UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed
by the Registrant [
X
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Filed
by a Party other than the Registrant [_]
Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material under Rule 14a-12
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Capital Financial
Holdings, Inc.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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[X]
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No fee
required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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of each class of securities to which transaction
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Aggregate number of
securities to which transaction
applies:
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which
filing fee is calculated and state how it was
determined):
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aggregate value of
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offering
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of the filing.
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previously
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Notice of Annual Meeting
and Proxy Statement
Annual Meeting to Be Held
July 11, 2017
1 Main Street North
Minot, ND 58703
(877) 814-6379
May 29, 2017
Dear
Shareholder:
You are cordially invited to attend
the Annual Meeting of Shareholders to be held at
the offices
of Capital Financial Holdings, Inc., 1821 W Burdick Expressway,
Minot, North Dakota 58701, commencing at 9:00 a.m. local time, on
July 11, 2017.
The
Secretary’s Notice of Annual Meeting and the Proxy Statement,
which follow, describe the matters to come before the Meeting.
During the Meeting we will also review the activities of the past
year and items of general interest about the Company.
We hope
that you will be able to attend the Meeting in person and we look
forward to seeing you. As indicated in the Notice of Annual Meeting
of Shareholders, you may submit your Proxy online or complete, sign
and date a proxy which is available to you online or upon request,
even if you plan to attend the Meeting. You may revoke the Proxy
and vote in person at that time if you so desire.
Sincerely,
/s/ Gordon Dihle
Gordon
Dihle
President &
Chief Executive Officer
Table of Contents
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Page
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Notice
of Annual Meeting
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1
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Proxy
Statement
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2
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General
Information
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2
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Question
and Answer Summary: About the Meeting
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4
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Proposal
No. 1 – Election of Directors
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6
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Certain
Relationships and Related Transactions
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8
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Corporate
Governance
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8
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Executive
Officers
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12
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Executive
Compensation
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12
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Fees
Billed for Services Rendered by Independent Accountant
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13
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Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
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13
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Director
Compensation
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14
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Section
16(A) Beneficial Ownership Reporting Compliance
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14
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Security
Ownership of Beneficial Owners and Management
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14
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Proposal
No. 2 – Ratification of Selection of Independent
Auditors
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15
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Proposal No. 3
– Approve the Compensation of the Named Executive
Officers
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16
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Proposal No. 4
– Approve on Frequency of Advisory Vote on Executive
Compensation
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17
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Other
Matters
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Deadline
for Submission of Shareholder Proposals For Next Annual
Meeting
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18
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Voting
Trustees and Their Nominees
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Proxy
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Notice of 2017 Annual Meeting of Shareholders
To be held July 11, 2017
Important Notice Regarding the Availability of Proxy Materials for
the
Shareholder Meeting to Be Held July 11, 2017
The Notice of 2017 Annual Meeting, Proxy Statement and 2017 Annual
Report
to Shareholders are available
at
www.capitalfinancialholdings.com/proxy
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Notice is Hereby Given
that the
Annual Meeting of Shareholders (the “
Meeting
”) of Capital Financial
Holdings, Inc., (the “
Company
”), a North Dakota
corporation, will be held on July 11, 2017, at 9:00 a.m., local
time, at the offices of Capital Financial Holdings, Inc.,
1821 W
Burdick Expressway,
Minot, North Dakota 58701, for the
following purposes:
1.To elect the
Board of Directors of the Company.
2.
To ratify
the selection of Dave Banerjee, CPA-An Accountancy Corporation as
the Company’s independent auditors for the fiscal year ending
December 31, 2017.
3.To approve the
compensation of the named executive officers.
4.To approve on
frequency of advisory vote on executive compensation.
5.To transact such
other business as may properly come before the Meeting and at any
postponements or adjournments thereof.
Only
shareholders of record at the close of business on May 22, 2017,
are entitled to notice of and to vote at the Meeting or at any
postponements or adjournments thereof.
Pursuant to rules
and regulations adopted by the Securities and Exchange Commission,
we have elected to provide access to our proxy materials over the
Internet, allowing us to provide the information shareholders need,
while lowering delivery and printing expenses. On or about May 29,
2017, we mailed to our shareholders a notice containing
instructions on how our shareholders may access online our 2017
Proxy Statement, 2017 Annual Report to Shareholders, and Annual
Report on Form 10-K for the fiscal year ended December 31,
2016; how our shareholders may request paper copies of these
materials; and how our shareholders may direct their votes. Neither
our Annual Report to Shareholders nor our Annual Report on
Form 10-K constitutes soliciting materials, but provides you
with additional information about the Company. We invite your
attention to each of these documents, and we invite you to attend
the Annual Meeting of Shareholders in person.
The
Board of Directors of the Company is soliciting Proxies for this
meeting. The Board of Directors recommends that you vote in favor
of the proposed items. Your vote is important.
By
Order of the Board of Directors
/s/ Elizabeth
Colby
Elizabeth A. Colby,
Secretary
Minot,
North Dakota
Dated:
May 29, 2017
Even if you plan to attend the meeting in person, please either
submit your proxy online or complete, sign and date a proxy, which
is available to you online or upon request, and return it promptly
to us.
Please
do it today
.
If you attend the meeting
in person, you may revoke your proxy and vote in person at the
meeting.
1 Main Street North
Minot, ND 58703
(877) 814-6379
Proxy Statement
Annual Meeting of Shareholders
To be held July 11, 2017
General Information
The
enclosed Proxy is being solicited by the Board of Directors
(“
Board
”) of
Capital Financial Holdings, Inc. (the “
Company
” or “
CFH
”), a North Dakota
corporation, for use in connection with the Annual Meeting of
Shareholders to be held on July 11, 2017, at 9:00 a.m. local time
(the “
Meeting
”)
at the offices of Capital Financial Holdings, Inc.,
1821 W Burdick
Expressway,
Minot, North Dakota 58701, and at any
postponement or adjournment thereof. Only shareholders of record as
of the close of business on May 22, 2017 (the “
Record Date
”) will be entitled to
vote at the Meeting or any postponement or adjournment thereof.
When the accompanying Proxy (each, a “
Proxy
”) is properly executed and
returned, the shares it represents will be voted at the Meeting in
the manner specified.
Any Proxy may be revoked at any time before it is voted by written
notice mailed or delivered to the secretary, by a receipt of a
Proxy properly signed and dated subsequent to an earlier Proxy and
by revocation of a written Proxy by request in person at the annual
meeting of shareholders. If not so revoked, the shares represented
by the Proxy will be voted in accordance with the instructions on
the Proxy form.
