UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant ☒ Filed by a partyParty other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material |
OneSpaWorld Holdings Limited
(Name of Registrant as Specified inIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules14a-6(i) | |||
Title of each class of securities to which transaction applies:
| ||||
Aggregate number of securities to which transaction applies:
| ||||
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| ||||
Proposed maximum aggregate value of transaction:
| ||||
Total fee paid:
| ||||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
Amount Previously Paid:
| ||||
Form, Schedule or Registration Statement No.:
| ||||
Filing Party:
| ||||
Date Filed:
|
Shirley House, 253 Shirley Street,Office Number 2, Pineapple Business Park, Airport Industrial Park, P.O.Box N-624
City of Nassau, Island of New Providence, Commonwealth of The Bahamas
May 22, 2020April 29, 2021
Dear Fellow Shareholders:
It is my pleasure to invite you to electronically attend the 20202021 Annual Meeting of Shareholders (the “Annual Meeting”) of OneSpaWorld Holdings Limited. The Annual Meeting will be held on Wednesday, June 9, 2021 at 12:30 p.m., Eastern Daylight Time, on Wednesday, June 10, 2020.Time. Due to the emergingongoing public health threat of the coronavirus(COVID-19) outbreak and to support the health and safety of our shareholders, this year’s Annual Meeting will be held as a virtual meeting only.only via live webcast on the Internet. We believe that a virtual meeting format will provide better communication and access for our shareholders.
You will be able to attend the Annual Meeting online, vote your shares electronically and submit your questions during the meeting by visiting https://www.cstproxy.com/onespaworld/2020 and using yourwww.virtualshareholdermeeting.com/OSW2021. To participate in the Annual Meeting, you will need the 16-digit control number assigned by Continental Stock Transfer & Trust Company.included on your notice, on your proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting live webcast will begin promptly at 12:30 p.m., Eastern Daylight Time, on Wednesday, June 10, 2020.
9, 2021. The accompanying Notice of Annual Meeting of Shareholders and proxy statement describe the items of business that will be discussed and voted upon during the Annual Meeting. On or about May 22, 2020,April 29, 2021, we will mail the proxy materials to our shareholders of record.
As a global provider and innovator in the fields of health and wellness, fitness and beauty, we strive to create a relaxing and therapeutic environment where guests can receive health and wellness, fitness and beauty services and experiences of the highest quality. On March 19, 2019, we consummated a business combination whereby we became the ultimate parent company of Haymaker Acquisition Corp. and certain direct and indirect subsidiaries of Steiner Leisure Limited that operated its OneSpaWorld business, in addition to a website formally owned by Elemis USA, Inc.
The regional and global outbreak of COVID-19 has had, and we expect will continue to have, a material negative impact on our current financial performance and cash positionliquidity and on the cruise industry on which our revenue is substantially dependent. The cruise industry inIn response to the United States is subject toCOVID-19 pandemic, the U.S. Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order on March 14, 2020, which was extended several times until, on April 9,October 30, 2020, to continuethe CDC issued a Framework for Conditional Sailing Order, which will remain in effect until the earliest of (i)(1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (ii)(2) the date theCDC Director of the CDC rescinds or modifies the order based on specific public health or other considerations, or (3) November 1, 2021. Pursuant to the Framework for Conditional Sailing Order, the No Sail Order orhas been lifted and the cruise industry is working with the CDC on a phased in return-to-service, which will consist of three phases: (i) testing and implementing additional safeguards for crew members; (ii) conducting simulated voyages to test cruise operators’ ability to mitigate COVID -19 risk; and (iii) 100 days after the order appears on the Federal Register, which would be July 24, 2020. Cruise cancellationsproviding a certification to ships that meet specified requirements, thereby allowing for a phased return to cruise ship passenger voyages. We have established safety protocols in concert with our cruise line partners for our onboard crew and hotel closures resulting in the closure of the Company’s onboard customers and resort spa operations have materially adversely impacted, and willwe continue to adversely impact, our operations, financial resultsmonitor and liquidity. The Company’s liquidity and operating results will continuecoordinate with their actions with respect to be negatively impacted until cruise and resort industries resume normalized operations. The full extent to which COVID-19 will impact our results will depend on future developments,the Framework for Conditional Sailing Order. Our comprehensive safety protocols, which are highly uncertaindocumented in our manual entitled “Guidelines for Protection and cannot be predicted, including new information which may emerge concerningSanitization” (“GPS”) include, among others, protocols for sanitization by service, modality and area, behavior, workplace controls, the severityuse of personal protective equipment, social distancing, recognizing signs of COVID-19, and reporting procedures. Our cruise line and destination resort employees receive training regarding compliance with the virus and the actions to contain or treat its impact. In light of the cruise industry’sGPS protocols as they
return to work. As of March 1, 2021, one of the ships we serve had commenced sailing and 44 of our destination resort spas were operating, some with capacity restrictions.
The COVID-19 pandemic has materially negatively impacted our business, operations, results of operations and financial condition, including cash flows and liquidity, which we expect to continue in fiscal year 2021. We cannot presently estimate the extent to which the pandemic will impact our business, operations, results of operations and financial condition, which will depend on a number of factors, such as the duration and scope of the pandemic; the negative impact it has on global and regional economies and economic activity, including without limitation the duration and magnitude of its adverse impact on unemployment rates and consumer discretionary spending; its short and longer-term impact on the demand for travel, transient and group business, and levels of consumer confidence; our ability to successfully navigate the impacts of the pandemic; actions governments take in response to the globalCOVID-19pandemic, including limiting or banning travel and the No Sail Order issued by the CDC, the Company is taking steps to mitigate the adverse impact ofcruises; and how quickly economies, travel and cruise activity, and demand for our services recover after the pandemic which include the Private Placement described below.
On April 30, 2020, we entered into an Investment Agreement with Steiner Leisure Limited, a current shareholder of the Company, and certain other investors, including members of the Company’s management and Board of Directors, which provides for, among other things, the issuance and sale to the investors of our common shares and warrants to purchase our common shares in exchange for an aggregate purchase price of $75.0 million (the “Private Placement”). Our Board of Directors believes that consummation of the Private Placement will provide the Company with the near-term financial support to operate through the COVID-19 pandemic, including the ability to maintain limited operations for more than 24 months and to remain in compliance with, and avoid a potential default under, its existing credit agreements for the foreseeable future. Once the cruise industry’s operations recommence, our Board of Directors believes that the Private Placement also will provide the Company with the near- and long-term support needed to quickly resume operations, facilitate innovation in its service offerings and wellness experiences and position the Company for long-term growth. The closing of the Private Placement is contingent upon, among other things, approval of Proposals 3 and 4 by our shareholders, as described in the accompanying proxy statement for the Annual Meeting.
Our Board of Directors recommends that you vote “FOR” the Private Placement Proposals.
YOUR VOTE IS VERY IMPORTANT.We urge you to vote and submit your proxy as soon as possible by Internet or mail, pursuant to the instructions on your proxy or voting instruction card to ensure your representation and the presence of a quorum at the Annual Meeting.subsides.
On behalf of our Board of Directors, I want to thank you for your continued support and confidence in 2020.2021.
Sincerely,
Glenn J. Fusfield
President and Chief Executive Officer
Leonard Fluxman
Executive Chairman and Chief Executive Officer
Notice of 20202021 Annual Meeting of Shareholders
to be Held on June 10, 20209, 2021
The 20202021 Annual Meeting of Shareholders (the “Annual Meeting”) of OneSpaWorld Holdings Limited (the “Company”), an international business company incorporated under the laws of the Commonwealth of The Bahamas, will be held onlineon Wednesday, June 9, 2021 at 12:30 p.m., Eastern Daylight Time via live webcast on Wednesday, June 10, 2020the Internet at https://www.cstproxy.com/onespaworld/2020.www.virtualshareholdermeeting.com/OSW2021. In light of the emerging public health threat of the coronavirus(COVID-19) outbreak and to support the health and safety of our shareholders, this year’s Annual Meeting will be held as a virtual meeting only, with noin-person in person meeting.
You will be able to attend the Annual Meeting online, vote your shares electronically, and submit your questions during the meetingAnnual Meeting via live webcast by visiting https://www.cstproxy.com/onespaworld/2020 and using yourwww.virtualshareholdermeeting.com/OSW2021. To participate in the Annual Meeting, you will need the 16-digit control number assigned by Continental Stock Transfer & Trust Company. We are holdingincluded on your notice, on your proxy card or on the meetinginstructions that accompanied your proxy materials. Prior to the Annual Meeting, you will be able to vote at www.proxyvote.com for the purpose of considering and voting upon the following, purposes, which are more fully described in the attached proxy statement:
To elect each of Steven J. Heyer, Andrew R. Heyer,Marc Magliacano, Jeffrey E. Stiefler and Leonard FluxmanWalter F. McLallen to serve as Class AB directors and to hold office for a three-year term expiring at the 20232024 Annual Meeting of Shareholders;
To ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2020;
To approve the Private Placement (as defined in the accompanying proxy statement) for purposes of Nasdaq Listing Rule 5635;
To approve the adoption of our Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Association (the “Amended Articles”) to, among other things, authorize a new class ofnon-voting common shares, par value $0.0001 per share (the“Non-Voting Common Shares”);2021; and
To transact any other matter that may properly come before the Annual Meeting, or any postponement or adjournment thereof.
Our Board of Directors has determined that our shareholders of record at the close of business on May 5, 2020April 15, 2021 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting. Holders of non-voting common shares of the Company as of the Record Date are entitled to listen in and to view the Annual Meeting and any adjournments thereof, and will have an opportunity to submit questions, as further described below. Holders of non-voting common shares as of the Record Date are not entitled to vote with respect to the matters referred to above, except Steiner Leisure shall be entitled to vote its non-voting common shares in favor of the director nominee Marc Magliacano, the designated director of Steiner Leisure Limited.
Most shareholders have a choice of voting on the Internet or by mail. Please refer to your proxy card, voting instruction card or other voting instructions included with these proxy materials for information on the voting method(s) available to you. If your shares are held in the name of a brokerage firm, bank or other nominee of record, follow the voting instructions you receive from such holder of record to vote your shares. If your sharesyou are held in the name ofnot a brokerage firm, bank or other nomineeshareholder of record but hold shares as a beneficial owner in street name, you will also needmay be required to provide a proxy,
letter orproof of beneficial ownership, such as your most recent account statement from that brokerage firm,as of the Record Date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of record that confirms that you are
the beneficial owner of those sharesownership in order to attend the Annual Meeting online or vote electronically on any of the proposals in person at the Annual Meeting.
Sincerely,
Inga A. Fyodorova
Corporate Secretary
May 22, 2020April 29, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ONJUNE10, 2020. 9, 2021. The proxy statement and our Annual Report on Form10-K for fiscal year 20192020 (the “2019“2020 Annual Report”) are available at the website appearing on your proxy card. The notice of internet availability of proxy materials, the proxy statement, proxy card, and the 20192020 Annual Report will be providedmailed and/or made available to shareholders beginning on or about May 22, 2020.April 29, 2021.
1 | ||||
3 | ||||
3 | ||||
4 | ||||
Proposal 2: Ratification of Independent Registered Public Accounting Firm | ||||
| ||||
Review, Approval or Ratification of Transactions with Related Persons | ||||
37 | ||||
| ||||
Securities Authorized for Issuance Under Equity Compensation Plans | ||||
46 | ||||
| ||||
i
OneSpaWorld Holdings Limited
20202021 Annual Meeting of Shareholders
to be Held on June 10, 20209, 2021
This proxy statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors (our “Board of Directors” or “Board”) of OneSpaWorld Holdings Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas (the “Company,” “OneSpaWorld,” “OSW,” “we,” “us,” or “our”). This proxy statement addresses the items of business for the 20202021 Annual Meeting of Shareholders of OneSpaWorld (the “Annual Meeting”) to be held on Wednesday, June 10, 2020,9, 2021, or any postponement or adjournment thereof. We will hold the Annual Meeting online at 12:30 p.m., Eastern Daylight Time at https://www.cstproxy.com/onespaworld/2020.via live webcast by visiting www.virtualshareholdermeeting.com/OSW2021. In light of the recent coronavirus(COVID-19) outbreak and to support the health and safety of our people and our shareholders, this year’s Annual Meeting will be held as a virtual meeting only, with noin-person meeting. At our virtual Annual Meeting, shareholders will be able to attend online, vote your shares electronically, and submit questions, as further described below. Prior to the Annual Meeting, you will be able to vote at www.proxyvote.com for the purpose of considering and voting upon the items of business for the Annual Meeting.
The Notice of Annual Meeting of Shareholders, this proxy statement, our Annual Report on Form10-K for the fiscal year ended December 31, 20192020 (the “2019“2020 Annual Report”), the proxy card and any accompanying proxy materials are being made available to shareholders on or about May 22, 2020.April 29, 2021.
For purposes of this proxy statement, “OSW Predecessor” is comprised of the net assets and operations of (i) the following wholly ownedwholly-owned subsidiaries of Steiner Leisure Limited (“Steiner Leisure”):Leisure: OneSpaWorld LLC, Steiner Spa Asia Limited, Steiner Spa Limited, and OneSpaWorld Marks Limited (formerly known as Steiner Marks Limited,Limited), (ii) the following respective indirect subsidiaries of Steiner Leisure: Mandara PSLV, LLC (subsequently dissolved), Mandara Spa (Hawaii), LLC, Florida Luxury Spa Group, LLC, Steiner Transocean U.S., Inc., Steiner Spa Resorts (Nevada), Inc., Steiner Spa Resorts (Connecticut), Inc., Steiner Resort Spas (California), Inc., OneSpaWorld Resort Spas (North Carolina), Inc. (formerly known as Steiner Resort Spas (North Carolina), Inc.), OSW SoHo LLC, OSW Distribution LLC, World of Wellness Training Limited (formerly known as Steiner Training Limited), STO Italy S.r.l., One Spa World LLC, Mandara Spa Services LLC, OneSpaWorld Limited, OneSpaWorld (Bahamas) Limited (formerly known as Steiner Transocean Limited), OneSpaWorld Medispa LLC, OneSpaWorld Medispa Limited, OneSpaWorld Medispa (Bahamas) Limited (formerly known as STO Medispa Limited), Mandara Spa (Cruise I), LLC, Mandara Spa (Cruise II), LLC, Steiner Transocean (II) Limited (subsequently dissolved), The Onboard Spa by Steiner (Shanghai) Co., Ltd., Mandara Spa LLC, Mandara Spa Puerto Rico, Inc., Mandara Spa (Guam), L.L.C. (subsequently dissolved), Mandara Spa (Bahamas) Limited, Mandara Spa Aruba N.V., Mandara Spa Polynesia Sarl, Mandara Spa (Saipan), Inc., Mandara Spa Asia Limited, PT Mandara Spa Indonesia, Spa Services Asia Limited, Mandara Spa Palau, Mandara Spa (Malaysia) Sdn. Bhd., Mandara Spa Ventures International Sdn. Bhd., Spa Partners (South Asia) Limited, Mandara Spa (Maldives) PVT LTD, and Mandara Spa (Fiji) Limited, (iii) Medispa Limited, a majority-owned subsidiary of Steiner Leisure (the noncontrolling interest in which was subsequently purchased by the Company)OneSpaWorld), and (iv) the timetospa.com website owned by Elemis USA, Inc. (formerly known as Steiner Beauty Products, Inc.) and, subsequently transferred to OneSpaWorld.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of the Company may differ from its actual results and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “will,” “may,” “could,” “should,” “would,” “believe,” “expect,” “estimate,” “project,” “budget,“anticipate,” “forecast,” “anticipate,“future,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,”“estimate” or the negative or other variations
thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s ability to consummate the Private Placement, statements regarding the expected benefits and risks associated with the Private Placement, expectations with respect to future performance of the Company, and the future plans, operations and opportunities for the Company and other statements that are not historical facts. These statements are based on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Factors that may cause such differences include, but are not limited to: the impact of COVID-19 on the COVID-19 pandemic onindustries in which the Company operates and the Company’s business, and itsoperations, results of operationoperations and liquidity for the foreseeable future;financial condition, including cash flows and liquidity; the demand for the Company’s services and products together with the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors or changes in the business environment in which the Company operates; changes in consumer preferences or the marketmarkets for the Company’s services;services and products; changes in applicable laws or regulations; competition for the Company’s services and products and the availability orof and competition for opportunities for expansion of the Company’s business; difficulties of managing growth profitably; the loss of one or more members of the Company’s management team; loss of a major customerchanges in the markets for the services and products we offer for sale; and other risks and uncertainties included from time to time in the Company’s reports (including all amendments to those reports) filed with the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, which was filed with the SEC on March 30, 2020.10, 2021. The Company cautions that the foregoing list of factors is not exclusive. You should not place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this proxy statement.
1. | Why am I receiving these proxy materials? |
Since you owned OneSpaWorld voting common shares at the close of business on May 5, 2020April 15, 2021 (the “Record Date”), you are considered a shareholder entitled to vote at the Annual Meeting. The Annual Meeting will be held on Wednesday, June 9, 2021 at 12:30 p.m., Eastern Daylight Time via live webcast on the Internet at www.virtualshareholdermeeting.com/OSW2021. To participate in the Annual Meeting, you will need the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.
Holders of non-voting common shares of the Company as of the Record Date are entitled to listen in and to view the Annual Meeting and any adjournments thereof, and will have an opportunity to submit questions, as further described below. Holders of non-voting common shares are not entitled to vote with respect to the matters referred to herein, except that Steiner Leisure Limited (“Steiner Leisure”) shall be entitled to vote its non-voting common shares in favor of the director nominee Marc Magliacano, the designated director of Steiner Leisure. Accordingly, we are providing you with “Notice and Access” to our proxy materials in order to solicit your vote at the Annual Meeting.
2. | Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials? |
In accordance with the SEC rules, we may furnish proxy materials, including this proxy statement and our Annual Report, to our shareholders by providing access to such documents on the internet instead of mailing printed copies. Accordingly, we are sending the Notice to our shareholders of record and beneficial shareholders as of April 15, 2021, which is the record date for the Annual Meeting.
3. | What is included in the proxy materials? |
The proxy materials include:
Our Notice of Annual Meeting of Shareholders;
Our proxy statement for the Annual Meeting;
Our proxy or voting instruction card; and
Our 20192020 Annual Report.
I share an address with another shareholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy? |
If you share an address with another shareholder, you may receive only one set of proxy materials unless you have provided contrary instructions. If you wish to receive a separate set of proxy materials, prior to May 26, 2021, please request an additional copy by contacting Morrow Sodali LLC, our proxy solicitor, at 800-662-5200 (toll free)(1) visiting www.proxyvote.com, (2) calling 1-800-579-1639 or OSW.info@investor.morrowsodali.com.(3) sending an email to sendmaterial@proxyvote.com. A separate set of the proxy materials will be sent promptly following receipt of your request.
If you are a shareholder of record or a beneficial owner of shares and you wish to receive a separate set of proxy materials in the future, or if you have received multiple sets of proxy materials and would like to receive only one set of proxy materials in the future, please call your broker, bank or other agent and our investor relations department.
Shareholders may also write to Morrow Sodali LLC, our proxy solicitor,us at the address below to request a separate copy of the proxy materials:
Morrow SodaliOneSpaWorld Holdings Limited
c/o One Spa World LLC
509 Madison Avenue,770 South Dixie Highway, Suite 1206200
New York, NY 10022Coral Gables, Florida 33146
E-mail: OSW.info@investor.morrowsodali.comAttn: Inga A. Fyodorova, Secretary
Who pays the cost of soliciting proxies for the Annual Meeting? |
OneSpaWorld is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and of soliciting any proxies. We do not use a third-party solicitor.
Our Board of Directors, officers and employees may also solicit proxies in person, by telephone or by electronic communication. They will not receive any additional compensation for these activities.
In addition, we have engaged Morrow Sodali LLC to assist us with the solicitation of proxies for a fee of approximately $8,500, plus reasonable out-of-pocket expenses. In connection with the solicitation, Morrow
Sodali LLCWe will also request brokerage houses,reimburse brokers, banks and other nominees, fiduciaries and custodians nomineeswho nominally hold shares of our common shares as of the Record Date for the reasonable costs they incur furnishing proxy solicitation and fiduciaries to forward proxyother required Annual Meeting materials to their customers or principalsstreet-name holders who arebeneficially own those shares on the beneficial owners of our Common Shares, and we will reimburse those persons for their expenses in doing so. We do not anticipate that the costs and expenses incurred in connection with this proxy solicitation will exceed those normally expended for a proxy solicitation for those matters to be voted on at the Annual Meeting.Record Date.
What items of business will be voted on at the Annual Meeting? |
The business items to be voted on at the Annual Meeting are:
Proposal 1.The election of each of Steven J. Heyer, Andrew R. Heyer,Marc Magliacano, Jeffrey E. Stiefler and Leonard FluxmanWalter F. McLallen to serve as Class AB directors and to hold office for a three-year term expiring at the 20232024 annual meeting of shareholders;
Proposal 2.The ratification of the appointment of Ernst & Young LLP (“Ernst & Young”) to serve as our independent registered public accounting firm for the year ending December 31, 2020;
Proposal 3.The approval of the Private Placement (as defined below) for purposes of Nasdaq Listing Rule 5635; and
Proposal 4.The approval of the adoption of our Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Association (the “Amended Articles”) to, among other things, authorize a new class ofnon-voting common shares, par value $0.0001 per share (the“Non-Voting Common Shares”).
Approval of Proposal 4 is conditioned upon approval of Proposal 3. Unless approval is received with respect to Proposal 3, we will not take any of the actions contemplated under Proposal 4. Shareholder approval of both Proposals 3 and 4 is required to consummate the Private Placement, unless the closing condition in the Investment Agreement related to shareholder approval of the Amended Articles is waived.2021;
We are not aware of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matters are properly presented for a vote, then the individuals named as proxies will have discretionary authority, to the extent permitted by law, to vote on such matters according to their best judgment.
What are my voting choices? |
Proposal 1.You may vote “FOR” or “WITHHOLD” in the election of any or all nominees for election as a Class AB director. If you vote “withhold” authority to vote with respect to one or more director nominees, your vote will have no effect on the election of such nominees. Additionally, because the election of directors is not a “routine” or “discretionary” proposal under the applicable exchange rules, banks, brokers and other custodians will not have the authority to submit proxy cards on behalf of any beneficial owner from which it does not have instructions. Brokernon-votes will have no effect on the election of the nominees.
Proposal 2.You may vote “FOR,” “AGAINST” or “ABSTAIN” on the ratification of the appointment of our registered independent public accounting firm. Abstentions will have the effect of a vote against this proposal. Brokernon-votes will have no effect on the vote for this proposal.
Proposal 3.You may vote “FOR,” “AGAINST” or “ABSTAIN” on the proposal to approve the Private Placement pursuant to Nasdaq Listing Rule 5635. Abstentions will not be counted as votes “FOR” or “AGAINST” this proposal and will have no effect on the outcome of this proposal. Additionally, because this proposal is not a “routine” or “discretionary” proposal under the applicable exchange rules, banks, brokers and
other custodians will not have the authority to submit proxy cards on behalf of any beneficial owner from which it does not have instructions. Brokernon-votes will have no effect on the outcome of this proposal.
Proposal 4. You may vote “FOR,” “AGAINST” or “ABSTAIN” on the proposal to approve the adoption of our Amended Articles to, among other things, authorize a new class ofNon-Voting Common Shares. Abstentions will not be counted as votes “FOR” or “AGAINST” this proposal and will have no effect on the outcome of this proposal. Additionally, because this proposal is not a “routine” or “discretionary” proposal under the applicable exchange rules, banks, brokers and other custodians will not have the authority to submit proxy cards on behalf of any beneficial owner from which it does not have instructions. Brokernon-votes will have no effect on the outcome of this proposal.
How does the Board of Directors recommend that I vote? |
Our Board of Directors recommends that you vote your shares:
“FOR” each of the Class AB director nominees for election to the Board of Directors; and
“FOR” the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2020;
“FOR” the approval of the Private Placement for purposes of Nasdaq Listing Rule 5635; and
“FOR” the approval of the adoption of our Amended Articles to, among other things, authorize a new class ofNon-Voting Common Shares.2021.
What vote is required to approve each item? |
To conduct business at the Annual Meeting, a quorum must be established. Pursuant to our Third Amended and Restated Memorandum of Association and Second Amended and Restated Articles of Association (our “Articles”), a quorum is established by the presence, in person or by proxy, of holders of not less than fifty (50) percent of the votes of the shares or class or series of shares entitled to vote on resolutions of shareholders to be considered at the meeting. A shareholder shall be deemed to be present at a meeting of shareholders if such shareholder participates by telephone or other electronic means and all shareholders participating in the meeting are able to hear each other. Virtual attendance at the Annual Meeting constitutes presence in person for purposes of a quorum at the Annual Meeting. Additionally, if you submit a properly executed proxy card, even if you abstain from voting, you will be considered part of the quorum. Similarly, brokernon-votes will be counted in determining whether there is a quorum. Our common shares have no cumulative voting rights.
Proposal | Required Vote | |
1. Election of the Class | Plurality of the votes present in person or represented by proxy at the meeting and entitled to vote on the election of directors | |
2. Ratification of the appointment of the independent registered public accounting firm | Majority of the votes present in person or represented by proxy at the meeting and entitled to vote on the subject matter | |
In the election of Class AB directors, the affirmative vote of a plurality of the votes present in person or represented by proxy and entitled to vote on the election of directors is required. This means the director nominees receiving the greatest number of votes will be elected and withhold votes and brokernon-votes will have no effect on the outcome of the vote.
For the ratification of the appointment of the independent registered public accounting firm, the affirmative vote of a majority of the votes present in person or represented by proxy at the meeting and entitled to vote on such matter is required. Abstentions will have the effect of a vote against this proposal. Brokernon-votes will have no effect on the outcome of this proposal.
For the approval of the Private Placement for purposes of Nasdaq Listing Rule 5635, the affirmative vote of a majority of the votes cast on such matter is required. Abstentions and brokernon-votes will have no effect on the outcome of this proposal.
For the approval of the adoption of our Amended Articles to, among other things, authorize a new class ofNon-Voting Common Shares, the affirmative vote of a majority of the votes cast on such matter is required. Abstentions and brokernon-votes will have no effect on the outcome of this proposal.
|
On April 30, 2020, the Company entered into an Investment Agreement (the “Investment Agreement”) with Steiner Leisure Limited (“Steiner Leisure”), a current shareholder of the Company, and certain other investors, including members of the Company’s management and the Board of Directors (collectively, the“Co-Investors” and, together with Steiner Leisure, the “Investors”). The Investment Agreement provides for, among other things, the issuance and sale to the Investors of the Common Shares (as defined below) and warrants to purchase the Common Shares in exchange for an aggregate purchase price of $75.0 million (the “Private Placement”). Closing of the Private Placement is contingent upon, among other things, approval by the Company’s shareholders of Proposals 3 and 4.
Prior to the closing of the Private Placement, and assuming shareholder approval of Proposals 3 and 4, the Company will authorize a new class ofNon-Voting Common Shares, by adopting the Amended Articles. At closing, pursuant to the Investment Agreement, the Company will, among other things, (i) issue to Steiner Leisure an aggregate of (x) approximately 17.2 millionNon-Voting Common Shares and approximately 2.8 million of the Company’s voting common shares, par value $0.0001 per share (the “Voting Common Shares”, and together with the Non-Voting Common Shares, the “Common Shares”) (each amount includes the applicable portion of the Additional Shares (as defined below)), and (y) warrants to purchase approximately4.0 million Non-Voting Common Shares at an exercise price of $5.75 per share, and (ii) issue tothe Co-Investors an aggregate of (x) approximately 3.7 million of the Voting Common Shares and (y) warrants to purchase approximately 1.0 million Voting Common Shares at an exercise price of $5.75 per share, for an aggregate purchase price of $75.0 million. The Non-Voting Common Shares will be of equal rank to the Voting Common Shares in terms of dividends, liquidation, preferences and all other rights and features, with the following exceptions: (1) the Non-Voting Common Shares have no voting rights, except as may be required by law; (2) Steiner Leisure may vote its Non-Voting Common Shares in favor of its director designees; and (3) the Non-Voting Common Shares will automatically be converted to Voting Common Shares upon the occurrence of certain events.
Use of Proceeds
The Company intends to use the proceeds from the Private Placement for working capital or other general corporate purposes, and to (i) pay any costs, fees and expenses of the Company and (ii) pay or reimburse Steiner Leisure and its affiliates’ costs, fees and expenses (subject to a cap of $1.25 million), in each case, incurred in connection with the Private Placement.
Reasons for Shareholder Approval
Proposal 3. We are seeking shareholder approval of the Private Placement in order to comply with Nasdaq Listing Rule 5635, and because such shareholder approval is a condition to the closing of the Private Placement.
Under Nasdaq Listing Rule 5635(b), shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a “change of control” of the Company. This rule does not specifically define when a change in control may be deemed to occur, however, Nasdaq suggests in its guidance that a change of control would occur, subject to certain limited exceptions, if after a transaction a person or entity will hold 20% or more of a company’s then-outstanding capital stock and be that company’s largest shareholder. Based on this standard, the closing of the Private Placement would result in a change of control under Nasdaq Listing Rule 5635(b). Steiner Leisure and its affiliates currently beneficially own approximately 16.39% of our Common Shares (or approximately 14.0%, excluding the 1,486,520 Common Shares issuable upon exercise of warrants currently held by Steiner Leisure and its affiliates). If the Private Placement is consummated, Steiner Leisure will beneficially own more than 20% of our Common Shares, which will be the largest ownership position. Accordingly, we are seeking shareholder approval for this “change in control” as used in Nasdaq Listing Rule 5635(b). Shareholders should note that a “change of control” as described under Nasdaq Listing Rule 5635(b) applies only with respect to the application of such rule, and does not constitute a “change of control” for purposes of Bahamian law, our Articles, or any other purpose.
Under Nasdaq Listing Rule 5635(d), shareholder approval is required for a transaction (other than a public offering) involving the sale, issuance or potential issuance by an issuer of common shares (or securities convertible into or exercisable for common shares) at a price that is less than the “Minimum Price,” which is the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement with respect to the issuance or (ii) the average Nasdaq Official Closing Price of the common shares (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement, with respect to the issuance if the number of common shares to be issued is or may be equal to 20% or more of the common shares, or 20% or more of the company’s voting power, outstanding immediately prior to the issuance. The securities being sold in the Private Placement are priced below the Minimum Price, and the Private Placement will result in the issuance of more than 20% of the Company’s voting power. Furthermore, pursuant to the Investment Agreement, none of the securities being sold in the Private Placement may be issued unless and until shareholder approval is received.
We are therefore seeking shareholder approval for the Private Placement in order to satisfy (i) the requirements of Nasdaq Listing Rule 5635, and (ii) our obligations under the Investment Agreement.
Proposal 4. We are seeking shareholder approval of Proposal 4 because it is a condition to the closing of the Private Placement.
Approval of Proposal 4 is conditioned upon approval of Proposal 3. Unless approval is received with respect to Proposal 3, we will not take any of the actions contemplated under Proposal 4. Shareholder approval of both Proposals 3 and 4 is required to consummate the Private Placement, unless the closing condition in the Investment Agreement related to shareholder approval of the Amended Articles is waived. Please see “Background to Proposals 3 and 4” for additional information regarding the reasons for Proposals 3 and 4. For a complete description of the terms of the Private Placement, see the section entitled “Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635”. For a description of the Amended Articles, see the section entitled “Proposal 4:Approval of the adoption of our Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Association to authorize, among other things, a new class of Non-Voting Common Shares, par value $0.0001 per share”. The proposed form of the Amended Articles is included asAppendix B to this proxy statement. Shareholders should also carefully read the “Cautionary Note Regarding Forward-Looking Statements” section at the beginning of this proxy statement.
10. |
|
Yes, we engaged Nomura Securities International, Inc. (“Nomura”) as our financial advisor and placement agent with respect to the Private Placement. In addition, we engaged Duff & Phelps LLC (“Duff & Phelps”) to advise the Special Committee of the Board of Directors (the “Special Committee”), which committee was charged with evaluating different potential strategic alternatives for the Company, regarding, and to render to the Special Committee an opinion as to, the fairness, from a financial point of view, to the Company of the Private Placement. For more information, see the section entitled“Background to Proposals 3 and 4—Background of the Private Placement.” Duff & Phelps and Nomura were selected as financial advisors given, among other things, their respective qualifications, experience and reputation, and knowledge of and familiarity with the Company’s business and industry. Nomura was involved with the Company’s prior sale process and its business combination transaction and, based on that experience, was familiar with investors that had expressed interest in the Company in the past, and in a position to conduct potential investor outreach efforts in a targeted and expeditious manner. The Special Committee noted that Nomura previously served as a financial advisor to Steiner Leisure in connection with its sale of the Company and has provided services to Steiner Leisure and/or certain of its affiliates in connection with other matters, and engaged Duff & Phelps to provide an opinion regarding the fairness of any strategic transaction that it identified as desirable to present to the Board of Directors for consideration. On April 29, 2020, Duff & Phelps delivered its written opinion to the Special Committee that as of April 29, 2020, and based on and subject to the matters set forth in the opinion, the Private Placement was fair to the Company from a financial point of view. The full text of Duff & Phelps’s written opinion is included asAppendix Ahereto, and a summary of the written opinion is included under the section entitled “Background to Proposals 3 and 4—Opinion of Financial Advisor to the Special Committee.” Duff & Phelps’s opinion does not constitute a recommendation to any shareholder with respect to Proposals 3 or 4 or any of the other proposals to be considered at the Annual Meeting. We encourage you to read the opinion carefully in its entirety for a description of the assumptions made, matters considered and limitations on the review undertaken by Duff & Phelps.
