Indicate by check mark
if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☐
No
☒
Indicate by check mark
if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
☐
No
☒
Indicate by a check
mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes
☒
No
☐
Indicate by check mark
whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant as
required to submit such files). Yes
☒
No
☐
Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
☒
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.
If an emerging growth
company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark
whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
☐
No
☒
The aggregate market
value of the Registrant’s common stock held by non-affiliates of the Registrant (assuming, for the sole purpose of this calculation,
that all directors and executive officers of the Registrant are “affiliates”), based upon the closing price of the
Registrant’s common stock on June 29, 2018 as reported by Nasdaq, was approximately $66 million.
Indicate the number
of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.
TheStreet, Inc. (“TheStreet”,
the "Company", “we”, “our” and “us”) is filing this Amendment No. 2 on Form 10-K/A
(this “Amendment No. 2”) to amend its Annual Report on Form 10-K for the year ended December 31, 2018 that was originally
filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 15, 2019 (the “Original Form 10-K”)
and subsequently amended on March 21, 2019 for the sole purpose of correcting clerical errors (“Amendment No. 1”).
This Amendment No. 2 is being filed solely to include the information required in Part III, Items 10, 11, 12, 13 and 14 of Form
10-K that was previously omitted from the Original Form 10-K and Amendment No. 1 in reliance upon General Instruction G(3) to Form
10-K. General Instruction G(3) to Form 10-K allows such omitted information to be filed as an amendment or incorporated by reference
from the registrant’s definitive proxy statement that involves the election of directors not later than 120 days after the
end of the fiscal year covered by the Form 10-K. We are filing this Amendment No. 2 to include the information required by Part
III, Items 10, 11, 12, 13 and 14 of Form 10-K because we no longer intend to file such definitive proxy statement within 120 days
after the end of our fiscal year covered by the Original Form 10-K and Amendment No. 1.
The reference on the cover of the
Original Form 10-K and Amendment No. 1 regarding the incorporation by reference to certain portions of the registrant’s
definitive proxy statement for its 2019 annual meeting of shareholders is hereby deleted. In accordance with Rule 12b-15
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Part III, Items 10, 11, 12, 13 and 14
of Form 10-K are hereby amended and restated in their entirety and Part IV, Item 15 is hereby amended to reflect the new
certification filed by our principal executive officer and our principal financial officer as an exhibit to this Amendment
No. 2. Except as specifically set forth in this Amendment No. 2, no attempt has been made to modify or update other
disclosures presented in the Original Form 10-K or Amendment No. 1. and this Amendment No. 2 does not otherwise reflect
events occurring after March 15, 2019, which is the filing date of the Original Form 10-K. Accordingly, this Amendment No. 2
should be read in conjunction with the Original Form 10-K and Amendment No. 1 and the registrant’s other filings with
the SEC. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Original Form
10-K.
PART III
Item 10. Directors, Executive Officers
and Corporate Governance.
Information About Our Directors
Our Board of Directors, or the Board, currently
comprises seven directors. Our restated certificate of incorporation, as amended, provides for a classified Board consisting of
three classes of directors. Class I consists of three directors, Class II consists of two directors and Class III consists of two
directors. Each class serves a staggered three-year term. At each annual meeting of stockholders, the successors to directors whose
terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following
their election.
The current Class
I directors of the Company, whose terms will expire at our Annual Meeting of Stockholders in 2021, or until their successors have
been duly elected and qualified, are as follows:
James
J. Cramer
. Mr. Cramer, 64, is a founder of the Company and has served as a director since May 1998. From June
1996 to December 1998, he served as co-Chair of the Board and from October 2008 to January 2011, served as Chair. He has been a
columnist and contributor to the Company’s publications since its formation in 1996 and has been an employee of the Company
since 2001, after retiring from Cramer, Berkowitz & Co., a hedge fund, at the end of 2000. Mr. Cramer began his journalism
career while pursuing his undergraduate studies, and became a “beat” reporter in Tallahassee, Florida covering some
of the biggest stories of the day. Currently, Mr. Cramer hosts CNBC programs “Mad Money” and “Squawk on
the Street” and appears frequently on various news programs, such as “Meet the Press” and “The Today Show.”
The Board believes that Mr. Cramer’s extensive knowledge of financial markets and investing, the Company’s core
editorial focus, extensive experience in financial media and journalism, as well as his years of service on our Board, make him
a suitable member of the Board, able to provide valuable insight and advice.
Bowers
Espy
. Mr. Espy, 68, has served as a director of the Company since January 2016 and has over 25 years of experience
in finance. After joining Merrill Lynch in 1983 as a vice president, mortgage finance officer and mortgage securities trader, he
served in various roles until being named a Managing Director of Investment Banking and Head of the Financial Institutions Restructuring
Group in 1989 and then Co-Head of the Depository Institutions Mergers and Acquisitions Department in 1993. After departing Merrill
Lynch in 1995, among other ventures, Mr. Espy served as Senior Vice President and Chief Financial Officer of LinkShare Corporation,
a pioneering online affiliate marketing company, from 2000 to 2001, and later served on the Board of Directors of Accredited Home
Lenders Holding Co., a mortgage company, from 2004 to 2007. Mr. Espy currently serves on the National Advisory Council of
the Johns Hopkins University School of Nursing, a role he has enjoyed for over 14 years. Mr. Espy is also the sole trustee
of the charitable grantor trust organized and funded by TheStreet’s founder, James J. Cramer, in connection with TheStreet’s
Action Alerts PLUS product as a vehicle for subscribers to track the performance of Mr. Cramer’s Action Alerts PLUS
stock recommendations. Mr. Espy is not involved in any investment decisions undertaken by the trust and receives no compensation
for serving as trustee. Mr. Espy holds M.A. and B.S. degrees in Economics from the University of Florida. The Board believes
that Mr. Espy’s extensive financial business acumen and his long history with Action Alerts Plus, makes him a suitable
member of the Board, able to provide valuable insight and advice.
Kevin Rendino
.
Mr. Rendino,
52, has served as a director of the Company since November 2017 and has over thirty years of experience in finance and investing.
For over twenty years, from 1988 to 2012, Mr. Rendino worked on one fund, the Basic Value Fund, with a consistent Graham and Dodd
focus, at BlackRock/Merrill Lynch. He was the team leader, overseeing 11 funds and $13B in assets, a member of Blackrock’s
Leadership Committee and a frequent contributor to CNBC, Bloomberg TV, Fox Business, The New York Times and The Wall Street Journal.
For the entirety of his money management career at BlackRock/Merrill Lynch, Mr. Rendino ranked in the top quartile and beat the
competitor average and the SPX by over 100 basis points. He received numerous Lipper awards for Investment Excellence during his
tenure. From 2012 to 2016, Mr. Rendino served as Chairman and Chief Executive Officer of RGJ Capital, where he led a Graham and
Dodd approach to value investing. Mr. Rendino, has served as Chairman and Chief Executive Officer of 180 Degree Capital since March
2017. He has served as a member of the Board of 180 Degree Capital since June 2016. Since early 2016, Mr. Rendino has served on
the board of directors of Rentech Inc., a global wood fiber company.
Since March 2019, Mr.
Rendino has served on the board of directors of Synacor Inc., a technology development, multiplatform services and revenue partner
for video, Internet and communications providers, devise manufacturers, governments and enterprises.
In 1988, Mr. Rendino
graduated from the Carroll School of Management at Boston College (B.S.). The Board believes that Mr. Rendino’s three decades
of Wall Street experience and expertise in capital markets, value investing and global equity markets makes him a suitable member
of the Board, able to provide valuable insight and advice.