Notice and Access of Proxy Materials/Mail Date
The
Securities and Exchange Commission’s e-proxy rules allow
companies to post their proxy materials on the Internet and provide
only a Notice of Internet Availability of Proxy Materials to
stockholders as an alternative to mailing full sets of proxy
materials except upon request. This year we elected to use this
notice and access model.
On or
about May 29, 2017, we mailed to our shareholders the Notice of
Internet Availability of Proxy Materials containing instructions on
how to access our proxy materials (the Notice of Annual Meeting,
Proxy Statement, and Annual Report) on the Internet, how our
shareholders may request paper or email copies of these materials
at no charge, and how our shareholders may vote.
Annual Report to Stockholders and Annual Report on Form
10-K
Neither
our Annual Report to Shareholders nor our Annual Report on
Form 10-K constitutes soliciting materials, but provides you
with audited financial statements as well as additional information
about the Company and are available at
http://www.capitalfinancialholdings.com/proxy
.
Our annual report on Form 10-K for the fiscal year ended December
31, 2016, as filed with the Securities and Exchange Commission, is
included in our fiscal year 2017 Annual Report. We invite your
attention to each of these documents, and we invite you to attend
the Annual Meeting of Shareholders in person.
You can
obtain, free of charge, a paper or email copy of our annual report
on Form 10-K by:
●
accessing our
website at
http://www.capitalfinancialholdings.com/p
roxy
;
●
writing to us at:
Capital Financial Holdings, Inc., 1 Main Street North, Minot, North
Dakota 58703; or
●
telephoning us at
our toll-free number, (877) 814-6379.
You can
also obtain a copy of our annual report on Form 10-K and all other
reports and information that we file with, or furnish to, the
Securities and Exchange Commission from the Securities and Exchange
Commission’s EDGAR database located at
www.sec.gov
.
Solicitation of Proxies
The
Company is bearing all costs of soliciting Proxies and expressly
reserves the right to solicit Proxies otherwise than by Internet or
by mail. Telephone, e-mail, facsimile or other personal
solicitations of certain shareholders and brokers may follow the
solicitation of Proxies by mail by one or more of the directors, by
officers or by employees of the Company. The Company may make
requests to trusts, banks and brokers or other similar agents or
fiduciaries for the voting instructions of beneficial owners and
reimburse the expenses incurred by such agents or fiduciaries in
obtaining such instructions. As of the date of this Proxy
Statement, however, the Company has not made any contracts or
arrangements for such solicitations; hence, it cannot identify any
parties or estimate the cost of such solicitation.
Because
many of the Company’s shareholders may be unable to attend
the Meeting in person, our Board solicits Proxies by mailing a
Notice of Internet Availability of Proxy Materials containing
instructions to access the proxy materials online at
http://www.capitalfinancialholdings.com/proxy
and wherein each shareholder can submit their Proxy online or vote
by completing, signing and dating a Proxy form available at the
above Internet website in order to give each shareholder an
opportunity to vote on all matters presented at the Meeting.
Shareholders are urged follow instructions contained in the Notice
of Internet Availability of Proxy Materials and to:
(1)
read
t
he Proxy Statement
carefully;
(2)
specify their
choice in each matter by marking the appropriate box on the Proxy;
and
(3)
submit their
Proxy via the Internet in accordance with the instructions on the
Notice of Internet Availability of Proxy Materials or they may vote
by completing, signing, dating and mailing a Proxy which can be
printed out from the Internet website (
http://www.capitalfinancialholdings.com/proxy
)
or they may also request a paper copy of the Proxy be mailed to
them.
Quorum
As of
May 1, 2017, the Company had outstanding 1,241 common shares,
$0.0001 par value, with each share being entitled to one vote,
except for the election of directors when shareholders are entitled
to cumulate their votes. Representation of a majority of the
Company’s shares outstanding on such date, either in person
or by Proxy, constitutes a quorum for the Meeting. When a quorum is
present, the vote by the holders of a majority of the shares
present and entitled to vote at the Meeting shall decide the
proposals to be voted upon at the Meeting. A shareholder voting
through a Proxy who abstains with respect to a certain proposal is
considered to be present and entitled to vote on such proposal at
the Meeting and is, in effect, casting a negative vote, but a
shareholder (including a broker) who does not give authority to a
Proxy to vote or withholds authority to vote on a certain proposal
shall not be considered present and entitled to vote on such
proposal.
Principal Executive Office
The
address of the principal executive office of the Company is 1 Main
Street North, Minot, North Dakota 58703.
On
November 16, 2016, the Company purchased commercial office space
located at 1821 Burdick Expressway West, Minot, North Dakota. This
location offers 10,720 square feet of office space. The Company is
currently completing construction on this property and anticipates
moving in to the new office space in June of 2017.
Question and Answer Summary: About the Meeting
What is being voted on at the Meeting?
The
Company’s Board is asking shareholders to consider four items
at this Meeting:
●
To elect two
directors to the Company’s Board of Directors;
and
●
To ratify the
selection of Dave Banerjee, CPA-An Accountancy Corporation, as the
Company’s independent auditors for the fiscal year ending
December 31, 2017.
●
To approve on an
advisory basis the compensation of named executive officers;
and
●
To approve the
frequency of shareholder advisory voting on executive
compensation.
Who can vote at the Meeting?
Our
Board has set May 22, 2017, as the Record Date for the Meeting.
Only persons holding shares of record at the close of business on
the Record Date will be entitled to receive notice of and to vote
at the Meeting. Each share will be entitled to one vote on each
matter properly submitted for vote to our shareholders at the
Meeting. On the Record Date, there were approximately 1,241 common
shares outstanding held by approximately 300 shareholders of
record. Therefore, there are a total of approximately 1,241 votes
that will be entitled to be cast at the Meeting.
What constitutes a quorum for the Meeting?
A
quorum for the Meeting is based on the number of votes that can be
cast rather than the number of actual shares that are represented,
because each share has one vote per share. To have a quorum, we
need more than 50% of the votes entitled to be cast to be present,
in person or by proxy, including votes as to which authority to
vote on any proposal is withheld, shares abstaining as to any
proposal and broker non-votes (where a broker submits a Proxy but
does not have authority to vote a customer’s shares on one or
more matters) on any proposal, all of which will be considered
present at the Meeting for purposes of establishing a quorum for
the transaction of business at the Meeting. Each vote will be
tabulated separately.
How do I vote?
You may
submit your Proxy via the Internet in accordance with the
instructions on the Notice of Internet Availability of Proxy
Materials, or by completing, signing, dating and mailing a Proxy
which can be printed out from the Company’s Internet website
(
http://www.capitalfinancialholdings.com/proxy
),
or you may also request a paper copy of the Proxy be mailed to you.
