The following table sets forth information concerning outstanding equity awards for each of the Named Executive Officers at fiscal year-end.
|
| | | | | | | | | | | | |
Option Awards | Stock Awards |
Name (a) | Exercisable(#)(b) | Unexercisable (#)(c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Option (#)(d) | Option Exercise Price ($)(e) | Option Expiration Date (f) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(j) |
| | | | | | | |
Daniel K. Frierson | 50,000 |
| — |
| — |
| 5.00 |
| 11/4/2019 | 72,575 |
| 50,803 |
| 40,000 |
| | 4.59 |
| 5/30/2022 | | |
| | | | | | | |
D. Kennedy Frierson, Jr. | 22,000 |
| — |
| — |
| 5.00 |
| 11/4/2019 | 133,330 |
| 93,331 |
| 25,000 |
| | 4.59 |
| 5/30/2022 | | |
| | | | | | | |
Jon A. Faulkner | 11,000 |
| — |
| — |
| 5.00 |
| 11/4/2019 | 106,843 |
| 74,790 |
| 15,000 |
| | 4.17 |
| 5/30/2022 | | |
| | | | | | | |
T.M. Nuckols | — |
| 15,000 |
| — |
| 4.17 |
| 5/30/2022 | 52,493 |
| 36,745 |
| | | | | | |
| | | | | | | |
E. David Hobbs | — |
| 15,000 |
| — |
| 4.17 | 5/30/2022 | 24,562 |
| 17,193 |
| | | | | | |
| |
(1) | The market value of the restricted stock set forth in the table has been calculated by multiplying the closing price of the Company’s Common Stock at year-end ($0.70/share) by the number of shares of unvested restricted stock subject to the award. |
DIRECTOR COMPENSATION
| | | | | | | | | | | | | | | | | |
Name | Fees earned or paid in cash ($)(1) | Director's Restricted Stock Awards ($)(2) | Option Awards ($) | All Other Compensation ($) | Total ($) |
|
|
|
William F. Blue, Jr. | 50,000 | 27,680 | — | — | 77,680 |
| | | | | |
Charles E. Brock | 39,500 | 27,680 | — | — | 67,180 |
| | | | | |
Lowry F. Kline | 40,500 | 27,680 | — | — | 68,180 |
| | | | | |
Hilda S. Murray | 40,500 | 27,680 | — | — | 68,180 |
| | | | | |
Michael L. Owens | 49,000 | 27,680 | — | — | 76,680 |
|
| | | | | | |
| Name (a) | Fees earned or paid in cash ($) (b)(1) | Stock Awards ($) (c)(2) | Option Awards ($) (d)(3) | All Other Compensation ($) (e)(4) | Total ($) |
|
|
|
| William F. Blue, Jr. | 29,000 | 11,520 | — | — | 40,520 |
| | | | | | |
| Charles E. Brock | 30,500 | 11,520 | — | — | 42,020 |
| | | | | | |
| Walter W. Hubbard | 30,500 | 11,520 | — | — | 42,020 |
| | | | | | |
| Lowry F. Kline | 39,500 | 11,520 | — | — | 51,020 |
| | | | | | |
| Hilda S. Murray | 32,000 | 11,520 | — | — | 43,520 |
| | | | | | |
| Michael L. Owens | 37,500 | 11,520 | — | — | 49,020 |
| |
(1) | Directors who are employees of the Company do not receive any additional compensation for their services as members of the Board of Directors. Non-employee directors receive an annual retainer of $36,000, payable $18,000 in cash and the remainder in Performance Units (subject, for payments made in 2016, 2017 and 2018, to a $5.00 minimum value per unit). For 2018 the value awarded was $11,520 in Performance Units determined as of the date of grant. In addition to the annual retainer, directors who are not employees of the Company received $1,500 for each Board meeting attended and $1,000 for each committee meeting attended. Chairmen of the Audit and Compensation committees receive an additional annual payment of $8,000 and the Chairmen of the Nominations and Corporate Governance Committee receives an additional annual payment of $4,000. Also, directors receive reimbursement of the expenses they incur in attending all board and committee meetings. |
| |
(2) | The value presented is the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The value of the Performance Units awarded to each non-employee director under the Company's 2018 Incentive Compensation Plan was $11,520. |
At fiscal year-end, each(1)Non-employee directors receive an annual retainer of $40,000, payable in quarterly installments of $10,000 each. Committee Chairs receive an additional annual retainer of $10,000, also payable in quarterly installments. There are no additional individual Board or Committee meeting fees. Each non-employee director was issuedalso receives an equity award of $40,000 in value of restricted stock with such value determined by reference to the following outstanding equity awards,public share price (the closing price) as of the date of the annual meeting at which the individual is elected, or, if the individual is appointed to the Board, then with respectreference to service for 2018:the stock price as of the date of appointment (subject to a deemed minimum stock price of $5 per share. The restricted stock award will vest five business days after the succeeding annual meeting.
(2)The value presented is the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, using the annual meeting date as the grant date.
|
| | | |
| Name (a) | Performance Units (#)(b)(1) |
|
|
|
| William F. Blue, Jr. | 3,600 |
|
| | |
| Charles E. Brock | 3,600 |
|
| | |
| Walter W. Hubbard | 3,600 |
|
| | |
| Lowry F. Kline | 3,600 |
|
| | |
| Hilda S. Murray | 3,600 |
|
| | |
| Michael L. Owens | 3,600 |
|
| |
(1) | The performance units represent an equal number of shares of the Company's Common Stock. At year-end, the aggregate value of such stock was $15,120, determined by multiplying the number of performance units issued by the year-end per share market value of the Company's Common Stock ($0.70/share). |
PROPOSAL TWO
ADVISORY VOTE ON EXECUTIVE COMPENSATIONADOPTION OF THE OMNIBUS EQUITY INCENTIVE PLAN
As required
On March 12, 2022, the Compensation/Nominations and Corporate Governance Committee ("Compensation Committee") recommended and the Board of Directors unanimously approved adoption of the Omnibus Equity Incentive Plan (the “2022 Plan” or the “Omnibus Equity Incentive Plan”). The Company’s 2016 Incentive Plan will remain in effect. All remaining shares available for issuance under recent amendmentsthe 2016 Incentive Plan have been granted, subject to possible forfeiture or cancellation of unvested awards outstanding under that plan.