Where can I find the voting results? |
We expect to announce preliminary voting results at the Annual Meeting and to publish final results in a Current Report on Form8-K that we will file with the Securities and Exchange Commission (the “SEC”)SEC within four business days following the meeting. The report will be available on our website at www.onespaworld.com and on the SEC’s website at www.sec.gov.www.sec.gov.
What shares can I vote? |
You are entitled to one vote for each of our voting common shares that you owned at the close of business on the Record Date. You may vote all shares owned by you on the Record Date, including (1) shares held directly in your name as the shareholder of record and (2) shares held for you as the beneficial owner through a bank, broker or other nominee.
Holders of non-voting common shares as of the Record Date are not entitled to vote at the Annual Meeting, except Steiner Leisure shall be entitled to one vote for each of its non-voting common shares that they owned on the Record Date in favor of the director nominee Marc Magliacano, the designated director of Steiner Leisure.
What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
Summarized below are distinctions between shares held of record and shares owned beneficially.
Shareholder of Record
If your shares are registered directly in your name with our transfer agent, you are the shareholder of record of the shares. As the shareholder of record, you have the right to grant a proxy to vote your shares to representatives from the Company or to another person, or to vote your shares at the Annual Meeting, or any adjournment or postponement thereof. You have received a proxy card to use in voting your shares, which instructs you how to vote.
Beneficial Owner
If your shares are held through a bank, broker or other nominee, it is likely that they are registered in the name of the nominee and you are the beneficial owner of shares held in street name. As the beneficial owner of shares held for your account, you have the right to direct the registered holder to vote your shares as you instruct, and you also are invited to attend the Annual Meeting. Your bank, broker, plan trustee or other nominee has provided a voting instruction card for you to use in directing how your shares are to be voted. However, since a beneficial owner is not the shareholder of record, you may not vote your shares at the Annual Meeting, or any adjournment or postponement thereof, unless you obtain a legal proxy from the registered holder of the shares giving you the right to do so.
How can I vote? |
For directions on how to vote, please refer to the following instructions and those included on your proxy or voting instruction card.
Voting by Mail
Shareholders may submit proxies by completing, signing and dating their proxy or voting instruction card and mailing it in the envelope provided. If you do not timely return your proxy card, your shares will not be voted unless you or your proxy holder attends the Annual Meeting and any adjournment or postponement thereof and votes.
Voting by InternetPhone
Shareholders may submit proxies overvote by proxy by calling the Internet at https://www.cstproxy.com/onespaworld/2020 by following the instructionstoll-free number found on thetheir proxy or voting instruction card receivedcard.
Voting Online Prior to the Annual Meeting
Shareholders may vote by proxy by visiting www.proxyvote.com and entering the control number found in your Notice of Internet Availability. The availability of online voting may depend on the mail.voting procedures of the organization that holds your shares.
Voting Virtually During the Annual Meeting
Shareholders of record may vote virtually at the Annual Meeting with a proxy card by following the instructions at https://www.cstproxy.com/onespaworld/2020.www.virtualshareholdermeeting.com/OSW2021, entering the 16-digit control number found in your Notice of Internet Availability, and following the on-screen instructions. The availability of online voting may depend on the voting procedures of the organization that holds your shares. If you experience technical difficulties during the check-in process or during the meeting please call the support numbers provided on the registration page at www.virtualshareholdermeeting.com/OSW2021.
How will my shares be voted? |
Your shares will be voted as you specifically instruct on your online ballot or as you specifically instruct on your proxy or voting instruction card. If you sign and return your proxy or voting instruction card, or complete your
online ballot, without giving specific instructions, your shares will be voted in accordance with the recommendations of our Board of Directors and in the discretion of the proxy holders on any other matters that properly come before the meeting.
What if Ico-own my shares? |
The following shall apply in respect ofco-ownership of shares:
if two (2) or more persons hold shares together each of them may be present in person or by proxy at the Annual Meeting and may speak as a shareholder;
if only one of them is present in person or by proxy such person may vote on behalf of all of them; and
if two (2) or more are present in person or by proxy they must vote as one.
Will shares I hold in my brokerage account be voted if I do not provide timely voting instructions? |
If you do not provide timely instructions as to how your brokerage shares are to be voted, your broker will be prohibited from voting your shares on Proposal 1, Election of Class A Directors, Proposal 3, Approval of the Private Placement or Proposal 4, Approval of the Amended Articles.B Directors. These “brokernon-votes” will have no effect on determining the outcome of any of the proposals included herein.
When is the deadline to vote? |
If you hold shares as the shareholder of record, your vote by proxy must be received before the polls close at the Annual Meeting and any adjournment or postponement thereof. Voting and Internet voting end at 11:59 p.m., Eastern Daylight Time, on June 9, 2020.8, 2021.
If you hold shares as a beneficial owner, please follow the voting instructions provided by your bank, broker or other nominee.
May I change or revoke my vote? |
You may change or revoke your vote at any time prior to the vote at the Annual Meeting.
If you are a shareholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by sending a written notice of revocation to the address in Question 2423 prior to your shares being voted, or by attending the Annual Meeting. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
For shares you hold as a beneficial owner, you may change your vote by timely submitting new voting instructions to your bank, broker or other nominee (which revokes your earlier instructions), or, if you have obtained a legal proxy from the nominee giving you the right to vote your shares, by attending the Annual Meeting.
How can I attend the virtual Annual Meeting? |
Shareholders of record will be able to attend the Annual Meeting online, vote their shares electronically and submit questions during the meeting by visiting https://www.cstproxy.com/onespaworld/2020. www.virtualshareholdermeeting.com/OSW2021. Holders of non-voting common shares of the Company as of the Record Date are entitled to listen in and to view the Annual Meeting and any adjournments thereof, and will have an opportunity to submit questions. Holders of non-voting common shares as of the Record Date are not entitled to vote with respect to the matters referred to herein, except Steiner Leisure shall be entitled to vote its non-voting common shares as of the Record Date in favor of the director nominee Marc Magliacano, the designated director of Steiner Leisure.
The Annual Meeting live webcast will begin promptly at 12:30 p.m., Eastern Daylight Time, on Wednesday, June 10, 2020.9, 2021. You will not be able to attend the meeting in person. Shareholders participating in the virtual meeting will be in listen-only mode and will not be able to speak during the webcast. Shareholders may submit questions or comments during the meeting through the virtual meeting portal by typing in the “Submit a question” box.
Shareholders of Record
If you are a registered shareholder or a beneficial owner and you wish to attend the virtual Annual Meeting, goyou will be able to https://www.cstproxy.com/onespaworld/2020, enterattend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/OSW2021 and entering the 16-digit control number you receivedincluded in our notice of Internet availability of the proxy materials, on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Prior to the start of the meeting you will need to log back into the meeting site using your control number.Pre-registration is recommended but is not required in order to attend.
Beneficial Owner
Beneficial owners who wish to attend the virtual Annual Meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares ande-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial owners whoe-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the Annual Meeting. After contacting Continental Stock Transfer & Trust Company, beneficial shareholders will receive ane-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial shareholders should contact Continental Stock Transfer & Trust Company at least five business days prior to June 10, 2020.that accompanied your proxy materials.
Who can attend the Annual Meeting? |
You may attend the Annual Meeting and any adjournment or postponement thereof only if you were a shareholder of record or a beneficial owner at the close of business on the Record Date, or you hold a valid proxy to vote at the Annual Meeting. Please see Question 2019 above for details on how to register for and attend the Annual Meeting.
When and where will the Annual Meeting be held? |
The Annual Meeting will be held online on Wednesday, June 10, 20209, 2021 at 12:30 p.m., Eastern Daylight Time, at https://www.cstproxy.com/onespaworld/2020.www.virtualshareholdermeeting.com/OSW2021.
Why is the Annual Meeting being held virtually? |
Due to the emerging public health threat of theCOVID-19 outbreak and to support the health and well-being of our shareholders, this year’s Annual Meeting will be held as a virtual meeting only. We believe that the virtual meeting format will provide better access and improved communication for both us and our shareholders, while providing shareholders with the same rights and opportunities to participate as they would have had at anin-person meeting.
Shareholder Proposals and Director Nominations
What is the deadline to submit shareholder proposals to be included in the proxy materials for next year’s annual meeting of shareholders? |
To be included in our proxy materials for next year’s annual meeting of shareholders, shareholder proposals must be received by our Secretary no later than January 22,December 30, 2021 and must be submitted to our Secretary at OneSpaWorld Holdings Limited, c/o One Spa World LLC, 770 South Dixie Highway, #200,Suite 200, Coral Gables, Florida 33146.
Proposals that are not timely submitted by January 22,December 30, 2021 or are submitted to the incorrect address or other than to the attention of our Secretary will be considered untimely and may, at our discretion, be excluded from our proxy materials. Shareholder proponents must also meet the requirements of Rule14a-8 of the Securities and Exchange Act, as amended (the “Exchange Act”), to be included in our proxy materials.
How may I nominate director candidates or present other business for consideration at an annual meeting of shareholders? |
Shareholders who wish to (1) submit director nominees for inclusion in our proxy materials for next year’s annual meeting of shareholders or (2) present other items of business at next year’s annual meeting of shareholders must give written notice of their intention to do so in accordance with the deadlines described below
to our Secretary at the address set forth in Question 2426 and must be present at such annual meeting. Any such notice also must include the information required by our Articles (which may be obtained as provided in Question 27)26).
Notice of director nominees, or for the presentation of other items of business, submitted must be received not less than 75 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of shareholders. The period for the receipt from shareholders of any such notice for the 20212022 annual meeting of shareholders is currently set to begin on February 10, 20219, 2022 and end on March 27, 2021.26, 2022. In the event that next year’s annual meeting of shareholders is called for on a date that is not within 30 days before the first anniversary of the Annual Meeting, or 60 days after the first anniversary of the Annual Meeting, refer to our Articles for further details on submission.
These above-mentioned notice requirements applicable under our advance notice provisions do not apply to shareholder proposals intended for inclusion in our proxy materials under Rule14a-8 of the Exchange Act. The deadline for receiving such proposals is set forth in Question 24.23.
How may I recommend candidates to serve as directors? |
Shareholders may recommend director candidates for consideration by the Nominating and Governance Committee of our Board of Directors by writing to our Secretary at the address set forth in Question 24.23. A recommendation must include (1) sufficient biographical and other information concerning the candidate and his or her qualifications to permit the committee to make an informed decision as to whether further consideration of the candidate would be warranted; (2) a representation that such shareholder (or a qualified representative of such shareholder) intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; (3) a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected; and (4) and such other information as required by our Articles.
Obtaining Additional Information
How may I obtain information about OneSpaWorld? |
Shareholders may obtain, without charge, a copy of our Articles, code of ethics and board committee charters by writing to us at the address indicated below. Our board committee charters are also available on our website at www.onespaworld.com/investor-relations.
OneSpaWorld Holdings Limited
c/o One Spa World LLC
770 South Dixie Highway, #200Suite 200
Coral Gables, Florida 33146
Attn: Inga A. Fyodorova, Secretary
What if I have questions for OneSpaWorld’s transfer agent? |
If you are a shareholder of record and have questions concerning share certificates, dividend checks, ownership transfer or other matters relating to your share account, please contact Continental Stock Transfer & Trust Company, our transfer agent, at the following address or phone number:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Shareholder Services
Phone:888-509-5586800-509-5586
Email: cstmail@continentalstock.com
Who can answer my questions about voting? |
If you have questions about how to vote or direct a vote in respect of your common shares, you may contact Morrow Sodali LLC, our proxy solicitor,us at 800-662-5200 (toll free)(242) 322-2670 orOSW.info@investor.morrowsodali.com. proxyvote@onespaworld.com.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our voting common shares as of the Record Date (unless otherwise indicated) by:
each of the Company’s directors, director nominees and named executive officers;
all current executive officers and directors of the Company as a group; and
each person who is known by the Company to be the beneficial owner of more than 5% of our common shares.
The beneficial ownership of our voting common shares, subject to the exclusions below, is based on 61,218,15173,281,792 shares of voting common shares issued and outstanding as of the Record Date. The table below excludes 17,185,500 non-voting common shares (including the shares held by Steiner Leisure that they are entitled to vote in favor of the director nominee Marc Magliacano) and warrants to purchase 4,004,999 non-voting common shares.
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options, warrants or other derivative securities that are currently exercisable or convertible or are exercisable or convertible within 60 days.
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all of our common shares beneficially owned by them.
Name of Beneficial Owner(1) | Number of Shares | % | Number of Shares | % | ||||||||||||
Directors & Named Executive Officers: | ||||||||||||||||
Leonard Fluxman(2) | 2,428,780 | 3.96 | % | 3,090,076 | 4.22 | % | ||||||||||
Steven J. Heyer(3) | 1,721,234 | 2.81 | % | 2,460,155 | 3.36 | % | ||||||||||
Glenn J. Fusfield(4) | 941,521 | 1.53 | % | 131,648 | * | |||||||||||
Marc Magliacano | — | — | — | — | ||||||||||||
Andrew R. Heyer(5) | 1,309,679 | 2.13 | % | 1,929,729 | 2.63 | % | ||||||||||
Walter F. McLallen(6) | 271,487 | * | 418,444 | * | ||||||||||||
Jeffrey E. Stiefler(7) | 84,033 | * | 131,278 | * | ||||||||||||
Michael J. Dolan | — | — | ||||||||||||||
Adam Hasiba | — | — | ||||||||||||||
Stephen W. Powell | 2,500 | * | 2,500 | * | ||||||||||||
Maryam Banikarim | — | — | 6,411 | * | ||||||||||||
Stephen B. Lazarus(8) | 1,155,599 | 1.88 | % | 1,313,599 | 1.79 | % | ||||||||||
All current directors and officers as a group (11 persons) | 7,410,412 | 12.10 | % | |||||||||||||
All current directors and officers as a group (12 persons) | 9,527,281 | 13.00 | % | |||||||||||||
5% Shareholders: | ||||||||||||||||
Steiner Leisure Limited(9) | 10,034,650 | �� | 16.39 | % | 12,867,900 | 17.56 | % | |||||||||
Franklin Resources Inc(10) | 7,005,797 | 11.44 | % | |||||||||||||
BlackRock, Inc.(11) | 3,411,493 | 5.57 | % | |||||||||||||
Franklin Resources Inc.(10) | 7,070,166 | 9.65 | % | |||||||||||||
Capital Research Global Investors(11) | 4,896,238 | 6.68 | % | |||||||||||||
Channing Capital Management, LLC(12) | 4,739,754 | 6.47 | % | |||||||||||||
NewSouth Capital Management, Inc.(13) | 3,910,480 | 5.34 | % | |||||||||||||
Aristeia Capital, L.L.C.(14) | 3,690,214 | 5.04 | % | |||||||||||||
Ariel Investments, LLC(15) | 8,177,824 | 11.16 | % | |||||||||||||
Granahan Investment Management, Inc.(16) | 4,310,537 | 5.88 | % |
* | Indicates percentage of less than one percent. |
(1) | Unless otherwise noted, the business addresses of each of the |
(2) | Includes 736,296 common shares and 2,353,780 vested options to purchase common shares. |
(3) | Represents (a) (i) |
Justin Heyer Trust; and (v) |
(4) |
|
(5) | Represents (a) (i) |
(6) |
|
(7) | Represents |
(8) |
|
(9) | Includes 11,381,380 common shares and 1,486,520 warrants to purchase common shares on a one-for-one basis. Does not include beneficial ownership of approximately 17,185,500 non-voting common shares, or warrants to purchase approximately 4,004,999 non-voting common shares. Dory HoldCo, LLC (“Dory”) directly holds 8,198,130 common shares and Steiner Leisure directly holds 3,183,250 common shares and 1,486,520 warrants to purchase common shares. Dory is 100% owned by Steiner Leisure. Steiner Leisure is controlled by Nemo Parent, Inc. |
This information is based on the |
(10) | Includes |
(11) | Represents common shares beneficially owned by |
(12) | Represents common shares beneficially owned by Channing Capital Management, LLC, of which it has sole voting power of 4,443,005 common shares and sole dispositive power of 4,739,754 common shares. This information is based solely on a Schedule 13G filed with the SEC on February 11, 2021. The address of Channing Capital Management, LLC is 10 S. LaSalle St., Suite 2401, Chicago, IL 60603. |
(13) | Represents common shares beneficially owned by NewSouth Capital Management, Inc., of which it has sole voting power of 3,166,540 common shares and sole dispositive power of 3,910,480 common shares. This information is based solely on a Schedule 13G filed with the SEC on February 9, 2021. The address of NewSouth Capital Management, Inc. is |
(14) | Represents common shares beneficially owned by Aristeia Capital, L.L.C., of which it has sole voting power of 3,690,214 common shares and sole dispositive power of 3,690,214 common shares. This information is based solely on a Schedule 13G filed with the SEC on February 16, 2021. The address of Aristeia Capital, L.L.C. is One Greenwich Plaza, 3rd Floor, Greenwich, CT 06830. |
(15) | Represents common shares beneficially owned by Ariel Investments, LLC, of which it has sole voting power of 7,291,197 common shares and sole dispositive power of 8,177,824 common shares. This information is based solely on a Schedule 13G/A filed with the SEC on February 12, 2021. The address of Ariel Investments, LLC is 200 E. Randolph Street, |
(16) | Represents common shares beneficially owned by Granahan Investment Management, Inc., of which it has sole voting power of 3,239,863 common shares and sole dispositive power of 4,310,537 common shares. This information is based solely on a Schedule 13G filed with the SEC on January 21, 2021. The address of Granahan Investment Management, Inc. is 404 Wyman Street, Suite 460, Waltham, MA 02451. |
Proposal 1: Election of Class AB Directors
Our Board of Directors currently has ten members and is divided into three classes, designated Class A, Class B, and Class C. Pursuant to our Articles, the term of the initial Class AB Directors will expire at the Annual Meeting.
Our Board of Directors recognizes the importance of diversity and strives to achieve an effective combination of experience and institutional knowledge and fresh and diverse perspectives to enhance its ability to further shareholder interests. In furtherance of this objective, the Board recently appointed Ms. Maryam Banikarim as a new director. We believe that our Board represents a broad spectrum of professional experience while balancing independence and tenure. We continue to evaluate our board composition on an ongoing basis.
Our Nominating and Governance Committee, consisting solely of independent directors, has recommended, and our Board of Directors has nominated, Steven J. Heyer, Andrew R. HeyerMarc Magliacano, Jeffrey E. Stiefler and Leonard FluxmanWalter F. McLallen forre-election as Class AB Directors for three-year terms expiring at the 20232024 Annual Meeting.
Information regarding our directors and nominees, including information they have furnished as to their principal occupations, certain other directorships they hold, or have held, and their ages as of the date hereof is set forth below. Steven J. Heyer and Andrew R. Heyer, members of our Board of Directors, are brothers. Other than Steven J. Heyer and Andrew R. Heyer, there are currently no family relationships among any directors, director nominees or executive officers. In addition, except as described below, no nominee subject to election has any arrangement or understanding with another person under which he or she was or is to be selected as a director or nominee.
For information relatedOn June 12, 2020, the Company, Steiner Leisure and, solely for the purpose of Section 18 thereof, HYAC entered into the Governance Agreement (the “Governance Agreement”), pursuant to which Steiner Leisure’sLeisure and certain of its affiliates have certain consent, director designation, and other rights with respect to the Company. The Governance Agreement supersedes the Director Designation Agreement, dated as of November 1, 2018, by and among the Company, Steiner Leisure and HYAC.
Under the terms of the Governance Agreement, among other things, Steiner Leisure has the right to designate and appoint (a) two directors (three directors until the Company’s 2022 annual meeting of shareholders) so long as Steiner Leisure and its affiliates own at least 15% of the issued and outstanding common shares and (b) one director so long as Steiner Leisure and its affiliates own at least 5% of the issued and outstanding common shares.
So long as Steiner Leisure and its affiliates own at least 15% of the issued and outstanding common shares, (a) the directors designated by Steiner Leisure will have proportionate representation on each committee of the Board (rounded up to the nearest whole number of directors, unless such rounding would result in Steiner Leisure directors representing a majority), subject to applicable legal and stock exchange requirements, and (b) Steiner Leisure will have the right to appoint a non-voting observer to all committees for which none of the Steiner Leisure directors are members.
Under the terms of the Investment Agreement (as defined herein), Steiner Leisure has the right to designate and appoint three directors to the Company’s board of directors, with two of these directors being Class C directors and committeethe other director being a Class B director. One of the Class C director seats will not be subject to re-designation by Steiner Leisure at the expiration of the initial term thereof under the Governance Agreement. The following individuals are Steiner’s initial director designees pursuant to its designation rights under the Investment AgreementAgreement.
Class B Initial Steiner Designee: Marc Magliacano is the initial Class B director designee by Steiner Leisure and the Governance Agreement, which take effect upon the consummationserves as a member of the Private Placement and supersede the Director Designation Agreement, please refer toCompensation Committee. For more information regarding Mr. Magliacano, see “Proposal 3: Approval1: Election of Directors—Our Class B Directors.”
Class C Initial Steiner Designee: Adam Hasiba is the Private Placement for purposesinitial Class C director designee by Steiner Leisure. For more information regarding Mr. Hasiba, see “Proposal 1: Election of Nasdaq Listing Rule 5635—BackgroundDirectors—Our Class C Directors.”
Initial Non-Continuing Class C Steiner Designee: Stephen Powell is the initial Class C director designee by Steiner Leisure and Overview—Investment Agreement”will not be subject to re-designation by Steiner Leisure at the expiration of his term. For more information regarding Mr. Powell, see “Proposal 1: Election of Directors—Our Class C Directors.”
For additional information, please see “Certain Relationships and “—Governance Agreement.Related Person Transactions.”
We do not know of any reason why any nominee would be unable to serve as a director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board of Directors may nominate.
The graphic below provides a snapshot of the skills possessed by our Board of Directors:
Our Class B Director Nominees
Marc Magliacano Age: 46 Title: Director Director since: March | Mr. Magliacano joined the board of Steiner Leisure, the former parent company of OneSpaWorld, in December 2015. Mr. Magliacano currently serves as a Managing Partner for L Catterton’s Flagship Buyout Fund. L Catterton is the largest and most global consumer-focused private equity firm with over $15 billion of equity capital under management across six fund strategies in 17 offices worldwide. Since 1989, the firm has made over 200 investments in leading consumer brands. Mr. Magliacano has been a senior investment professional at L Catterton since May 2006. Prior to joining L Catterton, from 1999 to 2006, Mr. Magliacano was a Principal at North Castle Partners, a private equity firm focused on making consumer growth investments that benefit from healthy living and aging trends. While at North Castle, Mr. Magliacano originated and executed investments in the consumer health and wellness sectors. Prior to joining North Castle, Mr. Magliacano worked at NMS Capital, the merchant bank of NationsBanc Montgomery Securities, making growth investments in early stage consumer and retail businesses. Mr. Magliacano has served on the boards of directors of a variety of private and public companies, including Restoration Hardware and Leslie’s Pool Supplies. Mr. Magliacano received a BS in Economics from the University of Pennsylvania’s Wharton School of Business with dual degrees in Finance and Operations and Information Management and received an MBA from Columbia Business School. We believe Mr. Magliacano is qualified to serve as a director due to his prior experience on a variety of private and public company boards. Mr. Magliacano was nominated to our Board of Directors by Steiner Leisure pursuant to the terms of the Governance Agreement. For more information, see the section entitled “Certain Relationships and Related Transactions.” | |
Jeffrey E. Stiefler Age: 74 Title: Director Director since: March | Mr. Stiefler has spent a long career leading a wide range of consumer and business services companies across multiple industry sectors, including financial services, financial technology, real estate, advertising, computer software and services, private equity, and internet start-ups. Mr. Stiefler served as a director and non-executive chairperson of the board of directors of Worldpay, Inc. (formerly known as Vantiv Holding, LLC) from August 2010 until its initial public offering in March 2012, served as its chairman from March 2012 to January 2018, and then director until WorldPay was acquired by FIS in June, 2019, at which point Mr. Stiefler became Lead Independent Director of the combined firm. Mr. Stiefler previously served on the boards of directors of LPL Financial Corporation and VeriFone Systems, Inc., as Lead Director of Taleo Corporation, Inc. prior to its acquisition by Oracle Corporation in April 2012, and Lead Director of Square Trade prior to its acquisition by Allstate in 2017. Mr. Stiefler was the Chairman, President and CEO of Digital Insight from August 2003 until the company’s acquisition by Intuit in February 2007. Prior to Digital Insight, Mr. Stiefler worked with several private equity firms as an operating advisor and held a variety of positions at American Express, including President and Director of the company, and President and CEO of American Express Financial Advisors. Mr. Stiefler received a B.A. from Williams College and an M.B.A. from Harvard Business School. We believe Mr. Stiefler is qualified to serve as director due to his extensive strategic, operations, financial and leadership experiences at both the company and board levels. |
Walter F. McLallen Age: 55 Title: Director Director since: March | Mr. McLallen is a finance professional with over 25 years of leveraged finance, private equity, restructuring and operations experience. Mr. McLallen has been the Managing Member of Meritage Capital Advisors, an advisory boutique firm focused on debt and private equity transaction origination, structuring and consulting since 2004. Mr. McLallen has extensive board and organizational experience and has served as a director, Chairman or Vice Chairman on numerous corporate and non-profit boards and committees, with a significant historical focus on consumer products-related companies. Mr. McLallen has served as a director of publicly traded The Lovesac Company, a publicly traded branded omni-channel retailer of technology-forward furniture, since June 2019; as well as of private companies, including Timeless Wine Company, the producer of consumer luxury wine brands Silver Oak, Twomey and OVID, since August 2016; Worldwise, a consumer branded pet products company, since April 2016; adMarketplace, a search engine advertiser, since 2012; Classic Brands, an e-commerce marketer of mattresses and related products, since August 2018; Dutchland Plastics, a roto-molding plastics manufacturer, since January 2017; Frontier Dermatology, a physician practice platform, since January 2019; and Genus Oncology, an early-stage biotechnology company, since 2015. Mr. McLallen was previously on the board of directors of Centric Brands, Inc. from February 2016 through October 2020, Haymaker Acquisition Corp. from November 2017 through April 2019 and Haymaker Acquisition Corp. II from May 2019 through December 2020. Mr. McLallen is also a founder and Co-Chairman of Tomahawk Strategic Solutions, a law enforcement, military and corporate training and security company, since 2014. From 2006 to 2015, Mr. McLallen was the Executive Vice Chairman of Remington Outdoor Company, an outdoor consumer platform he co-founded with a major investment firm. Mr. McLallen was formerly with CIBC World Markets from 1995 to 2004, during which time he was a Managing Director, head of Debt Capital Markets and head of High Yield Distribution. Mr. McLallen started his career in the Mergers & Acquisitions Department of Drexel Burnham Lambert and was a founding member of The Argosy Group L.P. in 1990. Mr. McLallen received a B.A. with a double major in Economics and Finance from the University of Illinois at Urbana-Champaign. We believe Mr. McLallen is qualified to serve as a director due to his extensive consumer, operational and board experience, as well as his background in finance. |
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
Our Class A Director NomineesDirectors (serving until our 2023 annual meeting of shareholders)
Steven J. Heyer
Director since: March | Mr. Heyer has over 35 years of experience in the consumer and consumer-related products and services industries, leading a range of companies and brands. Mr. Heyer has applied his experience and analytical skills in a variety of leadership positions across diverse industry groups, including broadcast media, consumer products, and hotel and leisure companies. Mr. Heyer’s operating experiences include: leading the turnaround of Outback Steakhouse as an advisor (from 2010 to 2012); as Chief Executive Officer of Starwood Hotels & Resorts Worldwide (from 2004 until 2007); as President and Chief Operating Officer of The Coca-Cola Company (from 2001 to 2004); as a member of the boards of
We believe Mr. Heyer is qualified to serve as a director due to his extensive operations, management and business background, particularly in the consumer and consumer-related products and services industries. |
Andrew R. Heyer
Director since: March | Mr. Heyer is a finance professional with over 35 years of experience investing in the consumer and consumer-related products and services industries, as well as a senior banker in leveraged finance, during which time his clients included many large private equity firms. Mr. Heyer has deployed in excess of
We believe Mr. Heyer is qualified to serve as a director due to his extensive finance, investment and operations experience, particularly in the consumer and consumer-related products and services industries. |
Leonard Fluxman
Age: Title:Executive Director since: March | Mr. Fluxman is our Executive Chairman and Chief Executive Officer since March 2021 and previously served as our Executive Chairman from 2019 through March 2021. Mr. Fluxman served as the President and Chief Executive Officer of Steiner Leisure from January 2001 through March 2019 and as a director from November 1995 through March 2019. Mr. Fluxman served as President and Chief Operating Officer of Steiner Leisure from January 1999 through December 2000. From November 1995 through December 1998, Mr. Fluxman served as Chief Operating Officer and Chief Financial Officer of Steiner Leisure. Mr. Fluxman joined Steiner Leisure in June 1994 in connection with Steiner Leisure’s acquisition of Coiffeur Transocean (Overseas), Inc. (“CTO”), which operated a business similar to that of OSW Predecessor. Mr. Fluxman served as CTO’s Vice President—Finance from January 1990 until June 1994 and as its Chief Operating Officer from June 1994 until November 1996. Mr. Fluxman, a certified public accountant, was employed by Laventhol and Horwath from 1986 to 1989, during a portion of which period he served as a manager. Mr. Fluxman earned a Bachelor of Commerce from the University of Witwatersrand and a degree of Honors Bachelor of Accounting Science from the University of South Africa.
We believe Mr. Fluxman is qualified to serve as a director due to his prior leadership roles and operations experience, particularly in the consumer and consumer-related products and services industries. |
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
Our Class B Directors (serving until our 2021 annual meeting of shareholders)
|
| |
|
|
|
|
Our Class C Directors (serving until our 2022 annual meeting of shareholders)
Glenn J. Fusfield
Age: Title: Director since: March | Mr. Fusfield previously served as our Chief Executive Officer from 2019 through March 2021. He served as President and Chief Executive Officer of OSW Predecessor beginning in July 2016, as President and Chief Operating Officer from April 2007 until July 2016, and as Chief Operating Officer from October 2002 until April 2007. From January 2001 until April 2007, Mr. Fusfield served as Steiner Leisure’s Chief Operating Officer. Mr. Fusfield joined OSW Predecessor in November 2000 as Senior Vice President, Group Operations. Prior to joining OSW Predecessor, Mr. Fusfield was with Carnival Cruise Lines for 12 years, serving as Director, Hotel Operations, for Carnival from January 1995 until December 1998, and Vice President, Hotel Operations, from January 1999 to October 2000. Mr. Fusfield earned a B.A. from the University of Denver School of Hotel Management.
We believe Mr. Fusfield is qualified to serve as a director due to his extensive prior experience in the industry. | |
Stephen W. Powell
Age: Title: Director Director since: March | Mr. Powell’s experience spans private capital investment, investment banking, corporate operating, corporate governance and public accounting roles. Mr. Powell currently invests in and advises private companies focusing on health and wellness, fitness, nutrition, personal care services and consumer technology sectors. He also serves on the board of directors and as a member of the audit committees of Haymaker Acquisition Corp.