If you complete and properly submit your Proxy, whether by Internet
or by mail, it will be voted as you direct, unless you later revoke
the Proxy. Unless instructions to the contrary are marked or if no
instructions are specified, shares represented by a Proxy will be
voted
”FOR”
the
proposals set forth on the Proxy, and in the discretion of the
persons named as proxies, on such other matters as may properly
come before the Meeting. If you are a registered shareholder, that
is, if you hold your shares in certificate form and you attend the
Meeting, you may deliver your completed Proxy form in person. If
you hold your shares in “street name,” that is, if you
hold your shares through a broker or other nominee and you wish to
vote in person at the Meeting, you will need to obtain a Proxy form
from the institution that holds your shares.
Can I change my vote after I return my Proxy form?
Yes.
Even after you have submitted your Proxy, you may change your vote
at any time before the Proxy is exercised by filing with our
Secretary, at the address at the top of page 1, either a written
notice of revocation or a duly executed Proxy bearing a later date
or you may vote in person at the Meeting. The powers of the Proxy
holders will be suspended if you attend the Meeting in person and
so request. However, attendance at the Meeting will not by itself
revoke a previously granted Proxy.
Any
written notice of revocation sent to us must include the
shareholder’s name and must be received prior to the Meeting
to be effective.
What vote is required to approve each item?
Proposal No. l. Election of
Directors
. The election of each director nominee requires
the affirmative vote of a plurality of the votes cast, if a quorum
is present, in the election of directors. Shareholders are entitled
to cumulate votes with respect to the election of directors only in
accordance with the procedure described under Proposal No. l
herein.
Proposal No. 2. Ratification of
Auditors
. An affirmative vote of a majority of the votes
cast at the Meeting, if a quorum is present, is required for
ratification of the selection of Dave Banerjee, CPA-An Accountancy
Corporation as independent auditors for the fiscal year ending
December 31, 2017.
Proposal No. 3 – Approve on an
Advisory Basis the Compensation of Named Executive Officers.
An affirmative vote of a majority of the votes cast at the Meeting,
if a quorum is present, is required for non-binding advisory
approval of the executive compensation of named executive
officers.
Proposal No. 4 – Frequency of
Advisory Vote on Executive Compensation.
An affirmative vote
of a majority of the votes cast at the Meeting, if a quorum is
present, is required for approval to set the frequency of
shareholder advisory vote on executive compensation.
While
affirmative abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders, with respect to
Proposal No. 2, 3 and 4 broker non-votes are not counted for
purposes of determining whether the proposal has been approved.
Therefore, for those matters affirmative abstentions will have the
same effect as a vote against the proposal.
Votes
cast by Proxy will be tabulated by Issuer Direct Corporation, an
independent proxy service. The Company has appointed independent,
impartial election inspectors for the Meeting who will count votes
cast by Proxy or in person at the Meeting.
Proposal No. 1
Election of Directors
At the
Meeting to be held on July 11, 2017, and at any and all
postponements or adjournments thereof, it is intended that the
Company’s shares represented by properly executed Proxies
that are enclosed herewith will be voted to elect the director
nominees, unless authority so to vote is withheld. Each nominee is
currently a member of the Board of the Company and all of the
nominees have indicated a willingness to serve as a director, if
elected. If elected, each nominee will serve until the next annual
meeting of shareholders or until the earlier of his or her removal,
resignation, death or disqualification. The Board has no reason to
believe that any of the director nominees will be unable to serve
as directors or become unavailable for any reason. If, at the time
of the Meeting, any of the director nominees shall become
unavailable for any reason, the persons entitled to vote the Proxy
will vote, as such persons shall determine in his or her
discretion, for such substituted nominee or nominees, if any,
nominated by the Board. The affirmative vote of a plurality of the
votes present or represented to vote at the Meeting is necessary to
elect each director nominee. Shareholders of the Company will have
an opportunity on their Proxy to vote in favor of one or more
director nominees while withholding authority to vote for one or
more director nominees.
The
directors have voted to nominate two directors for election to hold
office for a one-year term or until the next Annual Meeting of
Shareholders or until their successors are elected and qualified.
Proxies solicited by the Board will, unless otherwise directed, be
voted to elect the two nominees named below.
Following is
certain information regarding the nominees for
director:
Name
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Age
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Term Of Office With The Company
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Positions And Offices With The Company
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Gordon
Dihle
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62
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As
Director of CFH, 11-07-2013 to Present
As CEO
of CFH 5-22-2017 to Present
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Director,
Chairman of the Board, CEO
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Elizabeth
Redding
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31
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As CFO
& Secretary of CFH, 03-26-2012 to Present
As
Director of CFH, 12-12-2013 to Present
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Director,
CFO, Secretary
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Cumulative voting
is permitted in the election of directors in accordance with the
following procedure:
Each
shareholder entitled to vote for directors has the right to
cumulate those votes in the election of directors by giving written
notice of such intent to any officer of the Company before the
Meeting or the presiding officer at the Meeting at any time before
the election of directors, in which case:
1.
The
presiding
officer at the Meeting shall announce, before the
election of directors, that shareholders may cumulate their votes;
and
2.
Each
shareholder
shall cumulate those votes either by casting for
one candidate the number of votes equal to the number of directors
to be elected multiplied by the number of votes represented by the
shares entitled to vote, or by distributing all of those votes on
the same principle among any number of candidates.
Therefore, unless
the above-described procedure is implemented, the holders of a
majority of the Company’s shares could elect all of the
directors. It is expected that the Proxies received by the
directors’ nominees will be voted, except to the extent that
authority is withheld on any Proxy as to all of one or more
individuals, to elect as directors the following nominees, whose
principal occupations during the past five years, directorships and
certain other affiliations and information are set forth
below:
Gordon Dihle
–
Mr. Dihle received a
B.S. in Accounting and Business Administration, Summa Cum Laude
(1976) at Dickinson State University, Dickinson, ND and earned a
J.D. with distinction at the University of North Dakota (1980) in
Grand Forks, ND. Mr. Dihle is a CPA licensed with the state of
North Dakota, a member of the AICPA and an attorney licensed with
the state of Colorado. Mr. Dihle has been employed as an attorney
and has been principal of Corporate Legal, LLC in Centennial
Colorado since 1996 and was concurrently employed at Spencer
Edwards, Inc., a securities brokerage firm from 2002 until November
2013 in various capacities as a general and financial principal.
Mr. Dihle has been the Chairman of Board of Directors of the
Company since November 7, 2013, the CEO of the Company since May
22, 2017, and had previously acted as general counsel for the
Company from September 2009 until February 2011. Mr. Dihle has been
a Director of the Company since November 7, 2013. SPreviously, Mr.