The 2022 Plan authorizes similar forms of awards as the Securities Exchange Act of 1934, our stockholders may cast an advisory vote2016 Incentive Plan and contains certain annual and other limits on the compensation of our Named Executive Officers,awards, as described herein, but eliminates those references to and the specific limitations on “qualifying performance awards” included in this proxy statement.
Our executive compensation programs arethe 2016 Incentive Plan that were designed to attract, motivate,meet former requirements under Code Section 162 (m) of the Internal Revenue Code of 1986, as amended (the “Code”).
The 2022 Plan, if adopted by the Company’s shareholders, will authorize the issuance of up to 1,300,000 shares of the Company’s Common or Class B Common Stock to designated officers, directors and retain our Named Executive Officers, whoemployees (as such terms are criticaldefined in the 2022 Plan) as equity awards, subject to our success. Please read the Compensation Discussion and Analysis for additional details about our executive compensation programs, including information about the fiscal 2018 compensation of our Named Executive Officers.
We are asking our Shareholders to indicate their approval of our Named Executive Officer compensationcertain limits as described in this proxy statement. This proposal, commonly known as a hereinafter.
“say-on-pay” proposal, gives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement.
We recommend that stockholders vote, on an advisory basis, “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as discussed and disclosed in the Compensation Discussion and Analysis, the executive compensation tables and related narrative executive compensation disclosure in this proxy statement.”
The above resolution will be deemed to be approved if it receives the affirmative vote of a majority of the total votes castrepresented in person or by proxy and entitled to vote on Proposal Twothis item will be required for approval of the plan. Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a negative vote. Broker non-votes will not be considered entitled to vote on this item and will therefore not be counted in determining the number of votes necessary for approval.
The 2022 Plan includes the following features that are designed to protect the interests of our shareholders:
Administration by a Compensation Committee composed entirely of independent directors.
The number of shares available for grant will not automatically increase because of an “evergreen feature.”
Exercise prices of awards (if applicable) must be at least 100% of fair market value on the date of the award.
Option Awards may not be re-priced, including, specifically, by any action that has the effect of reducing the exercise price of such option.
There are annual meeting. Abstentions and broker non-votes arefixed limits on the number of equity Awards:
The maximum number of options that may be granted to any one participant during any fiscal year is 150,000; the maximum number of shares of restricted stock that may be granted to any participant during any fiscal year is 330,000; the maximum number of shares of restricted stock that may be granted to any non-employee director in any one fiscal year is 20,000.
No material amendments may be made without the approval of shareholders.
Summary Description of the Omnibus Equity Incentive Plan.
Following is a brief description of certain key features of the Omnibus Equity Incentive Plan, the full text of which is attached as APPENDIX A. This Summary does not consideredpurport to be votes castcomplete and accordingly, will have no effectis qualified in its entirety by reference to APPENDIX A. If the Omnibus Equity Incentive Plan is approved by the Company’s shareholders, we intend to promptly file a registration statement on Form S-8 under the outcomeSecurities Act of 1933, as amended, registering the shares available for issuance under the 2022 Plan.
General. The Omnibus Equity Incentive Plan provides for various types of awards denominated in shares of the vote. AsCompany’s common stock (for these purposes, Common Stock and or Class B Common Stock) to employees, officers, directors and agents of the company and its participating subsidiaries. The primary purposes of the Omnibus Equity Incentive Plan are to attract and retain such persons by providing competitive compensation opportunities, to provide incentives for those who contribute to the long-term performance of the Company, and to align employee and director interests with those of our shareholders.
Administration. The Omnibus Equity Incentive Plan is administered by the Compensation Committee of the Board. All members of the Committee must satisfy the requirements for independence of the Securities Exchange Act rule 16b-3.
The Compensation Committee has the authority to administer and interpret the Omnibus Equity Incentive Plan, to determine the employees to whom awards will be granted under the plan and, subject to the terms and limitations of the plan, the type and size of each award, the terms and conditions for vesting, cancellation and forfeiture of awards and the other features applicable to each award or type of award. Included within this voteauthority is an advisory vote, the outcome is not binding on usbroad discretionary authority to administer and interpret each annual incentive plan adopted by the Company pursuant to the Omnibus Equity Incentive Plan.
The Committee may:
•accelerate or defer the vesting or payment of awards;
•cancel or modify outstanding awards;
•waive any conditions or restrictions imposed with respect to future executive compensation decisions, including those relatingawards or the stock issued pursuant to our named executive officers. Our Board of Directors awards;
•and our Compensation Committee, however, value the opinions of our stockholders,make any and all other determinations that it deems appropriate, subject to the extent thereexpress limitations imposed by the Omnibus Equity Incentive Plan, including minimum vesting requirements, prohibitions against re-pricing, and provisions designed to maintain compliance with the requirements of Sections 422 (for incentive stock options) and 409 A of the Internal Revenue Code, as well as other applicable laws and stock exchange rules.
The Committee may delegate some or all of its authority over administration of the Omnibus Equity Incentive Plan to one or more officers and directors except as otherwise prohibited by applicable rule or regulation.