The current Class
II directors of the Company, whose terms will expire at our Annual Meeting of Stockholders in 2019, or until their successors have
been duly elected and qualified, are as follows:
Eric Lundberg
.
Mr. Lundberg, 61, has served as a director of the Company since February 2019 and has served as the Company’s Chief
Financial Officer since January 2016 and in the additional role of the Company’s Chief Executive Officer since February 2019.
Prior to joining the Company, Mr. Lundberg served as Senior Vice President and Chief Financial Officer of ALM Media, LLC,
an integrated media company focused on the legal and commercial real estate sectors, from January 2008 to January 2015. He was
also a member of ALM Media's board of directors. Mr. Lundberg joined ALM Media from Penton Media, Inc., where he served as Chief
Financial Officer from November 2006 to January 2008. Prior to joining Penton Media, Mr. Lundberg held various financial positions
within American Lawyer Media (predecessor to ALM Media, LLC), including Vice President of Finance and Chief Financial Officer,
from 1995-2006. Mr. Lundberg holds a B.S. in accounting from Lehigh University. The Board believes Mr. Lundberg’s over 25
years of experience in the information services, media and publishing industry as a director and finance officer of public and
private media companies make him a suitable member of the Board, able to provide valuable insight and advice.
Larry S.
Kramer
. Mr. Kramer, 69, has served as the Company’s Chair of the Board since December 2015. He first joined
the Company’s Board in October 2015 and was the Company’s Interim President and Chief Executive Officer from February
2016 through June 2016. Mr. Kramer has over 40 years of experience in media and publishing and currently serves on the board
of directors of MDC Partners Inc., a marketing and communications network, and Gannett Co., Inc., a media company, and previously
served Gannett Co., Inc. as President and Publisher of USA TODAY from May 2012 to June 2015. Prior to joining Gannett, he was a
media consultant and adjunct professor of Media Management at the Newhouse School of Communications at Syracuse University. From
January 2008 to January 2010, Mr. Kramer was a Senior Advisor of Polaris Venture Partners. From March 2005 until March 2008,
he served in a number of positions at CBS, including President of CBS Digital Media. Prior to joining CBS, he was Chair, CEO and
Founder of MarketWatch, Inc. from 1995 until its sale to Dow Jones in January 2005. He was Founder, Executive Editor, and President
of Data Sport Inc. from 1991-1994 and joined Data Broadcasting Corp. as Vice President in 1994 following its acquisition of Data
Sport. Prior to founding Data Sport, he spent more than 20 years in journalism as a reporter and editor, including as Assistant
Managing Editor and Metro Editor of the Washington Post and Editor of the San Francisco Examiner. While a journalist, he won several
awards for reporting, including the National Press Club Award, and while an editor, his staff won two Pulitzer Prizes. Mr. Kramer
serves on the board of directors of Harvard Business Publishing and the board of trustees of Syracuse University. He was a founding
board member and former Chair of The Online Publishers Association and previously served on the public company boards of Discovery
Communications, Inc. (2008-2012) and Answers Corp. (2005-2011). The Board believes that Mr. Kramer’s long and extensive
record of success in financial media and journalism make him a suitable member of the Board, able to provide valuable insight and
advice.
The current Class
III directors of the Company, whose terms will expire at our Annual Meeting of Stockholders in 2020, or until their successors
have been duly elected and qualified, are as follows:
Sarah Fay
.
Ms. Fay,
56, has served as a director of the Company since May 2012 and has more than 20 years of experience in the marketing services
industry, with a track record of leveraging technology to deliver groundbreaking new models for advertising and media. Since February
2018, Ms. Fay has served on the board of directors of j2 Global, Inc., an Internet services company focused on Business Cloud Services
and Digital Media, where she is also a member of the compensation and corporate governance committees. Ms. Fay has served
as a partner in Boston-based venture capital firm Glasswing Ventures since January 2016. Prior to joining Glasswing Ventures, between
May 2009 and January 2016, Ms. Fay was primarily engaged by her board membership and advisor roles, which are described below.
From April 2008 to May 2009, Ms. Fay served as Chief Executive Officer of Aegis Media North America, a media and digital marketing
communications company, where she was also responsible for launching and growing a significant part of that business during her
eleven year tenure. Prior to this position, Ms. Fay served as President of Carat US and Isobar US, where she was tasked with
the integration of digital and traditional media services. During her tenure at Aegis, she launched the company’s U.S. digital
offering, building a full service digital marketing agency and, ultimately, a network of agencies under the Isobar umbrella. She
led the charge to acquire and integrate six specialist digital marketing firms: Vizium, Lot 21, Freestyle Interactive, AMMO, iProspect,
and Molecular. Ms. Fay serves on the board of directors of several prominent independent digital marketing and advertising
companies, such as Celtra, Inc., Women’s Marketing, Inc., and SocialFlow. In addition, Ms. Fay participates
as a board advisor to several startups in the advertising technology space including clypd, Viral Gains, Mavrck, Namely, AdDaptive
Intelligence, and associations MITX and the Ad Club of Boston. The Board believes that Ms. Fay’s extensive experience
in the media services industry, with particular knowledge of the digital media, marketing, and advertising industries, as well
as her service as a director of a number of other companies, makes her a suitable member of the Board, able to provide valuable
insight and advice.
Betsy Morgan
.
Ms. Morgan, 50, has served as a director of the Company since September 2016. She is currently the co-founder of Magnet Companies,
a private equity-backed company focused on media and commerce, and an associate professor at Columbia Business School and Columbia
College. From February 2016 to July 2018, Ms. Morgan served as an Executive in Residence of LionTree, an advisory and merchant
bank firm specializing in technology and media. From January 2011 to July 2015, Ms. Morgan was the CEO of TheBlaze, an early multi-platform
and direct-to-consumer news and entertainment company. Prior to TheBlaze, Ms. Morgan was the first CEO of The Huffington Post.
Ms. Morgan currently serves on the Board of Directors of Tripadvisor, Inc, an American travel and restaurant website company listed
on the Nasdaq Stock Market, as well as Trusted Media Brands, Chartbeat and TheSkimm. Ms. Morgan has B.A. in Political Science and
Economics from Colby College, where she served as a member of the Board of Trustees for eight years, and an M.B.A from Harvard
Business School. The Board believes that Ms. Morgan’s extensive experience in media as well as her financial background
and investment knowledge make her a suitable member of the Board, able to provide valuable insight and advice.
Board Committees
The Board has established
an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee to devote attention to specific
subjects and to assist the Board in the discharge of its responsibilities. In addition to these standing committees, the Board
from time to time may establish special committees to which authority may be delegated with respect to particular matters. The
functions of the standing committees, their members and the number of meetings held during fiscal year 2018 are described below.
The Audit, Compensation,
and Nominating and Corporate Governance Committees are currently composed of the following members:
|
|
|
Audit
|
|
Compensation
|
|
Nominating and
Corporate Governance
|
|
Sarah Fay
|
|
|
|
ü
, Chair
|
|
ü
, Chair
|
|
Betsy Morgan
|
|
ü
|
|
|
|
ü
|
Bowers Espy
|
|
ü
, Chair
|
|
ü
|
|
|
|
Larry Kramer
|
|
|
|
|
|
ü
|
|
Kevin Rendino
|
|
ü
|
|
ü
|
|
|
=
Audit Committee Financial Expert
A
udit Committee
.