Dihle served as a Director and President of Capital Natural
Resources, Inc., a subsidiary of the Company.Mr. Dihle also serves
as in house legal counsel to the Company.
On November 2, 2015 Mr. Dihle was named a
respondent in a FINRA complaint (unrelated in any way to Capital
Financial Services, Inc., the broker-dealer subsidiary of the
Company) alleging that the broker dealer (the “unaffiliated
BD”) for whom Mr. Dihle served as Chief Compliance Officer
(“CCO”) and AML Compliance Officer
(“AMLCO”) until June 2012, acting through registered
representatives, liquidated penny stocks in customers' accounts at
the unaffiliated BD that were not registered with the SEC or exempt
from registration in contravention of Section 5 of the Securities
Act of 1933. The complaint further alleged that none of the penny
stock sales at issue qualified for an exemption under Section 4(1)
of the Securities Act of 1933, the safe harbor contained in the
Securities Act Rule 144 or Section 4(4) of the Securities Act of
1933 because the unaffiliated BD failed to conduct adequate due
diligence into the circumstances surrounding the sales by
customers. The complaint also alleged that the unaffiliated BD and
Mr. Dihle, during his tenure as CCO, failed to establish, maintain,
and enforce a supervisory system reasonably designed to achieve
compliance with Section 5 for sales of penny stocks and also failed
to conduct reasonable and meaningful inquiries of the circumstances
surrounding the sales of the penny stocks by the unaffiliated BD's
customers. The complaint further alleged that the unaffiliated BD
and Mr. Dihle, during his tenure as CCO, failed to establish,
maintain and enforce a supervisory system reasonably designed to
ensure that business related email communications were retained and
reviewed by the unaffiliated BD. The complaint further alleges that
the unaffiliated BD, as well as Mr, Dihle, as the unaffiliated BD's
AMLCO, also failed to adequately establish and implement the
unaffiliated BD's AML program and AML policies and procedures in
that the unaffiliated BD and Mr. Dihle failed to reasonably detect
and investigate potentially suspicious transactions regarding the
sale of penny stocks and therefore did not make a reasoned
determination whether or not to report suspicious transactions to
the Financial Crimes Enforcement Network by filing a Suspicious
Activity Report if appropriate. Mr. Dihle has not been associated
with a FINRA member in any capacity since November 7, 2013 and is
not now and has never been registered as a principal or registered
representative with Capital Financial Services, Inc., the broker
dealer subsidiary of the Company. On December 23, 2015 Mr. Dihle
made an offer of settlement, which was accepted by FINRA, wherein
Mr. Dihle consented, without admitting or denying the allegations
of the FINRA complaint, and consented to the imposition of
sanctions, whereby Mr. Dihle was suspended in any FINRA principal
capacity for a period of 90 days which ended on April 2, 2016, and
agreed to a fine of $25,000 payable upon his re-association with a
FINRA member firm.
Elizabeth A. Colby
–
In 2010, Ms. Colby received a B.S. Degree in
Business Management from Minot State University, Minot, North
Dakota. Ms. Colby served as the general manager of Spicy Pie, a
restaurant located in Fargo, North Dakota, from 2009 to 2010. From
2010 to 2011, Ms. Colby served as an administrative assistant and
as a commission/accounting specialist at Capital Financial
Services, Inc., a broker-dealer located in Minot, North Dakota and
a subsidiary of the Company. From 2011 to 2012, Ms. Colby served as
a loan officer for Northern Tier Federal Credit Union located in
Velva, North Dakota. From 2012 to March 2014, Ms. Colby served as
Treasurer of the Velva Association of Commerce, a local
organization located in Velva, North Dakota. From 2012 to 2015, Ms.
Colby served on the Board of the Velva Association of Commerce. Ms.
Colby currently serves as the Business Manager of the Western
Plains Opera Company, a local organization located in Minot, North
Dakota. Ms. Colby has been employed by the Company since March 26,
2012, and has been its Chief Financial Officer and Secretary since
March 26, 2012, and a Director since December 12, 2013. Previously,
Ms. Colby served as a Director, Treasurer and Secretary of Capital
Natural Resources, Inc., a subsidiary of the
Company.
There
are no family relationships between any of our former or current
officers and directors.
Certain Relationships and Related Transactions
On
June 11, 2014, June 27, 2014, and July 22, 2014, Baron Energy, Inc.
issued promissory notes to the Company’s wholly owned
subsidiary, Capital Natural Resources, Inc., in the amounts of
$85,000, $40,000 and $375,000 respectively. The three notes carried
an interest rate of 15% per annum, payable monthly, and matured on
June 12, 2016, June 28, 2016, and July 23, 2016, respectively. On
or about September 1, 2014, the three notes were renegotiated and
consolidated into a single note, with essentially the same terms
and a maturity date of August 1, 2016. The Chairman of the Board of
the Company, Gordon Dihle, has acted, and continues to act, as
counsel to the Company relative to this transaction while his
affiliated law firm has acted as counsel to Baron Energy, Inc. Mr.
Dihle also served as a Director and President of Capital Natural
Resources, Inc. This related party transaction was reviewed
pursuant to the Company’s policies and procedures. On March
11, 2016, the consolidated note was paid in full including all
unpaid accrued interest and the transaction was
completed.
There
were no other related party transactions that are required to be
disclosed pursuant to Regulation S-K promulgated under the
Securities Act of 1933, as amended.
Corporate Governance
Attendance at Board, Committee and Annual Shareholder’s
Meetings
During
the fiscal year ended December 31, 2016, the Board held five
regular meetings and six special meetings. All directors are
expected to attend each meeting of the Board and the committees on
which they serve, and are also expected to attend each annual
meeting of shareholders. Each director attended at least 75% of the
Board meetings, including committee meetings on which the Board
member served during this period. The annual meeting was held
August 11, 2016 and all board members attended.