Eligibility. All “employees” of the Company-within the SEC’s broad definition set forth in the instructions to the Form S-8 registration statement, which includes employees, officers, directors and (subject to certain restrictions) consultants and advisors to the Company- are eligible to receive awards under the Omnibus Equity Incentive Plan. Participation is discretionary- awards are subject to approval of the Compensation Committee.
Shares Subject to the Plan. The maximum number of shares of Common Stock and Class B Common Stock that may be issued as awards pursuant to the Omnibus Equity Incentive Plan is 1,300,000.
The maximum number of shares of that may be issued will not be affected by the payment in cash of dividends or dividend equivalents in connection with outstanding awards, the granting or payment of stock-denominated awards that by their terms may be settled only in cash, or awards that are granted through the assumption of, or in substitution for outstanding awards previously granted to individuals who have become employees as a result of a merger, consolidation, or acquisition or other corporate transaction involving the Company or a subsidiary. Additionally, shares used by a participant to exercise an option and shares withheld by the Company to cover the withholding tax liability associated with the exercise or vesting of an award are not counted toward the maximum number of shares that may be issued and will not reduce the number of shares that will be available for future awards.
Shares of Common Stock and Class B Common Stock issued in connection with awards under the Omnibus Equity Incentive Plan may be shares that are authorized but unissued, or previously issued shares that have been reacquired, or both. If an award is forfeited, canceled, terminated or expires prior to the issuance of shares, the shares subject to the award will be available for future grants. Shares subject to outstanding awards granted under other plans shall not be subject to future issuance under the Omnibus Equity Incentive Plan, if such awards are forfeited, cancelled, terminated or expire prior to the issuance of such shares.
Limit on Awards. The aggregate number of shares of Common Stock and or Class B Common Stock subject to awards of restricted stock that may be granted to any significant vote againstone participant during any fiscal year of the Named Executive Officer compensation as disclosedCompany may not exceed 330,000, and the maximum number of shares subject to awards of stock options that may be granted to any one participant during any fiscal year may not exceed 150,000. The maximum number of shares of restricted stock that may be granted to any one non-employee director in this proxy statement,any fiscal year may not exceed 20,000.
Proportional exercise For Common Stock and Class B Common Stock. All awards granted under the Omnibus Equity Incentive Plan shall be denominated and documented with reference to the number of shares of Common Stock subject to such award; provided, however, that any participant who owns shares of the Company’s Class B Common Stock shall be entitled to elect, on the election date applicable to the award to receive a portion of such award in shares of Class B Common Stock in an amount no greater than the proportion of Class B Common Stock then held by such participant.
Types of Awards. The following types of awards may be granted under the Omnibus Equity Incentive Plan. All of the awards described below are subject to the conditions, limitations, restrictions, vesting and forfeiture provisions determined by the Compensation Committee, in its sole discretion, subject to such limitations as are provided in the Omnibus Equity Incentive Plan. The number of shares subject to any award is also determined by the Compensation Committee in its discretion. At the discretion of the Compensation Committee, awards may be made subject to or may vest on an accelerated basis upon the achievement of performance criteria, which may be established on a Company-wide basis or with respect to one or more business units or divisions or subsidiaries and may be based upon the attainment of criteria as may be determined by the Committee.
Restricted Stock. A restricted stock award is an award of outstanding shares of Common Stock or Class B Common Stock that does not vest until after a specified period of time, or upon the satisfaction of other vesting conditions as determined by the compensation Committee and which may be forfeited if conditions to vesting are not met. Participants generally are entitled to receive dividends (if any) during the vesting period and are also generally entitled to vote the shares underlying the award.
Non-Qualified Stock Options. An award of a non-qualified stock option under the Omnibus Equity Incentive Plan grants a participant the right to purchase a certain number of shares of Common Stock and or Class B Common stock during a
specified term in the future, after a vesting period, at an exercise price equal to at least 100% of the fair market value of the Common Stock on the grant date. The exercise price may be paid by any of the means described below under “Payment of Exercise Price.” A non-qualified stock option is one that does not qualify under Section 422 of the Code.
Incentive Stock Options. An incentive stock option is a stock option that meets the requirements of Section 422 of the Code, which include an exercise price of no less than 100% of fair market value on the date of grant, a term of no more than 10 years, and that the option be granted from a plan that has been approved by shareholders. Additional requirements apply to an incentive stock option granted to a participant who beneficially owns stock representing more than 10% of the total voting power of all outstanding stock of the Company on the date of grant. If certain holding period requirements are met and there is no disqualifying disposition of the shares, the participant will consider our stockholdersbe entitled to receive capital gain rather than ordinary income treatment under the Code with respect to any gain related to the exercise of the option.
Payment of the Exercise Price’. Payment of the exercise price of any option (or other award, if such award requires payment of an exercise price) granted under the Omnibus Equity Incentive Plan may be made in cash or, if permitted by the Compensation Committee, by tendering shares of Common Stock and or Class B Common Stock owned by the participant and acquired at least six (six) months prior to exercise, having a fair market value equal to the exercise price, by a combination of cash and shares or by authorizing the sale of shares otherwise issuable upon exercise, with the sale proceeds applied towards the exercise price. Additionally, the Committee may provide that stock options can be net exercised- that is by issuing shares having a value approximately equal to the difference between the aggregate value of the shares as to which the awards being exercised and the aggregate exercise price for such number of shares.
Stock Unit. concernsA stock unit is an award denominated in shares of Common Stock or Class B Common Stock that may be settled ether in shares and or cash subject to terms and conditions determined by the Compensation Committee.
Stock Payment. Subject to limits on individual and aggregate awards as described above, the Compensation Committee may issue unrestricted shares of Common Stock and or Class B Common Stock under the Omnibus Equity Incentive Plan, alone or in tandem with other awards, in such amounts and subject to such terms and conditions as the Compensation Committee may determine. A stock payment may be granted as, or in payment of a bonus or to provide incentives or recognize special achievements or contributions.