The
Audit Committee provides assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving
the accounting, auditing, financial reporting and internal control functions of the Company including ensuring the integrity of
the Company’s financial statements. The Audit Committee oversees the Company’s internal accounting and financial reporting
procedures and reviews the qualifications, independence and performance of the Company’s independent registered public accounting
firm. The Audit Committee has sole authority to appoint and replace the Company’s independent registered public accounting
firm, to approve their fees and to evaluate their performance. The Audit Committee currently consists of Mr. Espy, who serves
as its Chairman, Mr. Rendino and Ms. Morgan. All of the current members of the Audit Committee are independent under the Nasdaq
corporate governance listing standards and satisfy the additional Nasdaq and SEC independence requirements for audit committee
members, as well as Nasdaq rules for financial literacy. In addition, the Board has determined that Mr. Espy, the Chairman
of the Audit Committee and Mr. Rendino are “audit committee financial experts” as defined under SEC rules. The Audit
Committee held five meetings during fiscal year 2018. The Audit Committee operates under a written charter adopted by the Board,
available on the Company’s web site at
http://investor-relations.thestreet.com,
under “Corporate Governance.”
Compensation Committee
.
The Compensation Committee makes the final determinations concerning the compensation of the Company’s executive officers,
oversees retention planning for the Company’s senior management and other key employees, administers the Company’s
incentive and equity based compensation plans and makes recommendations to the Board regarding the compensation of the Company’s
directors. The Compensation Committee requests the Company’s Chief Executive Officer and Chief Financial Officer to make
compensation recommendations for the Company’s other senior managers (including the other named executive officers) and also
obtains the Chief Executive Officer and Chief Financial Officer’s evaluations of each senior manager’s performance.
The Compensation Committee currently consists of Ms. Fay, who serves as its Chairman, Mr. Rendino and Mr. Espy. The members
of the Compensation Committee are independent under SEC and Nasdaq corporate governance listing standards. The Compensation Committee
held eleven meetings during fiscal 2018. The Compensation Committee operates under a written charter, which is available on the
Company’s web site at
http://investor-relations.thestreet.com
, under “Corporate Governance.”
Nominating and Corporate Governance
Committee
.
The Nominating and Corporate Governance Committee identifies and evaluates potential director candidates,
recommends candidates for appointment or election to the Board and advises the Board on matters of corporate governance. The Nominating
and Corporate Governance Committee currently consists of Ms. Fay, who serves as its Chairman, Ms. Morgan and Mr. Kramer.
The members of the Nominating and Corporate Governance Committee are independent under SEC and Nasdaq corporate governance listing
standards. The Nominating and Corporate Governance Committee held two meetings during fiscal 2018. The Nominating and Corporate
Governance Committee operates under a written charter, which is available on the Company’s web site at
http://investor-relations.thestreet.com
,
under “Corporate Governance.”
Information About Our Executive Officers
The following sets
forth certain information regarding current executive officers of the Company, including their ages as of the date of this Amendment
No. 2.
Information pertaining to Mr. Lundberg, who is both the Chief Executive Officer
and Chief Financial Officer and a director of the Company, may be found in the section above entitled “Information about
Continuing Directors.”
Margaret
de Luna
. Ms. de Luna, 43, joined the Company in March 2016 as President of TheStreet.com, the Company’s consumer-facing
business, and has served as the Company’s Chief Operating Officer since February 2019. Ms. de Luna previously held the
position of Vice President of Product at Praetorian Digital, the leading digital media company in the public safety and local government
market, from December 2015 to March 2016. Prior to joining Praetorian Digital, Ms. de Luna held various management positions
within MarketWatch, including Director of Product Management and Interim General Manager, from September 2004 to August 2015. She
also served as a board member of the Software Information & Industry Association’s ABM/CISD division, now known as Connectiv,
from February 2015 to July 2015.
Ms. de Luna holds a BA in English from the University
of Texas at Austin.
Robert
Kondracki.
Mr. Kondracki, 62, joined the Company in June 2016 as Vice President of Finance and has served as the Company’s
Chief Accounting Officer since February 2019. Mr. Kondracki previously served as Corporate Controller and then Vice President of
Finance for ALM Media, LLC (a privately-owned print and digital media company focused on specialized news, research, information
services and events in digital and in the legal, real estate and insurance sectors) between October 1999 and June 2016. Prior to
Joining ALM Media, LLC, Mr. Kondracki held various senior financial management positions in a number of regional commercial and
community banks. Mr. Kondracki holds a B.S. degree in accounting from Kean University and is a licensed Certified Public Accountant
in the State of New Jersey.
There are no family relationships between
any director or executive officer of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
the Company’s directors, executive officers and persons who own more than 10% of the Company’s common stock to file
reports of their ownership and changes in ownership of common stock with the SEC. Based solely on its review of such reports received
by the Company with respect to fiscal 2018, all reports as required to be filed under Section 16(a) have been timely filed by such
persons.
Corporate Governance Guidelines and
Code of Ethics
We have adopted Corporate Governance Guidelines,
which, in conjunction with our Certificate of Incorporation, By-laws and charters of the committees of our Board, form the framework
for our corporate governance. We have also adopted a Code of Business Conduct and Ethics that applies to all of our employees,
directors and officers. Both our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website
in the Investor Relations section at http://investor-relations.thestreet.com, under “Corporate Governance.” To the
extent mandated by legal requirements, we intend to disclose on our website any amendments to our Code of Business Conduct and
Ethics, or any waivers of its requirements.
Director Nominations
The Nominating
and Corporate Governance Committee considers candidates for director who are recommended by its members, by other Board members,
by stockholders and by management. From time to time, the Nominating and Corporate Governance Committee may also engage third-party
search firms to assist it in identifying director candidates.
To have a potential
director candidate considered by the Nominating and Corporate Governance Committee, a stockholder of record (“Record Stockholder”)
must submit the recommendation in writing and must include the following information: (i) name and address of Record Stockholder
submitting the recommendation; (ii) name, age, business and residential address, educational background, current principal
occupation and employment for the preceding five full fiscal years of the proposed director candidate; (iii) description of the
qualifications and background of the proposed director candidate indicating the particular skills or expertise the candidate would
bring to the Board; (iv) consent of the proposed director candidate to be named in the proxy statement relating to the Company’s
annual meeting of stockholders and to serve as a director if elected at such annual meeting; (v) number of shares of the Company’s
stock owned by the Record Stockholder submitting the recommendation and the length of time such shares have been held and a representation
of share ownership in accordance with the requirements of the Company’s Amended and Restated By-Laws and policies; (vi) description
of all relationships, arrangements or understandings between the Record Stockholder and the proposed director candidate; (vii)
any additional information that would be required under applicable SEC rules to be included in the Company’s proxy statement
in the event the proposed candidate were to be nominated as a director; and (viii) any other information required by the Company’s
Amended and Restated By-Laws.
The Company’s
Nominating and Corporate Governance Committee will consider candidates recommended for nomination to the Board by Record Stockholders
if submitted on a timely basis to the Company’s Secretary. Such submissions must be delivered to or mailed and received at
the principal executive offices of the Company as set forth in its By-Laws, which currently require such notice to be provided
not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within
thirty (30) days before or after such anniversary date, notice by the Record Stockholder in order to be timely must be so received
not later than the close of business on the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following
the day on which public announcement is first made of the date of the annual meeting.
In evaluating director
candidates for purposes of recommending nominees to the Board, the Nominating and Corporate Governance Committee will consider
(among other factors the Nominating and Corporate Governance Committee may deem relevant) the candidate’s: (i) personal and
professional ethics and integrity; (ii) leadership experience; (iii) business and professional experience in fields relevant
to the Company’s business (including whether that experience complements the expertise and experience of the other directors);
(iv) commitment to representing the interests of all stockholders of the Company; (v) diversity in skills, experience and
background; (vi) ability to devote sufficient time to Board activities, including consideration of service on other public company
boards; and (vii) status under all applicable independence requirements. Candidates recommended by stockholders will be considered
under the same criteria as candidates recommended by other sources.