Currently the
entire board (Gordon Dihle and Elizabeth Colby) serves on the
Nominating Committee, the Audit Committee and the Compensation
Committee and, therefore, shareholders will have to rely upon the
entire Board of Directors. Although the Company is listed on the
OTC Link LLC (formerly known as the Pink OTC Markets, Inc) which
has no listing requirements mandating the Company to have
independent Board members, Item 407 of Regulation S-K requires each
company to adopt a definition of independence. Accordingly, the
Company has chosen to adopt the definition of independence
contained NASDAQ Rule 4200 (a)(15), as clarified in IM-4022
Definition of Independence. As set forth in Rule 4200 (a)(15),
“
"Independent director" means a
person other than an officer or employee of the company or its
subsidiaries or any other individual having a relationship, which,
in the opinion of the company's board of directors, would interfere
with the exercise of independent judgment in carrying out the
responsibilities of a director. The following persons shall not be
considered independent:
(
A)
a director who is, or during the past three years
was, employed by the company or by any parent or
subsidiary of the company ;
(B) a
director who accepts or who has a Family Member who
accepts any payments from the company or any parent
or subsidiary of the company in excess of $60,000 during the
current fiscal year or any of the past three fiscal years, other
than compensation for board service, payments arising solely
from investments in the company's securities, compensation paid to
a Family Member who is an employee of the company or a parent or
subsidiary of the company (but not if such person is an executive
officer of the company or any parent or subsidiary of the
company), benefits under a tax-qualified retirement plan, or
non-discretionary compensation (provided, however, that audit
committee members are subject to heightened requirements under Rule
4350(d));
(C) a
director who is a Family Member of an individual who is, or
during the past three years was employed by
the company or by any parent or subsidiary of
the company as an executive officer;
(D) a
director who is a partner in, or a controlling shareholder or an
executive officer of, any organization to which
the company made, or from which the
company received, payments (other than those arising solely
from investments in the company's securities) that exceed 5%
of the recipient's consolidated gross revenues for that
year, or $200,000, whichever is more, in the current fiscal
year or any of the past
three fiscal years;
(E) a
director of the listed company who is employed as an
executive officer of another entity where any of the
executive officers of the listed company serve on
the compensation committee of such other entity, or if
such relationship existed during the past three years;
or
(F) a
director who is or was a partner or employee of the company's
outside auditor, and worked on the company's audit, during the past
three years.
NASDAQ
Rule 4530(c)(5) recognizes a “Controlled Company” and
exempts such Controlled Company from the requirements of having an
independent directors on audit and compensation committees. A
Controlled Company, as defined by the rule, is “
a company of which more
than 50% of the voting power is held by an individual, a group or
another company. A Controlled Company relying upon this exemption
must disclose in its annual meeting proxy statement that it is a
Controlled Company and the basis for that determination.” The
Company fits within the definition of a “Controlled
Company” since more than 50% of the voting power is held by
an individual or a group.
Because it is a “Controlled Company” and does not
have independent directors sitting on its Nominating, Audit or
Compensation Committees
, there is a potential for a conflict
of interest in that board members who are management will
participate in discussions concerning management compensation and
audit issues that may affect management decisions.
Audit Committee
The
Company’s Audit Committee is composed of Gordon Dihle and
Elizabeth Colby, none of whom meet the independence requirements of
national securities exchanges or national securities association
with respect to audit committee membership. As discussed above, the
Company is not listed on a national securities exchange, but is
listed on the
OTC
Link LLC market, which has no requirement mandating its listing
companies to have independent directors. However, as discussed
above, the Company has adopted (and identified) the NASDAQ
Market’s definition of “independence”. As also
identified above, the Company is a Controlled Company and is
therefore exempt from the requirements of NASDAQ Rule 4530, which
requires members of the audit committee be independent. The Audit
Committee oversees the external audit coverage, including the
annual nomination of the independent accountants, reviews
accounting policies and policy decisions, reviews the financial
statements, including interim financial statements and annual
financial statements, together with auditor’s opinions,
inquires about the existence and the substance of any significant
accounting accruals, reserves or estimates made by management,
meets privately with the independent accountants to discuss all
pertinent matters and reports to the Board regarding its
activities. The Audit Committee held four regular meetings in
2016.
Although the Board
has determined that every member of the Audit Committee meets the
definition of “audit committee financial expert, it has
determined, with the assistance of our outside legal counsel, that
Gordon Dihle, Chairman of the Audit Committee, shall be the
“
audit committee financial
expert
” as such term is defined in Item 407(d)(5)(ii)
of Regulation S-K adopted by the SEC.
The
Audit Committee has adopted a formal, written charter, which was
recently amended and adopted on June 23, 2016. The charter
specifies the scope of the Audit Committee’s responsibilities
and how it should carry out those responsibilities. The charter
also outlines the Audit Committee’s pre-approval policies and
procedures that require the Audit Committee to review and approve,
in advance, fees proposed to be charged to the Company by the
auditors for each audit and non-audit service. The Audit Committee
Charter must be filed every three years and will be refiled in
2019.
Audit Committee Related Party Transaction Policy and
Procedures
It is
the policy of the Board of Directors of the Company that all
related party transactions shall be submitted for review to the
Company’s Audit Committee in accordance with the
Company’s Related Party Transaction Policy and Procedures, a
copy of which is annexed to this Proxy Statement as Exhibit B. The
Board has determined that the Audit Committee is best suited to
review all related party transactions.
Report of Audit Committee
The
Audit Committee met to review the audited financials for the fiscal
year ended December 31, 2016, with members of management and the
independent accountants. The independent accountants discussed with
the Audit Committee new accounting policies, management’s
judgments and use of accounting estimates in the preparation of the
financial statements and significant audit adjustments. Annually,
the independence of the auditors is discussed and the auditors
provide information regarding their independence required by
Independence Standards Board No. 1, as may be modified or
supplemented. Based upon a thorough discussion of the
aforementioned, the Audit Committee has recommended that the
audited financial statements be included in the Company’s
Annual Report on Form 10-K for the fiscal year 2016.
Director Independence
The market where the Company is listed does not
have listing rules which requires the Company to have a board
comprised of a majority of independent directors or separate
committees comprised of independent directors. We use the
definition of
“independence”
under the NASDAQ Rules, as applicable
and as may be modified or supplemented from time to time and the
interpretations thereunder, to determine if the members of our
Board are independent. . Moreover, the Company falls within the
definition of a “Controlled Company” under NASDAQ Rule
4530(c)(5). In making this determination, our Board considers,
among other things, transactions and relationships between each
director and his immediate family and us, including those reported
in this Proxy Statement under the caption
“Certain Relationships
and Related Transactions.”
The purpose of this review is to determine whether
any such relationships or transactions are material and, therefore,
inconsistent with a determination that the directors are
independent. On the basis of such review and its understanding of
such relationships and transactions, our Board has determined that
none of our Board members is an independent
director.
The
Board of Directors will continually assess its size, structure and
composition, taking into consideration its current strengths,
skills and experience, and the requirements and strategic direction
of
the Company
. As required,
The Board of Directors will seek out and recommend suitable
candidates for consideration as members of the Board of
Directors.
Code of Ethics
The
Board has adopted a code of ethics for the principal executive
officer, principal financial officer, controller and all persons
performing similar functions. The code of ethics is designed to
deter wrongdoing and to promote honest and ethical conduct, the
avoidance of conflict of interest, full and accurate disclosure and
compliance with all applicable laws, rules and regulations. The
code of ethics is available on the Company’s website at
www.capitalfinancialholdings.com
.