We believe Mr. Powell is qualified to serve as a director due to his broad experience analyzing, evaluating and advising corporate clients and investee companies, including companies with elements of comparability to the Company, and his board of directors and audit committee experience. Mr. Powell was nominated to our Board of Directors by Steiner Leisure pursuant to the terms of the Governance Agreement. For more information, see the section entitled “Certain Relationships and Related Transactions.” |
|
| |
Maryam Banikarim
Age: Title: Director Director since: May | Ms. Banikarim has served on our Board since May 2019. Ms. Banikarim does not currently serve on the board of directors of any other publicly traded companies. Ms. Banikarim is currently the Head of Marketing at Nextdoor. She previously worked at Hyatt Hotels Corp. as EVP & Global Chief Marketing Officer from 2015 to 2018, at Gannett Co., Inc. as SVP & Chief Marketing Officer from 2011 to 2015, at NBCUniversal Media, LLC as SVP of Integrated Sales Marketing from 2009 to 2011 and at Univision Communications as Chief Marketing Officer from 2002 to 2009. Ms. Banikarim is currently a member of the Samsung Retail Advisory Board, an executive advisor to Cove Hill Partners, and an Executive in Residence at Columbia
We believe Ms. Banikarim is qualified to serve as a director due to her extensive experience and leadership in marketing. | |
Adam Hasiba Age: 37 Title: Director Director since: June | Mr. Hasiba joined the board of Steiner Leisure, the former parent of company of OneSpaWorld, in 2019. Mr. Hasiba is currently serving as a Principal at L Catterton. L Catterton is the largest and most global consumer-focused private equity firm with over $15 billion of equity capital under management across six fund strategies in 17 offices worldwide. Since 1989, the firm has made over 200 investments in leading consumer brands. Mr. Hasiba has been an investment professional since 2014. Prior to joining L Catterton, Mr. Hasiba was the Director of Strategy at Ferrara Candy Company where he led a business transformation program spanning the marketing, sales, and supply chain functions. Prior to Ferrara, Mr. Hasiba spent a number of years at McKinsey & Company as a Business Analyst, Senior Associate and Engagement Manager. While at McKinsey, Mr. Hasiba was a part of the consumer packaged goods & retail practice where he focused on global assignments in supply chain, retail, finance, and business process optimization. Mr. Hasiba graduated cum laude from Northwestern University with a B.S. in Electrical Engineering and cum laude from Loyola University at Chicago with a B.S. in Physics. He also received an M.B.A from the Harvard Business School. We believe Mr. Hasiba is qualified to serve as a director due to his extensive leadership, supply chain, retail, finance and business optimization experience. Mr. Hasiba was nominated to our Board of Directors by Steiner Leisure pursuant to the terms of the Governance Agreement. For more information, see the section entitled “Certain Relationships and Related Transactions.” |
Proposal 2: Ratification of Independent Registered Public Accounting Firm
The members of our Audit Committee and our Board of Directors believe the continued retention of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 20202021 is in our best interest. We anticipate that representatives of Ernst & Young will be present at the Annual Meeting, and it is expected that they will have an opportunity to make a statement regarding their services and will be available to respond to questions.Our Board of Directors does not know of any direct or indirect financial interest of Ernst & Young in the Company. Ratification requires the receipt of “FOR” votes constituting a majority of the votes cast on the proposal at the Annual Meeting, assuming a quorum is present.
Ernst & Young served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 20192020 and 2018.2019.
Principal Accountant Fees and Services
The following table sets forth the fees paid to Ernst & Young that were incurred by the Company and paid by the Company in fiscal year 2019years 2020 and the fees incurred by the Company and paid by Nemo Investor Aggregator, Limited (the parent company of OSW Predecessor) in fiscal year 2018.2019.
Year Ended December 31, | Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Audit Fees(1) | $ | 2,275,000 | $ | 2,499,102 | $ | 1,667,892 | $ | 2,275,000 | ||||||||
Audit-Related Fees(2) | — | — | — | — | ||||||||||||
Tax Fees(3) | 47,900 | 4,500 | 50,475 | 47,900 | ||||||||||||
All Other Fees(4) | — | — | — | — | ||||||||||||
|
|
|
| |||||||||||||
Total Fees | $ | 2,322,900 | $ | 2,503,602 | $ | 1,718,367 | $ | 2,322,900 | ||||||||
|
|
|
|
(1) | Audit Fees. Audit fees consist of fees billed for professional services rendered for the audits of our financial statements, review of financial statements included in our Quarterly Reports on Form10-Q and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings. |
(2) | Audit-Related Fees. Audit-related fees would include assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services would include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. |
(3) | Tax Fees. Tax fees consist of fees billed for professional services for tax compliance and tax advice. |
(4) | All Other Fees. All other fees would include fees for products and services other than the services reported above. |
Audit CommitteePre-Approval Policies and Procedures
Our Audit Committee has adopted a policy and related procedures requiring itspre-approval of all audit andnon-audit services to be rendered by Ernst & Young. These policies and procedures are intended to ensure that the provision of such services does not impair Ernst & Young’s independence. These services may include audit services, audit-related services, tax services and other services. The policy provides for the annual establishment of fee limits for various types of audit services, audit-related services, tax services and other services, within which the services are deemed to bepre-approved by our Audit Committee. Ernst & Young is required to provide to our Audit Committee withback-up information with respect to the performance of such services.
Our Audit Committee has delegated to its chair the authority topre-approve services, up to a specified fee limit, to be rendered by Ernst & Young and requires that the chair report to our Audit Committee anypre-approval decisions made by the chair at the next scheduled meeting of our Audit Committee.
All services performed by Ernst & Young for the Company werepre-approved by our Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” PROPOSAL 2.
The Audit Committee reports to the Board of Directors by providing oversight of (1) the integrity of our financial statements, (2) the effectiveness of the Company’s internal controls over financial reporting, (3) our compliance with legal and regulatory requirements, (4) the independent registered public accounting firm’s performance, qualifications and independence and (5) the responsibilities, performance, budget and staffing of our internal audit function. The Audit Committee is comprised of fourthree directors, all of whom meet the standards of independence adopted by the SEC and Nasdaq.
In performing our Audit Committee oversight responsibilities, we have reviewed and discussed our audited financial statements for the year ended December 31, 20192020 with management and with representatives of Ernst & Young, our independent registered public accounting firm.
The Audit Committee also discussed with Ernst & Young matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has received from Ernst & Young the written disclosures and the letter required by applicable requirements of the PCAOB regarding the Company’s independent accountant’sregistered public accounting firm’s communication with the audit committeeAudit Committee concerning independence, and the Audit Committee has discussed the independence of Ernst & Young with representatives of such firm. The Audit Committee is satisfied that thenon-audit services provided to us by Ernst & Young are compatible with maintaining their independence.
Management is responsible for our system of internal controls and the financial reporting process. Ernst & Young is responsible for performing an audit of the consolidated financial statements in accordance with the standards of the PCAOB and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.
Based on the reviews and discussions referred to in this Audit Committee Report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form10-K for the fiscal year ended December 31, 2019.2020.
Walter F. McLallen, Chair
Stephen W. Powell
Michael J. Dolan
Andrew R. Heyer
Background to Proposals 3CORPORATE GOVERNANCE
Strong corporate governance is an integral part of our core values. The Company’s business and 4
Youaffairs are being asked to approve two proposals in connection with the Private Placement: (i) the approvalmanaged by our Board of Directors, which may exercise all such powers of the Private Placement for purposes of Nasdaq Listing Rule 5635 (Proposal 3); and (ii) the approval and adoption ofCompany as are not by our Amended Articles to, among other things, authorize a new class ofNon-Voting Common Shares (Proposal 4). Pursuant to the Investment Agreement, we are required to seek shareholder approval for Proposals 3 and 4, and both proposals must be approved in order for us to consummate the Private Placement, unless the closing condition in the Investment Agreement related to shareholder approval of the Amended Articles is waived. Proposals 3 and 4 are intended to be read together. Terms used herein but not otherwise defined shall have the meanings assigned to them in Proposals 3 and 4.
As more fully described below, theCOVID-19 pandemic has had, and we expect will continue to have, a material negative impact onexercised by our current financial and cash position and the cruise industry on which our revenue is substantially dependent. The worldwide growth of theCOVID-19 pandemic affected the cruise industry earlier than most other global industries, and the cessation of operations by the three largest global cruise companies on March 13, 2020, along with the subsequent cessation of operations by other cruise companies, resulted in our inability to generate substantially all of our revenue. This significant diminution of our financial and cash position and the other negative effects of theCOVID-19 pandemic has resulted in, among other things, a significant decline in our share value. Since December 24, 2019, when the trading price of our Common Shares was at anall-time high of $17.25 per share, the trading price of our Common Shares declined to anall-time low of $2.45 per share on March 20, 2020, a reduction of 85.8% since theall-time high just 97 days prior.
shareholders. Our Board of Directors is soliciting your vote on these proposals in orderestablishes Company policies and oversees our performance, our executive officers and other members of our management team to consummate the Private Placement, which is contingent in part upon shareholder approval of these proposals. Our Board of Directors believes that consummation of the Private Placement will provide the Company with the near-term financial support to operate through theCOVID-19 pandemic, including the ability to maintain limited operations for more than 24 months and to remain in compliance with, and avoid a potential default under, its existing credit agreements for the foreseeable future. Once the cruise industry’s operations recommence, the Board of Directors believes that the Private Placement also will provide the Company with the near- and long-term support needed to quickly resume operations, facilitate innovation in its service offerings and wellness experiences and position the Company for long-term growth. Further,whom our Board of Directors believes that the consummation of the Private Placement will provide the Company with both near- and long-termhas delegated authority to manage non-financialday-to-day support by, and a committed partner in, Steiner Leisure, which, as a prior owner of the Company’s business has an intimate understanding of the operational complexity and key value drivers of the business, previously recognized significant value appreciation for the prior shareholders of the Company and, since the public offering of the Company, has continued to be invested in, and committed to, the long-term success and growth of the Company, as evidenced by Steiner Leisure maintaining an ownership position in the Company since the expiration of the“lock-up” period with respect to approximately 8.5 million Common Shares it previously acquired in the Company’s business combination transaction and its agreement to a12-month“lock-up” period with respect to theNon-Voting Common Shares to be acquired in the Private Placement.operations.
In light of the cruise industry’s response to theglobal COVID-19 pandemic, and the cruise industry’s U.S. operations being subject to the U.S. Centers for Disease Control and Prevention (“CDC”) No Sail Order, which was extended on April 9, 2020 to continue until the earliest of (i) the expiration of the Secretary of Health and Human Services’ declarationthat COVID-19 constitutes a public health emergency, (ii) the date the Director of the CDC rescinds or modifies the No Sail Order or (iii) 100 days after the order appears on the Federal Register, which would be July 24, 2020, the Company has taken the following actions as of May 6, 2020 to reduce costs, prioritize liquidity, and preserve cash:
Closed all spas on ships where voyages have been canceled;
Closed all U.S., Caribbean-based and Asia-based destination resort spas;
Repatriated 52% of all cruise personnel, eliminating all ongoing expenses related to these employees;
Continues to work towards repatriating substantially all remaining cruise personnel as soon as is practical;
Furloughed 96% of U.S. and Caribbean-based destination resort spa personnel and 38% of corporate personnel;
Eliminatedall non-essential operating and capital expenditures;
Withdrew its dividend program until further notice and deferred payment of the dividend declared on February 26, 2020 until approved by the Board of Directors; and
Borrowed $20 million on its revolving credit facility to improve short-term liquidity.
Background of the Private Placement
The Board of Directors and the Company’s management regularly review and assess the Company’s operations and performance, financial condition and business strategy, and the various trends and conditions affecting the industry in which the Company operates in relation to the Company’s near- and long-term financial and strategic goals and plans.
Beginning in February 2020, the Company has experienced an unprecedented diminution in its financial position, liquidity and market capitalization from the effects ofCOVID-19 on the Company’s business, including, in particular, on the cruise industry on which the Company’s revenue is substantially dependent. In light of the Company’s near-term working capital and debt service requirements, to avoid a potential default under the Company’s existing credit facilities (as well as the potential acceleration of approximately $247.5 million of gross debt outstanding as of March 19, 2020), and to enhance the Company’s long-term financial position and ability to drive long-term growth, the Board of Directors began considering various strategic and financing alternatives in March 2020 as part of its regular review and assessment of the Company’s business and operations. Among other alternatives, the Board of Directors explored the possibility of obtaining additional debt financing from existing lenders, which were unwilling to consider extending additional debt to the Company given existing circumstances.
On March 20, 2020, the Company received an unsolicitednon-binding summary of proposed terms from Steiner Leisure for an investment in the Company. This proposal contemplated, among other things, (i) an investment of no less than $125 million in Common Shares at a per share price that represented a discount to the Company’sthree-day volume weighted average price per share (which implied a per share purchase price of approximately $2.61 as of the date of the proposal), (ii) the issuance of the Additional Shares, (iii) the right of Steiner Leisure to designate four directors to the Board of Directors, (iv) asix-month post-closing“lock-up” of the Common Shares to be acquired, and (v) certain other governance, information and other rights in favor of Steiner Leisure, including an uncapped expense reimbursement in favor of Steiner Leisure and its affiliates. In connection with the submission of the March 20, 2020 proposal and in anticipation of a potential proposed investment in the Company, Marc Magliacano, who is a director and officer of Steiner Leisure, recused himself from the Board of Directors’ evaluation of potential strategic and financing alternatives and the related process, including the evaluation of, and subsequent negotiation of, Steiner Leisure’s proposals and the Private Placement.
On March 21, 2020, in light of Steiner Leisure’s unsolicited proposal, the Board of Directors established a special committee, composed of Leonard Fluxman, Andrew R. Heyer, Walter F. McLallen, Jeffrey E. Stiefler and Stephen W. Powell (the “Special Committee”), to evaluate potential strategic and financing alternatives. After its formation, the Special Committee determined it was in the best interests of the Company and its shareholders to engage its own advisors to assist the Special Committee in evaluating, and to conduct a process on behalf of the Company to solicit, potential strategic and financing alternatives.
The Special Committee considered, and members of the Special Committee held discussions with, several potential financial advisors regarding their potential engagement to assist in an evaluation of potential strategic and financing alternatives for the Company. The Company subsequently engaged Nomura Securities International, Inc. (“Nomura”) as the Company’s financial advisor and placement agent to assist in such
evaluation and, if so determined by the Special Committee, to assist in the negotiation and consummation of any such transaction, and the Special Committee engaged Duff & Phelps as its financial advisor to advise, and to render an opinion to, the Special Committee regarding the fairness of any strategic transaction that the Special Committee identified as desirable to present to the Board of Directors for consideration. Duff & Phelps and Nomura were selected as financial advisors given, among other things, their respective qualifications, experience and reputation, and knowledge of and familiarity with the Company’s business and industry. Nomura was involved with the Company’s prior sale process and its business combination transaction and, based on that experience, was familiar with investors that had expressed interest in the Company in the past, and in a position to conduct potential investor outreach efforts in a targeted and expeditious manner. The Special Committee noted that Nomura previously served as a financial advisor to Steiner Leisure in connection with its sale of the Company and has provided services to Steiner Leisure and/or certain of its affiliates in connection with other matters, and engaged Duff & Phelps to provide an opinion regarding the fairness of any strategic transaction that it identified as desirable to present to the Board of Directors for consideration.
During late March and early April 2020, the Special Committee met telephonically several times with representatives of DLA Piper LLP (US) (“DLA”), counsel to the Special Committee and the Company for purposes of the potential strategic transaction, and Nomura to discuss the Company’s financial position, its near and long-term capital needs and funding strategy, the long-term prospects of the Company’s business and the effect of market and economic factors generally, Steiner Leisure’s March 20, 2020 proposal, and potential strategic and financing alternatives. At the Special Committee’s request, Nomura contacted 19 potential investors that were believed to potentially have interest in and the ability to provide the Company with the support needed. The potential investors included seven private equity firms, seven long-only investors, two hedge funds and three family offices / sovereign wealth funds. Among these potential investors, 14 parties agreed to be and were wall-crossed. Of the potential investors that were wall-crossed, eight parties requested and received presentations from the Company’s management. During the process, potential investors were advised of the Special Committee’s preference for a Common Share transaction as opposed to another investment structure given, among other things, the potential for material adverse tax consequences related to a preferred equity structure in certain circumstances.
Based on its unsolicited proposal and existing ownership in the Company, Steiner Leisure was one of the potential investors that was contacted and, like the other investors contacted, Steiner Leisure was asked to provide an indication of interest to the Company. At the Special Committee’s direction, Steiner Leisure was informed that certain aspects of its March 20, 2020 proposal would need to be improved in order for it to be considered. Ultimately, the Company received five proposals, including a revised proposal from Steiner Leisure on April 8, 2020 and the proposals described below that were received after entering into an exclusivity agreement with Steiner Leisure.
Steiner Leisure’s revised proposal contained improved economic and other terms relative to Steiner Leisure’s March 20, 2020 proposal. The revised proposal contemplated, among other things, an aggregate investment of $75 million in Common Shares at a per share price based on the lower of the10-day volume weighted average price per Common Share immediately before and after the signing (in each case, without a discount), which implied an upper limit on the per share purchase price of approximately $3.43 as of the date of the proposal. Steiner Leisure agreed to “back-stop” the full $75 million of the investment, but also indicated that it would provide other third-party investors with an opportunity to participate in up to $25 million of the issuance and that a portion of the Common Shares acquired by it would not be entitled to voting rights. The proposal also contemplated (i) the issuance of 9.9 million perpetual warrants exercisable for Common Shares (exercisable at 1.25x, 1.75x and 2.25x of the purchase price for the Common Shares acquired), (ii) the issuance of the Additional Shares, (iii) the right of Steiner Leisure to designate four directors to the Board of Directors, (iv) asix-month post-closing“lock-up” period with respect to the Common Shares acquired and (v) certain other governance, information and other rights in favor of Steiner Leisure and/or the other investors, as applicable, including an uncapped expense reimbursement in favor of Steiner Leisure. Steiner Leisure also expressed that it would not
require any further due diligence and would be ready, willing and able to quickly finalize and sign the definitive documentation for a potential transaction, which Steiner Leisure indicated that it believed was a key advantage to its proposal.
Following the Company’s receipt of these proposals, including Steiner Leisure’s revised proposal, the Special Committee met several times with representatives of DLA and Nomura to discuss and compare such proposals. The Special Committee then determined that, for the reasons, among others, described in the section entitled “The Board’s Reasons for Recommending Approval of the Private Placement,” it was in the best interests of the Company and its shareholders to continue discussions with Steiner Leisure regarding a potential transaction, which the Special Committee viewed, at that time, as the proposal that was most likely to result in a transaction that met the Company’s objectives, while also continuing discussions with other potential investors.
On April 20, 2020, after extensive negotiations with Steiner Leisure regarding its proposal and negotiations with other potential investors regarding alternative proposals, the Special Committee unanimously determined that it was in the best interests of the Company and its shareholders to enter into anon-binding indication of interest with Steiner Leisure. At the time, the Special Committee determined that the terms of the alternative proposals received were less favorable than those proposed by Steiner Leisure based on a number of considerations, including:
|
|
|
Thenon-binding indication of interest negotiated with Steiner Leisure contained further improved economic and other terms relative to Steiner Leisure’s April 8, 2020 proposal, including, among other things, (i) an increase in, and additional certainty with respect to, the proposed purchase price, (ii) a reduction in the number of warrants to be issued (from 9.9 million to 5 million) to Steiner Leisure and any other third-party investors (exercisable at 1.5x the purchase price for the Common Shares acquired) that would expire on the fifth anniversary of the closing of the transaction and would be redeemable by the Company if the trading price of the Common Shares exceeded $14.00 per share for any 20 trading days during any consecutive 30trading-day period, (iii) a requirement that one of the four Steiner Leisure Board designees would need to be reasonably acceptable to the disinterested Board of Directors, (iv) a12-month post-closing“lock-up” of the Common Shares acquired by Steiner Leisure and (v) a cap, to be mutually agreed upon, with respect to the expense reimbursement in favor of Steiner Leisure. Thisnon-binding indication of interest also contained a binding exclusivity period through April 30, 2020 for the parties to negotiate definitive transaction documents with respect to the proposed investment.
In March and April 2020, the Company engaged in discussions and negotiations with its lenders regarding potential amendments to the Company’s existing credit agreements in light of the Company’s financial position, potential defaults that may occur, as well as the potential acceleration of approximately $247.5 million of gross debt outstanding as of March 19, 2020 under such credit agreements, in the absence of such amendments and a potential equity investment by one or more third parties. During these discussions and negotiations, the Company’s lenders expressed their desire to only amend the Company’s existing credit agreements if a minimum amount of cash was invested in the Company’s equity by third-party investors.
Between April 22, 2020 and April 30, 2020, Kirkland & Ellis LLP (“K&E”), counsel to Steiner Leisure, and DLA exchanged, and the Special Committee and Steiner Leisure with the assistance of their respective advisors engaged in extensive negotiations regarding, drafts of the Investment Agreement and other definitive documents. Advisors to the third-partyco-investors also reviewed and provided comments to the Investment Agreement and other relevant definitive documents during this period.
On April 24, 2020, the Company received two unsolicited proposals from parties that had been contacted prior to the Company’s execution of its exclusivity agreement with Steiner Leisure. The Special Committee reviewed these proposals with the assistance of its legal and financial advisors and instructed Nomura, in accordance with the Company’s obligations under its exclusivity agreement with Steiner Leisure, to inform Steiner Leisure of the fact that the Company had received two unsolicited proposals with potentially more favorable terms than Steiner Leisure’s then-current proposal.
On April 26, 2020, following further negotiations, Steiner Leisure sent a revised proposal to the Company that contained improved economic and other terms relative to the previously agreednon-binding indication of interest, including, among other things, (i) an increase in the proposed purchase price of the Common Shares, (ii) an increase in the exercise price of the warrants, and (iii) a reduction in the number of directors that Steiner Leisure would be entitled to designate to the Board of Directors from four to three, with one nominee not subject to redesignation after the initial term thereof. The revised proposal also contemplated extending the exclusivity period through May 10, 2020, and indicated that its proposal would be withdrawn if it was not accepted on April 26, 2020. The Special Committee met to discuss and evaluate this revised proposal, and the two other unsolicited proposals in more detail, and determined that, for the reasons, among others, described in the section entitled “The Board’s Reasons for Recommending Approval of the Private Placement,” it was in the best interests of the Company and its shareholders to execute an amended and restatednon-binding summary with Steiner Leisure containing these revised terms, subject to Steiner Leisure agreeing to further improvements in its proposal, including a further increase in the exercise price of the warrants and an extension of the exclusivity period to May 3, 2020 (as compared to Steiner Leisure’s proposal of May 10, 2020). The Special Committee determined that the terms of the two unsolicited proposals were less favorable than those provided by Steiner Leisure based on a number of considerations, including:
|
|
In addition, the Special Committee considered the risk of Steiner Leisure abandoning the transaction if the Special Committee pursued the other alternative proposals. On April 27, 2020, after additional negotiations in which Steiner Leisure agreed to increase the exercise price and redemption price of the warrants and limit the extension of the exclusivity period, the Company (with the approval of the Special Committee) and Steiner Leisure executed an amended and restatednon-binding summary of proposed terms and extended the exclusivity period to May 3, 2020. The terms reflected in the amended and restatednon-binding summary of proposed terms reflected the material economic terms of the Private Placement, which were memorialized in definitive documentation over the course of the following days.
On April 29, 2020, the Special Committee and the Board of Directors (other than Mr. Magliacano, who previously had recused himself with respect to all Board of Directors’ matters related to the evaluation and negotiation of potential strategic and financing alternatives) met telephonically with representatives of DLA, Nomura and Duff & Phelps to discuss and consider the terms of the Private Placement. Representatives of Duff & Phelps presented certain financial analyses with respect to the financial terms of the Private Placement as summarized below under “Opinion of Financial Advisor to the Special Committee.” Representatives of Duff & Phelps then delivered Duff & Phelps’ oral opinion to the Special Committee, which opinion was confirmed by delivery of a written opinion dated April 29, 2020, as to the fairness of the Private Placement, from a financial point of view, to the Company. The full text of the written opinion of Duff & Phelps, dated April 29, 2020, which sets forth the assumptions made, procedures followed, and matters considered in connection with Duff & Phelps’ opinion, is attached asAppendix Ato this proxy statement and is incorporated by reference herein. After further discussion, the Special Committee unanimously determined that the terms of the Investment Agreement and the other transaction documents and the transactions contemplated thereby were advisable and in the best
interests of the Company and its shareholders, approved the terms of the Private Placement, and recommended its approval by the Board of Directors. The Board of Directors, based on the recommendation of the Special Committee, the opinion of Duff & Phelps and the other factors considered by the Special Committee, (i) unanimously approved the terms of the Private Placement, (ii) determined that the terms of the Investment Agreement and the other transaction documents and the transactions contemplated thereby were advisable and in the best interests of the Company and its shareholders, (iii) directed that the Private Placement be submitted to the shareholders of the Company for approval and (iv) recommended approval of Proposal 3 and Proposal 4 by the shareholders of the Company.
On April 29, 2020, the Company completed negotiations of and entered into amendments to the Company’s existing credit agreements. The continued effectiveness of these amendments is conditioned on the consummation of the Private Placement.
On April 30, 2020, the Company and the Investors executed the Investment Agreement.
The Board’s Reasons for Recommending Approval of the Private Placement
The Special Committee evaluated potential alternatives to the Private Placement during April 2020, and concluded that the Private Placement was in the best interests of the Company and its shareholders. In the weeks leading to the signing of the Investment Agreement, the Special Committee evaluated and negotiated the price, terms and conditions of the Private Placement, compared the price, terms and conditions of the Private Placement with other potential strategic and financing alternatives, consulted with the Company’s senior management and legal and financial advisors, and considered a number of factors. The various factors that the Special Committee considered that weighed positively in favor of the Private Placement included, among others and not necessarily in order of relative importance:
the Company’s business, future prospects and financial performance and condition, including the Company’s deteriorating cash position, current leverage position, obstacles to incurring additional debt in light of the Company’s current leverage position, obstacles to issuing preferred equity given the Company’s tax structure, the Company’s obligations under its existing credit agreements and the imminent need for additional capital and the ability of Steiner Leisure to enter into definitive agreements expeditiously to meet this need for imminent capital (without any due diligence period);
the results of the Company’s process of investigating, analyzing, reviewing and evaluating (including with respect to cost of capital considerations) potential strategic and financing alternatives and the Special Committee’s belief that the value offered to the Company’s shareholders in the Private Placement was fair and reasonable and represented the best available opportunity to stabilize and strengthen the Company’s near- and long-term financial position;
the fact that the consideration issuable in the Private Placement consists of Common Shares and warrants to purchase Common Shares rather than senior or preferred equity or debt securities;
the familiarity of Steiner Leisure with the Company as a current shareholder with a representative on the Board of Directors, which enabled Steiner Leisure to proceed expeditiously in evaluating and signing definitive agreements regarding the proposed transaction;
the uncertainty regarding signing and closing, and the pricing risk, associated with potential alternatives to the Private Placement, and the consequences of failing to secure equity financing expeditiously in light of the Company’s current financial condition and the requirement of its existing lenders to secure a minimum equity investment amount as a condition to agreeing to potential amendments to the Company’s existing credit agreements;
the agreement of the Company’s existing lenders to enter into the Credit Agreement Amendments substantially concurrently with the Private Placement, thus allowing the Company to avoid a potential default, as well as the potential acceleration of approximately $247.5 million of gross debt outstanding as of March 19, 2020, if the closing of the Private Placement occurs;
the agreement of Steiner Leisure to invest inNon-Voting Common Shares, the limited effect on the voting power of the Company’s shareholders as a result of the Private Placement and the effect of the Private Placement on the voting power of the Company’s shareholders relative to certain other alternative transactions;
the director designation rights to be granted to Steiner Leisure in the transaction, which the Special Committee viewed as reasonable in light of, among other things, the proportionality of Steiner Leisure’s director designation rights to its post-investment ownership in the Company, consistent with Nasdaq listing rules, and the fact that one nominee would not be subject to redesignation after the initial term thereof;
the dependence of the Company’s business on the cruise industry, which directly impacts the Company’s financial performance and cash requirements;
current industry, economic and market conditions and trends in the markets in which the Company competes, including the effect of theCOVID-19 pandemic on the cruise industry, and the uncertainty regarding the timeline for the industry to resume operations;
the effect of the Private Placement on employees, customers and communities, to the extent those effects will have an impact on the Company;
the strategic value of the Steiner Leisure proposal given its history with the Company and intimate knowledge of the Company’s business, including the operational complexity and key value drivers of the business;
the strategic value of a long-term investment in the Company (including a12-month“lock-up” period with respect to the Common Shares to be acquired) compared to potential negative factors regarding the Private Placement, including downward pressure on the price of the Common Shares, related to a short-term term investment;
the limited representations and warranties and post-closing recourse in the Investment Agreement;
the potential impact of the Private Placement on the market price of the Common Shares, including the expected market reaction to any investment by Steiner Leisure in the Company under these circumstances and the impact if the Company did not obtain equity financing in the near term;
Steiner Leisure allowing for the participation in the Private Placement by certain members of the Board of Directors, including Messrs. Fluxman, Andrew Heyer, Steven Heyer, Fusfield, Stiefler, and McLallen, whose new investment in the Company further aligns their incentives with those of the Company’s other shareholders and evidences their commitment to, and belief in, the long-term growth of the Company and the related expected market reaction; and
|
The Special Committee also considered a variety of risks and other potentially negative factors regarding the Private Placement. These factors included the following, which are not necessarily listed in order of relative importance:
the dilution to existing shareholders (which represented a potentially incrementally higher cost of capital and dilution relative to certain other alternative proposals), offset by the additional cash and resulting financial stability provided by the funds to be received in the Private Placement, the relative uncertainty in execution and pricing of other alternative transactions, the willingness of Steiner Leisure to agree to a12-month“lock-up” period with respect to the Common Shares acquired and the fact that the Additional Shares to be issued currently are considered outstanding for purposes of the Company’s earnings per share and other GAAP financial metrics;
the governance rights required by Steiner Leisure (specifically, Board representation, which was reduced compared to prior proposals, and certain veto rights), offset in the Special Committee’s view by both the near- and long-term support by, and a committed partner in, Steiner Leisure, which, as a prior owner of the Company’s business, has an intimate understanding of the operational complexity and key value drivers of the business, and Steiner Leisure’s agreement (i) to a12-month“lock-up” period with respect to the Common Shares to be acquired, (ii) that only two of its director seats would be subject to redesignation and (iii) that these governance rights would terminate if Steiner Leisure’s ownership fell below certain thresholds;
the provisions contained in the Investment Agreement restricting the Company and its representatives from soliciting alternative transactions and prohibiting the Board of Directors from changing its recommendation in favor of the Private Placement, which were offset in the Special Committee’s view by the Company’spre-signing third-party solicitation process and evaluation of other potential alternative transactions, and requiring that the Company reimburse Steiner Leisure’s expenses in certain circumstances, subject to a cap on such reimbursed expenses;
the interests of certain members of the Board of Directors in a potential transaction with Steiner Leisure, particularly with respect to (i) Mr. Fluxman, who has an indirect economic interest in a portion of the Additional Shares, (ii) Messrs. Andrew Heyer, Steven Heyer, McLallen and Stiefler, who have an economic interest in certain deferred shares issuable to former members of Haymaker Sponsor, LLC and (iii) Messrs. Fluxman, Andrew Heyer, Steven Heyer, Fusfield, Stiefler, and McLallen, who participated in the Private Placement as investors; and
Steiner Leisure’s proposal was conditioned on shareholder approval, the expiration or termination of the waiting period under the HSR Act, and receipt of certain amendments to the Company’s existing credit agreements, although these amendments were viewed by the Special Committee as beneficial to the Company, were conditioned on the Company not being charged any fees for such amendments, and were expected to be able to be obtained, and that, in the absence of obtaining these amendments, the Company potentially could be in default under such existing credit agreements.
The Special Committee concluded that the potentially negative factors associated with the Private Placement were outweighed by the potential benefits that it expected the Company would receive as a result of entering into the Private Placement. Accordingly, the Special Committee determined that the Private Placement was advisable and in the best interest of the Company and its shareholders.
The foregoing discussion of the factors considered by the Special Committee is not intended to be exhaustive, but, rather, includes the material factors considered by the Special Committee. In reaching their respective decision to approve the Private Placement and recommend its approval to the Company’s shareholders, the Special Committee and the Board of Directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Special Committee unanimously recommended that the Board of Directors approve the Private Placement and recommend its approval to the Company’s shareholders, and the Board of Directors approved the Private Placement and recommends that the shareholders approve these proposals, in light of all these factors as a whole, and overall considers the factors to be favorable to, and to support, its determination.
Before voting on these proposals, shareholders should carefully read the “Cautionary Note Regarding Forward-
Looking Statements” section at the beginning of this proxy statement.
Opinion of Financial Advisor to the Special Committee
On April 29, 2020, Duff & Phelps rendered its oral opinion to the Special Committee of the Board of the Company (solely in their capacity as members of the Board) in connection with its consideration of the Proposed Transaction (which was subsequently confirmed in writing by delivery of its written opinion dated the same date) to the effect that, subject to the assumptions, qualifications, limitations and other matters considered by Duff & Phelps in connection with the preparation of its opinion, as of such date, the Proposed Transaction was fair from a financial point of view to the Company. In the portions of this proxy statement addressing the opinion, the term “Proposed Transaction” refers to the capital raise by the Company of approximately $75 million in exchange for Common Shares, warrants to purchase Common Shares, and modifications of the restriction period of the Company’s deferred shares.
The full text of Duff & Phelps’ opinion is included asAppendix Ato this proxy statement and describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Duff & Phelps. The summary of Duff & Phelps’ opinion in this proxy statement is qualified in its entirety by reference to the full text of the opinion. The opinion was furnished for the use and benefit of the Special Committee in connection with its consideration of the Proposed Transaction and was not intended to be used for any other purpose, without Duff & Phelps’ express consent. Neither Duff & Phelps’ opinion nor the summary of its opinion and the related analyses set forth in this proxy statement is intended to be or constitutes a recommendation to any shareholder of the Company as to how such holder should act with respect to the Proposed Transaction.