The Nominating
and Corporate Governance Committee process for evaluating a director candidate may include, without limitation, any or all of the
following steps: (i) review publicly available information about the candidate; (ii) request additional information from the candidate
(or the submitting stockholder) to review his or her qualifications; (iii) conduct interviews with the candidate; (iv) contact
the candidate’s references and/or other sources of firsthand information about the candidate; (v) cause to be assembled information
concerning the background and qualification of the candidate, including information concerning the candidate to be disclosed in
the Company’s proxy statement under the rules of the SEC and any relationship between the candidate and the person recommending
the candidate; (vi) determine if the candidate satisfies minimum qualifications required by the Nominating and Corporate Governance
Committee of candidates for election as director; (vii) determine if the candidate possesses any of the specific qualities or skills
that under the Nominating and Corporate Governance Committee’s policies must be possessed by one or more members of the Board;
(viii) consider the contribution that the candidate can be expected to make to the overall functioning of the Board; and (ix) consider
the extent to which the membership of the candidate on the Board will promote diversity among the directors.
The Company’s
Policy and Procedures for Nomination of Directors is included as Attachment A to the Company’s Corporate Governance Guidelines,
which are available on the Company’s web site at
http://investor-relations.thestreet.com
, under “Corporate Governance.”
Item 11. Executive Compensation.
COMPENSATION AND OTHER INFORMATION CONCERNING
NAMED EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth certain information
regarding the compensation of our named executive officers for each of the last two fiscal years during which such individuals
were named executive officers. As a “smaller reporting company,” our named executive officers for 2018 consisted of
our principal executive officer and the two most highly compensated executive officers other than our principal executive officer.
|
Name and Principal Position
|
|
Year
|
|
|
Salary ($)
(1)
|
|
|
Bonus ($)
|
|
|
Stock Awards ($)
|
|
|
Option Awards ($)
|
|
|
Non-Equity
Incentive Plan Compensation
(2)
($)
|
|
|
All Other Compensation
(3)
($)
|
|
|
Total ($)
|
|
|
David Callaway
|
|
|
2018
|
|
|
|
522,725
|
|
|
|
—
|
|
|
|
450,000
|
|
|
|
—
|
|
|
|
122,781
|
|
|
|
8,250
|
|
|
|
1,103,756
|
|
|
President and Chief Executive Officer
(4)
|
|
|
2017
|
|
|
|
507,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
128,986
|
|
|
|
3,750
|
|
|
|
640,236
|
|
|
Eric Lundberg
|
|
|
2018
|
|
|
|
390,522
|
|
|
|
—
|
|
|
|
360,000
|
|
|
|
—
|
|
|
|
155,110
|
|
|
|
8,250
|
|
|
|
913,882
|
|
|
Chief Financial Officer
(5)
|
|
|
2017
|
|
|
|
325,708
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
111,861
|
|
|
|
7,230
|
|
|
|
444,799
|
|
|
Margaret de Luna
|
|
|
2018
|
|
|
|
312,113
|
|
|
|
—
|
|
|
|
297,000
|
|
|
|
—
|
|
|
|
61,062
|
|
|
|
5,669
|
|
|
|
675,844
|
|
|
President of TheStreet.com
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts reflect the salary earned during the course of the year by each named executive officer. See the section entitled “Base
Salary” below for more information.
|
|
|
(2)
|
Amounts shown in the “Non-Equity Incentive Plan Compensation” column reflect the short-term cash incentive earned
in the indicated year. See the section entitled “Performance-Based Bonus Awards” below for more information.
|
|
|
(3)
|
Amounts in the “All Other Compensation” column for each named executive officer for 2018 consist of Company matching
401(k) plan contributions: Mr. Callaway: $8,250; Mr. Lundberg: $8,250; Ms. de Luna: $5,669.
|
|
|
(4)
|
In connection with the Sale, Mr. Callaway resigned as President and Chief Executive Officer effective April 18, 2019.
|
|
|
(5)
|
In connection with the Sale, Mr. Lundberg was appointed to be Chief Executive Officer effective April 18, 2019.
|
|
|
(6)
|
In connection with the Sale, Ms. de Luna was promoted to President and Chief Operating Officer of the Company effective April
18, 2019. 2018 is the first fiscal year Ms. de Luna was a named executive officer.
|
Outstanding Equity Awards at 2018 Fiscal
Year-End
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
|
Grant Date
|
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable
(1)
|
|
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
|
|
Option Exercise Price($)
(1)
|
|
|
Option Expiration Date
|
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
(2)
|
|
|
David Callaway
|
|
|
7
|
/6/2016(3)
|
|
|
583,333
|
|
|
|
527,867
|
|
|
|
—
|
|
|
|
1.19
|
|
|
7/6/2023
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4
|
/18/19(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
507,500
|
|
|
Eric Lundberg
|
|
|
1
|
/19/2016(5)
|
|
|
469,495
|
|
|
|
234,650
|
|
|
|
—
|
|
|
|
1.36
|
|
|
1/19/2023
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4
|
/18/19(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
406,000
|
|
|
Margaret de Luna
|
|
|
3
|
/31/2016(6)
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
1.24
|
|
|
3/31/2023
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4
|
/18/19(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
|
|
334,950
|
|
|
|
(1)
|
The exercise price per share of the stock options reflects the closing price per share of the Company’s common stock
on the date of grant.
|
|
|
(2)
|
The market values of the RSUs that have not vested are calculated by multiplying the number of shares underlying the RSUs shown
in the table by $2.03, the closing price of our shares of our common stock on December 31, 2018, the last trading day of fiscal
2018.
|
|
|
(3)
|
The shares subject to the stock option award vest over a three-year period, with 1/3 of the shares underlying the stock option
vesting and becoming exercisable on July 6, 2017, and the remaining 2/3 vesting in approximately equal monthly installments over
the succeeding 24 months, subject to acceleration or forfeiture under various circumstances. On April 18, 2019, the shares subject
to the stock option award vested in full in connection with the Sale.
|
|
|
(4)
|
Represents RSUs that vest over a three-year period, with 1/3 of the RSUs vesting on January 2, 2019, and the remaining 2/3
vesting in approximately equal monthly installments over the succeeding 24 months. On April 18, 2019, all RSUs vested in full in
connection with the Sale.
|
|
|
(5)
|
The shares subject to the stock option award vest over a three-year period, with 1/3 of the shares underlying the stock option
vesting and becoming exercisable on April 1, 2017, and the remaining 2/3 vesting in approximately equal monthly installments over
the succeeding 24 months, subject to acceleration or forfeiture under various circumstances. On April 18, 2019, the shares subject
to the stock option award vested in full in connection with the Sale.
|
|
|
(6)
|
The shares subject to the stock option award vest over a three-year period, with 1/3 of the shares underlying the stock option
vesting and becoming exercisable on March 31, 2017, and the remaining 2/3 vesting in approximately equal monthly installments over
the succeeding 24 months, subject to acceleration or forfeiture under various circumstances. On April 18, 2019, the shares subject
to the stock option award vested in full in connection with the Sale.
|
Executive Compensation
Base Salary
Base salary is the basic element of direct
cash compensation, designed to attract and retain highly qualified executives. Accordingly, in setting base salary, the Compensation
Committee intends to be competitive with other publicly-traded companies in our industry of providing Internet-related content
services (with the understanding that such comparisons are imperfect). The Committee also considers the level of responsibility
of the position and the level of experience of the executive. Additionally, in some circumstances, it is necessary to set compensation
at levels that differ from median market levels, due to recruitment or retention considerations, to recognize roles that vary in
responsibility from standard market positions, or to reward individual performance. In evaluating base salaries for our executive
officers, we seek to be competitive, but remain cost-effective. In 2018, Mr. Callaway, Mr. Lundberg and Ms. de Luna had
an annual base salary rate of $515,000, $385,750 and $307,500, respectively. In 2019, following the Sale, Mr. Lundberg and
Ms. de Luna’s salaries were increased as described in the section entitled “Compensation Agreements with Named Executive
Officers” below.