Prohibition Against Re-Pricing. The Omnibus Equity Incentive Plan prohibits any adjustment to an award of options that would constitute a re-pricing (within the meaning of U.S. generally accepted accounting principles or any applicable stock exchange rule) of awards, and defined, for these purposes, as any action that would have the effect of reducing the exercise price of an option.
Additional Forfeiture Provisions. Awards granted under the Omnibus Equity Incentive Plan may be made subject to forfeiture if, after a termination of employment, the Participant engages in certain activities that breach an obligation or duty of the Participant to the Company, or that are materially injurious to or in competition with the Company.
Deferrals. The Compensation Committee may postpone the exercise of awards, or the issuance or delivery of shares or cash pursuant to any award for such periods and upon such terms and conditions as the Compensation Committee determines, but not in contravention of Section 409A of the Code.
Annual Incentive Plans. In accordance with past practice, and subject to the express terms and conditions of the Omnibus Equity Incentive Plan, the Company may continue to establish annual incentive plans that provide for cash and equity awards to eligible employees selected by the Committee. Awards under such annual plans may be based on achievement of performance criteria and formulas set by the Committee and evaluated in light of individual goals and achievements. The Committee retains broad discretion to interpret the goals and attainment of the performance metrics expressed by such goals, including the discretion to increase or decrease awards. A description of the annual plan adopted for 2022 is set forth under “Incentive Compensation Applicable to 2022.”
Individual Awards. Subject to relevant plan limitations, awards may be made outside of the terms of any annual incentive plan to participants selected by the Compensation Committee from among the Company’s eligible participants.
New Plan Benefits Under the Omnibus Equity Incentive Plan. Future benefits under the Omnibus Equity Incentive Plan are not currently determinable. The amounts and terms of any future awards, as well as the participants to which such awards may be made, depend on discretionary decisions of the Compensation Committee. While the Committee expects that shares which ultimately may become issuable for 2022 (under the annual incentive plan described herein at “Incentive Compensation Applicable to 2022”) will evaluatebe granted as restricted stock awards, whether such awards will be granted, and the number of shares to be issued pursuant to such awards that are granted cannot be known until the Committee evaluates whether and to what extent any actions are necessaryrelated performance criteria and goals have been met.
Additionally, the Committee anticipates reviewing awards issued under the annual plan for 2021 to address those concerns.determine whether and to what extent additional awards should be granted to participants under that plan in acknowledgement of the participants’ and the Company’s performance responding to the challenges of 2021. Additional awards in the aggregate amounting to 78,957 restricted shares may be considered based upon share availability under the Company's 2016 Incentive Compensation Plan as a result of forfeited awards.
The Boardfollowing table provides information as of Directors recommends thatMarch 12, 2022, with respect to compensation plans (including individual compensation arrangements) under which equity securities of the Company’s shareholders vote FORregistrant are authorized for issuance
. | | | | | | | | | | | |
2016 Incentive Compensation Plan | (a) Number of securities to be issued upon exercise of any outstanding options, warrants and rights
| (b) Weighted- average exercise price of outstanding options, warrants and rights
| (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column)
|
Equity Compensation Plan Approved by Security Holders | 281,320 [1] | 4.35[2] | 1,008 |
[1] Includes the approvaloptions to purchase 151,000 shares of Proposal Two.Common Stock under our 2016 Incentive Compensation Plan and 130,320 Performance Units issued under the 2016 Incentive Compensation Plan, each unit being equivalent to one share of Common Stock. Does not includes shares of Common Stock issued but not vested pursuant to outstanding restricted stock awards.
[2] Includes the aggregate weighted-average of (i) the exercise price per share for outstanding options to purchase 151,000 shares of Common Stock under our 2016 Incentive Compensation Plan and (ii) the price per share of the Common Stock on the grant date for each of 130,320 Performance Units issued under the 2016 Incentive Compensation Plan (each unit equivalent to one share of Common Stock).
PROPOSAL THREE
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY SAY-ON-PAY VOTESEXECUTIVE COMPENSATION
Our
As required under recent amendments to the Securities Exchange Act of 1934, our stockholders also have the opportunity to indicate how frequently we should seekmay cast an advisory vote on the compensation of our Named Executive Officers, as described in this proxy statement.
Our executive compensation programs are designed to attract, motivate and retain our Named Executive Officers, who are critical to our success. Please read the Compensation Discussion and Analysis for additional details about our executive compensation programs, including information about the fiscal 2021 compensation of our Named Executive Officers.
We are asking our Shareholders to indicate their approval of our Named Executive Officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation.
We recommend that stockholders vote, on an advisory basis, “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers. By votingofficers, as discussed and disclosed in the Compensation Discussion and Analysis, the executive compensation tables and related narrative executive compensation disclosure in this proxy statement.”
The above resolution will be deemed to be approved if it receives the affirmative vote of a majority of the total votes cast on Proposal Three stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every one, two, or three years. You will haveat the opportunity to vote on this issue at least once every six years.
Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for our company. Accordingly, our Board of Directors recommends that you vote for a one-year interval for the advisory vote on executive compensation.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, or three years. You may also abstain from voting. The option that receives the highest number of advisory votes by shareholders will be the frequency for the advisory vote on executive compensation deemed to have been selected by stockholders.annual meeting. Abstentions and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote.
As thethis vote is an advisory andvote, the outcome is not binding theon us with respect to future executive compensation decisions, including those relating to our Named Executive Officers. Our Board of Directors may decide that it is in the best interests of the Company and its shareholders to hold an advisory vote on executive compensation more or less frequently than the option selected by our shareholders (but not less often than once every three years). However, weCompensation Committee, however, value the opinions of our shareholdersstockholders, and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in this proxy statement, the Compensation Committee will consider our stockholders’ concerns and will consider the outcome of the advisory vote in deciding how oftenevaluate whether any actions are necessary to hold the advisory vote on executive compensation in future years.address those concerns.