Duff & Phelps’ opinion (i) did not address the merits of the underlying business decision to enter into the Proposed Transaction versus any alternative strategy or transaction, (ii) did not address any transaction related to
the Proposed Transaction, (iii) was not a recommendation as to how the Board or any shareholder should vote or act with respect to any matters relating to the Proposed Transaction, or whether to proceed with the Proposed Transaction or any related transaction, and (iv) did not indicate that the consideration received was the best possibly attainable under any circumstances; instead, it merely stated whether the consideration in the Proposed Transaction was within a range suggested by certain financial analyses. The decision as to whether to proceed with the Proposed Transaction or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which Duff & Phelps’ opinion was based.
In connection with its opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of its opinion included, but were not limited to, the items summarized below:
Reviewed the following documents:
The Company’s annual report and audited financial statements on Form10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2019;
The Company’s monthly profit and loss statements for theyear-to-date periods ending February 29, 2020, December 31, 2019, and February 28, 2018;
Additional financial information with respect to the Company, such as cash and debt balances as of March 31, 2020, provided by Company management;
A summary of the proposals received while considering and negotiating the Proposed Transaction, and their respective terms; and
Documents related to the Proposed Transaction, including an amended & restatednon-binding summary of proposed terms dated April 26, 2020 between the Company and Steiner Leisure Limited for the investment in the Company by Steiner Leisure Limited, its affiliates, and certain mutually agreed investors (the “Investment Term Sheet”);
Discussed the information referred to above and the background and other elements of the Proposed Transaction with the management of the Company;
Reviewed the historical trading price and trading volume of the Company’s common shares;
Performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques, including an analysis of selected public companies that Duff & Phelps deemed relevant and an analysis of selected private investment in public equity (“PIPE”) transactions that Duff & Phelps deemed relevant; and
Conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.
Assumptions, Qualifications and Limiting Conditions
In performing its analyses and rendering its opinion with respect to the Proposed Transaction, Duff & Phelps, with the Company’s consent:
Relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not independently verify such information;
Relied upon the fact that the Special Committee and the Company have been advised by counsel as to all legal matters with respect to the Proposed Transaction, including whether all procedures required by law to be taken in connection with the Proposed Transaction have been duly, validly and timely taken;
Assumed that any estimates and evaluations furnished to Duff & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same, and Duff & Phelps expressed no opinion with respect to the underlying assumptions;
Assumed that information supplied and representations made by Company management were substantially accurate regarding the Company and the Proposed Transaction;
Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conformed in all material respects to the drafts reviewed;
Assumed that there had been no material change in the assets, liabilities, financial condition, results of operations, business, or prospects of the Company since the date of the information made available to Duff & Phelps by Company management, and that there was no information or facts that would make the information reviewed by Duff & Phelps incomplete or misleading;
Assumed that all of the conditions required to implement the Proposed Transaction would be satisfied and that the Proposed Transaction would be completed in accordance with the Investment Term Sheet without any amendments thereto or any waivers of any terms or conditions thereof; and
Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Proposed Transaction would be obtained without any adverse effect on the Company.
To the extent that any of the foregoing assumptions or any of the facts on which Duff & Phelps’ opinion is based prove to be untrue in any material respect, the opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of its opinion, Duff & Phelps made numerous
assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction.
Duff & Phelps prepared its opinion effective as of the date of such opinion. Duff & Phelps’ opinion was necessarily based upon market, economic, financial and other conditions as they existed and could be evaluated as of the date of the opinion, and Duff & Phelps disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion which may come or be brought to the attention of Duff & Phelps after the date of the opinion.
Duff & Phelps’ opinion noted that the credit, financial and stock markets had been experiencing unusual volatility. In rendering its opinion,Duff & Phelps expressed no opinion or view as to any potential effects of such volatility on the Company or the Proposed Transaction.
Duff & Phelps’ opinion further noted that, in January 2020, the World Health Organization declaredCOVID-19 to constitute a “Public Health Emergency of International Concern” and that given the uncertainty of the current situation regardingCOVID-19, the duration of any business disruption and related financial impact with respect to the Company or the Proposed Transaction could not be reasonably estimated as of the date of such opinion. In rendering its opinion,Duff & Phelps expressed no opinion or view as to any potential effects ofCOVID-19 on the Company or the Proposed Transaction.
Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff & Phelps was not requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Proposed Transaction, the assets, businesses or operations of the Company, or any alternatives to the Proposed Transaction, (ii) negotiate the terms of the Proposed Transaction, and therefore, Duff & Phelps assumed that such terms were the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Investment Term Sheet and the Proposed Transaction, or (iii) advise the Board or any other party with respect to alternatives to the Proposed Transaction.
Duff & Phelps did not express any opinion as to the market price or value of the Company’s common shares (or anything else) after the announcement or the consummation of the Proposed Transaction. Duff & Phelps’ opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s or any other party’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps did not make, and assumed no responsibility to make, any representation, or render any opinion, as to any legal matter.
In rendering its opinion, Duff & Phelps did not express any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the consideration in the Proposed Transaction, or with respect to the fairness of any such compensation.
Summary of Material Financial Analyses by Duff & Phelps
Set forth below is a summary of the material financial analyses performed by Duff & Phelps in connection with providing its opinion to the Special Committee of the Board of the Company. While this summary describes the analyses and factors that Duff & Phelps deemed material in its presentation to the Special Committee of the Board of the Company, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, neither its opinion nor Duff & Phelps’ underlying analysis is susceptible to partial analysis or summary description. In arriving at its opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps’ analyses must be considered as a whole and selecting portions of its analyses and of the factors considered by it in rendering its opinion, without considering
all analyses and factors, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.
The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses undertaken by Duff & Phelps. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses.
Selected Precedent Transactions Analysis. Duff & Phelps performed an analysis of selected PIPE transactions that Duff & Phelps deemed relevant. The selected transactions were chosen because they involved common equity raises within the last five years for companies in similar situations as the Company, as evidenced by the companies’ leverage at the time of the transaction announcement based on total debt to total capital; the companies’ publicly traded stock price one day prior to announcement of the transaction as a percent of the52-week historical high publicly traded stock price; and the size of the investment as a percent of the companies’ market capitalization one day prior to the announcement of the transaction. Duff & Phelps analyzed the discount or premium of the offering price per share in the selected transactions relative to the following publicly traded stock price metrics prior to the announcement date: (i) thefive-day volume weighted average price (“VWAP”); (ii) the stock price one day prior to announcement; (iii) the stock price five days prior to announcement; and (iv) the stock price ten days prior to announcement.
In order to compare the discount per share offered in the Proposed Transaction to that of the selected transactions, Duff & Phelps adjusted the purchase price per share of $4.00 for the impact of the warrants issued as part of the Proposed Transaction to arrive at an effective purchase price per share. Duff & Phelps arrived at an estimated warrant value per underlying share using a Black-Scholes option pricing model, which resulted in a value of $1.67 per warrant. Duff & Phelps then multiplied the value per warrant by five million warrants, which resulted in an aggregate warrant value of approximately $8.3 million, and then divided the aggregate warrant value by the number of shares being issued in the Proposed Transaction, or 18.75 million shares. This analysis resulted in an estimated warrant value per share of $0.45 and an estimated effective purchase price per share of $3.55. For valuation purposes, Duff & Phelps considered the deferred shares to be issued and outstanding because the Company had apre-existing obligation to issue such deferred shares and such shares were treated, under GAAP, as being issued and outstanding for purposes of the Company’s financial statements. In considering the impact of the modifications of the restriction period of the Company’s deferred shares, Duff & Phelps did not view such modifications as reducing the aggregate equity value of the Company and, therefore, did not consider it in evaluating the purchase price per share. As of April 28, 2020, the effective purchase price per share represented the following: (i) a discount to thefive-day VWAP of approximately 20.4%; (ii) a discount to the stock price as of the market close one day prior to announcement of approximately 23.4%; (iii) a discount to the stock price as of the market close five days prior to announcement of approximately 7.7%; and (iv) a discount to the stock price as of the market close ten days prior to announcement of approximately 11.3%.
The selected transactions, and corresponding financial data for the selected transactions, were:
PIPE Offering Price (Discount) / Premium To: | ||||||||||||||||||||||||||||||||||||
Company Name | Announced Date | Total Transaction Value ($USDmm) | Transaction Value as % of Market Cap1-Day Prior | Total Debt / Capital 1-Day Prior | Stock % of 52-Week High Prior | 5-Day VWAP Prior | Stock Price 1 Trading Day Prior | Stock Price 5 Trading Days Prior | Stock Price 10 Trading Days Prior | |||||||||||||||||||||||||||
Bright Horizons Family Solutions Inc. | 4/19/2020 | $ | 250.00 | 3.5 | % | 20.4 | % | 68.7 | % | 0.6 | % | (3.8 | %) | 0.3 | % | 28.3 | % | |||||||||||||||||||
Noble Midstream Partners LP | 11/14/2019 | $ | 250.00 | 27.8 | % | 34.4 | % | 56.2 | % | (9.0 | %) | (8.6 | %) | (9.6 | %) | (14.2 | %) | |||||||||||||||||||
Gridsum Holding Inc. | 2/28/2019 | $ | 11.08 | 9.4 | % | 23.3 | % | 34.4 | % | (13.7 | %) | (16.0 | %) | (10.9 | %) | 1.6 | % | |||||||||||||||||||
TDH Holdings, Inc. | 1/31/2019 | $ | 1.00 | 17.4 | % | 62.5 | % | 10.4 | % | (21.3 | %) | (18.2 | %) | (25.4 | %) | (31.5 | %) | |||||||||||||||||||
Remark Holdings, Inc. | 12/4/2018 | $ | 3.10 | 5.9 | % | 43.3 | % | 9.5 | % | (3.2 | %) | (9.7 | %) | (7.8 | %) | (21.7 | %) | |||||||||||||||||||
Clean Energy Fuels Corp. | 5/9/2018 | $ | 83.40 | 29.2 | % | 46.5 | % | 61.3 | % | (9.0 | %) | (12.3 | %) | (8.4 | %) | 4.5 | % | |||||||||||||||||||
Enphase Energy, Inc. | 2/4/2018 | $ | 20.00 | 11.3 | % | 21.9 | % | 60.0 | % | 1.4 | % | 1.4 | % | 3.4 | % | 6.6 | % | |||||||||||||||||||
American Lorain Corporation | 12/28/2017 | $ | 1.28 | 18.9 | % | 81.4 | % | 28.8 | % | 4.5 | % | (3.8 | %) | (1.7 | %) | (14.1 | %) | |||||||||||||||||||
Famous Dave’s of America, Inc. | 11/10/2017 | $ | 1.46 | 5.8 | % | 30.0 | % | 54.5 | % | (5.4 | %) | (2.8 | %) | (10.7 | %) | (13.6 | %) | |||||||||||||||||||
CBAK Energy Technology, Inc. | 5/31/2017 | $ | 9.61 | 37.5 | % | 58.3 | % | 39.0 | % | 15.3 | % | 15.4 | % | 15.4 | % | 7.1 | % | |||||||||||||||||||
JAKKS Pacific, Inc. | 3/15/2017 | $ | 19.31 | 19.8 | % | 68.4 | % | 52.3 | % | 2.3 | % | 3.4 | % | 0.5 | % | (0.5 | %) | |||||||||||||||||||
Noodles & Company | 3/13/2017 | $ | 31.50 | 31.8 | % | 46.1 | % | 26.5 | % | 3.7 | % | 0.0 | % | (1.4 | %) | (10.1 | %) | |||||||||||||||||||
Enphase Energy, Inc. | 1/9/2017 | $ | 10.00 | 14.6 | % | 33.0 | % | 32.4 | % | (13.6 | %) | (16.7 | %) | (8.4 | %) | (24.8 | %) | |||||||||||||||||||
StoneMor Inc. | 12/30/2016 | $ | 20.00 | 6.2 | % | 49.9 | % | 30.3 | % | (1.7 | %) | (4.8 | %) | 0.6 | % | 9.5 | % | |||||||||||||||||||
Eagle Bulk Shipping Inc. | 12/13/2016 | $ | 100.00 | 36.3 | % | 46.8 | % | 7.7 | % | (27.9 | %) | (21.3 | %) | (32.4 | %) | (25.6 | %) | |||||||||||||||||||
Teekay Corporation | 5/24/2016 | $ | 100.00 | 14.2 | % | 68.0 | % | 19.8 | % | (8.4 | %) | (14.0 | %) | (14.1 | %) | (17.0 | %) | |||||||||||||||||||
Tribune Publishing Company | 2/3/2016 | $ | 44.37 | 19.6 | % | 63.2 | % | 39.4 | % | (4.3 | %) | (1.7 | %) | (0.6 | %) | 9.7 | % | |||||||||||||||||||
Torchlight Energy Resources, Inc. | 5/11/2015 | $ | 1.08 | 6.5 | % | 44.1 | % | 14.9 | % | (55.0 | %) | (64.3 | %) | (43.2 | %) | (20.6 | %) | |||||||||||||||||||
Parsley Energy, Inc. | 2/5/2015 | $ | 230.73 | 13.9 | % | 25.8 | % | 68.9 | % | (8.7 | %) | (12.5 | %) | (6.3 | %) | (7.1 | %) | |||||||||||||||||||
Highest Discount | (55.0 | %) | (64.3 | %) | (43.2 | %) | (31.5 | %) | ||||||||||||||||||||||||||||
Mean Discount | (8.1 | %) | (10.0 | %) | (8.5 | %) | (7.0 | %) | ||||||||||||||||||||||||||||
Median Discount | (5.4 | %) | (8.6 | %) | (7.8 | %) | (10.1 | %) | ||||||||||||||||||||||||||||
Lowest Discount | 15.3 | % | 15.4 | % | 15.4 | % | 28.3 | % | ||||||||||||||||||||||||||||
Proposed Transaction | $ | 75.00 | 26.4 | % | 46.6 | % | 26.9 | % | (20.4 | %) | (23.4 | %) | (7.7 | %) | (11.3 | %) |
“Prior” refers to prior to the announced date
Source: S&P Capital IQ, PrivateRaise
Additional Information
Solely for informational purposes, Duff & Phelps estimated the enterprise value and equity value of the Company as of April 28, 2020. Due to a lack of projected financial results for the Company, Duff & Phelps was unable to perform a discounted cash flow analysis of the Company and therefore relied upon an analysis of selected public companies for purposes of determining a range of enterprise values for the Company.
Selected Public Companies Analysis of OneSpaWorld Holdings Limited. Solely for informational purposes, Duff & Phelps reviewed certain financial information for selected public companies that Duff & Phelps deemed relevant. The selected public companies were selected because they were deemed to be similar to the Company
in one or more respects, including the nature of the business and financial performance economics. Duff & Phelps reviewed the enterprise value as a multiple of latest twelve months (“LTM”) of earnings before interest, taxes, depreciation, and amortization (“EBITDA”).
Enterprise value means, generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company), plus the amount of debt outstanding, preferred stock andnon-controlling interests, and less the amount of cash and cash equivalents on its balance sheet. Enterprise values used in the selected public companies analysis were calculated using the closing price of the common shares of the selected companies as of April 28, 2020 and, with respect to the Company, Duff & Phelps selected a range of LTM EBITDA multiples of 9.0x to 10.0x.
The selected public companies, and corresponding financial data for the selected public companies were:
Director/Nominee | Age | Class | Audit | Compensation | Nominating and | ||||||
Leonard Fluxman* | 63 | A | |||||||||
Steven J. Heyer | 67 | A | ✓* | ✓ | |||||||
| 57 | C | |||||||||
| B | ✓ | |||||||||
| A | ✓ | |||||||||
| 55 | B | ✓* | ✓ | |||||||
| B | ✓ | ✓* | ||||||||
| C | ||||||||||
| C | ✓ | ✓ | ||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| |||||||||||
| ✓ |
Source: S&P Capital IQ, SEC Filings, Annual
* | Indicates chairperson. |
† | Indicates audit committee financial expert. |
Leadership Structure
Our Board of Directors is responsible for establishing and Interim Reportsmaintaining an effective leadership structure for the Company. Our Board of Directors has not mandated a particular leadership structure, and thus maintains the flexibility to determine on an individual basis whether the positions of Chief Executive Officer and Executive Chairman of the board (the “Chairman of the Board”) should be combined or separated. This flexibility allows our Board of Directors to organize its functions and conduct its business in a manner it deems most effective based on the current circumstances. As of March 31, 2021, Leonard Fluxman serves as Executive Chairman, Chief Executive Officer and Director. Together, Mr. Fluxman and Stephen Lazarus (our Chief Operating Officer and Chief Financial Officer) lead a senior management team with over 130 years of combined industry experience. Previously, Glenn Fusfield was the Chief Executive Officer and Leonard Fluxman served as the Executive Chairman. Steven J. Heyer is our designated Lead Independent Director.
The selected public companies analysis resulted in a range of enterprise valuesBoard believes that having Mr. Fluxman serve as both Chairman and Chief Executive Officer is the most effective leadership structure for the Company basedat this time, particularly with respect to managing the ongoing impact of COVID-19 on LTM EBITDAour business, operations, results of operations and financial condition, and the Company’s resumption of normalized operations as the pandemic subsides. Mr. Fluxman has over 30 years of February 29, 2020leadership and operations experience, including over 25 years of $55.9 million,experience in the consumer and consumer-related products and services industry. Mr. Fluxman served as Steiner Leisure’s Chief Executive Officer from January 2001 to March 2019. The Board believes that he is uniquely well positioned to lead our business, operations and strategy at this time.
The combination of $502.9 millionthe Chief Executive Officer and Chairman roles at this time enables consistent communication and coordination with our team members throughout the Company and with our Board of Directors, and effective and efficient implementation of our business strategies. The combination of the Chief Executive Officer and Chairman roles is balanced by our Lead Independent Director position, by the independence of all of our other directors, each of whom has significant experience in leadership roles at public companies and other large, complex organizations, and by the three principal committees of the Board, each of which consists solely of independent directors.
Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Members serve on these committees until their successors are duly elected and qualified or until their earlier resignation, removal or death. Our Board of Directors may establish other committees as it deems necessary or appropriate.
Our standing committee charters and code of ethics are posted on our website at www.onespaworld.com/investor-relations. Paper copies may be obtained upon request by writing to $558.7 million. Duff & Phelps adjustedus: One Spa World Holdings Limited c/o One Spa World LLC, 770 South Dixie Highway, Suite 200, Coral Gables, Florida, 33146, Attention: Inga A. Fyodorova, Secretary.
For information related to Steiner Leisure’s board and committee designation rights under the enterprise value rangeInvestment Agreement and the Governance Agreement, see “Certain Relationships and Related Party Transactions.”
Audit Committee
At least annually, our Audit Committee reviews and assesses its charter and its performance under the charter. In addition, our Audit Committee has, among others, the following authority and responsibilities:
Reviews the effectiveness and adequacy of our internal accounting controls structure and procedures and discusses such results with our independent auditors and management;
Considers the adequacy of internal accounting controls and procedures, the selection and recommendations of our independent auditors, the scope and results of annual audits, fees to be paid to our independent auditors, the annual audit plan and changes to the audit plan, and the performance of our independent auditors; and
At least quarterly, meets with management, internal auditors, and the independent auditor, in separate executive sessions, to review the Company’s financial statements and financial reports.
Our Audit Committee charter requires that each of the members of our Audit Committee is independent, as defined under SEC rules and the Nasdaq Listing Rules, and that each member is able to read and understand fundamental financial statements, including balance sheet, income statement, statement of equity and statement of cash flows. Additionally, at least one member of our Audit Committee will have past employment experience in finance or accounting, professional certification in accounting, or other comparable experience or background resulting in the individual being financially sophisticated, which may include being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, and at least one member of the Committee must be an audit committee financial expert. The authority and responsibilities of our Audit Committee are described in greater detail in our Audit Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Audit Committee consists of Mr. McLallen (chairperson), Mr. Powell and Mr. A. Heyer. Mr. McLallen qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and has employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background as required by the Nasdaq Listing Rules. Each of our Audit Committee members is “financially literate” as that term is defined by the Nasdaq Listing Rules and our Board of Directors has determined that each is independent pursuant to applicable SEC regulations and the Nasdaq Listing Rules. Our Audit Committee held eight meetings during the fiscal year ended December 31, 2020.
Compensation Committee
Our Compensation Committee of our Board of Directors has the responsibility and authority to supervise and review the affairs of the Company as they relate to the compensation and benefits of our executive officers and our Board of Directors. In carrying out these responsibilities, our Compensation Committee reviews all components of executive officer and director compensation for net debt,consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of our shareholders. Notwithstanding the foregoing, our Board of Directors, at the recommendation of our Compensation Committee, is solely responsible for determining the compensation of our Board of Directors. The responsibilities and activities of our Compensation Committee are described in greater detail in the Compensation Committee charter, available on our website at www.onespaworld.com/investor-relations.
In addition, our Compensation Committee has, among others, the following authority and responsibilities:
Periodically review and advise our Board of Directors concerning the Company’s overall compensation (including executive officer and director compensation) for consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of the Company’s shareholders, and will review and advise our Board of Directors concerning policies and plans, including a review of both regional and industry compensation practices and trends;
Review and recommend to our Board of Directors for approval the frequency with which the Company will conduct Say-on-Pay Votes, taking into account the results of the most recent shareholder advisory vote on frequency of Say-on-Pay Votes required by Section 14A of the Exchange Act, and review and approve the proposals regarding the Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to be included in the Company’s proxy statement;
Monitor and assess risks associated with the Company’s compensation policies and consult with management regarding such risks;
Review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”) and the related executive compensation information, and determine whether to recommend the CD&A and related executive compensation information for inclusion in the Company’s proxy statement for the annual meeting of shareholders, in accordance with applicable rules and regulations of the SEC.
Make recommendations to our Board of Directors regarding the establishment and terms of the Company’s incentive compensation plans and administer such plans;
Determine share ownership guidelines for the Chief Executive Officer and othernon-operating assets executive officers of the Company and monitor compliance with such guidelines;
Obtain advice or assistance from compensation consultants, independent legal counsel, accounting, or other advisors, as appropriate to perform its duties;
Delegate all or a portion of its duties and responsibilities to one or more subcommittees of our Compensation Committee comprised of at least two members of our Compensation Committee;
Report to our Board of Directors on our Compensation Committee’s activities on a regular basis; and
Perform such other activities consistent with the impactcharter, our Articles, and governing law as our Compensation Committee deems necessary or as our Board of outstanding options and other equity securitiesDirectors may direct.
Our Compensation Committee meets as often as it deems necessary to fulfill its responsibilities, but not less frequently than four times each year. Our Compensation Committee may request that any employee of the Company attend any of its meetings or meet with any Compensation Committee member or any consultant or advisor to arrivethe Compensation Committee. Our Compensation Committee will meet at least annually with the aggregate equity valueCompany’s Chief Executive Officer and such other senior executives of the Company as the Committee deems
appropriate; provided, however, that the chief executive officer may not be present during deliberations or voting regarding his or her compensation. They will also meet periodically in executive session without the presence of management.
Our Compensation Committee charter requires that each of the members of our Compensation Committee is independent and satisfies the requirements of Rule 10C-1 under the Exchange Act, and the Nasdaq Listing Rules. In addition, no director may serve on our Compensation Committee unless he or she is a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. A director cannot serve on our Compensation Committee if any executive officer of the Company serves on the Board of Directors of an entity that employs such director as an executive officer.
Our Compensation Committee consists of Mr. Steven Heyer (chairperson), Mr. Powell, Mr. Magliacano and Mr. Stiefler. All members of our Compensation Committee are independent as defined by the applicable standards of the SEC and the Nasdaq Stock Market. Each member of our Compensation Committee is an “outside director” as defined in Section 162(m) of the Code and is a “non-employee” director as defined under Section 16 of the Exchange Act. Our Compensation Committee held four meetings during the fiscal year ended December 31, 2020.
Nominating and Governance Committee
Our Nominating and Governance Committee is responsible for (i) identifying individuals qualified to become members of our Board of Directors; (ii) selecting, or recommending to our Board of Directors, director nominees for each election of directors; (iii) developing and recommending to our Board of Directors criteria for selecting qualified director candidates; (iv) considering committee member qualifications, appointment and removal; (v) recommending a code of conduct applicable to the Company; and (vi) providing oversight in the evaluation of our Board of Directors and each committee. The responsibilities and activities of our Nominating and Governance Committee are described in greater detail in the Nominating and Governance Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Nominating and Governance Committee meets as often as it deems necessary or appropriate to fulfill its responsibilities, and at least once during each fiscal year. Our Nominating and Governance Committee may meet with management or individual directors at such time as it deems appropriate to discuss any matters.
Our Nominating and Governance Committee consists of Mr. Stiefler (chairperson), Mr. McLallen, Ms. Banikarim, and Mr. S. Heyer. All members of our Nominating and Governance Committee are independent as defined by the applicable standards of the SEC and the Nasdaq Stock Market. Our Nominating and Governance Committee held three meetings during the fiscal year ended December 31, 2020.
Nominating Functions
To fulfill its responsibilities and duties in connection with its nominating functions, our Nominating and Governance Committee, among other things:
Determines criteria for selecting new directors, including desired board skills, experience and attributes, and identifies and actively seeks individuals qualified to become directors;
Evaluates and selects, or recommends to our Board of Directors, nominees for each election of directors, except that if the Company is at any time legally required by contract or otherwise to provide any third party with the ability to nominate a director, our Nominating and Governance Committee need not evaluate or propose such nomination, unless required by contract or requested by our Board of Directors;
Develops and recommends to our Board of Directors for approval standards for determining whether a director is independent;
Considers any nominations of director candidates validly made by the Company’s shareholders, reviews shareholder proposals and recommends Board responses, oversees engagement with shareholders and proxy advisory firms, and reviews proxy advisory firm policies and voting recommendations;
Reviews and makes recommendations to our Board concerning qualifications, appointment, and removal of committee members; and
Reviews our leadership structure and recommends changes to our Board of Directors as appropriate.
Corporate Governance
To fulfill its responsibilities and duties in connection with its corporate governance functions, our Nominating and Governance Committee, among other things:
Develops, proposes changes to our Board of Directors, or recommends for approval, and reviews on an ongoing basis the adequacy of our Articles, and corporate governance guidelines applicable to the Company, including principles for director qualification standards, and diversity and sustainability and other corporate governance policies;
Reviews the code of ethics periodically and recommends changes and adopts procedures for monitoring and enforcing compliance with such code of ethics;
Reviews, at least annually, the Company’s compliance with the Nasdaq corporate governance listing requirements, and reports to our Board of Directors regarding the same;
Reviews and discusses with management disclosure of the Company’s corporate governance practices, including information regarding the operations of the Committee and other committees, director independence and the director nominations process, and recommends that this disclosure be included in the Company’s proxy statement or annual report on Form 10-K, as applicable;
Reviews emerging corporate governance trends and practices, and recommends changes to the Company’s corporate governance practices to our Board of Directors;
Assists our Board of Directors in developing evaluation criteria, and in the evaluation of the performance of our Board of Directors and committees; and
Performs any other activities consistent with the charter, our Articles, and governing law, as the Nominating and Governance Committee or our Board of Directors deems necessary or appropriate.
Board Diversity
Our Nominating and Governance Committee is committed to seeking members from various professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for the highest personal and professional integrity. Our Nominating and Governance Committee seeks to ensure that qualified director candidates with a diversity of gender, ethnicity and tenure are included in each pool of candidates from which Board of Director nominees are chosen, and reviews the Company’s policies, programs and initiatives for employee diversity and inclusion, and provides guidance to our Board of Directors on diversity matters.
Shareholder Nominations
Our Nominating and Governance Committee considers and evaluates any candidate who is properly recommended by shareholders or identified by members of our Board of Directors.
A shareholder’s written nomination notice to the Secretary of the Company must set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, and the reasons for conducting such business at such annual meeting, (b) the name and address, as they appear on the Company’s books, of the shareholder proposing such business, (c) the class and number of shares of the Company which impliedare beneficially owned by the shareholder, (d) the names of any other beneficial owners of such shares, (e) any material interest of the shareholder in such business and (f) the names and addresses of other shareholders known by the shareholder proposing such business to support such proposal and the class and numbers of shares beneficially owned by such shareholders.
Director Independence
Our Board of Directors determines the independence of our directors by applying the independence principles and standards established by the SEC and the Nasdaq Listing Rules.
The Nasdaq Listing Rules require listed companies to have a rangeboard of per share equity valuedirectors with at least a majority of $3.89 per share to $4.62 per share.
Other Matters
Duff & Phelps“Independent Directors” (as such term is a premier global valuation and corporate finance advisor with expertise in complex valuation, dispute and legal management consulting, M&A, restructuring, and compliance and regulatory consulting. Duff & Phelps reports that, since 2005, it has rendered over 900 fairness opinions in transactions aggregating more than $370 billion and is regularly engageddefined in the valuationNasdaq Listing Rules). Under the Nasdaq Listing Rules, in order for a director to be deemed independent, the board of businessesdirectors must determine that the individual does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities.
In accordance with the Nasdaq Listing Rules, our Board of Directors will annually determine each director’s independence. We will not consider a director independent unless our Board of Directors has determined that he or she has no material relationship with us. We will monitor the relationships of our directors and securitiesofficers through a questionnaire each director will complete no less frequently than annually and update periodically as information provided in the preparationmost recent questionnaire changes.
As part of fairness opinions in connectionits analysis, our Board of Directors affirmatively determined that Messrs. Hasiba, McLallen, Magliacano, Stiefler, A. Heyer, S. Heyer and Powell and Ms. Banikarim are independent. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and the Company with mergers, acquisitionsregard to each director’s business and other strategic transactions.outside activities as they may relate to the Company and our management team.
Board of Directors Meetings; Executive Sessions; Annual Shareholders’ Meetings
The Chairman of the Board presides over each Board of Directors meeting. Our Board of Directors meets at least quarterly to assess corporate governance matters and the effectiveness of our current management and leadership structure. An executive session of independent members of our Board of Directors is held at least annually, and any director may call for an executive session at any Board of Directors’ meeting.
Our Board of Directors may convene special meetings of the shareholders of the Company at such times and in such manner and places within or outside The Bahamas, or by means of remote communication, as the directors consider necessary or desirable.
During the fiscal year ended December 31, 2020, our Board of Directors held 14 regular meetings and no special meetings. All of our directors attended at least 75% of the meetings of the Board and of the committees on which they served during such fiscal year. During 2020, we held 11 special committee meetings focusing on the Investment Agreement and 2020 Private Placement, each as defined herein. In consideration of the health and safety of our directors, executive officers and other employees, our Board and Committees meetings were conducted virtually in 2020, due to the COVID-19 pandemic. We have not established a policy with respect to director attendance at our annual meeting of shareholders, however, all of our directors and nominees are encouraged to attend our annual meetings. All of our directors attended the 2020 annual meeting of shareholders, which was held virtually.
Evaluation of Board and Committee Performance
The Nominating and Governance Committee assists our Board of Directors in developing criteria for the evaluation, and in evaluating, the performance of our Board of Directors and committee performance.
Duff & Phelps was retainedThe Nominating and Governance Committee will evaluate the standing committees, including each member of such committee. The committee will assess and recommend to our Board of Directors committee composition and any necessary changes to committee charters.
The Nominating and Governance Committee will periodically assess and communicate with our Board of Directors concerning the appropriate criteria for nominating and appointing directors, including the size and composition of our board of directors, corporate governance policies, Nasdaq Capital Market listing standards, SEC laws, and any other applicable rules and regulations.
Risk Oversight
Our Board of Directors fulfills its oversight role through the operations of, and discussions with, its standing committees. Our Board of Directors oversees our strategy and governance of environmental, social and governance (“ESG”) matters. Our Audit Committee, at least annually, reports and discusses the guidelines and policies with respect to risk assessment and risk management of the Company’s risk exposure with our Board of Directors. Our Audit Committee reviews with the Chief Executive Officer and Chief Financial Officer of the Company any report on significant deficiencies in the design or operation of the internal controls that could adversely affect the Company’s ability to record, process, summarize or report financial data, any material weaknesses in the internal controls identified to the auditors, and any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls. Additionally, our Audit Committee discusses major financial risk exposures and cybersecurity risks and the steps management has taken to monitor and control such exposures.