Performance-Based Bonus Awards
Cash Bonus Plan
Our cash bonus plan is the short-term incentive
component of our executive compensation program pursuant to which Mr. Callaway, Mr. Lundberg and Ms. de Luna participated
in 2018. The cash bonus plan is designed to provide a direct method of motivating executives to achieve near-term corporate performance
goals. For 2018, the cash bonus plan provided that the annual target bonus of each participant in the cash bonus plan would be
allocated based on the Company and the participant’s individual performance during 2018, as follows:
David Callaway
|
Bonus
Criteria
|
|
Weighting
|
|
|
Amount of Target Bonus
|
|
|
Consolidated Revenue
|
|
|
40
|
%
|
|
$
|
103,000
|
|
|
Consolidated Adjusted EBITDA
|
|
|
30
|
%
|
|
$
|
77,250
|
|
|
Individual Performance Score
|
|
|
30
|
%
|
|
$
|
77,250
|
|
|
Total
|
|
|
100
|
%
|
|
$
|
257,500
|
|
Eric Lundberg
|
Bonus Criteria
|
|
Weighting
|
|
|
Amount of Target Bonus
|
|
|
Consolidated Revenue
|
|
|
35
|
%
|
|
$
|
67,331
|
|
|
Consolidated Adjusted EBITDA
|
|
|
35
|
%
|
|
$
|
67,331
|
|
|
Individual Performance Score
|
|
|
30
|
%
|
|
$
|
57,713
|
|
|
Total
|
|
|
100
|
%
|
|
$
|
192,375
|
|
Margaret de Luna
|
Bonus Criteria
|
|
Weighting
|
|
|
Amount of Target Bonus
|
|
|
Consolidated Revenue
|
|
|
10
|
%
|
|
$
|
12,300
|
|
|
Consolidated Adjusted EBITDA
|
|
|
10
|
%
|
|
$
|
12,300
|
|
|
Business Revenue
|
|
|
30
|
%
|
|
$
|
36,900
|
|
|
Business Adjusted EBITDA
|
|
|
25
|
%
|
|
$
|
30,750
|
|
|
Individual Performance Score
|
|
|
25
|
%
|
|
$
|
30,750
|
|
|
Total
|
|
|
100
|
%
|
|
$
|
123,000
|
|
Below is a summary of the performance goals,
performance results and performance-based bonuses earned in 2018 under the cash bonus plan by Mr. Callaway, Mr. Lundberg
and Ms. de Luna:
David Callaway
|
Bonus Criteria
|
Maximum
|
Target
|
Threshold
|
Actual
Performance
|
Payout
|
|
Consolidated Revenue
|
$73,491,360 (200% payout)
|
$61,242,800
(100% payout)
|
$58,793,088
(0% payout
if less than $58,793,088)
|
$57,033,000
|
$0
(0% payout)
|
|
Consolidated Adjusted EBITDA*
|
$10,208,796
(200% payout)
|
$5,104,398
(100% payout)
|
>$3,573,079
(0% payout if $3,573,079 or less)
|
$4,475,642
|
$45,531
(59% payout)
|
|
Individual Performance Score
|
150%
|
100%
|
>0%
|
100%
|
$77,250
(100% payout)
|
|
|
|
|
|
Total
|
$122,781
|
*Excludes certain unusual costs and
non-cash compensation expenses
Eric Lundberg
|
Bonus Criteria
|
Maximum
|
Target
|
Threshold
|
Actual Performance
|
Payout
|
|
Consolidated Revenue
|
$73,491,360 (200% payout)
|
$61,242,800
(100% payout)
|
$58,793,088
(0% payout
if less than $58,793,088)
|
$57,033,000
|
$0
(0% payout)
|
|
Consolidated Adjusted EBITDA*
|
$10,208,796
(200% payout)
|
$5,104,398
(100% payout)
|
>$3,573,079
(0% payout if $3,573,079 or less)
|
$4,475,642
|
$39,685
(59% payout)
|
|
Individual Performance Score
|
150%
|
100%
|
>0%
|
200%
|
$115,425
(200% payout)
|
|
|
|
|
|
Total
|
$155,110
|
*Excludes certain unusual costs and
non-cash compensation expenses
Margaret de Luna
|
Bonus Criteria
|
Maximum
|
Target
|
Threshold
|
Actual Performance
|
Payout
|
|
Consolidated Revenue
|
$73,491,360 (200% payout)
|
$61,242,800
(100% payout)
|
$58,793,088
(0% payout
if less than $58,793,088)
|
$57,033,000
|
$0
(0% payout)
|
|
Consolidated Adjusted EBITDA*
|
$10,208,796
(200% payout)
|
$5,104,398
(100% payout)
|
>$3,573,079
(0% payout if $3,573,079 or less)
|
$4,475,642
|
$7,250
(59% payout)
|
|
Business Revenue
|
$38,290,852
|
$31,909,043
|
>$30,313,591 (0% payout if $30,313,591 or less
)
|
$27,511,200
|
$0
(0% payout)
|
|
Business Adjusted EBITDA*
|
$9,671.957
|
$8,059,964
|
>$6,447,971
(0% payout if $6,447,971 or less
)
|
$5,485,800
|
$0
(0% payout)
|
|
Individual Performance Score
|
150%
|
100%
|
>0%
|
175%
|
$53,812
(175% payout)
|
|
|
|
|
|
Total
|
$61,062
|
*Excludes certain unusual costs and
non-cash compensation expenses
70% of each named executive officer’s bonus was paid in
December 2018 based on a preliminary estimate of achievement with the remaining 30% paid in March once the bonus calculations were
finalized.
Long-Term Equity Incentives
Long-term incentives are provided by equity
awards, generally made under the 2007 Plan. The 2007 Plan authorizes the Compensation Committee to grant a variety of types of
equity awards, including stock options, stock appreciation rights, restricted stock and RSUs. Long-term equity awards enable our
executive officers to maintain an equity interest in the Company, which aligns their financial interests with those of our stockholders.
In January 2018, the Compensation Committee
awarded RSUs to our named executive officers for the number of shares set forth in the table below
,
which were granted effective
April 18, 2019, following stockholder approval of the amendment and the restatement of the 2007 Plan.
|
Name
|
Number
of Securities
Underlying RSUs
|
|
David Callaway
|
250,000
|
|
Eric Lundberg
|
200,000
|
|
Jeff Davis
|
120,000
|
Perquisites and Personal Benefits
In 2018, we did not provide our named executive
officers with any perquisites or personal benefits that are not provided to our employees generally. In 2018, like all employees
who participated in our 401(k) plan, our named executive officers received matching contributions based on their contributions
to our 401(k) plan.
Stock Ownership Guidelines
The Board believes that our executive officers
and certain other members of our leadership team should own and hold our common stock to further align their interests with the
interests of our stockholders and to further promote our commitment to sound corporate governance. Therefore, the Board adopted
the minimum stock ownership guidelines described below that is applicable for our executive officers.
Each of our executive officers, and certain
other members of our leadership team as identified by our Compensation Committee, is required to own common stock equal to one
times his or her annual base salary as follows. Each person has until the five years from the date that the person is appointed
and subject to these guidelines to attain and maintain such ownership levels. For purposes of these guidelines, the value of a
share shall be measured as of January 1
st
of each year based on the closing price on the last day of the prior
fiscal year. As of April 1, 2019, all our directors were currently in compliance with the ownership guidelines.