Executive Officers
The
named executive officers of the Company and/or its subsidiaries,
Capital Natural Resources, Inc. (“CNR
,
”) and Capital Financial
Services, Inc. (“CFS”), for fiscal year 2016 were John
R. Carlson, Gordon Dihle and Elizabeth Colby.
Executive Compensation
The
following table sets forth compensation information for the
Company’s Named Executive Officers for services rendered in
all capacities to the Company and its subsidiaries in fiscal year
2016.
Summary Compensation Table
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Nonequity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
(1)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
John R.
Carlson, Director and CEO of CFH; President and CCO of
CFS
|
2016
2015
|
$132,080
$127,000
|
$3,569
$13,844
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$39,970
$56,676
|
$175,619
$197,520
|
|
|
|
|
|
|
|
|
|
|
Elizabeth
A. Redding, Director, CFO & Corporate Secretary of CFH;
Treasurer and Secretary of CNR
|
2016
2015
|
$70,500
$70,500
|
$2,631
$10,084
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$4,517
$3,885
|
$77,648
$84,469
|
|
|
|
|
|
|
|
|
|
|
Gordon
Dihle, Chairman of CFH; President of CNR
|
2016
2015
|
$96,000
$127,500
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$5,395
$2,778
|
$101,395
$130,278
|
|
|
|
|
|
|
|
|
|
|
(1)
All other
compensation includes representative commissions, employer paid
life insurance premiums and employer matched 401K
contributions.
Narrative Disclosure to Summary Compensation Table
None of
the Company’s Named Executive Officers have an employment
contract with the Company. Mr. Carlson, who resigned from
employment with the Company on May 22, 2017, had compensation of
$80,557 to date in 2017, Mr. Dihle’s annual compensation for
2017 is $96,000 and Ms. Colby’s annual compensation for 2017
is $75,000. The Company matches contributions to the Named
Executive Officers’ 401k plans as well as the 401k plans of
all other employees of the Company to the extent of six percent of
the voluntary contributions of the employee. The Company provides
employer paid life insurance policies for all employees including
the Named Executive Officers. The Company also has a discretionary
bonus pool for all employees including the Named Executive Officers
except for Mr. Dihle who does not participate in the discretionary
bonus pool.
Ms.
Colby is entitled to severance pay pursuant to an “Individual
Executive Involuntary Termination Severance Pay Plan” under
which Ms. Colby would be entitled to sixteen weeks of
Employee’s then annual salary following termination
conditioned upon the meeting of certain criteria outlined in the
plan.
Mr.
Dihle is not entitled to severance pay or the discretionary bonus
pool.
Fees Billed for Services Rendered by Independent
Accountant
Audit and Non-Audit Fees
During
the fiscal year ended December 31, 2016, Hein & Associates, LLP
(“
Hein &
Associates
”), the Company’s independent auditors
and principal accountant, billed the Company the fees set forth
below. The Audit Committee has considered and determined that the
provision of the non-audit services rendered to the Company by Hein
& Associates during the Company’s fiscal year 2016 was
compatible with maintaining the independence of Hein &
Associates.
The
following table presents fees for professional audit services
rendered by Hein & Associates for the audit of the
Company’s annual financial statements for the years ended
December 31, 2016 and 2015, and fees billed for other services
rendered by Hein & Associates
|
|
|
|
|
|
Audit
Fees
(1)
|
$
112,893
|
$
108,155
|
Audit-Related
Fees
(2)
|
$
2,000
|
$
2,000
|
All Other
Fees
|
$
0
|
$
0
|
______________________
(1)
Audit
Fees
consist of fees for professional services rendered for the audit of
the Company’s financial statements and review of financial
statements included in the Company’s quarterly reports and
services normally provided by the independent auditor in connection
with statutory and regulatory filings or engagements.
(2)
Audit-related
fees
are fees principally for professional services rendered
for the annual review of Capital Financial Services, Inc., related
to the filing of the SIPC assessment form.
Policy on Audit Committee Pre-Approval of Audit
and Permissible Non-Audit Services of Independent
Auditors
The
Audit Committee’s policy is to review and pre-approve all
audit and permissible non-audit services provided by the
independent registered public accounting firm. These services may
include audit services, audit-related services, tax services and
other services. The independent registered public accounting firm
and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with
this pre-approval, and the fees for the services performed to date.
The Audit Committee may also pre-approve particular services on a
case-by-case basis.
Director Compensation
Name
|
Fees Earned or
Paid in Cash ($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred
Compensation Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
Gordon
Dihle
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
|
|
|
|
|
|
|
John R.
Carlson
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
|
|
|
|
|
|
|
Elizabeth
Colby
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
|
|
|
|
|
|
|
Gordon
Dihle, Chairman of the Board, John R. Carlson and Elizabeth Colby
received no cash compensation for the year 2016 for their service
as directors of the Company. Board members were reimbursed for
their expenses associated with attendance at meetings or otherwise
incurred in connection with the discharge of their duties as
directors of the Company.
Shareholder Say-on-Pay and Say-on-Frequency Votes
The
Company
provides its shareholders with
the opportunity to cast an advisory vote on executive compensation
(a
"say-on-pay
proposal"
) every three years.
At
the Company'
s annual meeting
of shareholders held in June of 2014, a substantial majority of the
votes cast on the three-year say-on-pay proposal at that meeting
were voted in favor of the proposal. The Compensation Committee
believes this affirms shareholders' support of
the
Company
's executive compensation
program, and did not change its program in 2014. Executive
compensation will be voted upon by shareholders again at the 2017
annual meeting. The Compensation Committee will consider the
outcome of
the Company
's
say-on-pay vote when making future compensation decisions for the
named executive officers.
Pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
Shareholders will have an opportunity
at least every six years to cast an advisory vote on the frequency
of say-on-pay proposals. At the Company’s 2014 annual meeting
of shareholders, the Shareholders of the Company approved a
say-on-pay vote every three years; thus, the next advisory vote on
the frequency of say-on-pay proposals will occur at the 2017 annual
meeting.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company’s directors and executive officers file
initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. Directors and
executive officers are required to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon a review of
the copies of such forms furnished to the Company and written
representations from the Company’s directors and executive
officers, all Section 16(a) filing requirements were met for the
fiscal year ended December 31, 2016.
Security Ownership of Beneficial Owners and Management
The
following table sets forth, as of April 18, 2017, the ownership of
shares of the Company by each shareholder who is known by the
Company to own beneficially more than 5% of the outstanding voting
securities of the Company, each director, each executive officer
named in the Summary Compensation Table on page 10, and all
executive officers and directors as a group.
