person who served as a member of our Board of Directors at any time during 2020 who was not also an executive officer.
Anyone who serves on our Board of Directors that was an executive officer during any portion of a calendar year does not receive additional
compensation for serving on the Board of Directors for the remainder of that year. None of our non-employee Directors held any outstanding
stock awards or options as of December 31, 2020.
|
Name
|
|
Fees earned or paid in cash ($)
|
|
|
Total ($)
|
|
|
Justin Barnes
|
|
$
|
180,000
|
|
|
$
|
180,000
|
|
|
F. Peter Cuneo
|
|
$
|
240,000
|
|
|
$
|
240,000
|
|
|
Drew Cohen
|
|
$
|
180,000
|
|
|
$
|
180,000
|
|
|
James A. Marcum
|
|
$
|
180,000
|
|
|
$
|
180,000
|
|