Compensation Agreements with Named Executive Officers
Severance Agreements
On May 18, 2018, following the Compensation
Committee’s annual review of executive severance, the Compensation Committee approved new severance agreements for our named
executive officers, which provide for the following benefits in the event of a termination without Cause or resignation for Good
Reason (each, as defined in the applicable agreement) during a “protective period,” beginning 30 days prior to and
ending 18 months following a Transaction (as defined in the applicable agreement): (x) severance payments equal to 18 months of
his then-current base salary in the case of David Callaway and Eric Lundberg, and 12 months of her then-current base salary in
the case of Ms. de Luna; and (y) Company-paid COBRA premiums for up 18 months in the case of Mr. Callaway and Mr. Lundberg, and
for up to twelve months in the case of Ms. de Luna.
In order to receive such severance payments
and benefits, each named executive officer is required to execute a release of claims and comply with certain post-termination
restrictions, which among other things, include complying with certain non-competition, non-solicitation, non-disparagement and
confidentiality provisions. If a named executive officer has a termination of employment other than during the protective period,
then the severance protections previously disclosed will apply.
David Callaway – Former Chief Executive Officer
In connection with and effective as of the
Closing, David Callaway stepped down as the Company’s Chief Executive Officer given the reduced size of the Company’s
operations following the Sale. Upon his departure, Mr. Callaway became entitled to the severance benefits under his Transaction
Severance Agreement with the Company following his executing a release of claims. His benefits remain subject to his complying
with the post-termination restrictions described above.
Eric Lundberg – Current Chief Executive Officer
and Chief Financial Officer
In connection with Mr. Callaway’s
departure, Eric Lundberg was appointed Chief Executive Officer, effective as of the Closing. Mr. Lundberg also continues to serve
as Chief Financial Officer. In recognition of the increased duties and responsibilities associated with his appointment as Chief
Executive Officer, Mr. Lundberg received an increase in his annual base salary to $450,000, effective as of the Closing. As an
incentive for his continued service and dedication to the Company following the Sale, Mr. Lundberg will also have the opportunity
to earn: (i) a cash award of $300,000 payable in a single lump sum upon the six (6) month anniversary of the Closing, subject to
his continued employment with the Company through such date, (ii) a cash award of $300,000 payable in a single lump sum upon the
12 month anniversary of the Closing, subject to his continued employment with the Company through the six (6) month anniversary
of the Closing, and (iii) a cash award of $200,000 payable in 12 monthly installments, with the first installment being made on
the first payroll date following the Closing, subject to his continued employment with the Company through each applicable payment
date.
Mr. Lundberg will receive the cash awards
described in clauses (i) and (ii) above unless he voluntarily terminates without Good Reason (as defined in his Transaction Severance
Agreement) prior to the six (6) month anniversary of the Closing. If the Company terminates his employment without Cause (as defined
in his Transaction Severance Agreement) or if he resigns for Good Reason, Mr. Lundberg will receive any unpaid portion of the cash
awards described in clause (iii) above. If any cash bonus is paid to Mr. Lundberg following his termination of employment, payment
of such cash bonus will be conditioned upon his execution of a release of claims and complying with certain post-termination restrictions,
which among other things, include complying with certain non-competition, non-solicitation, non-disparagement and confidentiality
restrictions. Upon Mr. Lundberg’s termination of employment, he will be entitled to the COBRA benefits described in his Transaction
Severance Agreement. In consideration for such benefits, Mr. Lundberg waived his right to resign for Good Reason under his Transaction
Severance Agreement in connection with the Sale and his right to resign for Good Reason following the Sale will be determined based
on reference to his authority, duties and responsibilities as in effect immediately following the Sale. In addition, Mr. Lundberg
will forfeit his right to any severance benefits that are provided for in his Transaction Severance Agreement or any other severance
arrangement with the Company.
Margaret de Luna
Effective as of the Closing, Margaret de
Luna, President of TheStreet.com, was promoted to President and Chief Operating Officer of the Company. In recognition of the increased
duties and responsibilities associated with her promotion to Chief Operating Officer, Ms. de Luna received an increase in her annual
base salary to $450,000, effective as of the Closing. As an incentive for her continued service and dedication to the Company following
the Sale, Ms. de Luna will also have the opportunity to earn: (i) a cash award of $50,000 payable in a single lump sum upon the
six (6) month anniversary of the Closing (the “First Cash Award”) and (ii) a cash award of $50,000 payable in a single
lump sum upon the 12 month anniversary of the Closing (the “Second Cash Award” and together with the First Cash Award,
the “Cash Awards”), subject in each case to her continued employment with the Company through the applicable payment
date.
Payment of the Cash Awards will accelerate
upon certain events occurring during the relevant six (6) month period for each Cash Award, including the consummation of the sale
or dissolution of the Company’s B2C Business, the sale of the premium subscription business, a termination of her employment
without Cause or a resignation for Good Reason (each, as defined in her Transaction Service Agreement) and certain other circumstances.
Further, if Ms. de Luna becomes entitled to the severance benefits set forth in her Transaction Severance Agreement with the Company
prior to the payment of her annual cash bonus for fiscal year 2019, in addition to such severance benefits, she will receive a
pro-rata annual cash bonus for fiscal year 2019 based on the number of days she is employed in fiscal year 2019 by the Company;
provided, however, that if her termination of employment occurs after December 31, 2019, then she will instead receive the bonus
she would have received for fiscal year 2019, based on actual company performance, provided further that any achievement against
her individual performance metric for fiscal year 2019 will not be less than 100% achievement. Ms. de Luna’s severance rights
under her Transaction Severance Agreement will become permanent following the Closing rather than expire on 18-month anniversary
of the Closing In consideration for such benefits, Ms. de Luna waived her right to resign for Good Reason under her Transaction
Severance Agreement in connection with the Sale and her right to resign for Good Reason following the Sale will be determined based
on reference to her authority, duties and responsibilities as in effect immediately following the Sale.
Compensation Committee Interlocks and
Insider Participation
The Compensation Committee currently consist
of Ms. Fay, Chair, Mr. Rendino and Mr. Espy. Each of them is independent and none of them are employees or former employees
of the Company. During fiscal year 2018 none of the Company’s executive officers served on the compensation committee (or
equivalent) or the board of directors of another entity, an executive officer of which served on the Company’s Compensation
Committee or Board.
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table sets forth certain information as of December
31, 2018, concerning shares of our common stock authorized for issuance under the 2007 plan and certain inducement stock option
grants made pursuant to NASDAQ listing rule 5635(c).
|
|
|
Number of securities
to be
issued upon exercise
of outstanding
options
|
|
|
Weighted-average
exercise price of
outstanding options
|
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,368,883
|
|
|
$
|
1.41
|
|
|
|
3,386,288
|
|
|
Equity compensation plans not approved by security holders
|
|
|
2,350,000
|
|
|
$
|
1.22
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Non-qualified stock option grant to Jeff Davis on 11/1/2016 to purchase 200,000 shares with an exercise price of $0.97 per share.
|
|
|
●
|
Non-qualified stock option grant to Terri Smith on 9/12/2016 to purchase 150,000 shares with an exercise price of $1.15 per share.
|
|
|
●
|
Non-qualified stock option grant to David Callaway on 7/6/2016 to purchase 1,000,000 shares with an exercise price of $1.19 per share.
|
|
|
●
|
Non-qualified stock option grant to Heather Mars on 6/27/2016 to purchase 100,000 shares with an exercise price of $1.20 per share.
|
|
|
●
|
Non-qualified stock option grant to Robert Kondracki on 6/17/2016 to purchase 100,000 shares with an exercise price of $1.16 per share.