The Board of Directors recommends athat the Company’s shareholders vote FOR the frequencyapproval of the say-on-pay advisory vote to be "one year".Proposal Three.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR 20192021
The firm of Dixon Hughes Goodman LLP served as independent registered public accountants for the Company for fiscal year 2018. Subject to ratification of its decision by the Company’s shareholders, the Company has selected the firm of Dixon Hughes Goodman LLP to serve as its independent registered public accountants for its 20192022 fiscal year. A representative of Dixon Hughes Goodman LLP is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he so desires and to respond to appropriate questions from shareholders.
The Board of Directors recommends that that the Company’s shareholders vote FOR Proposal Four.
In the event that the Company’s shareholders do not ratify the selection of Dixon Hughes Goodman LLP as independent registered public accountants for fiscal 2019,2022, the Board of Directors will consider other alternatives, including appointment of another firm to serve as independent registered public accountants for fiscal 2019.2022.
AUDIT FEES DISCUSSION
The following table sets forth the fees paid to Dixon Hughes Goodman LLP for services provided during fiscal year 20172020 and 2018:2021:
|
| | | | | | |
| 2018 | 2017 |
Audit fees paid to Dixon Hughes Goodman LLP (1) | $ | 610,026 |
| $ | 652,536 |
|
Audit related fees (2) | $ | 3,354 |
| $ | 23,612 |
|
Tax fees (3) | $ | 45,495 |
| $ | 174,975 |
|
All other fees (4) | $ | 5,716 |
| $ | — |
|
Total Audit Fees | $ | 664,591 |
| $ | 851,123 |
|
| | | | | | | | |
| 2021 | 2020 |
Audit fees paid to Dixon Hughes Goodman LLP (1) | $ | 849,364 | | $ | 603,642 | |
Tax fees (2) | $ | 7,800 | | $ | 1,450 | |
All other fees (3) | | $ | 10,000 | |
Total Audit Fees | $ | 857,164 | | $ | 615,092 | |
| |
(1) | Represents fees for professional services paid to Dixon Hughes Goodman LLP provided in connection with the audit of the Company’s annual financial statements, review of the Company’s quarterly financial statements, review of other SEC filings and technical accounting issues during 2017 and 2018. |
| |
(2) | Represents fees for discussions of recent accounting pronouncements and review of SEC comment letter. |
| |
(3) | Represents fees for tax compliance and tax planning services. |
| |
(4) | Represents fees related to a sale leaseback transaction. |
1. Represents fees for professional services paid to Dixon Hughes Goodman LLP provided in connection with the audit of the Company’s annual financial statements, review of the Company’s quarterly financial statements, review of other SEC filings and technical accounting issues during 2020 and 2021.
2. Represents fees for tax compliance and tax planning services.
3. Represents fees related to the S-8 Registration Statement filing.
It is the policy of the Audit Committee to pre-approve all services provided by its independent registered public accountants. In addition, the Audit Committee has granted the Chairman of the Audit Committee the power to pre-approve any services that the Committee, as a whole, could approve. None of the fees were approved by the Audit Committee pursuant to the de minimis exception of Reg. S-X T Rule 2-01(c)(7)(i)(C).
SHAREHOLDER PROPOSALS
FOR INCLUSION IN NEXT YEAR'S PROXY STATEMENT
In the event any shareholder wishes to present a proposal at the 20202023 Annual Meeting of Shareholders, such proposal must be received by the Company on or before November 1512, 2019,2022, to be considered for inclusion in the Company's proxy materials. All shareholder proposals should be addressed to the Company at its principal executive offices, P.O. Box 2007, Dalton, Georgia 30722-2007, Attention: Corporate Secretary, and must comply with the rules and regulations of the Securities and Exchange Commission.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders who wish to communicate with members of the Board, including the independent directors individually or as a group, may send correspondence to them in care of the Corporate Secretary at the Company’s corporate headquarters, P.O. Box 2007, Dalton, Georgia 30722-2007.
ADDITIONAL INFORMATION
The entire cost of soliciting proxies will be borne by the Company. In addition to solicitation of proxies by mail, proxies may be solicited by the Company’s directors, officers, and other employees by personal interview, telephone, and telegram. The persons making such solicitations will receive no additional compensation for such services. The Company also requests that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of the shares of Common Stock held of record by such persons and will pay such brokers and other fiduciaries all of their reasonable out-of-pocket expenses incurred in connection therewith.
OTHER MATTERS
As of the date of this Proxy Material, the Board does not intend to present, and has not been informed that any other person intends to present, any matter for action at the Annual Meeting other than those specifically referred to herein. If other matters should properly come before the Annual Meeting, it is intended that the holders of the proxies will vote in accordance with their best judgment.
The Dixie Group, Inc.
Daniel K. Frierson
Chairman of the Board
Dated: March 22, 2019
30, 2022
ANNEX A
DIXIE GROUP, INC.
OMNIBUS EQUITY INCENTIVE PLAN
DIXIE GROUP, INC.
Omnibus Equity Incentive Plan
1.Purpose. The primary purposes of the Omnibus Equity Incentive Plan are to attract, retain and motivate employees, officers, agents or other eligible plan participants, including non-employee directors of the Company, and to compensate them for their contributions to the growth and profits of the Company.
2.Definitions. Except as otherwise provided in an applicable Award Document, the following capitalized terms shall have the meanings indicated below for purposes of the Plan and any Award:
“Administrator” means the Compensation/Nominations and Corporate Governance Committee or any subcommittee or individual appointed by the Committee to administer the Plan.