Our Audit Committee also establishes procedures for the receipt, investigation, retention and treatment of complaints received by the Company to provide an opinion toregarding accounting, internal accounting controls or auditing matters, and the Special Committee of the Boardconfidential, anonymous submission by employees of the Company (solely in their capacityof concerns regarding questionable accounting or auditing matters. Our Audit Committee also adopts, as members of the Board) as to the fairness, from a financial point of view, of the Proposed Transaction to the Company. Pursuant to the terms of its engagement, Duff & Phelps became entitled to a fee of $450,000 for its services, $100,000 of which was previously paid in connection with its engagement and the remainder of which became payable upon Duff & Phelps informing the Special Committee that it was prepared to deliver its opinion. No portion of Duff & Phelps’ fee is contingent upon either the conclusion expressed in its opinionnecessary, appropriate remedial measures or whether the Proposed Transaction is successfully consummated. Furthermore, Duff & Phelps is entitled to be paid additional fees at Duff & Phelps’ standard hourly rates for certain time incurred should Duff & Phelps be called upon to support its findings subsequent to the delivery of its opinion. The Company has also agreed to reimburse Duff & Phelps for itsout-of-pocket expenses and reasonable fees and expenses of counsel, consultants and advisors retained by Duff & Phelps in connection with the engagement. The Company has also agreed to indemnify Duff & Phelps for certain liabilities arising out of its engagement.
The issuance of Duff & Phelps’ opinion was approved by its fairness review committee.
Other than this engagement, during the two years preceding the date its opinion was delivered, Duff & Phelps has provided corporate finance advisory services to affiliates of principals in the Proposed Transaction for which Duff & Phelps received fees, in the aggregate, of approximately $1,500,000. For these prior engagements, Duff & Phelps also received customary expense reimbursement and indemnification.
Risks of Shareholder Non-Approval
If the shareholders do not approve both Proposals 3 and 4, the Company will not be able to proceed with the Private Placement, and the Investment Agreement will likely be terminated unless additional votes in favor of the proposals are obtained following an adjournment of the Annual Meeting and the solicitation of additional proxies or, in the case of Proposal 4, the closing condition in the Investment Agreement related to shareholder approval of the Amended Articles is waived. If the Private Placement is not consummated, the Company will be required to seek alternative sources of financing in order to enhance its liquidity position.
The amount of funding that the Company seeks and the timing of such fundraising efforts will continue to depend on the extent to which the Company is able to restart operations in light of the ongoing COVID-19 pandemic. Adequate funds may not be available when needed, and if the Company does not receive sufficient capital, the Company may be required to further reduce its limited operations and may have insufficient funds to pay its existing accounts payable.Furthermore, there can be no guarantee that the Company will be able to effect another long-term financing option on terms as favorable as the Private Placement.
The Investment Agreement contains non-solicitation provisions that prohibit us from, among other things, directly or indirectly, initiating, soliciting or encouraging, or facilitating, any offer or proposal from any person or group which constitutes, or could reasonably be expected to result in, an alternative transaction or an inquiryactions with respect to such a transaction. In addition, the Company agreedcomplaints or concerns and review and investigates conduct alleged by our Board of Directors to certain covenantsbe in supportviolation of the transaction, including thatCompany’s code of ethics, and adopts, as necessary or appropriate, remedial, disciplinary, or other measures with respect to such conduct.
With respect to the material adverse impact of COVID-19 on our business, operations, results of operations and financial condition during 2020 and ongoing, the Board of Directors recommend thatDirectors: received frequent updates and briefings from our Executive Chairman, Chief Executive Officer, Chief Financial Officer and other senior executives and members of our management team regarding the Company’s shareholders adoptoperations, including the health and approvewell-being of our employees and the status of our employee repatriation efforts globally; discussed and assessed management’s strategies to minimize and mitigate business, operational and financial risks; and monitored (and continues to monitor) developments and risk factors impacting the Company caused by COVID-19.
Communications with our Board of Directors
Shareholders and interested parties may contact any member (or all members) of our Board of Directors (including, without limitation, the non-management directors as a group), any committee of our Board of Directors or the chair of any such committee by mail. All such correspondence may be sent to our Board of Directors, any committee or any individual director, c/o One Spa World LLC, 770 South Dixie Highway, Suite 200, Coral Gables, Florida, 33146, Attention: Inga A. Fyodorova, Secretary.
Our Board of Directors has adopted a code of ethics that applies to our executive officers, directors, employees and agents. A copy of the code of ethics will be provided without charge upon request from us and is available on our corporate website at onespaworld.com/investor-relations. The information on our website is not part of this proxy statement. We intend to disclose any amendments to or waivers of certain provisions of our code of ethics in a Current Report on Form 8-K.
Insider Trading Policy—Prohibition on Hedging and Pledging
Our insider trading policy prohibits our and our subsidiaries’ directors, officers and employees from engaging in hedging or monetization transactions such as selling “short,” buying or selling puts or calls or other derivatives on OneSpaWorld securities, or otherwise entering into any hedging arrangements involving our securities. Additionally, our directors, officers and other employees are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Sustainability and Social Responsibility
OneSpaWorld strives for a better tomorrow by effecting positive change in the lives of our guests, employees and the inhabitants of the destinations we visit and the locations where we operate and call home. Sustainability is at the core of our commitment to the world, and through our advocacy and support of a diverse range of charitable organizations and activities, we strive to inspire others to make the world a better place. We currently have new environmental directives that aim to ensure that we are more mindful of our environment and the next generation. Such directives include, among others, removing more than 500,000 plastic spatulas from global production, saving approximately 450 kilograms of plastic waste to landfill and removing 1.2 million cardboard liners where possible, saving approximately 9,070 kilograms in waste each year, reducing paper waste and protecting our forests.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation arrangements with our named executive officers and directors are described elsewhere in this proxy statement.
Investment Agreement
On April 30, 2020, we entered into an Investment Agreement and approve the transactions contemplated by the Investment Agreement and other related agreements. The Co-Investors also agreed to vote in support of the transaction.
In the event that the Investment Agreement is terminated, in certain circumstances, including in the event we fail to obtain shareholder approval of Proposals 3 and 4, we must reimburse Steiner Leisure and its affiliates for up to $1.25 million in fees and expenses incurred in connection(the “Investment Agreement”) with the Private Placement.
In addition, the Credit Agreement Amendments (as defined below) will be deemed to be ineffective if, among other reasons, (i) the Company has not received cash proceeds from an investment by Steiner Leisure and certain other investors, in an aggregate amountincluding members of not less than $75 million (less transaction fees, costsour management and expensesBoard of
Directors (collectively, the “Co-Investors” and, together with Steiner Leisure, and its affiliates required to be paid or reimbursed by the Company pursuant to the Investment Agreement) by July 15, 2020, which may be extended to July 31, 2020 under certain circumstances, (ii)“Investors”). Pursuant the Investment Agreement, has been terminated by the Company or any other party thereto or (iii) the Investment Agreement shall have been amended, amended and restated, supplemented or otherwise modifiedwe completed a private placement financing transaction on June 12, 2020 (the “2020 Private Placement”) in a manner the effect of which, shall be to reduce the minimum investment amount to an amount less than $65 million. In the event that the Private Placement does not occur and, as a result, the Credit Agreement Amendments are not effective, the Company may not be in compliance with certain representations, warranties and affirmative covenants under its existing credit agreements, which would, absent an agreement from the Company’s existing lenders, result in a default under these existing credit agreements and the potential acceleration of approximately $247.5 million of gross debt outstanding as of March 19, 2020.
Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635
Background and Overview
Please refer to “Background of the Private Placement” and “The Board’s Reasons for Recommending Approval of the Private Placement” above for information with respect to the background and overview of, and the reasons for, the Private Placement.
Description of the Investment Agreement
Overview
The Investment Agreement provides that, prior to the closing of the Private Placement, and assuming shareholder approval of Proposals 3 and 4, the Company will authorize a new class ofNon-Voting Common Shares by adopting the Amended Articles. At closing of the Private Placement, pursuant to the Investment Agreement, the Company will, among other things, (i) issuewe issued to Steiner Leisure an aggregate of (x) approximately 15.0 millionNon-Votingnon-voting Common Sharescommon shares and (y) warrants to purchase approximately 4.0 millionNon-Votingnon-voting Common Sharescommon shares at an exercise price of $5.75 per share, and (ii) issuewe issued to theCo-Investors an aggregate of (x) approximately 3.7 million voting common shares of the Voting Common Shares and (y) warrants to purchase approximately 1.0 million Voting Common Sharesvoting common shares at an exercise price of $5.75 per share, for an aggregate purchase price of $75.0 million.
In addition, the Investment Agreement provides that, in consideration for, among other things, Steiner Leisure providing a “back stop” for the Private Placement and Steiner Leisure’s agreement to voting limitations in respect of certain of the securities issuable to it, the Company will issue and deliver an aggregate of 5.0 million Common Shares to Steiner Leisure at the closing of the Private Placement (collectively, the “Additional Shares”), which will satisfy in full the Company’s obligation to issue 5.0 million “deferred” Common Shares to Steiner Leisure pursuant to Section 2.6 of the Business Combination Agreement, dated as of November 1, 2018 (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the “BCA”).
Conditions to the Closing of the Private Placement
The obligations of the Company and the Investors to close the Private Placement are subject to the satisfaction or waiver (to the extent permitted by law) by the Company and amajority-in-interest of the Investors (based on the number of Company securities to be issued to such Investors) (the “Majority of the Investors”) at or prior to the closing of the Private Placement of each of the following conditions, among other customary conditions:
the Common Shares and the Common Shares issuable upon exercise of the warrants have been approved for listing on Nasdaq, subject only to official notice of issuance;
shareholder approval for Proposal 3 and Proposal 4 has been obtained; and
the waiting periods applicable to the consummation of the transactions contemplated by the Investment Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) have expired or been terminated.
The obligation of the Company to close the Private Placement is subject to the satisfaction or waiver (to the extent permitted by law) by the Company at or prior to the closing of the Private Placement of each of the following conditions, among other customary conditions:
the accuracy of the representations and warranties made by the Investors in the Investment Agreement, except for any inaccuracies in such representations and warranties that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of the Investors to close the Private Placement; and
each Investor has performed in all material respects all of its obligations under the Investment Agreement required to be performed by such Investor at or prior to the closing of the Private Placement.
The obligations of the Investors to close the Private Placement are subject to the satisfaction or waiver (to the extent permitted by law) by the Majority of the Investors at or prior to the closing of the Private Placement of each of the following conditions, among other customary conditions:
the accuracy in all material respects of certain “fundamental” representations and warranties made by the Company in the Investment Agreement;
the accuracy of all other representations and warranties made by the Company in the Investment Agreement, except for any inaccuracies in such representations and warranties that have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company;
the Company has performed in all material respects all of its obligations under the Investment Agreement required to be performed by it at or prior to the closing of the Private Placement; and
the Amended Articles are in full force and effect and have not been further amended or modified or otherwise been rescinded.
The obligation of Steiner Leisure to close the Private Placement as between the Company and Steiner Leisure is subject to the satisfaction or waiver (to the extent permitted by law) by Steiner Leisure at or prior to the closing of the Private Placement of each of the following conditions, among other customary conditions:
the Board of Directors and any committee thereof is comprised of individuals determined pursuant to, and is consistent in all respects with the requirements of, the Investment Agreement immediately following the closing of the Private Placement with respect to Steiner Leisure;
the Company has We paid or reimbursed Steiner Leisure and its affiliates for their costs, fees and expenses incurred in connection with the Private Placement (subject to a cap of $1.25 million) substantially concurrently with the closing of the Private Placement with respect to Steiner Leisure; and
the amendments to the Company’s first-lien and second-lien credit agreements are in full force and effect and have not been repudiated, rescinded, modified or terminated by the parties thereto.
The obligation of Neuberger Berman Alternative Funds, Neuberger Berman Long Short Fund and NB All Cap Alpha Master Ltd. (collectively, “Neuberger Berman”) to close the Private Placement as between the Company and Neuberger Berman is subject to the satisfaction or waiver by Neuberger Berman at or prior to the closing of the Private Placement of the following condition: the closing of the purchase by Steiner Leisure of no less than $50approximately $6.4 million of Common Shares and warrants prior to or simultaneously with the purchase by Neuberger Berman.
Assuming the applicable conditions to closing have been satisfied or waived, the closingoffering-related expenses, resulting in total net proceeds of the Private Placement with respect to Steiner Leisure will occur even if aCo-Investor does not or is unable to close its portion of the Private Placement.
None of the parties to the Investment Agreement may rely on the failure of any condition set forth above to be satisfied if such failure was proximately caused by such party’s failure to use reasonable best efforts to cause the applicable closing of the Private Placement to occur or a breach of the Investment Agreement.
Termination
The Investment Agreement may be terminated at any time prior to the closing of the Private Placement by mutual written consent of the Company and the Majority of the Investors.
The Investment Agreement may also be terminated by either the Company or the Majority of the Investors in certain customary circumstances, including if:
the closing of the Private Placement has not occurred on or prior to July 15, 2020 (as it may be extended, the “Outside Date”); provided, that if at the initial Outside Date, the Company shareholders’
|
approval of Proposal 3 and Proposal 4 by the Company’s shareholders has not been obtained upon a vote taken at the applicable meeting of the Company’s shareholders or any adjournments or postponements thereof; or
there has been a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the other party that would cause the other party to fail to satisfy any condition to the closing of the Private Placement related to the accuracy of its representations and warranties or the performance of its covenants and agreements, subject to the limitations set forth in the Investment Agreement.
The Investment Agreement may also be terminated by the Majority of the Investors if:
the Board of Directors has (i) failed to recommend the adoption and approval of Proposal 3 and Proposal 4 in the Company’s proxy statement as contemplated by the Investment Agreement or the Board of Directors has withdrawn or modified such recommendation in a manner adverse to the Investors, (ii) recommended to the Company’s shareholders an alternative transaction to the Private Placement, or (iii) otherwise changed or modified its recommendation that the Company’s shareholders adopt and approve Proposal 3 and Proposal 4; or
the Company has breached any of itsnon-solicitation obligations in any material respect.
Neuberger Berman may terminate the Investment Agreement with respect to its purchase thereunder in the event of a termination of the Investment Agreement by Steiner Leisure.
Assuming the applicable conditions to closing have been satisfied or waived, the termination of the Investment Agreement by anyCo-Investor or by the Company with respect to anyCo-Investor will not affect the ability of the Company and Steiner Leisure to close Steiner Leisure’s portion of the Private Placement. Upon a termination of the Investment Agreement with respect to anyCo-Investor or any failure by theCo-Investor to close its portion of the Private Placement, Steiner Leisure may elect to acquire the Common Shares (in the form ofNon-Voting Common Shares) and warrants to acquire Common Shares (in the form of Non-Voting Common Shares) that suchCo-Investor would otherwise have acquired.
Upon a termination of the Investment Agreement in accordance with its terms, and subject to the limitations set forth therein, (i) neither the Company nor the Investors will have any further liability or obligation with respect to the Investment Agreement, except for liability for fraud or any material and willful breach by any party and (ii) the Company may be required to reimburse the fees, costs and expenses of Steiner Leisure and its affiliates incurred in connection with the Private Placement (subject to a cap of $1.25 million) in certain circumstances.
No Solicitation
The Investment Agreement containsnon-solicitation provisions that prohibit the Company and its representatives from, among other things, directly or indirectly initiating, soliciting or encouraging, or facilitating, any offer or proposal from any person or group which constitutes, or could reasonably be expected to result in, an alternative transaction to the Private Placement or an inquiry with respect to such a transaction. In addition, the Company has agreed to certain covenants in support of the Private Placement, including that the Board of Directors recommend that the Company’s shareholders adopt and approve the Investment Agreement and approve the transactions contemplated by the Investment Agreement and other related agreements.
Transaction Support
At the Company shareholders’ meeting to approve Proposal 3 and Proposal 4, eachCo-Investor that beneficially owns any Common Shares as of the date of the Investment Agreement (such Common Shares, collectively, the “Covered Shares”) has agreed to, among other things, (i) appear at such meeting for quorum purposes, (ii) vote all Covered Shares in favor of Proposal 3 and Proposal 4 and (iii) vote all Covered Shares that would oppose or impede the approval of Proposal 3 and Proposal 4.
EachCo-Investor has also agreed not to deposit the Covered Shares into a voting trust or enter into any voting or similar agreement with respect to the Covered Shares.approximately $68.6 million.
Steiner Leisure Director Designation Right
Under the terms of the Investment Agreement, Steiner Leisure will havewas granted the right to designate and appoint three directors to the Company’s board of directors at the closing of the Private Placement, with two of these directors being Class C directors and the other director being a Class B director. One of the Class C director seats willis not be subjectto re-designation by Steiner Steiner Leisure at the expiration of the initial term thereof under the Governance Agreement.
Representations and Warranties
In the Investment Agreement, each of the Company and the Investors made certain customary and limited representations and warranties. Certain “fundamental” representations and warranties of the Company and the Investors under the Investment Agreement survive until the first anniversary of the closing of the Private Placement.
Covenants
The Company has agreed to certain customary covenants in the Investment Agreement restricting the conduct of its business between the date of the Investment Agreement and the earlier of the closing of the Private Placement and the termination of the Investment Agreement in accordance with its terms.
Pursuant to the Investment Agreement, the Company applied to cause the Common Shares to be issued in connection with the Private Placement to be approved for listing on Nasdaq, subject only to official notice of issuance.
In addition, pursuant to the Investment Agreement, the Company and the Investors have agreed to certain other customary covenants, including, among other things, (i) preparing and filing the proxy statement with respect to and seeking shareholder approval of the Private Placement, (ii) using their respective reasonable best efforts to consummate the Private Placement as promptly as practicable and (iii) submitting the required filings under the HSR Act to the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.
Transfer Restrictions
Following the closing of the Private Placement, the Investors (other than Neuberger Berman) mayBerman Group LLC) are not able to transfer the purchased Common Sharescommon shares and warrants until the twelve-month anniversary of such closing, subject to customary exceptions (e.g., transfers to affiliates).
Description ofNon-Voting Common Shares
See Proposal 4 for a description of the rights, preferences and privileges of theNon-Voting Common Shares.
Description of Warrants
The warrants issuable pursuant to the Investment Agreement will expire on the earlier of (i) the fifth anniversary of the closing of the Private Placement or (ii) the Redemption Date (as defined below). The warrants will be
immediately exercisable by the holder thereof upon payment of the purchase price; provided, however, that the holder may exercise such warrants on a “cashless” basis, in accordance with a specified formula. In addition, the Company may, at any time prior to their expiration, elect to redeem not less than all of such then-outstanding warrants at a price of $0.01 per warrant, provided that the last sales price of the Common Shares reported has been at least $14.50 per share (subject to adjustment in accordance with certain specified events), on each of twenty trading days within the thirty-trading day period ending on the third business day prior to the date on which notice of the redemption is given (the “Redemption Date”), and provided that the Common Shares issuable upon exercise of such warrants have been registered, qualified or are exempt from registration or qualification under the Securities Act of 1933, as amended (the “Securities Act”) and under the securities laws of the state of residence of the registered holder of the warrant. The warrants to be issued to Steiner Leisure pursuant to the Private Placement will initially be exercisable solely forNon-Voting Common Shares.
Governance Agreement
Designation RightsAudit Committee
Contingent upon shareholder approvalAt least annually, our Audit Committee reviews and assesses its charter and its performance under the charter. In addition, our Audit Committee has, among others, the following authority and responsibilities:
Reviews the effectiveness and adequacy of Proposals 3our internal accounting controls structure and 4,procedures and discusses such results with our independent auditors and management;
Considers the adequacy of internal accounting controls and procedures, the selection and recommendations of our independent auditors, the scope and results of annual audits, fees to be paid to our independent auditors, the annual audit plan and changes to the audit plan, and the performance of our independent auditors; and
At least quarterly, meets with management, internal auditors, and the independent auditor, in connectionseparate executive sessions, to review the Company’s financial statements and financial reports.
Our Audit Committee charter requires that each of the members of our Audit Committee is independent, as defined under SEC rules and the Nasdaq Listing Rules, and that each member is able to read and understand fundamental financial statements, including balance sheet, income statement, statement of equity and statement of cash flows. Additionally, at least one member of our Audit Committee will have past employment experience in finance or accounting, professional certification in accounting, or other comparable experience or background resulting in the individual being financially sophisticated, which may include being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, and at least one member of the Committee must be an audit committee financial expert. The authority and responsibilities of our Audit Committee are described in greater detail in our Audit Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Audit Committee consists of Mr. McLallen (chairperson), Mr. Powell and Mr. A. Heyer. Mr. McLallen qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and has employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background as required by the Nasdaq Listing Rules. Each of our Audit Committee members is “financially literate” as that term is defined by the Nasdaq Listing Rules and our Board of Directors has determined that each is independent pursuant to applicable SEC regulations and the Nasdaq Listing Rules. Our Audit Committee held eight meetings during the fiscal year ended December 31, 2020.
Compensation Committee
Our Compensation Committee of our Board of Directors has the responsibility and authority to supervise and review the affairs of the Company as they relate to the compensation and benefits of our executive officers and our Board of Directors. In carrying out these responsibilities, our Compensation Committee reviews all components of executive officer and director compensation for consistency with the closingCompany’s compensation philosophy, as in effect from time to time, and with the interests of our shareholders. Notwithstanding the foregoing, our Board of Directors, at the recommendation of our Compensation Committee, is solely responsible for determining the compensation of our Board of Directors. The responsibilities and activities of our Compensation Committee are described in greater detail in the Compensation Committee charter, available on our website at www.onespaworld.com/investor-relations.
In addition, our Compensation Committee has, among others, the following authority and responsibilities:
Periodically review and advise our Board of Directors concerning the Company’s overall compensation (including executive officer and director compensation) for consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of the Private Placement,Company’s shareholders, and will review and advise our Board of Directors concerning policies and plans, including a review of both regional and industry compensation practices and trends;
Review and recommend to our Board of Directors for approval the frequency with which the Company Steiner Leisurewill conduct Say-on-Pay Votes, taking into account the results of the most recent shareholder advisory vote on frequency of Say-on-Pay Votes required by Section 14A of the Exchange Act, and solelyreview and approve the proposals regarding the Say-on-Pay Vote and the frequency of the Say-on-Pay Vote to be included in the Company’s proxy statement;
Monitor and assess risks associated with the Company’s compensation policies and consult with management regarding such risks;
Review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”) and the related executive compensation information, and determine whether to recommend the CD&A and related executive compensation information for inclusion in the Company’s proxy statement for the purposeannual meeting of Section 18 thereof, HYAC will enter into the Governance Agreement, pursuant to which Steiner Leisureshareholders, in accordance with applicable rules and certain of its affiliates will be granted certain consent, director designation, and other rights with respect to the Company described in this subsection. Subject to, and conditioned upon, the closingregulations of the Private Placement,SEC.
Make recommendations to our Board of Directors regarding the Governance Agreement will supersede the Director Designation Agreement, dated as of November 1, 2018, byestablishment and among the Company, Steiner Leisure and HYAC.
Under the terms of the Governance Agreement, amongCompany’s incentive compensation plans and administer such plans;
Determine share ownership guidelines for the Chief Executive Officer and other things, Steiner Leisure will have the right to designate and appoint (a) two directors after the closingexecutive officers of the Private Placement (three directors until the Company’s 2022 annual meetingCompany and monitor compliance with such guidelines;
Obtain advice or assistance from compensation consultants, independent legal counsel, accounting, or other advisors, as appropriate to perform its duties;
Delegate all or a portion of shareholders) so long as Steiner Leisureits duties and its affiliates ownresponsibilities to one or more subcommittees of our Compensation Committee comprised of at least 15%two members of our Compensation Committee;
Report to our Board of Directors on our Compensation Committee’s activities on a regular basis; and
Perform such other activities consistent with the charter, our Articles, and governing law as our Compensation Committee deems necessary or as our Board of Directors may direct.
Our Compensation Committee meets as often as it deems necessary to fulfill its responsibilities, but not less frequently than four times each year. Our Compensation Committee may request that any employee of the issued and outstanding Common Shares and (b) one director after the closingCompany attend any of the Private Placement so long as Steiner Leisure and its affiliates own at least 5% of the issued and outstanding Common Shares.
So long as Steiner Leisure and its affiliates own at least 15% of the issued and outstanding Common Shares, (a) the directors designed by Steiner Leisure will have proportionate representation on each committee of the Board (rounded upmeetings or meet with any Compensation Committee member or any consultant or advisor to the nearest whole number of directors, unless such rounding would result in Steiner Leisure directors representing a majority), subject to applicable legal and stock exchange requirements, and (b) Steiner Leisure will have the right to appoint anon-voting observer to all committees for which none of the Steiner Leisure directors are members.
The following individuals are Steiner’s initial director designees pursuant to its designation rights under the Investment Agreement (for more information regarding Steiner Leisure’s board designation and appointment rights upon the closing of the Private Placement, see “Steiner Leisure Director Designation Rights” above for more information).
Class B Initial Steiner Designee:Marc Magliacano will be the initial Class B director designee by Steiner Leisure and will serve as a member of the Compensation Committee. For more informationOur Compensation Committee will meet at least annually with the Company’s Chief Executive Officer and such other senior executives of the Company as the Committee deems
appropriate; provided, however, that the chief executive officer may not be present during deliberations or voting regarding his or her compensation. They will also meet periodically in executive session without the presence of management.
Our Compensation Committee charter requires that each of the members of our Compensation Committee is independent and satisfies the requirements of Rule 10C-1 under the Exchange Act, and the Nasdaq Listing Rules. In addition, no director may serve on our Compensation Committee unless he or she is a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. A director cannot serve on our Compensation Committee if any executive officer of the Company serves on the Board of Directors of an entity that employs such director as an executive officer.
Our Compensation Committee consists of Mr. Steven Heyer (chairperson), Mr. Powell, Mr. Magliacano see “Proposal 1: Electionand Mr. Stiefler. All members of Directors—Our Class B Directors.”
Class C Initial Steiner Designee:Adam Hasiba will beour Compensation Committee are independent as defined by the initial Class C director designee by Steiner Leisureapplicable standards of the SEC and will serve as athe Nasdaq Stock Market. Each member of our Compensation Committee is an “outside director” as defined in Section 162(m) of the Code and is a “non-employee” director as defined under Section 16 of the Exchange Act. Our Compensation Committee held four meetings during the fiscal year ended December 31, 2020.
Nominating and Governance Committee
Our Nominating and Governance Committee is responsible for (i) identifying individuals qualified to become members of our Board of Directors; (ii) selecting, or recommending to our Board of Directors, director nominees for each election of directors; (iii) developing and recommending to our Board of Directors criteria for selecting qualified director candidates; (iv) considering committee member qualifications, appointment and removal; (v) recommending a code of conduct applicable to the Company; and (vi) providing oversight in the evaluation of our Board of Directors and each committee. The responsibilities and activities of our Nominating and Governance Committee are described in greater detail in the Nominating and Governance Committee.Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Nominating and Governance Committee meets as often as it deems necessary or appropriate to fulfill its responsibilities, and at least once during each fiscal year. Our Nominating and Governance Committee may meet with management or individual directors at such time as it deems appropriate to discuss any matters.
Our Nominating and Governance Committee consists of Mr. Hasiba joinedStiefler (chairperson), Mr. McLallen, Ms. Banikarim, and Mr. S. Heyer. All members of our Nominating and Governance Committee are independent as defined by the applicable standards of the SEC and the Nasdaq Stock Market. Our Nominating and Governance Committee held three meetings during the fiscal year ended December 31, 2020.
Nominating Functions
To fulfill its responsibilities and duties in connection with its nominating functions, our Nominating and Governance Committee, among other things:
Determines criteria for selecting new directors, including desired board skills, experience and attributes, and identifies and actively seeks individuals qualified to become directors;
Evaluates and selects, or recommends to our Board of Steiner Leisure,Directors, nominees for each election of directors, except that if the former parentCompany is at any time legally required by contract or otherwise to provide any third party with the ability to nominate a director, our Nominating and Governance Committee need not evaluate or propose such nomination, unless required by contract or requested by our Board of companyDirectors;
Develops and recommends to our Board of OneSpaWorld,Directors for approval standards for determining whether a director is independent;
Considers any nominations of director candidates validly made by the Company’s shareholders, reviews shareholder proposals and recommends Board responses, oversees engagement with shareholders and proxy advisory firms, and reviews proxy advisory firm policies and voting recommendations;
Reviews and makes recommendations to our Board concerning qualifications, appointment, and removal of committee members; and
Reviews our leadership structure and recommends changes to our Board of Directors as appropriate.
Corporate Governance
To fulfill its responsibilities and duties in 2019. Mr. Hasibaconnection with its corporate governance functions, our Nominating and Governance Committee, among other things:
Develops, proposes changes to our Board of Directors, or recommends for approval, and reviews on an ongoing basis the adequacy of our Articles, and corporate governance guidelines applicable to the Company, including principles for director qualification standards, and diversity and sustainability and other corporate governance policies;
Reviews the code of ethics periodically and recommends changes and adopts procedures for monitoring and enforcing compliance with such code of ethics;
Reviews, at least annually, the Company’s compliance with the Nasdaq corporate governance listing requirements, and reports to our Board of Directors regarding the same;
Reviews and discusses with management disclosure of the Company’s corporate governance practices, including information regarding the operations of the Committee and other committees, director independence and the director nominations process, and recommends that this disclosure be included in the Company’s proxy statement or annual report on Form 10-K, as applicable;
Reviews emerging corporate governance trends and practices, and recommends changes to the Company’s corporate governance practices to our Board of Directors;
Assists our Board of Directors in developing evaluation criteria, and in the evaluation of the performance of our Board of Directors and committees; and
Performs any other activities consistent with the charter, our Articles, and governing law, as the Nominating and Governance Committee or our Board of Directors deems necessary or appropriate.
Board Diversity
Our Nominating and Governance Committee is currently servingcommitted to seeking members from various professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for the highest personal and professional integrity. Our Nominating and Governance Committee seeks to ensure that qualified director candidates with a diversity of gender, ethnicity and tenure are included in each pool of candidates from which Board of Director nominees are chosen, and reviews the Company’s policies, programs and initiatives for employee diversity and inclusion, and provides guidance to our Board of Directors on diversity matters.
Shareholder Nominations
Our Nominating and Governance Committee considers and evaluates any candidate who is properly recommended by shareholders or identified by members of our Board of Directors.
A shareholder’s written nomination notice to the Secretary of the Company must set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a Vice President atL Catterton.L Catterton isbrief description of the largest and most global consumer-focused private equity firm with over $15 billion of equity capital under management across six fund strategies in 17 offices worldwide.business desired to be
Since 1989,brought before the firm has made over 200 investments in leading consumer brands. Mr. Hasiba has been an investment professional since 2014. Prior to joiningL Catterton, Mr. Hasiba wasannual meeting, and the Directorreasons for conducting such business at such annual meeting, (b) the name and address, as they appear on the Company’s books, of Strategy at Ferrara Candy Company where he led athe shareholder proposing such business, transformation program spanning(c) the marketing, sales,class and supply chain functions. Prior to Ferrara, Mr. Hasiba spent a number of yearsshares of the Company which are beneficially owned by the shareholder, (d) the names of any other beneficial owners of such shares, (e) any material interest of the shareholder in such business and (f) the names and addresses of other shareholders known by the shareholder proposing such business to support such proposal and the class and numbers of shares beneficially owned by such shareholders.
Director Independence
Our Board of Directors determines the independence of our directors by applying the independence principles and standards established by the SEC and the Nasdaq Listing Rules.
The Nasdaq Listing Rules require listed companies to have a board of directors with at McKinsey & Companyleast a majority of “Independent Directors” (as such term is defined in the Nasdaq Listing Rules). Under the Nasdaq Listing Rules, in order for a director to be deemed independent, the board of directors must determine that the individual does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities.
In accordance with the Nasdaq Listing Rules, our Board of Directors will annually determine each director’s independence. We will not consider a director independent unless our Board of Directors has determined that he or she has no material relationship with us. We will monitor the relationships of our directors and officers through a questionnaire each director will complete no less frequently than annually and update periodically as a Business Analyst, Senior Associate and Engagement Manager. While at McKinsey, Mr. Hasiba was ainformation provided in the most recent questionnaire changes.
As part of its analysis, our Board of Directors affirmatively determined that Messrs. Hasiba, McLallen, Magliacano, Stiefler, A. Heyer, S. Heyer and Powell and Ms. Banikarim are independent. In making these determinations, our Board of Directors reviewed and discussed information provided by the consumer packaged goods & retail practice where he focused on global assignments in supply chain, retail, finance,directors and the Company with regard to each director’s business process optimization. Mr. Hasiba graduated cum laude from Northwestern University with a B.S. in Electrical Engineering and cum laude from Loyola University at Chicago with a B.S. in Physics. He also received an M.B.A fromother outside activities as they may relate to the Harvard Business School.Company and our management team.
InitialNon-Continuing Class C Steiner Designee:Stephen Powell will be the initial Class C director designee by Steiner Leisure and will not be subject tore-designation by Steiner Leisure at the expirationBoard of his term following the closingDirectors Meetings; Executive Sessions; Annual Shareholders’ Meetings
The Chairman of the Board presides over each Board of Directors meeting. Our Board of Directors meets at least quarterly to assess corporate governance matters and the effectiveness of our current management and leadership structure. An executive session of independent members of our Board of Directors is held at least annually, and any director may call for an executive session at any Board of Directors’ meeting.
Our Board of Directors may convene special meetings of the shareholders of the Company at such times and in such manner and places within or outside The Bahamas, or by means of remote communication, as the directors consider necessary or desirable.