|
|
|
●
|
Non-qualified stock option grant to Margaret de Luna on 6/17/2016 to purchase 150,000 shares with an exercise price of $1.24 per share.
|
|
|
●
|
Non-qualified stock option grant to Eric Lundberg on 1/19/2016 to purchase 650,000 shares with an exercise price of $1.36 per share.
|
Each of the stock options described above
has a seven-year term and vests over a period of three years, with one-third vesting after one year from the grant date and the
remaining two-thirds vesting in approximately equal monthly increments over the succeeding twenty-four months, subject to continuous
service through each vesting date. Each of the stock options is subject to acceleration or forfeiture upon the occurrence of certain
events as set forth in his or her stock option agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information
regarding the beneficial ownership of our common stock as of April 15, 2019 (except as otherwise noted) by (i) each person who
is known by us to beneficially own more than 5% of our outstanding common stock, (ii) each director and nominee for director, (iii)
each of the named executive officers and other persons named in the Summary Compensation Table, and (iv) all directors and executive
officers as a group. Unless otherwise indicated, the address of each listed stockholder is c/o TheStreet, Inc., 14 Wall Street,
New York, New York 10005. With respect to the beneficial owners of 5% or more of the Company’s common stock, we have relied
upon their beneficial ownership reports as filed with the SEC and internal Company records.
The amounts and percentage of our common
stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership
of securities. The SEC has defined “beneficial” ownership of a security to mean, generally, the possession, including
shared possession, directly or indirectly, of voting power or investment power. A shareholder is also deemed to be, as of any date,
the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (1)
the exercise of any option, warrant or right, (2) the conversion of a security, (3) the power to revoke a trust, discretionary
account or similar arrangement or (4) the automatic termination of a trust, discretionary account or similar arrangement. Under
these rules, more than one person may be deemed a beneficial owner of the same securities, and a person may be deemed a beneficial
owner of securities as to which he has no economic interest. Unless otherwise indicated, we believe that each of the shareholders
listed has sole voting and investment power with respect to their beneficially owned shares of our common stock.
The percentages reflect beneficial ownership
as of April 15, 2019, as determined under Rule 13d-3 under the Exchange Act and are based on 53,353,310 shares of our common stock
outstanding as of that date. In addition, any options exercisable or RSU vesting within 60 days of April 15, 2019 are included
in the beneficial ownership of the holder of such option, and the percentage ownership for that holder is calculated by adding
the aggregate number of options exercisable or RSUs vesting within 60 days of April 52, 2019 to both the number of shares held
by that specific shareholder and the total number of shares outstanding.
Unless otherwise indicated, all ownership
interests or voting power referenced herein, either in percentage terms or number of shares, in respect of the Company’s
outstanding shares, have been calculated in accordance with Rule 13d-3 under the Exchange Act.
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|
|
Shares of
Common Stock
Beneficially Owned
(1)
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|
|
Name and Address of Beneficial Owner
|
|
Number of
Shares
|
|
|
Percent
|
|
|
Five Percent Stockholders:
|
|
|
|
|
|
|
|
|
|
180 Degree Capital Corp.
(2)
|
|
|
8,136,363
|
|
|
|
15.2
|
|
|
Cannell Capital LLC
(3)
|
|
|
5,635,701
|
|
|
|
10.6
|
|
|
James J. Cramer
(4)
|
|
|
3,995,764
|
|
|
|
7.5
|
|
|
B. Riley Financial, Inc.
(5)
|
|
|
3,631,014
|
|
|
|
6.8
|
|
|
Renaissance Technologies LLC
(6)
|
|
|
2,782,158
|
|
|
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive Officers:
|
|
|
|
|
|
|
|
|
|
Kevin Rendino
(7)
|
|
|
8,279,963
|
|
|
|
15.5
|
|
|
James J. Cramer
(4)
|
|
|
3,995,764
|
|
|
|
7.5
|
|
|
David Callaway
(8)
|
|
|
1,175,201
|
|
|
|
2.2
|
|
|
Larry S. Kramer
(9)
|
|
|
1,079,367
|
|
|
|
2.0
|
|
|
Sarah A. Fay
(10)
|
|
|
488,848
|
|
|
|
*
|
|
|
Eric F. Lundberg
|
|
|
454,804
|
|
|
|
*
|
|
|
Bowers W. Espy
|
|
|
216,189
|
|
|
|
*
|
|
|
Margaret de Luna
|
|
|
206,982
|
|
|
|
*
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|
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Betsy L. Morgan
|
|
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202,002
|
|
|
|
*
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All current directors and executive officers as a group (9 persons)
(11)
|
|
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15,146,983
|
|
|
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28.4
|
|
|
|
*
|
Represents beneficial ownership of less than 1%.
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(1)
|
Shares owned are as of April 15, 2019, prior to the Company’s ten-for-one reverse stock split, which was effective on April 26, 2019 at 12:01 a.m. ET. The reverse stock split did not alter any stockholder's percentage ownership interest in the Company, except to the extent that the reverse stock split resulted in fractional shares, which were paid for in cash.
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(2)
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Based solely on information contained in a Schedule 13D filed with the SEC on November 14, 2017, includes (i) 4,636,363 shares held of record by 180 Degree Capital Corp. and (ii) 3,500,000 shares held of record by TheStreet SPV Series, a series of 180 Degree Capital Management. Mr. Rendino is Chief Executive Officer of 180 Degree Capital Corp. and 180 Degree Capital Corp. is the investment manager of TheStreet SPV Series. The principal business address of 180 Degree Capital Corp. and each person or entity listed in this note is 7 N. Willow Street, Suite 4B, Montclair, New Jersey 07042.
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(3)
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Based solely on information contained in a Form 4 filed by Cannell Capital LLC with the SEC on March 14, 2019. Cannell Capital LLC is the investment adviser to various entities, including Tristan Partners, L.P. and Tristan Offshore Fund, Ltd., that in the aggregate own the above-reported shares. J. Carlo Cannell is the managing member of Cannell Capital and each of Mr. Cannell and Cannell Capital LLC may be deemed to beneficially own the above-reported shares. Mr. Cannell possesses the sole power to vote and the sole power to direct the disposition of all securities of the Company. The principal business address of Cannell Capital LLC is 245 Meriwether Circle, Alta, WY 83414.
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(4)
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Includes 3,547,431 shares of common stock owned directly by Mr. Cramer and 448,333 shares of common stock owned indirectly by Mr. Cramer through Cramer Partners, LLC. Mr. Cramer has the sole power to vote and the sole power to direct the disposition of the shares of which he is the record owner. Cramer Partners, LLC has the sole power to vote and the sole power to direct the disposition of the shares of which it is the record owner.
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(5)
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Based solely on information contained in a Schedule 13G jointly filed with the SEC on January 23, 2019 by B. Riley Financial, Inc., B. Riley Capital Management, LLC, B. Riley FBR, Inc., BR Dialectic Capital Management, LLC, and Dialectic Antithesis Partners, LP. The principal business address of B. Riley Financial, Inc. is 21255 Burbank Blvd., Suite 400, Woodland Hills, CA 91367.
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(6)
|
Based solely on information contained in a Schedule 13G filed with the SEC on February 13, 2019, includes 2,660,758 shares of common stock owned directly by Renaissance Technologies LLC and 121,400 shares are owned indirectly by Renaissance Technologies LLC through Renaissance Technologies Holdings Corporation. Renaissance Technologies LLC has the sole power to vote and the shared power to direct the disposition of the shares of which it is the record owner. The principal business address of Renaissance Technologies LLC is 800 Third Avenue, New York, New York 10022.
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(7)
|
Includes (i) the shares listed in footnote (1) above, which are held of record by 180 Degree Capital Corp. and TheStreet SPV Series and (ii) 143,600 shares of common stock owned directly by Mr. Rendino.