“Award” means any Award of Restricted Stock, Stock Units, Performance Units, Options, Cash or Other Awards (or any combination thereof) made under and pursuant to the terms of the Plan.
“Award Date” means the date specified in a Participant’s Award Document as the grant date of the Award.
“Award Document” means a written document (including in electronic form) that sets forth the terms and conditions of an Award. Award Documents shall be authorized in accordance with Section 11(c).
“Board” means the Board of Directors of The Dixie Group, Inc.
“Code” means the Internal Revenue Code of 1986, as amended, and the applicable rulings, regulations and guidance thereunder.
“Committee” means the Compensation/Nominations and Corporate Governance Committee of the Board, any successor committee thereto or any other committee of the Board appointed by the Board to administer the Plan or to have authority with respect to the Plan, or any subcommittee appointed by such Committee.
“Company” means The Dixie Group, Inc. and all of its Subsidiaries.
“Eligible Individuals” means the individuals described in Section 6 who are eligible for Awards.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the applicable rulings and regulations thereunder.
“Fair Market Value” means, with respect to a Share, the fair market value thereof as of the relevant date of determination, as determined in accordance with a valuation methodology approved by the Committee.
“Incentive Stock Option” or “ISO” means an Option that is intended to qualify for special federal income tax treatment pursuant to Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Document.
“Option” or “Stock Option” means a right, granted to a Participant pursuant to Section 9, to purchase Shares of The Dixie Group, Inc. common stock (Common Stock and Class B Common Stock).
“Other Award” means any other form of Award authorized under Section 12.
“Participant” means an individual to whom an Award has been made.
“Plan” means the Dixie Group, Inc. Omnibus Equity Incentive Plan, as amended from time to time in accordance with Section 14(e).
“Restricted Stock” means Shares granted or sold to a participant pursuant to Section 7.
“Section 409A” means Section 409A of the Code.
“Shares” means shares of Stock.
“Stock” means the Common Stock, Par Value $3.00 per share, of The Dixie Group, Inc., and, where permitted under the Plan, the Class B Common Stock, $3.00 Par Value per share of The Dixie Group, Inc.
“Stock Unit” means a right, granted to a Participant pursuant to Section 8, redeemable in shares or cash, as authorized by the Committee.
“Subsidiary” means (i) a corporation or other entity with respect to which the Dixie Group, Inc. directly or indirectly, has the power, whether through the ownership of securities, by contract or otherwise, to elect at least a majority of the members of such corporation’s board of directors or analogous governing body, or any other corporation or other entity in which the Dixie Group, Inc. directly or indirectly, has an equity or similar interest and which the Committee designates as a Subsidiary for purposes of the Plan.
3. Effective Date.
(a) Effective Date. The Plan shall become effective upon its adoption by the Board, subject to its approval by The Dixie Group Inc.’s stockholders. Prior to such stockholder approval and subject to applicable regulatory limitations, the Committee may grant Awards conditioned on stockholder approval, but no shares may be issued or delivered pursuant to any such Award until The Dixie Group, Inc.’s stockholders have approved the Plan. If such stockholder approval is not obtained the Plan and any awards made thereunder shall terminate ab initio and be of no further force and effect.
(b) Term of Plan. No awards may be made after May 4, 2032.
4. Stock Subject to Plan.
(a) Overall Plan Limit. The total number of Shares that may be delivered pursuant to Awards shall be 1,300,000 as calculated pursuant to Section 4(c). the number of Shares available for delivery under the Plan shall be adjusted as provided in Section 4(b). Shares delivered under the Plan may be authorized but unissued shares or treasury shares that the Company acquires in the open market, in private transactions or otherwise.
(b) Adjustments for Certain Transactions. In the event of a stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, consolidation, extraordinary dividend or distribution, split-up, spin-off, combination, reclassification or exchange of shares, warrants or rights or other change in corporate structure or any other event that affects the Company’s capitalization, the Committee shall have the authority to equitably adjust (i) the number and kind of Shares authorized for delivery under the Plan, including the maximum number of shares available for Awards and Options as provided in Section 4(d), the maximum number of Incentive Options as provided in Section 4(e) and (ii) the number and kind of shares subject to any outstanding Award and the purchase price per share, if any, under any outstanding Award. The Committee shall make all such adjustments, and its determination as to what adjustments shall be made, and the extent thereof, shall be final. Unless the Committee determines otherwise, such adjusted Awards shall be subject to the same vesting schedule and restrictions to which the underlying Award is subject.
(c) Calculation of Shares Available for Delivery. In calculating the number of Shares that remain available for delivery pursuant to Awards at any time, the following rules shall apply (subject to the limitation in Section 4(e)):
(1) the number of Shares available for delivery shall be reduced by the number of shares subject to an Award and, in the case of an Award that is not denominated in Shares, the number of Shares actually delivered upon payment or settlement of the Award.
(2) the number of Shares tendered (by actual delivery or attestation) or withheld from an Award to pay the exercise price of the Award or to satisfy any tax withholding obligation or liability of a Participant shall be added back to the number of Shares available for delivery pursuant to Awards.
(3) the number of Shares in respect of any portion of an Award that is canceled or that expires without having been paid or settled by the Company shall be added back to the number of Shares available for delivery pursuant to clause (1).
(4) If an Award is settled or paid by the Company in whole or in part through the delivery of consideration other than Shares, or by delivery of fewer that the full number of Shares that was counted against the Shares available for delivery pursuant to clause (1), there shall be added back to the number of shares available for delivery pursuant to Awards the excess of the number of Shares that had been so counted over the number of shares (if any) actually delivered upon payment or settlement of the Award.
(d) Individual Limit on Options. The maximum number of Shares that may be subject to Options granted to a Participant in any fiscal year shall be 150,000 Shares.