During the fiscal year ended December 31, 2020, our Board of Directors held 14 regular meetings and no special meetings. All of our directors attended at least 75% of the meetings of the Board and of the committees on which they served during such fiscal year. During 2020, we held 11 special committee meetings focusing on the Investment Agreement and 2020 Private Placement.Placement, each as defined herein. In consideration of the health and safety of our directors, executive officers and other employees, our Board and Committees meetings were conducted virtually in 2020, due to the COVID-19 pandemic. We have not established a policy with respect to director attendance at our annual meeting of shareholders, however, all of our directors and nominees are encouraged to attend our annual meetings. All of our directors attended the 2020 annual meeting of shareholders, which was held virtually.
We expect Michael Dolan will step down fromEvaluation of Board and Committee Performance
The Nominating and Governance Committee assists our Board of Directors in developing criteria for the evaluation, and in evaluating, the performance of our Board of Directors and allcommittee performance.
The Nominating and Governance Committee will evaluate the standing committees, on which he serves, effective asincluding each member of such committee. The committee will assess and recommend to our Board of Directors committee composition and any necessary changes to committee charters.
The Nominating and Governance Committee will periodically assess and communicate with our Board of Directors concerning the closingappropriate criteria for nominating and appointing directors, including the size and composition of the Private Placement for purposesour board of facilitating the designationdirectors, corporate governance policies, Nasdaq Capital Market listing standards, SEC laws, and appointment rights of Steiner Leisureany other applicable rules and its affiliates.regulations.
Consent RightsRisk Oversight
UnderOur Board of Directors fulfills its oversight role through the termsoperations of, the Governance Agreement, amajority-in-interest (based on ownershipand discussions with, its standing committees. Our Board of Common Shares)Directors oversees our strategy and governance of Steiner Leisureenvironmental, social and its affiliates will be entitled to negative consent rights related to the following matters so long as they owngovernance (“ESG”) matters. Our Audit Committee, at least 15% ofannually, reports and discusses the issuedguidelines and outstanding Common Shares:
any amendmentpolicies with respect to risk assessment and risk management of the Company’s organizational documents in a manner that adversely affectsrisk exposure with our Board of Directors. Our Audit Committee reviews with the rights or obligations of Steiner LeisureChief Executive Officer and its affiliates under (i) the organizational documentsChief Financial Officer of the Company any report on significant deficiencies in the design or (ii)operation of the internal controls that could adversely affect the Company’s ability to record, process, summarize or report financial data, any shareholders or similar agreement with Steiner Leisure and its affiliates; provided that this negative consent right shall not apply to any amendmentmaterial weaknesses in the internal controls identified to the Company’s organizational documentsauditors, and any fraud, whether or not material, that involves management or other employees who have a significant role in connection with the issuanceinternal controls. Additionally, our Audit Committee discusses major financial risk exposures and cybersecurity risks and the steps management has taken to monitor and control such exposures.
Our Audit Committee also establishes procedures for the receipt, investigation, retention and treatment of senior equity securities so long ascomplaints received by the Common Shares heldCompany regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by Steiner Leisure and its affiliates are treated the same economically as the Common Shares held by shareholders other than Steiner Leisure and its affiliates.
any liquidation, dissolution, recapitalization, reorganization, bankruptcy or similar event;
changing the sizeemployees of the Company of concerns regarding questionable accounting or auditing matters. Our Audit Committee also adopts, as necessary, appropriate remedial measures or actions with respect to such complaints or concerns and review and investigates conduct alleged by our Board of Directors to be in violation of the Company’s code of ethics, and adopts, as necessary or appropriate, remedial, disciplinary, or other measures with respect to such conduct.
With respect to the material adverse impact of COVID-19 on our business, operations, results of operations and financial condition during 2020 and ongoing, the Board of Directors: received frequent updates and briefings from our Executive Chairman, Chief Executive Officer, Chief Financial Officer and other senior executives and members of our management team regarding the Company’s operations, including the health and well-being of our employees and the status of our employee repatriation efforts globally; discussed and assessed management’s strategies to minimize and mitigate business, operational and financial risks; and monitored (and continues to monitor) developments and risk factors impacting the Company caused by COVID-19.
Communications with our Board of Directors
Shareholders and interested parties may contact any member (or all members) of our Board of Directors (including, without limitation, the non-management directors as a group), any committee of our Board of Directors or the classes on which memberschair of any such committee by mail. All such correspondence may be sent to our Board of Directors, any committee or any individual director, c/o One Spa World LLC, 770 South Dixie Highway, Suite 200, Coral Gables, Florida, 33146, Attention: Inga A. Fyodorova, Secretary.
Our Board of Directors has adopted a code of ethics that applies to our executive officers, directors, employees and agents. A copy of the Board serve; and
entry into any related party transaction, subject to customary exceptions.
A majority in interestcode of Steiner Leisure and its affiliatesethics will be entitledprovided without charge upon request from us and is available on our corporate website at onespaworld.com/investor-relations. The information on our website is not part of this proxy statement. We intend to negative consent rights related to the following matters so long as they own at least 25% of the issued and outstanding Common Shares:
any issuance of senior equity securities that, together with one or more series of related issuances of equity securities, would require shareholder approval under Nasdaq’s (or, if the Company’s equity securities are listed on another exchange, such other exchange’s) listing rules;
any merger, consolidation or other sale of the Company that would result in net consideration per Common Share to Steiner Leisure and its affiliates less than $4.00 per Common Share;
any new incentive equity or similar plan ordisclose any amendments to or modifications to any such existing plans that require shareholder approval under Nasdaq’s (or, if the Company’s equity securities are listedwaivers of certain provisions of our code of ethics in a Current Report on another exchange, such other exchange’s) listing rules;Form 8-K.
any increase in the Company’s consolidated aggregate net indebtedness for borrowed money (other than revolving credit) to an amount exceeding four times the Company’s EBITDA for the most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional indebtedness is incurred;
acquisitions that require shareholder approval under Nasdaq’s (or, ifInsider Trading Policy—Prohibition on Hedging and Pledging
Our insider trading policy prohibits our and our subsidiaries’ directors, officers and employees from engaging in hedging or monetization transactions such as selling “short,” buying or selling puts or calls or other derivatives on OneSpaWorld securities, or otherwise entering into any hedging arrangements involving our securities. Additionally, our directors, officers and other employees are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Sustainability and Social Responsibility
OneSpaWorld strives for a better tomorrow by effecting positive change in the Company’s equity securities are listed on another exchange, such other exchange’s) listing rules orlives of our guests, employees and the disposition of all or substantially allinhabitants of the Company’s assets;destinations we visit and
materially altering the Company’s existing principal linelocations where we operate and call home. Sustainability is at the core of business.
Information Rights
In additionour commitment to any other information or similar rights that Steiner Leisurethe world, and its affiliates may be entitled to as an equityholderthrough our advocacy and support of a Bahamian public company, so long as Steiner Leisurediverse range of charitable organizations and its affiliates are entitledactivities, we strive to designate a director to the Board of Directors, Steiner Leisure will be entitled to receive any information received by members of the Board of Directors and share such information with its affiliates and other representatives (subject to customary exceptions and conditions).
Registration Rights Agreement
Contingent upon shareholder approval of Proposals 3 and 4, in connection with the closing of the Private Placement, the Company, the Investors and certain existing shareholders of the Company will enter into a Second Amended and Restated Registration Rights Agreement (the “A&R RRA”). The A&R RRA provides for customary registration rights, including demand and piggyback rights subjectto cut-back provisions. In addition, the Company has agreed to use its commercially reasonable efforts to file a shelf registration statement to register the resale of the Investors’ securities within 30 days following the closing of the Private Placement. At any time, and from time to time, after the shelf registration statement has been declared effective by the Securities and Exchange Commission (“SEC”), Steiner Leisure will be entitledinspire others to make upthe world a better place. We currently have new environmental directives that aim to three demands perensure that we are more mindful of our environment and the next generation. Such directives include, among others, removing more than 500,000 plastic spatulas from global production, saving approximately 450 kilograms of plastic waste to landfill and removing 1.2 million cardboard liners where possible, saving approximately 9,070 kilograms in waste each year, (subject to meeting a minimum offering size requirement) that a resale of Common Shares pursuant to such shelf registration statement be made pursuant to an underwritten offering. Pursuant to the A&R RRA, subject to certain exceptions, the Investors will agree not to sell, transfer, pledge or otherwise dispose of their shares during the seven days beforereducing paper waste and 90 days after the pricing of any underwritten offering of the Company,protecting our forests.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation arrangements with our named executive officers and will enter into acustomary lock-up agreement to such effect.directors are described elsewhere in this proxy statement.
Amendments to Credit AgreementsInvestment Agreement
On April 30, 2020, the Company, Dory Intermediate LLC, Dory Acquisition Sub, Inc., the lenders party thereto and Goldman Sachs Lending Partners LLC, as administrative agent,we entered into Amendment No. 1 to First Lien Creditan Investment Agreement (the “First Lien Amendment”“Investment Agreement”). On that same date, the Company, Dory Intermediate LLC, the lenders party thereto, and Cortland Capital Market Services LLC, as administrative agent, entered into Amendment No. 1 to Second Lien Credit Agreement (the “Second Lien Amendment” and, together with the First Lien Amendment, the “Credit Agreement Amendments”). The purpose of the Credit Agreement Amendments was to, among other things, amend the definition of “Material Adverse Effect” to exclude any effect, change, event or development related to or arising fromthe COVID-19 pandemic that occurs prior to or on December 31, 2020 and qualify certain representations and affirmative covenants in respect of material contracts by reference to a Material Adverse Effect.
The Credit Agreement Amendments shall be deemed to be ineffective if, among other reasons, (i) the Company has not received cash proceeds from an investment by Steiner Leisure and certain other investors, in an aggregate amountincluding members of not less than $75 million (less transaction fees, costsour management and expensesBoard of Directors (collectively, the “Co-Investors” and, together with Steiner Leisure, and its affiliates required to be paid or reimbursed by the Company pursuant to the Investment Agreement) by the Outside Date, which may be extended to July 31, 2020 under certain circumstances, (ii)“Investors”). Pursuant the Investment Agreement, has been terminated by the Company or any other party thereto or (iii) the Investment Agreement shall have been amended, amended and restated, supplemented or otherwise modified inwe completed a manner the effect of which shall be to reduce the minimum investment amount to an amount less than $65 million.
Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Association
Contingent upon shareholder approval of Proposals 3 and 4, the Company will adopt the Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Associationprivate placement financing transaction on June 12, 2020 (the “Amended Articles”“2020 Private Placement”) in the form attached hereto asAppendix B, in order to,which, among other things, authorize a new class ofNon-Voting Common Shares for issuance in the Private Placement. Please see the section entitled “Proposal 4: Approval of the adoption of our Third Amended & Restated Memorandum of Association and Second Amended & Restated Articles of Association to authorize, among other things, a new class of Non-Voting Common Shares, par value $0.0001 per share” for more details on the Amended Articles.
Amendment to the BCA
In addition, in order to align the incentives of certain members of the Board of Directors, the parties to the Investment Agreement agreed to amend the terms of the Founder Deferred Shares (as defined in the BCA), such that, effective as of the closing of the Private Placement, such shares will be issuable upon the occurrence of any of the following: (i) the first day on which the Common Shares achieve afive-day volume weighted average price equal to or greater than $10.50 (such share price, as may be adjusted, the “Price Target”); (ii) in the case of a change in control of the Company, if the price per common share paid or payable in connection with such change in control is equal to or greater than the Price Target; or (iii) thetwo-year anniversary of the closing of the Private Placement.
Other Terms
The Company anticipates that closing of the Private Placement will take place as soon as reasonably practicable after shareholder approval of Proposals 3 and 4, and no later than the Outside Date. All securities purchased by Steiner Leisure or members of the Company’s management and the Board of Directors will be subject tocustomary lock-up provisions for twelve months following closing of the Private Placement.
The offer and sale of the securities in the Private Placement are being made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act. Such offers and sales are being made solely to “accredited investors” under Rule 506 and are being made without any form of general solicitation.
The terms of the Investment Agreement, the warrants, the Governance Agreement, the Credit Agreement Amendments, the A&R RRA, and the Amended Articles are complex and only briefly summarized above. Representations and warranties contained in the agreements were made for purposes of that contract between the parties, are subject to qualifications and limitations agreed by the parties in connection with negotiating the terms of such agreements and, except as specified in relation to Nomura as the Company’s placement agent, are not intended to be relied upon by third parties. In addition, certain representations and warranties were made as of a specified date, may be subject to a contractual standard of materiality different from those generally applicable to investors, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. The agreements not intended to be a source of factual, business or operational information about the Company beyond information regarding the legal relationships between the parties to such agreement. For further information, please refer to the descriptions contained in the Company’s Current Report on Form8-K filed with the SEC on May 1, 2020, and the transaction documents filed as exhibits to such report. The discussion herein is qualified in its entirety by reference to such filed transaction documents.
Use of Proceeds
The Company intends to use the proceeds from the Private Placement for working capital or other general corporate purposes, and to (i) pay any costs, fees and expenses of the Company and (ii) pay or reimburse Steiner Leisure and its affiliates’ costs, fees and expenses (subject to a cap of $1.25 million), in each case, incurred in connection with the Private Placement.
Why We Need Shareholder Approval
We are seeking shareholder approval of the Private Placement in order to comply with Nasdaq Listing Rule 5635, and because such shareholder approval is a condition to consummation of the Private Placement.
Under Nasdaq Listing Rule 5635(b), shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a “change of control” of the Company. This rule does not specifically define when a change in control may be deemed to occur, however, Nasdaq suggests in its guidance that a change of control would occur, subject to certain limited exceptions, if after a transaction a person or entity will hold 20% or more of a company’s then-outstanding capital stock and be that company’s largest shareholder. Based on this standard, the closing of the Private Placement would result in a change of control under Nasdaq Listing Rule 5635(b). Steiner Leisure and its affiliates currently beneficially own approximately 16.39% of our Common Shares (or approximately 14.0%, excluding the 1,486,520 Common Shares issuable upon exercise of warrants currently held by Steiner Leisure and its affiliates). At closing, Steiner Leisure will beneficially own more than 20% of our Common Shares, which will be the largest ownership position. Accordingly, we are seeking shareholder approval for this “change in control” as used in Nasdaq Listing Rule 5635(b). Shareholders should note that a “change of control” as described under Nasdaq Listing Rule 5635(b) applies only with respect to the application of such rule, and does not constitute a “change of control” for purposes of Bahamian law, our Articles, or any other purpose.
Under Nasdaq Listing Rule 5635(d), shareholder approval is required for a transaction (other than a public offering) involving the sale, issuance or potential issuance by an issuer of common shares (or securities convertible into or exercisable for common shares) at a price that is less than the “Minimum Price,” which is the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement or (ii) the average Nasdaq Official Closing Price of the common shares (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement, if the number of common shares to be issued is or may be equal to 20% or more of the common shares, or 20% or more of the company’s voting power, outstanding immediately prior to the issuance. The securities being sold in the Private Placement are priced below the Minimum Price, and the Private Placement will result in the issuance of more than 20% of the Company’s voting power. Furthermore, pursuant to the Investment Agreement, none of the securities being sold in the Private Placement may be issued unless and until shareholder approval is received.
We are therefore seeking shareholder approval for the Private Placement in order to satisfy (i) the requirements of Nasdaq Listing Rule 5635, and (ii) our obligations under the Investment Agreement.
Effect of this Proposal on Current Shareholders
If Proposals 3 and 4 are adopted, and assuming the other closing conditions are met, the Company will (i) issue to Steiner Leisure an aggregate of (x) approximately 17.215.0 millionNon-Votingnon-voting Common Shares and approximately 2.8 million Voting Common Shares (each amount includes the applicable portion of the Additional Shares),common shares and (y) warrants to purchase approximately 4.0 million Non-Voting Common Sharesnon-voting common shares at an exercise price of $5.75 per share, and (ii) issuewe issued tothe Co-Investors an aggregate of (x) approximately 3.7 million Voting Common Sharesvoting common shares and (y) warrants to purchase approximately 1.0 million Voting Common Sharesvoting common shares at an exercise price of $5.75 per share. Asshare, for an aggregate purchase price of May 5, 2020, these Common Shares would represent$75.0 million. We paid approximately 28%$6.4 million of our Common Shares outstanding immediately followingoffering-related expenses, resulting in total net proceeds of approximately $68.6 million.
Steiner Leisure Director Designation Right
Under the closing and, together with the Common Shares issuable upon exercise of these warrants, would represent approximately 24% of our Common Shares outstanding on a fully-diluted basis immediately following the closing. The issuance of such shares would result in significant dilution to our shareholders, and would afford our shareholders a smaller percentage interest in the voting power, liquidation value and aggregate book valueterms of the Company. The sale or any resale ofInvestment Agreement, Steiner Leisure was granted the Common Shares, or Common Shares issued upon exercise of the warrants, could also cause the market price of our Voting Common Sharesright to decline.
Before voting on this proposal, shareholders should carefully read the “Cautionary Note Regarding Forward-Looking Statements” section at the beginning of this proxy statement.
Vote Required
This Proposal requires the affirmative (“FOR”) vote of a majority of the votes cast on the matter.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” PROPOSAL 3.
Proposal 4: Approval of the adoption of our Third Amended & Restated Memorandum of Associationdesignate and Second Amended & Restated Articles of Association to authorize, among other things, a new class ofNon-Voting Common Shares, par value $0.0001 per share
Background and Overview
You are being asked to approve the adoption of our Amended Articles in order to authorize, among other things, a new class ofNon-Voting Common Shares for issuance in the Private Placement. Please see Proposal 3 for a full description of the Private Placement.
Description of the Amended Articles
Among the other changesappoint three directors to the Company’s existing Articles described more fully below,board of directors at the Amended Articles authorizes the creation of a new class ofNon-Voting Common Shares.
TheNon-Voting Common Shares will be of equal rank to the Voting Common Shares, in terms of dividends, liquidation, preferences and all other rights and features, with the following exceptions:
theNon-Voting Common Shares have no voting rights, except as may be required by law;
Steiner Leisure may vote itsNon-Voting Common Shares in favor of its director designees; and
theNon-Voting Common Shares will automatically be converted to Voting Common Shares upon the occurrence of certain events set forth in the Amended Articles.
In addition to the creation of a new class ofNon-Voting Common Shares, the Amended Articles include certain changes to the Company’s existing Articles related to Steiner Leisure’s transfer restrictions, including in light of the potential for convertingNon-Voting Common Shares to Voting Common Shares.
The above descriptions of the Amended Articles do not purport to be complete, and are qualified entirely by reference to the full text of the Amended Articles, which is attached to this proxy statement asAppendix B.
Why We Need Shareholder Approval
We are seeking shareholder approval to adopt the Amended Articles because it is a condition to closing of the Private Placement.
ApprovalPlacement, with two of Proposal 4 is conditioned upon approval of Proposal 3. Unless approval is received with respect to Proposal 3, we will not take anythese directors being Class C directors and the other director being a Class B director. One of the actions contemplated under Proposal 4. Shareholder approval of both Proposals 3 and 4 are requiredClass C director seats is not subject to consummatere-designation by Steiner Leisure at the Private Placement, unless the closing condition in the Investment Agreement related to shareholder approvalexpiration of the Amended Articles is waived.
Before voting on this proposal, shareholders should carefully readinitial term thereof under the “Cautionary Note Regarding Forward-LookingStatements” section at the beginning of this proxy statement.
Vote Required
This Proposal requires the affirmative (“FOR”) vote of a majority of the votes cast on the matter.
Recommendation of the BoardGovernance Agreement.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” PROPOSAL 4.
Strong corporate governance is an integral part of our core values. The Company’s business and affairs are managed by our Board of Directors, who may exercise all such powers of the Company as are not by our Articles required to be exercised by our shareholders. Our Board of Directors establishes company policies and oversees our performance, our executive officers and other members of our management team to whom our Board of Directors has delegated authority to manageday-to-day business operations.
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
|
|
|
Leadership StructureTransfer Restrictions
Our Board of Directors is responsible for establishing and maintaining an effective leadership structure forFollowing the Company. Our Board of Directors has not mandated a particular leadership structure, and thus maintains the flexibility to determine on an individual basis whether the positions of Chief Executive Officer and Executive Chairman of the board (the “Chairman of the Board”) should be combined or separated. This flexibility allows our Board of Directors to organize its functions and conduct its business in a manner it deems most effective based on the current circumstances. Leonard Fluxman currently serves as the Chairman of the Board. Together, Mr. Fluxman, Stephen Lazarus (our Chief Financial Officer), and Glenn Fusfield (our Chief Executive Officer), lead an internally developed senior management team with over 150 years of combined industry experience. Steven J. Heyer is our designated lead independent director.
The Chairman of the Board performs such duties and possess such powers as are assigned to him by our Board of Directors and our Articles, including to act as chairman of all special and annual shareholder meetings of the Company. At any meeting of our shareholders, the chairman of the board shall be responsible for deciding in such manner as the chairman considers appropriate whether any resolution has been carried or not and the result of his decision will be announced to the meeting and recorded in the minutes thereof.
Our Board of Directors believes that this leadership structure is appropriate because it furthers its independence, provides optimal oversight of our management team and employees, and effectively allocates authority and responsibility between our management team and the independent members of our Board of Directors. Our Board of Directors will continue to review its leadership structure as we continue to grow as a company.
Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Members will serve on these committees until their successors are duly elected and qualified or until their earlier resignation, removal or death. Our Board of Directors may establish other committees as it deems necessary or appropriate.
Our standing committee charters and code of ethics are posted on our website at www.onespaworld.com/investor-relations. Paper copies may be obtained upon request by writing to us: c/o One Spa World LLC, 770 South Dixie Highway, # 200, Coral Gables, Florida, 33146, Attention: Inga A. Fyodorova, Secretary.
The following information is presented as of the date of the proxy statement. For information related to Steiner Leisure’s board and committee designation rights under the Investment Agreement and the Governance Agreement, which take effect upon the consummationclosing of the Private Placement, the Investors (other than Neuberger Berman Group LLC) are not able to transfer the purchased common shares and supersedewarrants until the Director Designation Agreement, please refertwelve-month anniversary of such closing, subject to “Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635—Background and Overview—Investment Agreement” and “—Governance Agreementcustomary exceptions (e.g., transfers to affiliates).”
Audit Committee
At least annually, our Audit Committee reviews and assesses its charter and its performance under the charter. In addition, our Audit Committee has, among others, the following authority and responsibilities:
Reviews the effectiveness and adequacy of our internal accounting controls structure and procedures and discusses such results with our independent auditors and management;
Considers the adequacy of internal accounting controls and procedures, the selection and recommendations of our independent auditors, the scope and results of annual audits, fees to be paid to our independent auditors, the annual audit plan and changes to the audit plan, and the performance of our independent auditors; and
At least quarterly, meets with management, internal auditors, and the independent auditor, in separate executive sessions, to review the Company’s financial statements and financial reports.
Our Audit Committee charter requires that each of the members of our Audit Committee is independent, as defined under SEC rules and the Nasdaq Listing Rules, and that each member is able to read and understand fundamental financial statements, including a balance sheet, an income statement, statement of equity and astatement of cash flow statement.flows. Additionally, at least one member of our Audit Committee will have past employment experience in finance or accounting, professional certification in accounting, or other comparable experience or background resulting in the individual being financially sophisticated, which may include being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, and at least one member of the Committee must be an audit committee financial expert. The authority and responsibilities of our Audit Committee are described in greater detail in our Audit Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Audit Committee consists of Mr. McLallen (chairperson), Mr. Powell Mr. Dolan and Mr. A. Heyer. Mr. McLallen qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and has employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background as required by the Nasdaq Listing Rules. Each of our Audit Committee members is “financially literate” as that term is defined by the Nasdaq Listing Rules and our Board of Directors has determined that each is independent pursuant to applicable SEC regulations and the Nasdaq Listing Rules. Our Audit Committee held eight meetings during the fiscal year ended December 31, 2019.
If the Private Placement is consummated, we expect Mr. Dolan to resign from the Board and our Audit Committee.2020.
Compensation Committee
Our Compensation Committee of our Board of Directors has the responsibility and authority to supervise and review the affairs of the Company as they relate to the compensation and benefits of our executive officers and our Board of Directors. In carrying out these responsibilities, our Compensation Committee reviews all components of executive officer and director compensation for consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of our shareholders. Notwithstanding the foregoing, our Board of Directors, at the recommendation of our Compensation Committee, is solely responsible for determining the compensation of our Board of Directors. The responsibilities and activities of our Compensation Committee are described in greater detail in the Compensation Committee charter, available on our website at www.onespaworld.com/investor-relations.
In addition, our Compensation Committee has, among others, the following authority and responsibilities:
Periodically review and advise our Board of Directors concerning the Company’s overall compensation (including executive officer and director compensation) for consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of the Company’s shareholders, and will review and advise our Board of Directors concerning policies and plans, including a review of both regional and industry compensation practices and trends;
Review and recommend to our Board of Directors for approval the frequency with which the Company will conductSay-on-Pay Votes, taking into account the results of the most recent shareholder advisory vote on frequency ofSay-on-Pay Votes required by Section 14A of the Exchange Act, and review and approve the proposals regarding theSay-on-Pay Vote and the frequency of theSay-on-Pay Vote to be included in the Company’s proxy statement;
Monitor and assess risks associated with the Company’s compensation policies and consult with management regarding such risks;
Review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”) and the related executive compensation information, and determine whether to recommend the CD&A and related executive compensation information for inclusion in the Company’s proxy statement for the annual meeting of shareholders, in accordance with applicable rules and regulations of the SEC.
Make recommendations to our Board of Directors regarding the establishment and terms of the Company’s incentive compensation plans and administer such plans;
Determine share ownership guidelines for the chief executive officerChief Executive Officer and other executive officers of the Company and monitor compliance with such guidelines;
Obtain advice or assistance from compensation consultants, independent legal counsel, accounting, or other advisors, as appropriate to perform its duties;
Delegate all or a portion of its duties and responsibilities to one or more subcommittees of our Compensation Committee comprised of at least two members of our Compensation Committee;
Report to our Board of Directors on our Compensation Committee’s activities on a regular basis; and
Perform such other activities consistent with the charter, our Articles, and governing law as our Compensation Committee deems necessary or as our Board of Directors may direct.
Our Compensation Committee meets as often as it deems necessary to fulfill its responsibilities, but not less frequently than four times each year. Our Compensation Committee may request that any employee of the Company attend any of its meetings or meet with any Compensation Committee member or any consultant or advisor to the Compensation Committee. Our Compensation Committee will meet at least annually with the Company’s chief executive officerChief Executive Officer and such other senior executives of the Company as the Committee deems
appropriate; provided, however, that the chief executive officer may not be present during deliberations or voting regarding his or her compensation. They will also meet periodically in executive session without the presence of management.
Our Compensation Committee charter requires that each of the members of our Compensation Committee is independent and satisfies the requirements of Rule10C-1 under the Exchange Act, and the Nasdaq Listing Rules. In addition, no director may serve on our Compensation Committee unless he or she is a“non-employee director” for purposes of Rule16b-3 under the Exchange Act. A director cannot serve on our Compensation Committee if any executive officer of the Company serves on the boardBoard of directorsDirectors of an entity that employs such director as an executive officer.
In 2019, our Compensation Committee engaged a compensation consultant to assist with the review, assessment, and implementation of the Company’s executive compensation governance platform, including the design of compensation programs to be consistent with the Compensation Committee’s executive compensation philosophy, confirmation of appropriate peer group composition, conducting benchmarking of executive compensation and development of recommendations for target pay levels, evaluation of equity plan utilization and overhang relative to peers, conducting a competitive compensation analysis for the Board of Directors, and providing the Compensation Committee with executive compensation trends and regulatory and legislative changes.
Our Compensation Committee consists of Mr. Steven Heyer (chairperson), Mr. Powell, Mr. Magliacano and Mr. Stiefler. All members of our Compensation Committee are independent as defined by the applicable standards of the SEC and the Nasdaq Stock Market. Each member of our Compensation Committee is an “outside director” as defined in Section 162(m) of the Code and is a“non-employee” director as defined under Section 16 of the Exchange Act. Our Compensation Committee held fivefour meetings during the fiscal year ended December 31, 2019.2020.
Nominating and Governance Committee
Our Nominating and Governance Committee is responsible for (i) identifying individuals qualified to become members of our Board of Directors; (ii) selecting, or recommending to our Board of Directors, director nominees for each election of directors; (iii) developing and recommending to our Board of Directors criteria for selecting qualified director candidates; (iv) considering committee member qualifications, appointment and removal; (v) recommending a code of conduct applicable to the Company; and (vi) providing oversight in the evaluation of our Board of Directors and each committee. The responsibilities and activities of our Nominating and Governance Committee are described in greater detail in the Nominating and Governance Committee charter, available on our website at www.onespaworld.com/investor-relations.
Our Nominating and Governance Committee meets as often as it deems necessary or appropriate to fulfill its responsibilities, and at least once during each fiscal year. Our Nominating and Governance Committee may meet with management or individual directors at such time as it deems appropriate to discuss any matters.
Our Nominating and Governance Committee consists of Mr. DolanStiefler (chairperson), Mr. McLallen, Ms. Banikarim, Mr. Stiefler and Mr. S. Heyer. All members of our Nominating and Governance Committee are independent as defined by the applicable standards of the SEC and the Nasdaq Stock Market. Our Nominating and Governance Committee held twothree meetings during the fiscal year ended December 31, 2019.2020.
If the Private Placement is consummated, we expect Mr. Dolan to be replaced on our Nominating and Governance Committee with Adam Hasiba, who is expected to be designated as a member of our Nominating and Governance Committee by Steiner Leisure pursuant to the terms of the Investment Agreement. Mr. Stiefler is expected to serve as the chairperson of the Nominating and Governance Committee.
Nominating Functions
To fulfill its responsibilities and duties in connection with its nominating functions, our Nominating and Governance Committee, among other things:
Determines criteria for selecting new directors, including desired board skills, experience and attributes, and identifies and actively seeks individuals qualified to become directors;
Evaluates and selects, or recommends to our Board of Directors, nominees for each election of directors, except that if the Company is at any time legally required by contract or otherwise to provide any third party with the ability to nominate a director, our Nominating and Governance Committee need not evaluate or propose such nomination, unless required by contract or requested by our Board of Directors;
Develops and recommends to our Board of Directors for approval standards for determining whether a director is independent;
Considers any nominations of director candidates validly made by the Company’s shareholders, reviews shareholder proposals and recommends Board responses, oversees engagement with shareholders and proxy advisory firms, and reviews proxy advisory firm policies and voting recommendations;
Reviews and makes recommendations to our Board concerning qualifications, appointment, and removal of committee members; and
Reviews our leadership structure and recommends changes to our Board of Directors as appropriate.
Corporate Governance
To fulfill its responsibilities and duties in connection with its corporate governance functions, our Nominating and Governance Committee, among other things:
Develops, proposes changes to our Board of Directors, or recommends for approval, and reviews on an ongoing basis the adequacy of our Articles, and corporate governance guidelines applicable to the Company, including principles for director qualification standards, and diversity and sustainability and other corporate governance policies;
Reviews the code of ethics periodically and recommends changes and adopts procedures for monitoring and enforcing compliance with such code of ethics;
Reviews, at least annually, the Company’s compliance with the Nasdaq corporate governance listing requirements, and reports to our Board of Directors regarding the same;
Reviews and discusses with management disclosure of the Company’s corporate governance practices, including information regarding the operations of the Committee and other committees, director independence and the director nominations process, and recommends that this disclosure be included in the Company’s proxy statement or annual report on Form10-K, as applicable;
Reviews emerging corporate governance trends and practices, and recommends changes to the Company’s corporate governance practices to our Board of Directors;
Assists our Board of Directors in developing evaluation criteria, and in the evaluation of the performance of our Board of Directors and committees; and
Performs any other activities consistent with the charter, our Articles, and governing law, as the Nominating and Governance Committee or our Board of Directors deems necessary or appropriate.
Board Diversity
Our Nominating and Governance Committee is committed to seeking members from various professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for the highest
personal and professional integrity. Our Nominating and Governance Committee seeks to ensure that qualified director candidates with a diversity of gender, ethnicity and tenure are included in each pool of candidates from which Board of Director nominees are chosen, and reviews the Company’s policies, programs and initiatives for employee diversity and inclusion, and provides guidance to our Board of Directors on diversity matters.
Shareholder Nominations
Our Nominating and Governance Committee considers and evaluates any candidate who is properly recommended by shareholders or identified by members of our Board of Directors.
A shareholder’s written nomination notice to the Secretary of the Company must set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, and the reasons for conducting such business at such annual meeting, (b) the name and address, as they appear on the Company’s books, of the shareholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the shareholder, (d) the names of any other beneficial owners of such shares, (e) any material interest of the shareholder in such business and (f) the names and addresses of other shareholders known by the shareholder proposing such business to support such proposal and the class and numbers of shares beneficially owned by such shareholders.