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(8)
|
Includes (i) 1,151,201 shares of common stock owned directly by
Mr. Callaway and (ii) 24,000 shares of common stock held indirectly by Mr. Callaway through the Callaway Family Trust.
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(9)
|
Includes 8,652 shares of common stock held directly by Mr. Kramer and 1,070,715 shares of common stock held indirectly by Mr. Kramer through Lawrence Kramer and Myla Lerner Revocable Trust.
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(10)
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Includes 15,000 shares of common stock issuable upon exercise of stock options, which are exercisable within 60 days of April 15, 2019.
|
|
|
(11)
|
Includes a total of 15,000 shares of common stock issuable upon exercise of stock options, which are exercisable within 60 days of April 15, 2019.
|
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
Transactions with Related Persons
Amended and Restated Employment Agreement
with James J. Cramer
On November 8, 2017, the Company and James
Cramer entered into an amended and restated employment agreement with a new four-year term commencing January 1, 2018 (the “Amended
Employment Agreement”). Pursuant to the Amended Employment Agreement, Mr. Cramer will author articles for the Company’s
publications, provide online video content for the Company’s websites, participate in events and provide reasonable promotional
and other services, subject to his personal and professional availability.
The Amended Employment Agreement provides
that Mr. Cramer will not receive a salary or bonus, but he will instead receive a royalty based on the total net revenues of the
Company’s consumer subscription products as well as revenues from investor and conference programs, presentations or events
offered by the Company in which Mr. Cramer is advertised or serves as a presenter, speaker, participant or panelist. Mr. Cramer’s
royalty payment is guaranteed to be at least $2,000,000 per year (a $500,000 decrease from his prior employment agreement), and
to satisfy the guarantee, beginning January 1, 2018, the Company began paying Mr. Cramer a semi-monthly draw in an amount equal
to $104,167, which assumes an annual royalty payment of $2,500,000. At the end of each year, the Company will prepare a royalty
statement and calculate and pay the total royalty payable to Mr. Cramer for such year. To the extent the annual royalty amount
exceeds the total monthly draw the Company paid during the period, then such excess amount will be paid to Mr. Cramer. To the extent
the total monthly draws paid during the period exceed the annual royalty amount, such excess (up to a maximum of $500,000) shall
be recoverable by the Company as set forth in the agreement. In addition, during the term of the Amended Employment Agreement,
the Company will pay Mr. Cramer an annual license fee in the amount of $300,000 for the use of his name and likeness, (which remains
unchanged from his prior employment agreement) payable in four equal installments of $75,000 on each of January 1, April 1, July
1 and October 1.
Pursuant to the terms of the Amended Employment
Agreement, Mr. Cramer was granted RSUs under the Company’s 2007 Plan covering 1,000,000 shares of the Company’s common
stock. The RSUs will be payable in shares of common stock and will vest and become payable as to 25% of the shares in four equal
installments on December 31 of each of 2018, 2019, 2020 and 2021, respectively, subject to Mr. Cramer’s continued service
through each such vesting date and other terms as set forth in the applicable award agreement. Upon (i) the consummation of a “change
of control” of the Company (as defined in the 2007 Plan), (ii) a termination of Mr. Cramer’s employment by the Company
without “cause” or (iii) Mr. Cramer’s resignation for “good reason” (as such terms are defined in
the Amended Employment Agreement or the award agreement, as applicable), all of the unvested RSUs held by Mr. Cramer will become
fully vested.
Mr. Cramer has agreed that, during the term
of the Amended Employment Agreement, Mr. Cramer will not author articles or columns for any other digital financial publication
that competes with the Company without first obtaining the Company’s consent. In addition, if, during the term of the Amended
Employment Agreement, either the Company terminates Mr. Cramer’s employment for cause or Mr. Cramer resigns without good
reason, such restrictions shall continue to apply for a period of 18 months following his termination date. In addition, subject
to certain exceptions, during the term of the Amended Employment Agreement and for a period of 18 months after the termination
of his employment, Mr. Cramer will not solicit for employment, in any business enterprise or activity, any person who was employed
by the Company during the six months prior to his termination date.
The Amended Employment Agreement may be
terminated by the Company for cause, by Mr. Cramer for good reason, upon Mr. Cramer’s death or disability, upon the dissolution
or liquidation of the Company, or by Mr. Cramer for specified events provided under the employment agreement.
Other than as described above, the provisions
of Mr. Cramer’s prior employment agreement generally continue.
In determining Mr. Cramer’s compensation,
the Compensation Committee, among other things, considered:
|
|
·
|
Mr. Cramer’s unique role as the founder of the Company;
|
|
|
·
|
His status as a well-known American television personality and author of financial advice;
|
|
|
·
|
His development of the Company’s brand;
|
|
|
·
|
The competitive pay for similarly situated individuals; and
|
|
|
·
|
The recommendations of Frederick W. Cook, an independent compensation consultant.
|
Based on the foregoing, the Compensation
Committee determined that the compensation terms described above were necessary and appropriate.
In 2018, Mr. Cramer received an aggregate
of $2,800,000 in cash compensation pursuant to the agreement, which includes $2,500,000 in royalty payments and the $300,000 licensing
fee. In addition, Mr. Cramer’s RSUs vested in full upon the Closing as the Sale was a change in control under the 2007 Plan.
Independence of Directors
The Board has determined
that five of its current seven members are “independent” as that term is described under listing requirements of Nasdaq.
Under these standards, a director is not independent if the director has certain specified relationships with the Company or any
other relationship, which in the opinion of the Board would interfere with the director’s exercise of independent judgment
as a director. The independent directors are: Mr. Espy, Mr. Rendino, Ms. Fay, Ms. Morgan, and Mr. Kramer.
Item 14. Principal Accounting Fees and
Services.
Fees of Independent Registered Public
Accountants
The Company’s independent registered
public accounting firm was BDO USA, LLP for fiscal years ended December 31, 2018 and 2017. The following table sets forth
the aggregate fees billed to the Company by BDO USA, LLP for services rendered with respect to such fiscal years:
|
|
|
2018
|
|
|
2017
|
|
|
Audit Fees
(1)
|
|
$
|
808,850
|
|
|
$
|
542,056
|
|
|
Audit-Related Fees
|
|
|
—
|
|
|
|
—
|
|
|
Tax Fees
(2)
|
|
|
175,052
|
|
|
|
170,853
|
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
Total Fees
|
|
$
|
983,902
|
|
|
$
|
712,909
|
|
|
(1)
|
In accordance with SEC rules, audit fees are fees that the Company paid to its independent registered public accounting firm for the audit of the Company’s annual financial statements included in the Annual Report on Form 10-K and review of financial statements included in the Quarterly Reports on Form 10-Q, for the audit of the Company’s internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.
|
|
|
|
|
(2)
|
Tax fees for 2018 relate to (i) preparation and filing of the Company’s fiscal 2017
tax returns, as well as fees billed for professional services and tax compliance, tax advice and tax planning and (ii)
diligence related to the sale transaction activity in 2018. Tax fees for 2017 relate to (i) preparation and filing
of the Company’s fiscal 2016 tax returns, as well as fees billed for professional
services and tax compliance, tax advice and tax planning and (ii) assistance with a sales and
use tax audit, and tax restructuring and a transfer pricing study related to Management Diagnostics
Limited.
|
Pre-Approval of Audit and Non-Audit Services
The Audit Committee pre-approves, on a case-by-case
basis, all audit, review or attest services and permitted non-audit services (including the fee arrangements and terms in respect
of such services) to be performed by the Company’s independent registered public accounting firm prior to its engagement
to perform such services.