(e) ISO Limit. In calculating the number of Shares that remain available for Awards of Incentive Stock Options, the rules set out in Section 4(c) shall not apply to the extent not permitted by Section 422 of the Code.
5. Administration.
(a) Committee Authority Generally. The Committee shall administer the Plan and shall have full power and authority to make all determinations under the Plan, subject to the express provisions hereof, including, without limitation: (i) to select participants from among the Eligible Individuals; (ii) to make Awards; (iii) to determine the number of Shares subject to each Award or the cash amount payable in connection with an Award; to establish the terms and conditions of each
Award, including, without limitation, those related to vesting, cancellation, payment, exercisability, and the effect, if any, of certain events on a Participant’s Awards, such as the Participant’s termination of employment with the Company; (v) to specify and approve the provisions of the Award Documents; (vi) to construe and interpret any Award Document; (vii) to prescribe, amend and rescind rules and procedures relating to the Plan; (viii) to make all determinations necessary or advisable in administering the Plan and Awards, including, without limitation, determinations as to whether (and if so as of what date) a Participant has commenced, or has experienced a termination of, employment; provided, however, that to the extent full or partial payment of any Award that constitutes a deferral of compensation subject to Section 409A is made upon or as a result of a participant’s termination of employment, the Participant will be considered to have a termination of employment if, and only if, the participant has experienced a separation of service for purposes of Section 409A; (ix) to vary the terms of Awards to take account of securities law and other legal or regulatory requirements of jurisdictions in which Participants work or reside or to procure favorable tax treatment for participants; and (x) to formulate procedures necessary or advisable for the administration of the Plan.
(b) Authority to Construe and Interpret. The Committee shall have full power and authority, subject to the express provisions hereof, to construe and interpret the Plan.
(c) Committee Discretion. All of the Committee’s determinations in carrying out, administering, construing, and interpreting the Plan shall be made or taken in its sole discretion and shall be final, binding and conclusive for all purposes and upon all persons. The Committee’s determinations need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations and to enter into non-uniform and selective Award Documents, as to persons receiving Awards under the Plan, and the terms and provisions of Awards under the Plan
(d) No Liability. Subject to applicable law: (i) no member of the Committee or any Administrator shall be liable for anything whatsoever in connection with the exercise of authority under the Plan or the administration of the Plan except such person’s own willful misconduct; (ii) under no circumstances shall any member of the Committee or any Administrator be liable for any act or omission of any other member of the Committee or an Administrator; and (iii) in the performance of its functions with respect to the Plan, the Committee and any Administrator shall be entitled to rely upon information and advice furnished by the Company’s officers, the Company’s accountants, the Company’s counsel and any other party the Committee deems necessary, and no member of the Committee shall be liable for any action taken or not taken in good faith reliance upon any such advice.
6. Eligibility. All “employees” of the Company- within the SEC’s broad definition set forth in the instructions to the Form S-8 registration statement, which includes, employees, officers, directors and (subject to certain restrictions) consultants and advisors to the Company- are eligible to receive Awards under the Plan. Participation is discretionary- Awards are subject to approval by the Committee.
7. Restricted Stock. An Award of Restricted Stock shall be subject to the terms and conditions established by the Committee in connection with the Award and specified in the applicable Award Document. Restricted Stock may, among other things, be subject to restrictions on transfer, vesting requirements or cancellation under certain circumstances.
8. Stock Units. A stock Unit is an Award denominated in Shares that may be settled either in Shares and or in cash, or partly in cash and partly in Shares subject to terms and conditions determined by the Compensation Committee.
9. Options.
(a) Options Generally. An Award of Options shall be subject to the terms and conditions established by the Committee in connection with the Award and specified in the applicable Award Document. The Committee shall establish (or shall authorize the method for establishing) the exercise price of all Options awarded under the Plan, except that the exercise price of an option shall not be less than 100% of the Fair market Value of one share on the Award Date (110% in the case of a 10% Shareholder). Upon satisfaction of the conditions to exercisability of the Award, a Participant shall be entitled to exercise the Options included in the Award and to have delivered, upon the Company’s receipt of payment of the exercise price and completion of any other conditions or procedures specified by the Company, the number of shares in respect of which the Options shall have been exercised. Options may be either nonqualified stock options or Incentive Stock Options. Options and the Shares acquired upon exercise may, among other things, be subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances.
(b) Prohibition on Repricing. Anything in the Plan to the contrary notwithstanding, the committee may not reprice any Option. “Reprice” means any action that would have the effect of reducing the exercise price of such Option.
(c) Payment of Exercise Price. Subject to the provisions of the Applicable Award Document and to the extent authorized by the Company from time to time, the exercise price of an Option may be paid in cash, by actual delivery of Shares already owned by the person exercising the Option, or by such other means as the Company may authorize.
(d) Maximum Term on Options. No Incentive Stock Option shall have an expiration date that is later than the tenth anniversary of the Award Date thereof.
10. Certain Restrictions.
(a) Stockholder Rights. Except as otherwise provided in Section 4(b) or 12(b), no adjustments shall be made for dividends or distributions on, or other events relating to, Shares subject to an Award for which the record date is prior to the date such Shares are delivered. Except for the risk of cancellation and the restrictions on transfer that may apply to certain Shares (including restrictions relating to any dividends or other rights) or as otherwise set forth in the applicable Award Document, the Participant shall be the beneficial owner of any Shares delivered to the Participant in connection with an Award and, upon such delivery shall be entitled to all rights of ownership, including, without limitation, the right to vote the Shares and to receive cash dividends or other dividends (whether in Shares, other securities or other property) thereon.