Name Of Beneficial Owner
Or Identity Of Group
|
Amount And Nature Of Beneficial Ownership
(2)
As Of April 18, 2017
|
Percentage Of Outstanding Shares
(3)
|
|
|
|
John
Carlson
(1)
|
24
(4)
|
1
%
|
|
|
|
Gordon
Dihle
(1)
|
664
(5)
|
53
%
|
|
|
|
Elizabeth
Colby
(1)
|
0
|
*
|
|
|
|
Executive officers
and directors as a group (3 persons)
|
688
|
54
%
|
* Less
than 1% owned.
(1)
Officer
and/or
Director of the Company.
(2)
Unless
otherwise
indicated in the footnotes to this table, the
listed beneficial owner has sole voting power and investment power
with respect to such shares.
(3)
For
each
executive officer or director included in the table, percentage of
outstanding shares is calculated by dividing the number of common
shares beneficially owned by such officer or director by the 1,241
common shares the Company outstanding on May 31, 2016 and the
number of shares that each officer or director had the right to
acquire within 60 days of the record date. This percentage assumes
the exercise of outstanding options or warrants and conversion of
preferred shares.
(4)
Includes
16
shares held directly by Mr. Carlson and 8 shares held by Mr.
Carlson’s spouse.
(5)
Includes
26
shares held directly by Mr. Dihle, 97 shares held in Mr.
Dihle’s IRA account, 188 shares held by Antelope Creek Realty
& Energy Services, Inc., an entity managed by Mr. Dihle, and
353 shares held by the Dihle Chattel Trust of which Mr. Dihle is
the Trustee.
The Board Of Directors Recommends That You Vote “FOR”
the Election of the Above Nominees as Directors.
|
Proposal No. 2
Ratification of Selection of Independent Auditors
The
Board has selected Dave Banerjee, CPA-An Accountancy Corporation to
serve as independent auditors of the Company for the fiscal year
ending December 31, 2017. The shareholders of the Company are being
asked to ratify this selection at the Meeting. A majority of the
votes cast at the Meeting, if a quorum is present, will be
sufficient to ratify the selection of Dave Banerjee, CPA-An
Accountancy Corporation as the Company’s independent auditors
for the fiscal year ending December 31, 2017. The firm of Dave
Banerjee, CPA-An Accountancy Corporation has been providing
accounting and auditing services for more than 30 years to both
public and private companies in a variety of industries. While it
is not required to do so, the Board is submitting the selection of
that firm for ratification to ascertain the view of the
shareholders. If the selection is not ratified, the Board will
reconsider its selection. Proxies solicited by the Board will,
unless otherwise directed, be voted to ratify the appointment of
Dave Banerjee, CPA-An Accountancy Corporation as independent
auditor for the Company for the year ending December 31,
2017.
The Board Of Directors Recommends That You Vote
“FOR”the Ratification of the Appointment of Dave
Banerjee, CPA-An Accountancy Corporation
as. our Independent Registered public Accounting Firm.
|
Proposal No. 3
Advisory Vote on Executive Compensation
Section
14A of the Securities Exchange Act of 1934 (15 U.S.C. 78n-1),
pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the “
Dodd-Frank Act
”), also requires
the Company to hold an advisory, non-binding vote to approve the
compensation of the Company’s named executive officers as
disclosed in this Proxy Statement in accordance with the
SEC’s rules.
The
Company’s current named executive officers, Gordon Dihle and
Elizabeth Colby, are identified in the 2016 Summary Compensation
Table and the compensation of the named executive officers is set
forth thereon. The Company’s executive compensation is
designed to attract, retain and motivate executive talent,
including its named executive officers, who are critical to the
Company’s success. We believe that our named executive
compensation is reasonable and consistent with the compensation of
other similar executives in the industry while providing incentives
for performance which promotes long-term shareholder
value.
The
Board of Directors strongly endorses the Company’s executive
compensation program and is therefore requesting your non-binding
vote in favor of the following resolution:
“RESOLVED, that the compensation of the Company’s
current named executive officers, Gordon Dihle and Elizabeth Colby,
as disclosed in this Proxy Statement pursuant to the compensation
disclosure rules of the Securities and Exchange Commission,
including the tabular disclosure regarding named executive officer
compensation together with any accompanying narrative disclosure in
this Proxy Statement, is approved.”
Because
the vote is advisory, it will not binding upon the Board and the
Board will not be required to take any action as a result of the
outcome of the vote on this Proposal. The Board will carefully
consider the outcome of the vote when considering future executive
compensation arrangements.
The Board Recommends that You Vote “FOR” Approval Of
The Compensation Paid To The Company’s Named Executive
Officers.
|
Proposal No. 4
Advisory Vote on Frequency of
Vote on Executive Compensation
Section
14A of the Securities Exchange Act of 1934 (15 U.S.C. 78n-1),
pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the “
Dodd-Frank Act
”), also requires
the Company to hold an advisory vote, not less frequently than
every six years, on the frequency of the advisory vote to approve
the compensation of our named executive officers as described in
Proposal 4 in this Proxy Statement. Future votes, regardless of
frequency, would be substantially similar in nature to the vote
requested under Proposal 3. By voting on this Proposal 4,
shareholder may indicate whether they would prefer that we hold a
“
say-on-pay
”
vote every one, two or three years.
The
Company is presenting the following proposal which gives you as a
shareholder the opportunity to inform the Company as to how often
you wish the Company to include a proposal similar to Proposal 4 in
our proxy statements. While our Board of Directors intends to
carefully consider the shareholder vote resulting from this
Proposal, the final vote will not be binding on us and is advisory
in nature.
“RESOLVED, that the shareholder wish the Company to include
an advisory vote on the compensation of the Company’s named
executive officers pursuant to Section 14A of the Securities
Exchange Act every:
The
Board of Directors believes that having an advisory vote on
executive compensation every three years would comply with
regulatory requirements while providing the Board with sufficient
time to evaluate and respond to shareholder input, effectively
implement changes, as needed, and make decisions as to future
compensation to our named executive officers.
The
Board will consider the outcome of the vote requested by this
Proposal 4 when making future decisions regarding the frequency of
the “
say-on-pay
” vote described in
Proposal 3 of this Proxy Statement. However, because this is an
advisory vote and not binding on the Board of Directors of the
Company, the Board may decide that it is in the best interest of
our shareholders and the Company to hold an advisory vote on the
compensation of our named executive officers more or less
frequently than the frequency approved by our
shareholders.
The Board Of Directors Recommends That You Vote “FOR” a
Three Year Frequency for an Advisory
Vote on Executive Compensation.
|
Other Matters
The
Company’s management is not aware of any other matters that
may come before the Meeting. The proxies named in the accompanying
Proxy form will vote said Proxy in accordance with their judgment
if any other matter does properly come before the
Meeting.