Director Independence
Our Board of Directors determines the independence of our directors by applying the independence principles and standards established by the SEC and the Nasdaq Listing Rules.
The Nasdaq Listing Rules require listed companies to have a board of directors with at least a majority of “Independent Directors” (as such term is defined in the Nasdaq Listing Rules). Under the Nasdaq Listing Rules, in order for a director to be deemed independent, the board of directors must determine that the individual does not have a relationship that would interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities.
In accordance with the Nasdaq Listing Rules, our Board of Directors will annually determine each director’s independence. We will not consider a director independent unless our Board of Directors has determined that he or she has no material relationship with us. We will monitor the relationships of our directors and officers through a questionnaire each director will complete no less frequently than annually and update periodically as information provided in the most recent questionnaire changes.
As part of its analysis, our Board of Directors affirmatively determined that Messrs. Dolan,Hasiba, McLallen, Magliacano, Stiefler, A. Heyer, S. Heyer and Powell and Ms. Banikarim are independent. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and the Company with regard to each director’s business and other outside activities as they may relate to the Company and our management team.
Board of Directors Meetings; Executive Sessions; Annual Shareholders’ Meetings
The Chairman of the Board presides over each Board of Directors meeting. Our Board of Directors meets at least quarterly to assess corporate governance matters and the effectiveness of our current management and leadership structure. An executive session of independent members of our Board of Directors is held at least annually, and any director may call for an executive session at any Board of Directors’ meeting.
Our Board of Directors may convene special meetings of the shareholders of the Company at such times and in such manner and places within or outside The Bahamas, or by means of remote communication, as the directors consider necessary or desirable.
During the fiscal year ended December 31, 2019,2020, our Board of Directors held four14 regular meetings and no special meetings. All of our directors attended at least 75% of the meetings of the Board and of the committees on which they served during such fiscal year. During 2020, we held 11 special committee meetings focusing on the Investment Agreement and 2020 Private Placement, each as defined herein. In consideration of the health and safety of our directors, executive officers and other employees, our Board and Committees meetings were conducted virtually in 2020, due to the COVID-19 pandemic. We have not established a policy with respect to director attendance at our annual meeting of shareholders, however, all of our directors and nominees are encouraged to attend our annual meetings. The Annual Meeting will beAll of our firstdirectors attended the 2020 annual meeting of shareholders, as a public company.which was held virtually.
Evaluation of Board and Committee Performance
The Nominating and Governance Committee assists our Board of Directors in developing criteria for the evaluation, and in evaluating, the performance of our Board of Directors and committee performance.
The Nominating and Governance Committee will evaluate the standing committees, including each member of such committee. The committee will assess and recommend to our Board of Directors committee composition and any necessary changes to committee charters.
The Nominating and Governance Committee will periodically assess and communicate with our Board of Directors concerning the appropriate criteria for nominating and appointing directors, including the size and composition of our board of directors, corporate governance policies, Nasdaq Capital Market listing standards, SEC laws, and any other applicable rules and regulations.
Risk Oversight
Our Board of Directors fulfills its oversight role through the operations of, and discussions with, its standing committees. Our Board of Directors oversees our strategy and governance of environmental, social and governance (“ESG”) matters. Our Audit Committee, at least annually, reports and discusses the guidelines and policies with respect to risk assessment and risk management of the Company’s risk exposure with our Board of Directors. Our Audit Committee reviews with the Chief Executive Officer and Chief Financial Officer of the Company any report on significant deficiencies in the design or operation of the Internal Controlsinternal controls that could adversely affect the Company’s ability to record, process, summarize or report financial data, any material weaknesses in the internal controls identified to the auditors, and any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls. Additionally, our Audit Committee discusses major financial risk exposures and cybersecurity risks and the steps management has taken to monitor and control such exposures.
Our Audit Committee also establishes procedures for the receipt, investigation, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. Our Audit Committee also adopts, as necessary, appropriate remedial measures or actions with respect to such complaints or concerns and review and investigates conduct alleged by our Board of Directors to be in violation of the Company’s code of ethics, and adopts, as necessary or appropriate, remedial, disciplinary, or other measures with respect to such conduct.
With respect to the material adverse impact of COVID-19 on our business, operations, results of operations and financial condition during 2020 and ongoing, the Board of Directors: received frequent updates and briefings from our Executive Chairman, Chief Executive Officer, Chief Financial Officer and other senior executives and members of our management team regarding the Company’s operations, including the health and well-being of our employees and the status of our employee repatriation efforts globally; discussed and assessed management’s strategies to minimize and mitigate business, operational and financial risks; and monitored (and continues to monitor) developments and risk factors impacting the Company caused by COVID-19.
Communications with our Board of Directors
Shareholders and interested parties may contact any member (or all members) of our Board of Directors (including, without limitation, thenon-management directors as a group), any committee of our Board of Directors or the chair of any such committee by mail. All such correspondence may be sent to our Board of Directors, any committee or any individual director, c/o One Spa World LLC, 770 South Dixie Highway, #Suite 200, Coral Gables, Florida, 33146, Attention: Inga A. Fyodorova, Secretary.
Our Board of Directors has adopted a code of ethics that applies to our executive officers, directors, employees and agents. A copy of the code of ethics will be provided without charge upon request from us and is available on our corporate website at onespaworld.com/investor-relations.investor-relations. The information on our website is not part of this proxy statement. We intend to disclose any amendments to or waivers of certain provisions of our code of ethics in a Current Report onForm 8-K.
Insider Trading Policy—Prohibition on Hedging and Pledging
Our insider trading policy prohibits our and our subsidiaries’ directors, officers and employees from engaging in hedging or monetization transactions such as selling “short,” buying or selling puts or calls or other derivatives on OneSpaWorld securities, or otherwise entering into any hedging arrangements involving our securities. Additionally, our directors, officers and other employees are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Sustainability and Social Responsibility
OneSpaWorld strives for a better tomorrow by effecting positive change in the lives of our guests, employees and the inhabitants of the destinations we visit and the locations where we operate and call home. Sustainability is at the core of our commitment to the world, and through our advocacy and support of a diverse range of charitable organizations and activities, we strive to inspire others to make the world a better place. We currently have new environmental directives that aim to ensure that we are more mindful of our environment and the next generation. Such directives include, among others, removing more than 500,000 plastic spatulas from global production, saving approximately 450 kilograms of plastic waste to landfill and removing 1.2 million cardboard liners where possible, saving approximately 9,070 kilograms in waste each year, reducing paper waste and protecting our forests.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation arrangements with our named executive officers and directors are described elsewhere in this proxy statement.
Registration RightsInvestment Agreement
On April 30, 2020, we entered into an Investment Agreement (the “Investment Agreement”) with Steiner Leisure and Haymaker Sponsor, LLC (“Haymaker Sponsor”certain other investors, including members of our management and Board of Directors (collectively, the “Co-Investors” and, together with Steiner Leisure, the “Investors”). Pursuant the Investment Agreement, we completed a private placement financing transaction on June 12, 2020 (the “2020 Private Placement”) in which, among other things, (i) we issued to Steiner Leisure an aggregate of (x) approximately 15.0 million non-voting common shares and (y) warrants to purchase approximately 4.0 million non-voting common shares at an exercise price of $5.75 per share, and (ii) we issued to the Co-Investors an aggregate of (x) approximately 3.7 million voting common shares and (y) warrants to purchase approximately 1.0 million voting common shares at an exercise price of $5.75 per share, for an aggregate purchase price of $75.0 million. We paid approximately $6.4 million of offering-related expenses, resulting in total net proceeds of approximately $68.6 million.
Steiner Leisure Director Designation Right
Under the terms of the Investment Agreement, Steiner Leisure was granted the right to designate and appoint three directors to the Company’s board of directors at the closing of the Private Placement, with two of these directors being Class C directors and the other director being a Class B director. One of the Class C director seats is not subject to re-designation by Steiner Leisure at the expiration of the initial term thereof under the Governance Agreement.
Transfer Restrictions
Following the closing of the Private Placement, the Investors (other than Neuberger Berman Group LLC) are entitlednot able to certaintransfer the purchased common shares and warrants until the twelve-month anniversary of such closing, subject to customary registration rightsexceptions (e.g., transfers to affiliates).
Governance Agreement
Designation Rights
In connection with the closing of the Private Placement on June 12, 2020, the Company, Steiner Leisure and, solely for the purpose of Section 18 thereof, HYAC entered into the Governance Agreement, pursuant to which Steiner Leisure and certain of its affiliates were granted certain consent, director designation, and other rights with respect to the Registration RightsCompany described in this subsection. The Governance Agreement supersedes the Director Designation Agreement, dated as of March 19, 2019November 1, 2018, by and among the Company, Steiner Leisure and HYAC.
Under the terms of the Governance Agreement, among other things, Steiner Leisure has the right to designate and appoint (a) two directors (three directors until the Company’s 2022 annual meeting of shareholders) so long as Steiner Leisure and its affiliates own at least 15% of the issued and outstanding common shares and (b) one director so long as Steiner Leisure and its affiliates own at least 5% of the issued and outstanding common shares.
So long as Steiner Leisure and its affiliates own at least 15% of the issued and outstanding common shares, (a) the directors designed by Steiner Leisure will have proportionate representation on each committee of the Board (rounded up to the nearest whole number of directors, unless such rounding would result in Steiner Leisure directors representing a majority), subject to applicable legal and stock exchange requirements, and (b) Steiner Leisure will have the right to appoint a non-voting observer to all committees for which none of the Steiner Leisure directors are members.
The following individuals are Steiner’s initial director designees pursuant to its designation rights under the Investment Agreement (for more information regarding Steiner Leisure’s board designation and appointment rights, see “Steiner Leisure Director Designation Rights” above for more information).
Class B Initial Steiner Designee: Marc Magliacano is the initial Class B director designee by Steiner Leisure and serves as a member of the Compensation Committee. For more information regarding Mr. Magliacano, see “Proposal 1: Election of Directors—Our Class B Directors.”
Class C Initial Steiner Designee: Adam Hasiba is the initial Class C director designee by Steiner Leisure and serves as a member of the Nominating and Governance Committee. For more information regarding Mr. Hasiba, see “Proposal 1: Election of Directors—Our Class C Directors.”
Initial Non-Continuing Class C Steiner Designee: Stephen Powell is the initial Class C director designee by Steiner Leisure and will not be subject to re-designation by Steiner Leisure at the expiration of his term.
Consent Rights
Under the terms of the Governance Agreement, a majority-in-interest (based on ownership of common shares) of Steiner Leisure and its affiliates will be entitled to negative consent rights related to the following matters so long as they own at least 15% of the issued and outstanding common shares:
any amendment of the Company’s organizational documents in a manner that adversely affects the rights or obligations of Steiner Leisure and its affiliates under (i) the organizational documents of the Company or (ii) any shareholders or similar agreement with Steiner Leisure and its affiliates; provided that this negative consent right shall not apply to any amendment to the Company’s organizational documents in connection with the issuance of senior equity securities so long as the common shares held by Steiner Leisure and its affiliates are treated the same economically as the common shares held by shareholders other than Steiner Leisure and its affiliates;
any liquidation, dissolution, recapitalization, reorganization, bankruptcy or similar event;
changing the size of the Board of Directors or the classes on which members of the Board serve; and
entry into any related party transaction, subject to customary exceptions.
A majority in interest of Steiner Leisure and its affiliates will be entitled to negative consent rights related to the following matters so long as they own at least 25% of the issued and outstanding common shares:
any issuance of senior equity securities that, together with one or more series of related issuances of equity securities, would require shareholder approval under Nasdaq’s (or, if the Company’s equity securities are listed on another exchange, such other exchange’s) listing rules;
any merger, consolidation or other sale of the Company that would result in net consideration per common share to Steiner Leisure and its affiliates less than $4.00 per common share;
any new incentive equity or similar plan or any amendments or modifications to any such existing plans that require shareholder approval under Nasdaq’s (or, if the Company’s equity securities are listed on another exchange, such other exchange’s) listing rules;
any increase in the Company’s consolidated aggregate net indebtedness for borrowed money (other than revolving credit) to an amount exceeding four times the Company’s EBITDA for the most recently ended four fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional indebtedness is incurred;
acquisitions that require shareholder approval under Nasdaq’s (or, if the Company’s equity securities are listed on another exchange, such other exchange’s) listing rules or the disposition of all or substantially all of the Company’s assets; and
materially altering the Company’s existing principal line of business.
Information Rights
In addition to any other information or similar rights that Steiner Leisure and its affiliates may be entitled to as an equityholder of a Bahamian public company, so long as Steiner Leisure and its affiliates are entitled to designate a director to the Board of Directors, Steiner Leisure will be entitled to receive any information received by members of the Board of Directors and share such information with its affiliates and other representatives (subject to customary exceptions and conditions).
Registration Rights Agreement
On June 12, 2020, the Company, the Investors and certain existing shareholders of the Company entered into a Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”“A&R RRA”). We have filedThe A&R RRA provided for customary registration rights, including demand and piggyback rights subject to cut-back provisions. In addition, the Company agreed to use its commercially reasonable efforts to file a shelf prospectus registering Steiner Leisure’s and Haymaker Sponsor’s common shares.registration statement to register the resale of the Investors’ securities within 30 days following the closing of the Private Placement. At any time, and from time to time, Steiner Leisure will be entitled to make up to three demands (and Haymaker Sponsor will beis entitled to make up to three demands per year)year (subject to meeting a minimum offering size requirement) that a resale of our common shares reasonably expected to exceed $10,000,000 in gross offering price pursuant to such shelf prospectusregistration statement be made pursuant to an underwritten offering. In addition, Steiner Leisure and Haymaker Sponsor have customary piggyback registration rights subjectto cut-back provisions. We will bear the expenses incurred in connection with the filing of the shelf prospectus. Pursuant to the Registration Rights Agreement, Steiner Leisure and Haymaker Sponsor have agreedA&R RRA, subject to certain exceptions, the Investors will agree not to sell, transfer, anypledge or otherwise dispose of their shares in us during the seven days before and 90 days after the pricing of any underwritten offering of our common shares, subject to certain exceptions,the Company, and Steiner Leisure and Haymaker Sponsor will enter into acustomary lock-up agreement to to such effect.
In addition, certain private placement investors have certain registration rights under certain subscription agreements.
Indemnity Agreements
On March 19, 2019, we entered into indemnity agreements with each of our directors and executive officers. Each indemnity agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.
Lock-up Agreements
On March 19, 2019, in connection with the our previously entered into business combination, whereby we became the ultimate parent company of the Haymaker Acquisition Corp. (“Haymaker”) and a combined company comprised of assets and operations of direct and indirect subsidiaries Steiner Leisure, in addition to a website formally owned by Elemis USA, Inc. (the “Business Combination”), Haymaker Sponsor, Steiner Leisure, our directors and officers, and (solely for the purpose of certain provisions thereof) Haymaker (the“Lock-up Parties”), entered into aLock-up Agreement (the“Lock-up Agreement”) with us, that, among other things, modifies that certainlock-up agreement, dated as of October 24, 2017, by and among Haymaker, Haymaker Sponsor, and the directors and officers of Haymaker. Pursuant to theLock-up Agreement, theLock-up Parties agreed that they would not, subject to certain limited exceptions, transfer or sell their common shares for a period of six months after March 19, 2019, the date on which we completed the Business Combination.
Director Designation Agreement
On November 1, 2018, the Company, Haymaker Acquisition Corp., a Delaware corporation, and Steiner Leisure entered into a Director Designation Agreement, pursuant to which, among other things, Steiner Leisure has the right to appoint one member of our Class B Board of Directors and one member of our Compensation Committee for so long as Steiner Leisure and certain of its affiliates, in the aggregate, beneficially own 5% or more of our issued and outstanding common shares. Pursuant to the Director Designation Agreement, Marc Magliacano shall serve as a Class B director until the 2021 annual meeting.
Executive Services Agreement
OSW Predecessor entered into an Executivea Services Agreement concurrent with the closing of the Business Combination, withSteiner Management Services LLC (“SMS”), Bliss World LLC (“Bliss”), Nemo Investor Aggregator, Limited (“Nemo” and together with SMS and Bliss, the parent company of Steiner Leisure,“SMS Parties”), which became effective at the timeas of January 1, 2020. The agreement provided that SMS shall pay to OSW fees for certain operational and related services in two installments totaling $450,000 and that OSW shall pay to SMS 40% of the closing.employment costs of a legal assistant of an affiliate of SMS. The agreement terminated on December 31, 2020. On April 27, 2021, the SMS Parties entered into a new Services Agreement, which provides that after the closing of the Business Combination, Leonard FluxmanSMS shall pay to OSW fees for certain reduced operational and Stephen Lazarus are to be made available to provide certain transitionrelated services to Nemo untiltotaling $75,000. The agreement will terminate on December 31, 2020 in exchange for $850,000.
Agreements Related to the Private Placement
For information related to the agreements with Steiner Leisure and certain other investors, including members of the Company’s management and board of directors, please refer to “Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635—Background and Overview.”2021.
Review, Approval or Ratification of Transactions with Related Persons
Consistent with Bahamian law and our Articles, we have adopted a code of ethics that prohibits directors and executive officers from engaging in transactions that may result in a conflict of interest with us. The code of ethics includes a policy requiring that our Board of Directors review any transaction a director or executive officer proposes to have with us that could give rise to a conflict of interest or the appearance of a conflict of interest, including any transaction that would require disclosure under Item 404(a) of RegulationS-K. In conducting this review, our Board of Directors is obligated to ensure that all such transactions are approved by a majority of our Board of Directors not otherwise interested in the transaction and are fair and reasonable to us and on terms not less favorable to us than those available from unaffiliated third parties.
Our Audit Committee also reviews and approves any transactions between the Company and any related person (as defined in Item 404 of RegulationS-K) on an ongoing basis, in accordance with Company policies and procedures; keeps the Company’s independent auditor informed of the Committee’s understanding of the Company’s relationships and transactions with related persons that are significant to the Company and whether the Audit Committee has concerns regarding relationships or transactions with related persons and, if so, the substance of those concerns; and reviews and discusses with the Company’s independent auditor the independent auditor’s evaluation of the Company’s identification of, accounting for, and disclosure of its relationships and transactions with related persons, including any significant matters arising from the audit regarding the Company’s relationships and transactions with related persons.
Name | Age | Position | ||||
Leonard Fluxman | 63 | Executive Chairman, | ||||
| ||||||
Stephen B. Lazarus | 57 | Chief Financial Officer and Chief Operating Officer | ||||
Susan Bonner | 56 | Chief Commercial Officer |
Leonard FluxmanSee “Proposal 1: Election of Directors—Our Class A DirectorsB Director Nominees.”
Glenn J. FusfieldSee “Proposal 1: Election of Directors—Our Class C Directors.”
Stephen B. Lazarusis our Chief Financial Officer and Chief Operating Officer. He previouslyPrior to the Business Combination, he served as Chief Operating Officer and Chief Financial Officer of Steiner Leisure fromsince December 2014 through March 2019.2014. From August 2006 to 2014, Mr. Lazarus served as Steiner Leisure’s Executive Vice President and Chief Financial Officer. From July 2003 through August 2006, Mr. Lazarus served as Steiner Leisure’s Senior Vice President and Chief Financial Officer. From October 1999 until joining Steiner Leisure, Mr. Lazarus was
Division Vice President and Chief Financial Officer for Rayovac Corporation’s Latin America Division. From September 1998 through September 1999, Mr. Lazarus was Director, Financial Planning and Analysis for Guinness, a division of Diageo. Prior to that, Mr. Lazarus was with Duracell, Inc. (later a subsidiary of The Gillette Company) from February 1990 until April 1998, where he held finance and business positions of increasing responsibility. From February 1988 to January 1990, Mr. Lazarus was employed by Ernst & Young as a senior auditor. Mr. Lazarus earned a Bachelor of Commerce degree from the University of Witwatersrand and a Masters of Science in Management from the University of London.
Susan Bonner is our Chief Commercial Officer since October 2020. She has over 20 years of experience in the cruise line sector and is a seasoned executive with a proven track record and significant background in strategy, revenue management, operations management, sales, and marketing. Prior to joining the Company, she served as Managing Director and Vice President, APAC Region for Celebrity Cruises, a subsidiary of Royal Caribbean International, since January 2020, Ms. Bonner developed strategic plans, executed operational initiatives, and established critical partnerships, among other responsibilities. Previously, she served in global leadership roles at Royal Caribbean International and its five brands, including Managing Director and Vice President, Australia and New Zealand from June 2018 to October 2020 and Vice President, Revenue Management and Onboard Revenue for Celebrity Cruises from January 2015 to June 2018. Prior to her time with Royal Caribbean, she served with Norwegian Cruise Line, Seabourn Cruise Line and KPMG Consulting.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act. This section discusses the material components of the executive compensation program for our Chief Executive Officer and our two other most highly compensated officers, who we refer to as our “Named Executive Officers”. As of the year ended December 31, 2019,2020, our Named Executive Officers were Leonard Fluxman, Glenn J. Fusfield and Stephen B. Lazarus.
This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion.
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Option Awards ($)(2) | Stock Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Leonard Fluxman(6) Executive Chairman | 2020 | 849,750 | — | — | 12,649,543 | (8) | — | 93,332 | 13,592,625 | |||||||||||||||||||||||
2019 | 825,000 | — | 10,544,934 | — | — | 92,504 | 11,462,438 | |||||||||||||||||||||||||
Glenn J. Fusfield(6) | 2020 | 567,788 | — | — | 1,731,019 | — | 64,172 | 2,362,979 | ||||||||||||||||||||||||
President and Chief Executive Officer | 2019 | 525,000 | — | 4,217,974 | — | — | 21,638,734 | (7) | 26,381,708 | |||||||||||||||||||||||
Stephen B. Lazarus | 2020 | 540,750 | — | — | 5,250,379 | (8) | — | 64,241 | 5,855,370 | |||||||||||||||||||||||
Chief Operating Officer and Chief Financial Officer | 2019 | 525,000 | — | 4,841,084 | — | — | 67,183 | 5,433,267 |
(1) | Amounts reflect the |
(2) | Amounts reflect the grant date fair value of stock options granted to the Named Executive Officers as computed in accordance with FASB ASC 718. The assumptions used in calculating the grant date fair value of the stock options are set forth in Note 9 to the Consolidated Financial Statements included in the Company’s 2019 Annual Report, filed with the SEC on March 30, 2020. The amounts reported in this column and the “Stock Awards” column reflect the accounting cost for these stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”), and do not correspond to the actual economic value that may be received by the Named Executive Officers for |
(3) | Amounts reflect the grant date fair value of RSUs and PSUs granted to the Named Executive Officers as computed in accordance with FASB ASC 718, and in respect of PSUs, based on the probable outcomes of the performance conditions as of the grant date. The assumptions used in calculating the grant date fair value of the RSUs and PSUs are set forth in Note 9 to the Consolidated Financial Statements included in the Company’s 2020 Annual Report, filed with the SEC on March 10, 2021. The PSUs and RSUs were granted with dividend equivalent rights that will vest and be settled at the same time and subject to the same terms |
and conditions as the corresponding PSUs or RSUs, as applicable. The grant date value of the following PSUs granted to Messrs. Fluxman, Fusfield and Lazarus in 2020, assuming the highest level of performance conditions will be achieved (200%), is: (i) $2,475,014, $892,500 and $892,500 for the January 2020 PSU grants to Messrs. Fluxman, Fusfield and Lazarus, respectively; and (ii) $2,474,997 and $892,501 for the December 2020 PSU grants to Messrs. Fluxman and Lazarus, respectively. The PSUs granted to Messrs. Fluxman and Lazarus in August 2020 and Mr. Fusfield in October 2020 are not subject to a maximum and can only vest up to the target amount of the Company’s common shares underlying the award. |
(4) | No amounts were earned in 2019 and 2020 for any Named Executive Officer’s annual performance-based cash incentive bonus opportunity set forth in his Employment Agreement. See “—Narrative to Summary Compensation Table—Executive Employment Agreements” below for further information regarding these bonus opportunities. |
(5) | Amounts |
each case, for fringe payments received in 2020 for medical, dental, vision and long-term disability premiums, and (iv) an amount equal to $19,752 for Mr. Fluxman, $5,410 for Mr. Fusfield and $6,102 for Mr. Lazarus, in each case, for reimbursement of life insurance premiums. Amounts for 2019 reflect: (i) $11,000 for each Named Executive Officer for 401(k) Plan employer matching contributions; (ii) an annual automobile allowance equal to $25,000 for Mr. Fluxman and $15,000 for each of Messrs. Lazarus and |
Fusfield, |
Messrs. Fluxman and Fusfield serve on our Board, but |
|
(7) | In 2016, OneSpaWorld (Bahamas) entered into two separate exit bonus award agreements with Mr. Fusfield that were subject to certain service and performance-vesting conditions through an exit |
(8) | Amounts include $691,803 and $249,467 of the incremental fair value incurred in respect of Messrs. Fluxman’s and Lazarus’s January 2020 PSU awards, respectively, in connection with the Board’s waiver of the performance criteria, as described further below. See “Outstanding Equity Awards At 2020 Fiscal Year End” below for further information on the Board’s actions. |
Narrative to Summary Compensation Table
Executive Employment Agreements
Executive Employment Agreements. Certain of the compensation paid to the Named Executive Officers reflected in the Summary Compensation Table above was provided pursuant to employment agreements with OneSpaWorld (collectively, the “Employment Agreements”). Each Employment Agreement provides an initial term ending on December 31, 2020, subject to automaticone-year renewals thereafter unless either party provides 90 days’ prior notice not to renew the term. The Employment Agreements generally provide for base salary, incentive compensation, benefits, severance protection and a grant of Company stock options. Pursuant to the terms of the Employment Agreements, the Named Executive Officers are subjectto non-competition,
non-hire andnon-solicitation of employees and customers/suppliers restrictions during employment and for a period of two years following their termination of employment, as well as perpetual mutualnon-disparagement and confidentiality obligations.
Non-Equity Incentive Compensation. For 2019,2020, our Named Executive Officers were eligible to earn annual performance-based cash incentive bonuses pursuant to their respective Employment Agreements. Bonus opportunities for 20192020 were based on a formula and performance criteria approved by our Compensation Committee in its sole discretion. The potential bonus each Named Executive Officer was eligible to earn for 20192020 ranged from 75%90% to 150%180% of base salary (with a target bonus equal to 75%90% of base salary) for Messrs. Lazarus and Fusfield, and 100%125% to 200%250% of base salary (with a target bonus equal to 100%125% of base salary) for Mr. Fluxman (each applicable target bonus, the Named Executive Officer’s “Target Annual Bonus”), subject to continued employment through the end of the performance period. Achievement falling below the minimum performance targets would result in no payout of the award, unless our Compensation Committee determined otherwise. The performance goals used to determine 20192020 annual bonuses were based on achievement of budgeted EBITDA levels. These 20192020 performance goals were not achieved, and as a result, the Company did not pay out such annual performance-based cash incentive bonuses to the Named Executive Officers for 2019.
Health and Welfare Plans, and Retirement Plans
Health and Welfare Plans. Our Named Executive Officers are eligible to participate in the Company’s standard employee benefit plans, including medical, life, and disability benefits.
Retirement Plan.Plan
We maintain a retirement plan that is intended to qualify for favorable tax treatment under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), containing a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code (our “401(k) Plan”). All regular U.S. employees who have completed at least three months of service and have attained at least age 21 are generally eligible to participate in our 401(k) Plan, including our Named Executive Officers. Participants maymake pre-tax contributions to the 401(k) Plan from their eligible earnings up to the statutorily prescribed annual limiton pre-tax contributions under the Code. Participants who are 50 years of age or older may contribute additional amounts based on the statutory limitsfor catch-up contributions. No minimum benefit is provided under the 401(k) Plan. An employee is 100% vested in his orher pre-tax deferrals when contributed and employer safe harbor matching contributions, and any other employer contributions vest ratably over four years. Our 401(k) Plan provides for employer safe harbor matching contributions equal to 100% of up to 3% of compensation plus 50% on the next 2% of compensation, and discretionary employer matchingand non-elective contributions.
Outstanding Equity Awards At 20192020 Fiscal Year End
The following table summarizes the outstanding equity awards held as of December 31, 20192020 by each of the Named Executive Officers. The market value of RSUs and PSUs reflected below were calculated based on the closing price of OneSpaWorld’s common shares on December 31, 2020 of $10.14.
Option Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Number of Securities Underlying Unexercised Unearned Options | Option Price ($) | Option Expiration Date | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market value of unearned shares, units or other rights that have not vested ($) | |||||||||||||||||||||||||||||||||||||||||||||
Leonard Fluxman | — | — | 2,353,780 | 12.99 | 3/26/2025 | 3/26/2019 | — | — | 2,353,780 | 12.99 | 3/26/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2020 | 78,973 | (2) | 800,786 | 39,486 | (3)(9) | 400,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/18/2020 | 687,500 | (4) | 6,971,250 | 515,625 | (5) | 5,228,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/21/2020 | 131,789 | (7) | 1,336,340 | 65,894 | (8)(9) | 668,170 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Glenn J. Fusfield | — | — | 941,512 | 12.99 | 3/26/2025 | 3/26/2019 | — | — | 941,512 | 12.99 | 3/26/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2020 | 28,478 | (2) | 288,767 | 14,239 | (3)(9) | 144,383 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/1/2020 | 166,667 | (6) | 1,690,003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephen B. Lazarus | — | — | 1,080,599 | 12.99 | 3/26/2025 | 3/26/2019 | — | — | 1,080,599 | 12.99 | 3/26/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2020 | 28,478 | (2) | 288,767 | 14,239 | (3)(9) | 144,383 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/18/2020 | 315,500 | (4) | 3,199,170 | 236,625 | (5) | 2,399,378 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/21/2020 | 47,524 | (7) | 496,151 | 23,762 | (8)(9) | 240,947 |
(1) | Each stock option was granted pursuant to our 2019 Equity Incentive Plan (the “2019 Plan”) that was approved by our Board on March 18, 2019 and by our shareholders on March 18, 2019. The stock options will become exercisable if and when thefive-day volume weighted average price of the Company’s common shares reaches $20 per share. Upon a termination of the Named Executive Officer’s employment for any reason other than for “cause” (as defined in the 2019 Plan), the stock options will remain outstanding and may be exercised by the Named Executive Officer until the first to occur of (x) the stock option’s expiration date or (y) a “change in control” (as defined in the 2019 Plan). Upon a termination by OneSpaWorld for cause, the stock options will immediately terminate. Under the terms of Mr. Fusfield’s Transition Agreement, as described below, his stock options will be immediately terminated and forfeited to the extent not exercised within the 30-day period following his termination of employment. |
(2) | Reflects restricted stock units (“RSUs”) granted on January 21, 2020, that vest 1/3 on each of the first, second and third anniversaries of the grant date. Upon a termination by OneSpaWorld without “cause” or due to death or disability or by the Named Executive Officer for “good reason” (as each such term is defined in their Employment Agreements), the RSUs will accelerate and vest. The RSUs will also accelerate and vest upon a “change in control” (as defined in the 2019 Plan), subject to the Named Executive Officer’s continued employment through the consummation of such change in control. If the Named Executive terminates his employment and he has at least ten years of full time employment with OneSpaWorld and is at least 65 years old (an “Eligible Retirement”), he will remain eligible to continue to vest in the RSUs following the termination of employment, subject to compliance with his restrictive covenants. Upon any other termination event, any unvested RSUs will be forfeited (and upon a termination for cause, all RSUs (whether vested or unvested) will be forfeited). Under the terms of Mr. Fusfield’s Transition Agreement, he forfeited the remaining 2/3 of his unvested January 2020 RSUs on his termination date. |
(3) | Reflects performance stock units (“PSUs”) granted on January 21, 2020 that are subject to both performance and time vesting conditions. As described further below, the Board took certain action in respect of the performance criteria for Messrs. Fluxman’s and Lazarus’s January 2020 PSUs. |
(4) | Reflects RSUs granted on August 18, 2020, that vest 1/3 on each of the first, second and third anniversaries of the grant date. Upon a termination by OneSpaWorld without cause or due to death or disability or by the Named Executive Officer due to an Eligible Retirement (and the Compensation Committee has approved the accelerated vesting treatment) or for good reason, the RSUs will accelerate and vest. Upon any other termination event, any unvested RSUs will be forfeited. The RSUs will accelerate and vest upon a change in control, subject to the Named Executive Officer’s continued employment through the consummation of such change in control. |
(5) | Reflects PSUs granted on August 18, 2020 that vest based on achievement, prior to the end of the six-year performance period, of specified volume weighted average price hurdles of the Company’s common shares for any twenty trading days out of thirty consecutive trading days. Any then-unvested PSUs will accelerate and vest upon a termination due to death or disability. Upon a termination by OneSpaWorld without cause or by the Named Executive Officer due to an Eligible Retirement (and the Compensation Committee has approved the continued vesting treatment) or for good reason, the PSUs will remain eligible to vest following the termination date. Upon any other termination event, any unvested PSUs will be forfeited. Any then-unvested PSUs will accelerate and vest upon a change in control, subject to the Named Executive Officer’s continued employment through the consummation of such change in control. |
(6) | Reflects PSUs granted on October 1, 2020 that vest based on achievement, prior to the end of the six-year performance period, of specified volume weighted average price hurdle of the Company’s common shares for any twenty trading days out of thirty consecutive trading days. Any then-unvested PSUs will accelerate and vest upon a termination due to death or disability, or upon a change in control occurring during the performance period, subject to the Named Executive Officer’s continued employment through such change in control. Upon a termination by OneSpaWorld without cause, the PSUs will remain eligible to vest following the termination date. |
(7) | Reflects RSUs granted on December 21, 2020, that vest 1/3 on each of the first, second and third anniversaries of the grant date. Upon a termination by OneSpaWorld without cause or due to death or disability or by the Named Executive Officer for good reason, the RSUs will accelerate and vest. If the Named Executive terminates his employment due to an Eligible Retirement (and the Compensation Committee has approved the continued vesting treatment), the Named Executive Officer will remain eligible to vest in the RSUs following termination, subject to compliance with his restrictive covenants. |
(8) | Reflects PSUs granted on December 21, 2020 that are subject to both performance and time vesting conditions. |
(9) | The PSUs will performance vest up to a maximum of 200% based on achievement of specified EBITDA performance goals during the one-year period following the grant date (the “Earned PSUs”), as determined by the Compensation Committee no later than March 15th following such performance period (such determination date, the “Determination Date”), and such Earned PSUs will fully vest 1/3 on each of the Determination Date and the second and third anniversaries of the grant date. The minimum of the PSUs are reflected above. Upon a termination by OneSpaWorld without “cause” or due to death or disability or by the Named Executive Officer for “good reason” (as each such term is defined in their Employment Agreements), 100% of the PSUs will accelerate and vest. If the Named Executive terminates his employment following the performance period and the Determination Date due to an Eligible Retirement (and for the December 2020 PSUs, the Compensation Committee has approved the continued vesting treatment), he will remain eligible to continue to vest in any Earned PSUs following termination, subject to compliance with his restrictive covenants. The PSUs will be subject to the terms of the 2019 Plan upon a change in control, except that if the change in control occurs (i) during the performance period and prior to the Determination Date, the target number of PSUs will be deemed earned and vest upon such change in control, or (ii) following the performance period and the Determination Date, any outstanding Earned PSUs will vest upon such change in control, subject, in each case, to the Named Executive Officer’s continued employment through the consummation of such change in control. |
The performance criteria for the January 2020 PSUs were not achieved due to the severe interruption of OneSpaWorld’s business and operations resulting from the unforeseen circumstances of the COVID-19 pandemic. However, the Board recognized the retentive value of the PSUs given the subsequent time vesting
conditions applicable to the awards. Therefore, in order to incentivize continuing employees, the Board approved in December 2020 the waiver of the performance criteria applicable to all outstanding January 2020 PSU holders and for the target number of shares underlying such PSUs to be considered earned, with 1/3 of such earned PSUs vesting on January 21, 2021, and 2/3 of such earned PSUs remaining subject to the same service vesting conditions (1/3 vesting on each of the second and third anniversaries of the grant date), subject to the PSU holder’s continued employment through each vesting date. The 2020 PSUs otherwise remain subject to all other applicable terms and conditions set forth in the 2019 Plan and the applicable award agreements.