(b) Transferability. No Award granted under the Plan shall be transferable, whether voluntarily or involuntarily, other than by will or by the laws of descent and distribution; provided that, except with respect to Incentive Stock Options, the Committee may permit transfers on such terms and conditions as it shall determine. During the lifetime of a Participant to whom Incentive Stock Options were awarded, such Incentive Stock Options shall be exercisable only by the Participant.
11. General Terms and Provisions.
(a) Awards in General. Awards may be granted as an award of cash, as Shares, as Restricted Stock, as a Performance Award, as Options or as Stock Units. Awards may be granted independent of other Awards. The grant, vesting or payment of an Award may, among other things, be conditioned on the attainment of performance objectives as established by the Committee.
(b) Dividends and Distributions. If the Company pays any dividend or makes any distribution to holders of Stock the Committee may in its discretion authorize payments) which may be in cash, Stock (including Restricted Stock) or Stock Units or a combination thereof) with respect to the Shares corresponding to an Award, or may authorize appropriate adjustments to outstanding Awards, to reflect such dividend or distribution. The Committee may make any such payments subject to vesting, deferral, restrictions on transfer or other conditions. Any determination by the Committee will be part of the terms and conditions of the Award.
(c) Award Documentation and Award Terms. The terms and conditions of an Award shall be set forth in an Award Document authorized by the Committee. The Award Document shall include any vesting, exercisability, payment, and other restrictions applicable to an Award (which may include, without limitation, the effects of termination of employment, cancellation of the Award under certain circumstances, restrictions on transfer or provision for mandatory resale to the Company).
(d) Proportional Exercise for Common Stock and Class B Common Stock. All awards granted under the Plan shall be documented with reference to the number of shares of Common Stock subject to such Award; provided, however, that any participant who already owns shares of Class B Common Stock shall be entitled to elect to receive shares of both Common Stock and Class B Common stock with respect to such Award, with the maximum number of shares of Class B Common Stock that the Participant may elect to receive being limited to a number that will not increase the ratio of the number of shares of Class B common Stock held by the Participant to the total number of shares of Common Stock and Class B Common Stock held by such participant on the Election Date. For any Award which is an ISO or non-qualified Stock Option (or portion thereof, in the case of Options which vest over time), the Election Date shall be the date on which such Award (or any applicable portion of such Award) is exercised, unless the Participant chooses to express such election on the date of grant. For any Award of Restricted Stock, the Election Date shall be the date on which the Award is granted. Any Participant who holds shares of Class B Common stock and fails to make the applicable election will only receive shares of Common Stock with respect to such Award. References to Common Stock shall where applicable be deemed to include Class B Common Stock, unless otherwise indicated.
(e) Voting. Participants shall have the right to vote shares of Common Stock and Class B Common stock allocated to an Award of Restricted Stock.
12. Representation; Compliance with Law. The Committee may condition the grant, exercise, settlement or retention of any Award on the Participant making any representations required in the applicable Award Document. Each Award shall also be conditioned upon the making of any filings and the receipt of any consents or authorizations required to comply with, or required to be obtained under, applicable law.
13. Miscellaneous Provisions.
(a) Satisfaction of Obligations. As a condition to the making or retention of any Award, the vesting, exercise or payment of any Award or the lapse of any restrictions pertaining thereto, The Dixie Group, Inc. may require a Participant to pay such sum to the Company as may be necessary to discharge the Company’s obligations with respect to any taxes, assessments or other governmental charges (including FICA and other social security or similar tax) imposed on property or income received by a Participant pursuant to the Award or to satisfy any obligation that the Participant owes to the Company. In accordance with rules and procedures authorized by The Dixie Group, Inc., (i) such payment may be in the form of cash or other property, including the tender of previously owned Shares, and (ii) in satisfaction of such taxes, assessments or other governmental charges or, exclusively in the case of an Award that does not constitute a deferral of compensation subject to Section 409A, of other obligations that a Participant owes to the Company, The Dixie Group, Inc. may make available for delivery a lesser number of Shares in payment or settlement of an Award, may withhold from any payment or distribution of an Award or may enter into any other suitable arrangements to satisfy such withholding or other obligation. To the extent an Award constitutes a deferral of compensation subject to Section 409A, the Company may not offset from the
payment of such Award amounts that a Participant owes to the Company with respect to any such other obligation except to the extent such offset is not prohibited by Section 409A and would not cause a Participant to recognize income for United States federal income tax purposes prior to the time of payment of the Award or to incur interest or additional tax under Section 409A
(b) No Right to Continued Employment. Neither the Plan nor any Award shall give rise to any right on the part of any Participant to continue in the employ of the Company.
(c) Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of the Plan.
(d) Governing Law. The Plan and all rights hereunder shall be construed in accordance with and governed by the laws of the State of Tennessee, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the award to the substantive law of another jurisdiction.
(e) Amendments and Termination. The Board or Committee may modify, amend, suspend or terminate the Plan in whole or in part at any time and may modify or amend the terms and conditions of any outstanding Award (including by amending or supplementing the relevant Award Document at any time); provided, however, that no such modification, amendment, suspension or termination shall, without a Participant’s consent, materially adversely affect that Participant’s rights with respect to any Award previously made; and provided, further, that the Committee shall have the right at any time, without a Participant’s consent and whether or not the Participant’s rights are materially adversely affected thereby, to amend or modify the Plan or any Award under the Plan in any manner that the Committee considers necessary or advisable to comply with any law, regulation, ruling, judicial decision, accounting standards, regulatory guidance or other legal requirement. Notwithstanding the preceding sentence, neither the Board nor the Committee may accelerate the payment or settlement of any Award, including, without limitation, any Award subject to a prior deferral election, that constitutes a deferral of compensation for purposes of Section 409A except to the extent such acceleration would not result in the Participant incurring interest or additional tax under Section 409A.