Deadline for Submission of Shareholder Proposals
For Next Annual Meeting
We will
include in our proxy materials for our 2018 annual meeting of
stockholders any stockholder proposals that comply with Rule 14a-8
under the Exchange Act. Among other things, Rule 14a-8 requires
that we receive such proposals not less than 120 days prior to the
one-year anniversary of this Proxy Statement, or January 28, 2018.
If the proposal is in compliance with all of the requirements set
forth in Rule 14a-8 under the Exchange Act, we will include the
stockholder proposal in our Proxy Statement and place it on the
form of proxy issued for the 2018 annual meeting. If notice of any
other shareholder proposal intended to be presented at the 2018
Annual Meeting of shareholders but not intended to be included in
the Company’s Proxy Statement and form of Proxy for such
Meeting is not received by the Company on or before January 28,
2018, the Proxy solicited by the Board of the Company for use in
connection with the Meeting may confer authority on the proxies
named therein to vote in their discretion on such proposal without
any discussion in the Company’s Proxy Statement for that
Meeting of either the proposal or how such proxies intend to
exercise their voting discretion. Stockholder proposals submitted
for inclusion in our proxy materials should be mailed to the
following address: Capital Financial Holdings, Inc., Attention:
Corporate Secretary, 1821 W Burdick Expressway, Minot, North Dakota
58701.
Voting Trustees and Their Nominees
Please
advise the Company whether other persons are the beneficial owners
of the Company’s shares for which Proxies are being solicited
from you, and, if so, the number of copies of this Proxy Statement
and other soliciting materials you wish to receive in order to
supply copies to the beneficial owners of the Company’s
shares.
This
solicitation is being made by Internet or mail on behalf of the
Board, but may also be made without additional remuneration by
officers or employees of the Company by telephone, telegraph,
facsimile transmission or personal interview. The expense of the
preparation, printing and mailing, as required, of this Proxy
Statement and the Proxy form and Notice of Annual Meeting and any
additional material relating to the Meeting which may be furnished
to shareholders by the Board subsequent to the furnishing of this
Proxy Statement has been or will be borne by the Company. The
Company will reimburse banks and brokers who hold the
Company’s shares in their name or custody, or in the name of
nominees for others, for their out-of-pocket expenses incurred in
forwarding copies of the Proxy materials to those persons for whom
they hold those Company’s shares. To obtain the necessary
representation of shareholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by
officers of the Company or selected securities dealers. It is
anticipated that the cost of any other supplementary solicitations,
if any, will not be material.
It is
important that Proxies be returned promptly. Shareholders, whether
or not they expect to attend the meeting in person, may submit
their Proxy via the Internet in accordance with the instructions on
the Notice of Internet Availability of Proxy Materials, or may vote
by completing, signing, dating and mailing a Proxy which can be
printed out from the Internet website (
http://www.capitalfinancialholdings.com/proxy
),
or shareholders may also request a paper copy of the Proxy be
mailed to them. By returning your form of Proxy promptly, you can
help the Company avoid the expense of follow-up mailings to ensure
a quorum so that the Meeting can be held. Shareholders who attend
the Meeting may revoke a prior Proxy and vote their Proxy in person
as set forth in this Proxy Statement.
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By Order of the Board of Directors
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/s/
Elizabeth
Colby
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Elizabeth
Colby
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Dated: May 29,
2017
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Secretary
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CAPITAL FINANCIAL HOLDINGS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF SHAREHOLDERS – JULY 11, 2017 AT 9:00 AM LOCAL
TIME
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CONTROL ID:
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REQUEST ID:
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The undersigned hereby appoints Elizabeth Colby,
with power of substitution, as proxy to vote the shares of Common
Stock of the undersigned in Capital Financial Holdings, Inc. at the
Annual Meeting of Shareholders to be held Thursday, July 11, 2017,
at the offices of Capital Financial Holdings, Inc., 1821 W Burdick
Expressway, Minot, North Dakota 58701, and at any adjournment
thereof, upon all business that may properly come before the
meeting, including the business identified (and in the manner
indicated) on this proxy and described in the proxy statement
furnished herewith. Using a black or blue ink pen, indicate your
vote by an
☒
.
Please do not write outside the designated
areas.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
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FAX:
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Complete the reverse portion of this Proxy Card
and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/CPFH
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL MEETING OF THE SHAREHOLDERS OF
CAPITAL FINANCIAL HOLDINGS, INC.
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PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE:
☒
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THE BOARD OF DIRECTORS SOLICIT THIS PROXY CARD AND RECOMMEND A VOTE
“FOR” EACH OF THE LISTED NOMINEES AND “FOR”
PROPOSAL NOS. 2 AND 3 AND “THREE YEARS” FOR PROPOSAL
NO. 4.
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Proposal
1
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FOR
ALL
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WITHHOLD
ALL
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FOR
ALL
EXCEPT
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To elect the
following persons as directors of the Company to serve until the
next Annual Meeting of Shareholders or until their successors have
been duly elected and qualified:
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☐
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☐
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Gordon
Dihle
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☐
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CONTROL ID:
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Elizabeth
Colby
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☐
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REQUEST ID:
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Proposal
2
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FOR
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AGAINST
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ABSTAIN
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To
ratify the appointment of Dave Banerjee, CPA-An Accountancy
Corporation as the Company’s independent registered public
accountant to audit the Company’s financial books and records
for its fiscal year ended December 31, 2017
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☐
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☐
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☐
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Proposal
3
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FOR
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WITHHOLD
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A
non-binding, advisory vote to approve the compensation of the named
executives.
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☐
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☐
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Proposal
4
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ONE
YEAR
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TWO YEARS
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THREE
YEARS
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ABSTAIN
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A
non-binding, advisory vote to set the frequency of advisory voting
on the compensation of the named executive officers.
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☐
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
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(PLEASE
DATE, SIGN, AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED STAMPED
ENVELOPE.)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED “FOR” EACH OF THE
NOMINEES, “FOR” PROPOSAL NO. 2. IF ANY OTHER BUSINESS
IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXY
NAMED ABOVE IN THEIR BEST JUDGMENT.
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MARK HERE FOR ADDRESS CHANGE
☐
New Address (if applicable):
____________________________________________________________________________________
IMPORTANT:
Please sign exactly as name(s) appear on this
proxy. If joint account, each joint owner should sign. If signing
for a corporation or partnership or as agent, attorney or
fiduciary, indicate the capacity in which you are
signing.
Dated:
________________________, 2017
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(Print Name of
Shareholder and/or Joint Tenant)
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(Signature of
Shareholder)
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(Second Signature
if held jointly)
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Capital Financial (CE) (USOTC:CPFH)
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