Severance, Change in Control and Equity Arrangements
Severance Benefits. Each Named Executive Officer’s Employment Agreement provides that, in the event that the Named Executive Officer’s employment is terminated either by the Company without “cause” (which includes the employer’s delivery of a notice of nonrenewal of the employment term), or by the Named Executive Officer for “good reason” (in each case as such terms are defined in the employment agreements), in addition to receiving (i) any accrued but unpaid annual bonus, (ii) apro-rata Target Annual Bonus for the year of the applicable Named Executive Officer’s termination, and (iii) a lump sum payment equal to the premiums that would be paid by the Named Executive Officer for 24 months’ of COBRA continuation coverage, the Named Executive Officer will be entitled to receive, subject to the Named Executive Officer’s execution andnon-revocation of a release of claims in favor of the Company and its affiliates, (x) a lump sum cash payment
equal to 2.5X for each of Messrs. Lazarus and Fusfield (3X for Mr. Fluxman) of the sum of the Named Executive Officer’s base salary and Target Annual Bonus, and (y) the annual bonus for the year of the Named Executive Officer’s termination, determined based on actual achievement of the applicable performance criteria during the performance period of such annual bonus. As noted below, Mr. Fusfield was entitled to only receive the severance benefits set forth under the terms of his Transition Agreement.
In the event that any payment or benefit to be made to the Named Executive Officers under the Employment Agreements in connection with a change in control would constitute a parachute payment under Section 280G of the Code, then the applicable Named Executive Officer will have such payments reduced to the largest amount that would result in no portion of such payments being subject to the excise taxes imposed by Section 4999 of the Code, unless such payments, less any excise tax which would be imposed on such payments pursuant to Section 4999 of the Code, would be greater than such reduced payments, in which case no reduction would occur. Any payment or benefit made to Mr. Fusfield under his Transition Agreement (as described below), will also be subject to this treatment.
Glenn Fusfield Transition Agreement. In connection with Glenn Fusfield’s retirement, he entered into a transition and retirement agreement with OneSpaWorld, dated as of September 15, 2020 (the “Transition Agreement”), which superseded Mr. Fusfield’s Employment Agreement described above, pursuant to which he remained in his then-current position and continued to run the business in the ordinary course until his retirement on March 31, 2021. Under the terms of the Transition Agreement, during the remaining period of Mr. Fusfield’s employment with OneSpaWorld, he remained eligible to continue to participate in our employee benefit plans and receive his base salary at its current rate prior to October 1, 2020, and at an annualized rate of $648,900 from October 1, 2020 through March 31, 2021. Furthermore, due to Mr. Fusfield not resigning prior to March 31, 2021, not being terminated by the Company for “cause”, and timely re-executing the general release of claims in favor of OneSpaWorld and complying with the terms of the Transition Agreement, he (i) received a grant of 166,667 performance stock units (“PSUs”) in October 2020 under the 2019 Plan, pursuant to an award agreement substantially in the form utilized by the Company for the most recent grants of PSUs to its executive officers, (ii) immediately vested on January 21, 2021 in one-third of the restricted stock units (“RSUs”) granted to him on January 21, 2020, with the remaining portion of such award being forfeited and (iii) is eligible to receive up to 18 months’ of COBRA continuation coverage for himself and his dependents and reimbursement of monthly premiums. The Transition Agreement also provides that Mr. Fusfield will remain eligible to exercise his stock options granted to him on March 26, 2019 for a period of only 30 days following the termination of his employment, and to the extent not exercised, such stock options will be immediately terminated and forfeited at
the end of such period. Each of the foregoing payments and benefits are subject to Mr. Fusfield’s continued compliance with the terms and conditions of the Transition Agreement and all of his continuing restrictive covenant obligations, including those concerning confidentiality, mutual non-disparagement, assignment of intellectual property, and non-competition and non-solicitation of customers, suppliers and employees. Following Mr. Fusfield’s retirement date on March 31, 2021, he will continue to serve as member of the Board, but in the capacity of a non-employee director, and will remain entitled to the same directors’ and officers’ liability insurance coverage that OneSpaWorld provides generally to its other directors and officers.
On March 31, 2021, the Board appointed Leonard Fluxman as Chief Executive Officer, where he previously served from 2001 through 2018, and OneSpaWorld entered into an amended employment agreement to reflect his new title of Executive Chairman and Chief Executive Officer. Mr. Fluxman’s compensation did not change in connection with his appointment as Chief Executive Officer.
Outstanding Equity Awards. The purpose of the 2019 Plan is to make available incentives that will assist the Company to attract, retain, and motivate employees, including officers, consultantsdirectors and directors.consultants. The Company may provide these incentives through the grant of share options, share appreciation rights, restricted shares, restricted share units, performance shares and units and other cash-based or share-based awards. Awards may be granted under the 2019 Plan to OneSpaWorld employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. Each Named Executive Officer is party to a Stock Option Agreement pursuant toUnder the terms of the 2019 Plan, that provides for the grant of options to purchase the Company’s common shares. If a Named Executive Officer’s employment is terminated for any reason other than for “cause” (as defined in the 2019 Plan), then the stock options will remain outstanding and may be exercised by the Named Executive Officer until the first to occur of (x) the stock option’s expiration date or (y) a “change in control” (as defined in the 2019 Plan). If the Named Executive Officer’s employment is terminated by the Company for cause, then the stock options will immediately terminate.In the event of a change in control, the acquiring or successor entity may assume or continue all or any awards outstanding or substitute substantially equivalent awards. Any awards which are not assumed or continued in connection with a change in control or are not exercised or settled prior to the change in control will terminate at the time of the change in control. The 2019 Plan also authorizes the Compensation Committee, in its discretion and without the consent of any participant, to accelerate the exercisability, vesting and/or settlement of an award in connection with a change in control upon such conditions determined by the Compensation Committee (including a termination prior to, upon or following such change in control), or cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each vested share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share in the change in control transaction over the exercise price per share, if any, under the award.
Prior Profits Interests Arrangements. In December 2015, Mr. Fluxman and Mr. Lazarus were each granted Class B Common Shares in Nemo Investor Aggregator, Limited (“Nemo”), a parent company of OSW Predecessor, which were (and are) intended to constitute profits interests of Nemo for tax purposes (the “Nemo Shares”). While Nemo is not currently an affiliate of the Company, it does have a meaningful indirect ownership stake in the Company through its holdings in Steiner Leisure. As a result, the value of the Nemo Shares held by Mr. Fluxman and Mr. Lazarus is inextricably linked to the value of the Company’s common shares, even though these shares were not granted to Mr. Fluxman or Mr. Lazarus as compensation for their services to the Company. Messrs. Fluxman and Lazarus were granted these Nemo Shares at no purchase price, and such shares were granted subject to a combination of time- and performance-based vesting conditions. The Nemo Shares represent a right to a fractional portion of the profits and distributions of Nemo in excess of a “floor amount” determined in accordance with Nemo’s operating agreement upon a sale (as specified in the applicable award agreements). Messrs. Fluxman and Lazarus each still hold their Nemo Shares, which have fully time vested, but remain subject to performance vesting conditions.
Prior Bonus Arrangements. In 2016, Mr. Fusfield entered into two bonus agreements with OneSpaWorld (Bahamas) Limited, an affiliate of the Company (“OneSpaWorld Bahamas”), that granted cash bonuses payable
upon an “exit event” (as defined in the agreements), subject to certain conditions, including Mr. Fusfield’s continued employment through the exit event (except as described below). The cash bonus payment under one of the agreements (the “First Bonus”) was determined with reference to the “total enterprise value” (as defined in the agreement) of OneSpaWorld Bahamas and vested in full upon an exit event. Upon a termination of his employment without “cause” (as defined in the agreement), Mr. Fusfield remained eligible to receive all or a portion of the cash bonus for up to two years following his termination if an exit event occurred during that period. The other cash bonus payment (the “Second Bonus”) was equal to 150% of Mr. Fusfield’s annual cash bonuses from 2016 onward, and vested in 36 equal monthly installments commencing on January 31, 2017 and fully vested upon an “exit event” (as defined in the agreement) if Mr. Fusfield remained employed through the exit event. If Mr. Fusfield was terminated other than for “cause” (as defined in the agreement), he remained eligible to receive the vested bonus through such date of termination within 60 days following an exit event. The First Bonus and Second Bonus each vested and were paid out by Steiner Management Services, LLC to Mr. Fusfield upon the consummation of the Business Combination, in amounts equal to $16,706,300 for the First Bonus and $1,887,237 for the Second Bonus. Upon payment of the bonuses, Mr. Fusfield was deemed to have released OneSpaWorld and its affiliates from any and all claims relating to the bonus payments.
Our Compensation Committee has the responsibility and authority to supervise and review the affairs of the Company as they relate to the compensation and benefits of our executive officers and our Board of Directors. In carrying out these responsibilities, our Compensation Committee reviews all components of executive officer and
director compensation for consistency with the Company’s compensation philosophy, as in effect from time to time, and with the interests of our shareholders. Our Board of Directors, at the recommendation of our Compensation Committee, is solely responsible for determining the compensation of our Board of Directors.
Under our current director compensation program, all members of our Board of Directors who are not employees of the Company receive a yearly cash retainer equal to $50,000 and our Lead Director also receives an additional yearly cash retainer equal to $50,000, in each case, payable at the time of the director’s election around the time of the Company’s annual shareholder meetingmeeting. Due to the severe interruption of the Company’s business and operations resulting from the unforeseen circumstances of the COVID-19 pandemic, members of our Board of Directors were provided with the option to receive their 2020 retainer fees, which would normally be paid in cash, in the form of either cash or restricted stock units. units (“RSUs”) or cash that would accrue and be paid at a later date, to be determined based on the resumption of our operations in light of COVID-19.
In addition, the chairperson of our Audit Committee receives an additional yearly fee of $30,000, the chairperson of our Compensation Committee receives an additional yearly fee of $25,000 and the chairperson of our Nominating and Governance Committee receives an additional yearly fee of $20,000. Eachnon-employee director (other than Marc Magliacano and Adam Hasiba, who receiveseach receive a cash payment instead) also receives a yearly grant of restricted stock units (“RSUs”)RSUs with a value equal to $100,000 (based on the closing stock price of the Company’s common shares on the date immediately preceding the date of grant). The RSUs fully vest upon theone-year anniversary of the grant date, subject to continuous service. Pursuant to the 2019 Plan, eachnon-employee director may voluntarily elect to defer the delivery of shares upon vesting of the RSUs, generally until the earlier of the 60th day following thenon-employee director’s date of their separation of service or immediately prior to a change in control. We also pay reasonable travel and accommodation expenses of thenon-employee directors in connection with their participation in meetings of our Board of Directors. For the purposes of director compensation, the term “yearly” refers to a “Board Year” in which a director serves and which begins on the date of the Company’s annual shareholder meeting for such year.
20192020 Non-Employee Director Compensation
The following table presents the total compensation for each person who served as anon-employee director of our Board of Directors during 2019.2020. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards ornon-equity awards to, or pay any other compensation to, any of the othernon-employee directors of our Board of Directors. Messrs. Fluxman and Fusfield, our Executive
Chairman and President and Chief Executive Officer, respectively, did not receive noany compensation for service as directors and, consequently, are not included in this table. The compensation received by Messrs. Fluxman and Fusfield as employees of the Company is presented in “—Summary Compensation Table”.Table.”
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Option Awards ($) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | |||||||||||||||||||||
Marc Magliacano | 150,000 | — | — | 150,000 | 150,000 | — | 150,000 | |||||||||||||||||||||
Michael J. Dolan | 95,000 | 100,012 | — | 195,012 | ||||||||||||||||||||||||
Adam Hasiba | 150,000 | — | 150,000 | |||||||||||||||||||||||||
Steven J. Heyer | 100,000 | 100,012 | 766,904 | (4) | 966,916 | (4) | 125,000 | 100,002 | 225,002 | |||||||||||||||||||
Jeffrey E. Stiefler | 50,000 | 100,012 | — | 150,012 | 70,000 | 100,002 | 170,002 | |||||||||||||||||||||
Andrew R. Heyer | 50,000 | 100,012 | — | 150,012 | 50,000 | 100,002 | 150,002 | |||||||||||||||||||||
Maryam Banikarim | 50,000 | 100,012 | — | 150,012 | 50,000 | 100,002 | 150,002 | |||||||||||||||||||||
Walter F. McLallen | 80,000 | 100,012 | — | 180,012 | 80,000 | 100,002 | 180,002 | |||||||||||||||||||||
Stephen W. Powell | 50,000 | 100,012 | — | 150,012 | 50,000 | 100,002 | 150,002 |
(1) | Reflects the cash retainer earned for eachnon-employee director’s board service. The followingnon-employee directors elected to receive RSUs in lieu of cash with a grant date fair value equal to the cash retainer amounts reflected above: |
the form of cash and Walter F. McLallen elected to receive his cash retainer in the form of cash, which, for each such non-employee director, is earned and accrued but will be paid at a later date. |
(2) | Represents the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718 of each grant of RSUs under our 2019 Plan. Eachnon-employee director (other than Mr. |
(3) | As of December 31, |
Name |
| Shares subject
RSUs | |||||||
Marc Magliacano | — | ||||||||
| — | ||||||||
Steven J. Heyer | |||||||||
Jeffrey E. Stiefler | |||||||||
Andrew R. Heyer | |||||||||
Maryam Banikarim | |||||||||
Walter F. McLallen | |||||||||
Stephen W. Powell |
|
Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2019,2020, the 2019 Plan is the only incentive equity plan administered by the Company. The following table provides information as of December 31, 20192020 regarding common shares that may be issued under the 2019 Plan:
Plan Category | Number of Securities to be Issued Upon of Options, Warrants and Rights | Weighted Exercise of Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | ||||||||||||||||||
Equity compensation plans approved by security holders | 4,436,794 | (1) | $ | 12.99 | 2,563,206 | 6,207,214 | (1) | $ | 12.99 | 0 | ||||||||||||||
Equity compensation plans not approved by security holders | 0 | $ | — | 0 | 0 | $ | — | 0 |
(1) | Represents |
Compensation Committee Interlocks and Insider Participation
During fiscal 2019,2020, our Compensation Committee consisted of Mr. Dolan (chairperson), until January 6, 2020, at which time Mr. S. Heyer joined the Compensation Committee and assumed the position of chairperson, Mr. Powell, and Mr. Magliacano, and commencing on July 30, 2019, Mr. Stiefler. On June 12, 2020, Mr. Dolan stepped down from our board of directors upon consummation of the private placement. None of the members of our Compensation Committee is, nor was during fiscal 2019,2020, an officer or employee of the Company. None of the members of our Compensation Committee was formerly an officer of the Company. None of our executive officers serves, or during fiscal year 20192020 served, as a member of a Board of Directors or Compensation Committee of any entity that has, or during fiscal year 20192020 had, one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
Mr. Magliacano, wasMr. Hasiba, and Mr. Powell were nominated to our Board of Directors by Steiner Leisure pursuant to the terms of the Director DesignationGovernance Agreement. For more information, see the section entitled “Certain Relationships and Related Transactions.”
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires that our executive officers and directors, and persons who own more than 10% of our common stock, file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based solely on our review of copies of such forms that we have received, or written representations from reporting persons, we believe that during the fiscal year ended December 31, 2020, all executive officers, directors and greater than 10% stockholders complied with all applicable SEC filing requirements, with the exceptions noted below:
Due to an administrative error, a late Form 4 report was filed for Walter F. McLallen on August 18, 2020 to report a grant of 6,411 shares of Class A common stock and a grant of 17,606 restricted stock units on July 30, 2020.
Due to an administrative error, a late Form 4 report was filed for Maryam Banikarim on August 18, 2020 to report a grant of 6,411 shares of Class A common stock and a grant of 26,408 restricted stock units on November 25, 2020.
Due to an administrative error, a late Form 4 report was filed for Leonard Fluxman on November 12, 2020 to report a grant of 687,500 restricted stock units and a grant of 687,500 performance stock units on August 18, 2020.
Due to an administrative error, a late Form 4 report was filed for Stephen Lazarus on November 12, 2020 to report a grant of 315,500 shares of performance stock units and a grant of 315,500 restricted stock units on August 18, 2020.
Due to an administrative error, a late Form 4 report was filed for Glenn Fusfield on November 12, 2020 to report a grant of 166,667 shares of performance stock units on October 1, 2020.
ONESPAWORLD HOLDINGS LIMITED OFFICE NUMBER 2, PINEAPPLE BUSINESS PARK, AIRPORT INDUSTRIAL PARK, P.O. BOX N-624 NASSAU, ISLAND OF NEW PROVIDENCE, COMMONWEALTH OF THE BAHAMAS |
OneSpaWorld Holdings Limited
c/o One Spa World LLC
770 South Dixie Highway, Suite 200
Coral Gables, Florida 33146
Ladies and Gentlemen:
OneSpaWorld Holdings Limited (the “Company”) has engaged Duff & Phelps, LLC (“Duff & Phelps”) to serve as an independent financial advisor to the Special Committee (the “Special Committee”) of the board of directors (the “Board”) of the Company (solely in their capacity as members of the Board) to provide financial advice (the “Advice”) and an opinion (the “Opinion”) as of the date hereof as to the fairness, from a financial point of view, to the Company in the contemplated transaction described below (the “Proposed Transaction”).
Description of the Proposed Transaction
VOTE BY INTERNET
Before The Meeting - Go towww.proxyvote.com
The Proposed Transaction involves a capital raise by the Company of approximately $75 million.
Scope of Analysis
In connection with this Opinion, Duff & Phelps has made such reviews, analyses and inquiries as it has deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of this Opinion included, but were not limited to, the items summarized below:
During The Meeting - Go to www.virtualshareholdermeeting.com/OSW2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on June 8th, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
D52407-P57127 | KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —— — — — — —
DETACH AND RETURN THIS PORTION ONLY | ||||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
| ||||||||||||||||||
|
|
OneSpaWorld Holdings Limited
Page 2 of 4
April 29, 2020
|
|
|
|
Assumptions, Qualifications and Limiting Conditions
In performing its analyses and rendering this Opinion with respect to the Proposed Transaction, Duff & Phelps, with the Company’s consent:
|
|
|
|
|
|
|
|
To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based prove to be untrue in any material respect, this Opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of this Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction.
OneSpaWorld Holdings Limited
Page 3 of 4
April 29, 2020
Duff & Phelps has prepared this Opinion effective as of the date hereof. This Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date hereof, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting this Opinion which may come or be brought to the attention of Duff & Phelps after the date hereof. As you are aware, the credit, financial and stock markets have been experiencing unusual volatility and we express no opinion or view as to any potential effects of such volatility on the Company or the Proposed Transaction.
In January 2020, the World Health Organization declared COVID 19 to constitute a “Public Health Emergency of International Concern.” Given the uncertainty of the current situation regardingCOVID-19, the duration of any business disruption and related financial impact with respect to the Company or the Proposed Transaction cannot be reasonably estimated at this time. In addition, the credit, financial and stock markets have been experiencing unusual volatility as a result ofCOVID-19 and other factors. Accordingly, we express no opinion or view as to any potential effects ofCOVID-19 or the current volatility of the credit, financial and stock markets on the Company or the Proposed Transaction.
Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff & Phelps has not been requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Proposed Transaction, the assets, businesses or operations of the Company, or any alternatives to the Proposed Transaction, (ii) negotiate the terms of the Proposed Transaction, and therefore, Duff & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Investment Term Sheet and the Proposed Transaction, or (iii) advise the Board of Directors or any other party with respect to alternatives to the Proposed Transaction.
Duff & Phelps is not expressing any opinion as to the market price or value of the Company’s common shares (or anything else) after the announcement or the consummation of the Proposed Transaction. This Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.
In rendering this Opinion, Duff & Phelps is not expressing any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the consideration to be received by the Company in the Proposed Transaction, or with respect to the fairness of any such compensation.
This Opinion is furnished solely for the use and benefit of the Special Committee in connection with its consideration of the Proposed Transaction and is not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff & Phelps’ express consent. This Opinion (i) does not address the merits of the underlying business decision to enter into the Proposed Transaction versus any alternative strategy or transaction; (ii) does not address any transaction related to the Proposed Transaction; (iii) is not a recommendation as to how the Board of Directors or any shareholder should vote or act with respect to any matters relating to the Proposed Transaction, or whether to proceed with the Proposed Transaction or any related transaction, and (iv) does not indicate that the consideration received is the best possibly attainable under any circumstances; instead, it merely states whether the consideration in the Proposed Transaction is within a range suggested by certain financial analyses. The decision as to whether to proceed with the Proposed Transaction or any related transaction may
OneSpaWorld Holdings Limited
Page 4 of 4
April 29, 2020
depend on an assessment of factors unrelated to the financial analysis on which this Opinion is based. This letter should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.
This Opinion is solely that of Duff & Phelps, and Duff & Phelps’ liability in connection with this letter shall be limited in accordance with the terms set forth in the engagement letter between Duff & Phelps and the Company dated April 4, 2020 (the “Engagement Letter”). This letter is confidential, and its use and disclosure is strictly limited in accordance with the terms set forth in the Engagement Letter.
Disclosure of Prior Relationships
Duff & Phelps has acted as financial advisor to the Board of Directors and will receive a fee for its services. No portion of Duff & Phelps’ fee is contingent upon either the conclusion expressed in this Opinion or whether or not the Proposed Transaction is successfully consummated. Pursuant to the terms of the Engagement Letter, a portion of Duff & Phelps’ fee is payable upon the Company requesting the Opinion and Duff & Phelps’ stating to the Special Committee that it is prepared to deliver its Opinion. Other than this engagement, during the two years preceding the date of this Opinion, Duff & Phelps has provided corporate finance advisory services to affiliates of principals in the Proposed Transaction for which Duff & Phelps received fees, in the aggregate, of approximately $1,500,000. For these prior engagements, Duff & Phelps also received customary expense reimbursement and indemnification.
Conclusion
Based upon and subject to the foregoing, Duff & Phelps is of the opinion that as of the date hereof the Proposed Transaction is fair from a financial point of view to Company.
This Opinion has been approved by the Opinion Review Committee of Duff & Phelps.
Respectfully submitted,
Duff & Phelps, LLC
COMMONWEALTH OF THE BAHAMAS
THE INTERNATIONAL BUSINESS COMPANIES ACT 2000
THIRD AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
OF
ONESPAWORLD HOLDINGS LIMITED
NAME
|
REGISTERED OFFICE
|
REGISTERED AGENT
|
OBJECTS AND POWERS
|
|
|
|
CURRENCY
|
AUTHORISED CAPITAL
|
CLASSES, NUMBER AND PAR VALUE OF SHARES
|
SHARE RIGHTS AND LIMITATIONS
|
The Board of Directors | ||||||||||
1. | Election of | For | Withhold | |||||||
1a. | Marc Magliacano | ☐ | ☐ | |||||||
1b. | Jeffrey E. Stiefler | ☐ | ☐ | |||||||
1c. | Walter F. McLallen | ☐ | ☐ | |||||||
NOTE: Such other business as may Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Provisions Regarding theNon-Voting Common Shares:
|
|
|
|
|
|
|
|
|
|
|
VARIATION OF CLASS RIGHTS
|
|
REGISTERED SHARES
|
LIABILITY OF SHAREHOLDERS
|
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
DEFINITIONS
|
Adopted: [ ], 2020
COMMONWEALTH OF THE BAHAMAS
THE INTERNATIONAL BUSINESS COMPANIES ACT 2000
SECOND AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
ONESPAWORLD HOLDINGS LIMITED
TABLE OF CONTENTS
Article | Description | Page | ||||
1-7 | 10-12 | |||||
8-12 | 12-13 | |||||
13-23 | 13-14 | |||||
24-26 | 14 | |||||
27-29 | 14-15 | |||||
30-34 | 15 | |||||
35-40 | 15-16 | |||||
41-66 | 16-20 | |||||
67-75 | 20-21 | |||||
76-81 | 21 | |||||
82-93 | 21-22 | |||||
94-97 | 23 | |||||
98-99 | 23 | |||||
100-111 | 23-26 | |||||
112 | 26 | |||||
113-123 | 26-27 | |||||
124-132 | 27-33 | |||||
133-136 | 33-34 | |||||
137 | 34 | |||||
138 | 34 | |||||
139 | 34 | |||||
140-141 | 34 | |||||
142 | 35 | |||||
143 | 35 |
|
|
| |
| ||
Signature [PLEASE SIGN WITHIN BOX] | Date |
Against | Abstain | |||||||
| ||||||||
| ||||||||
2. |
|
|
|
|
|
|
|
“THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO SIGNIFICANT OWNERSHIP AND TRANSFER RESTRICTIONS PURSUANT TO THE SECOND AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF ONESPAWORLD HOLDINGS LIMITED (THE “COMPANY”), AS SUCH ARTICLES OF ASSOCIATION MAY BE AMENDED, RESTATED, OR OTHERWISE MODIFIED FROM TIME TO TIME (THE “ARTICLES OF ASSOCIATION”). THE COMPANY WILL FURNISH A COPY OF THE ARTICLES OF ASSOCIATION TO THE HOLDER OF RECORD OF THIS CERTIFICATE WITHOUT CHARGE UPON A WRITTEN REQUEST ADDRESSED TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.”
|
|
|
SHARES, AUTHORISED CAPITAL AND CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ☐ | ☐ | ☐ |
|
|
|
REDUCTION OR INCREASE IN AUTHORISED CAPITAL
| ||||||
Signature (Joint Owners) | Date |
|
|
|
provided, however, that where shares are divided or combined under (a) or (b) of this Article, the aggregate par value of the new shares must be equal to the aggregate par value of the original shares.
|
|
|
|
|
|
MEETINGS AND CONSENTS OF SHAREHOLDERS
|
|
|
|
|
|
|
|
have waived notice of the meeting; and for this purpose presence at the meeting shall be deemed to constitute waiver.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTRICTIONS ON TRANSFER AND OWNERSHIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VOLUNTARY WINDING UP AND DISSOLUTION
|
|
|
|
COMMONWEALTH OF THE BAHAMAS
New Providence
Company under the International Business
Companies Act 2000
THIRD AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
AND
SECOND AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
ONESPAWORLD HOLDINGS LIMITED
Incorporated the 5th day of October, 2018
Prepared by:
Harry B. Sands, Lobosky Management Co. Ltd.
Shirley House
253 Shirley Street
Nassau, New Providence
Bahamas
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. Vote by Internet QUICK EASY IMMEDIATE 24 Hours a Day, 7 Days a Week or by Mail Your Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Votes submitted electronically over the Internet must be received by 11:59 p.m., Eastern Daylight Time, on June 9, 2020. INTERNET www.cstproxyvote.com Use the Internet to vote your proxy. Have your proxy card available when you access the above website. Follow the prompts to vote your shares. Vote at the Meeting If you plan to attend the virtual online annual meeting, you will need your 12 digit control number to vote electronically at the annual meeting. To attend: http://cstproxy.com/onespaworld/2020 PLEASE DO NOT RETURN THE PROXY CARD your IF YOU ARE VOTING ELECTRONICALLY. MAIL Mark, sign and date proxy card and return it in the postage-paid envelope provided. FOLD HERE DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED PROXY Please mark your votes X like this THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED IN PROPOSAL 1 AND A VOTE “FOR” PROPOSALS 2, 3 AND 4. 1. Election of Directors: 3. Approval of the Private FOR AGAINST ABSTAIN Placement (as defined in the FOR AGAINST WITHHOLD proxy statement) for purposes of (1) Steven J. Heyer Nasdaq Listing Rule 5635: (2) Andrew R. Heyer 4. Approval of the adoption of our FOR AGAINST ABSTAIN (3) Leonard Fluxman Amended Articles (as defined in the proxy statement) to, among 2. Ratification of the appointment FOR AGAINST ABSTAIN other things, authorize a new of Ernst & Young LLP as the class ofNon-Voting Common Company’s independent Shares, par value $0.0001 per registered public accounting firm share: for the year ending December 31, 2020. CONTROL NUMBER Signature Signature, if held jointly , 2020 Note: Please sign exactly as your name(s) appear hereon. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give full title.
16007 OneSpaWorld Proxy Card REV4 Back Important Notice Regarding the Internet Availability of Proxy Materials for the Annual MeetingMeeting:
The Notice of Shareholders To view the 2020 Proxy Statement, 2019 Annual Report and to attend the Annual Meeting, please go to: https://www.cstproxy.com/onespaworld/2020 FOLD HERE DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OneSpaWorld Holdings Limited For the Annual Meeting of Shareholders to be held on Wednesday, June 10, 2020,and Proxy Statement and Annual Report are available at 12:30 p.m., Eastern Daylight Time By signing this proxy, you revoke all prior proxies and appoint Glenn J. Fusfield and Stephen B. Lazarus, and each of them with full power of substitution, to represent and to vote, as designated on the reverse hereof, all of the common shares of OneSpaWorld Holdings Limited held of record by you at the close of business on May 5, 2020 at the Annual Meeting of Shareholders of OneSpaWorld Holdings Limited to be held on June 10, 2020, and at any postponement or adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED. IF NO CONTRARY INDICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF ELECTING THE THREE NOMINEES TO THE BOARD OF DIRECTORS, IN FAVOR OF PROPOSALS 2, 3 AND 4, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. (Continued and to be marked, dated and signed, on the other side)www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
D52408-P57127
ONESPAWORLD HOLDINGS LIMITED THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS JUNE 9, 2021 The shareholder(s) hereby appoint(s) Leonard Fluxman and Stephen B. Lazarus or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Shares of OneSpaWorld Holdings Limited that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held virtually at 12:30 p.m., Eastern Daylight Time on Wednesday, June 9, 2021, at www.virtualshareholdermeeting.com/OSW2021, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL 2. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE CONTINUED AND TO BE SIGNED ON REVERSE SIDE |