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 party 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 under §240.14a-12 |
OneSpaWorld Holdings Limited
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee paid previously with preliminary materials. | ||||
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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 25, 2024
Dear Fellow Shareholders:
It is my pleasure to invite you to attend the 20202024 Annual Meeting of Shareholders (the “Annual Meeting”) of OneSpaWorld Holdings Limited. The Annual MeetingLimited, which will be held in the Library Room, located at 12:30 p.m.The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, on Wednesday, June 5, 2024 at 11:00 a.m., Eastern Daylight Time, on Wednesday, June 10, 2020. Due to 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. 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 questions during the meeting by visiting https://www.cstproxy.com/onespaworld/2020 and using your control number assigned by Continental Stock Transfer & Trust Company. The Annual Meeting live webcast will begin promptly at 12:30 p.m., Eastern Daylight Time, on Wednesday, June 10, 2020.
Time. The accompanying Notice of Annual Meeting of Shareholders and proxy statementProxy Statement describe the items of business that will be discussed and voted upon during the Annual Meeting. On or about May 22, 2020,April 25, 2024, 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 and cash position and the cruise industry on which our revenue is substantially dependent. The cruise industry in the United States is 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’ declaration that 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. Cruise cancellations and hotel closures resulting in the closure of the Company’s onboard and resort spa operations have materially adversely impacted, and will continue to adversely impact, our operations, financial results and liquidity. The Company’s liquidity and operating results will continue 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, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact. In light of the cruise industry’s
response to the globalCOVID-19 pandemic and the No Sail Order issued by the CDC, the Company is taking steps to mitigate the adverse impact of 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.
On behalf of our Board of Directors, I want to thank you for your continued support and confidence in 2020.2024.
Sincerely,
Glenn J. Fusfield
President and Chief Executive Officer
Leonard Fluxman
President, Executive Chairman and Chief Executive Officer
Notice of 20202024 Annual Meeting of Shareholders
to be Held on June 10, 20205, 2024
The 20202024 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 onlinein the Library Room, located at 12:30 p.m.The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, on Wednesday, June 5, 2024 at 11:00 a.m., Eastern Daylight Time, on Wednesday, June 10, 2020 at https://www.cstproxy.com/onespaworld/2020. In light ofTime.
Prior to 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 meeting.
Youyou will be able to attend the Annual Meeting online, vote your shares electronically, and submit questions during the meeting by visiting https://www.cstproxy.com/onespaworld/2020 and using your control number assigned by Continental Stock Transfer & Trust Company. We are holding the meetingat www.proxyvote.com for the purpose of considering and voting upon the following, purposes, which are more fully described in the attached proxy statement:Proxy Statement:
To elect each of Steven J. Heyer, Andrew R. Heyer,Marc Magliacano, Walter F. McLallen and Leonard FluxmanJeffrey E. Stiefler to serve as Class AB directors and to hold office for a three-year term expiring at the 20232027 annual meeting of shareholders (the “2027 Annual MeetingMeeting”);
To consider the approval, by an advisory vote, of Shareholders;the compensation of the Company’s named executive officers (i.e., “Say-On-Pay” proposal);
To approve, by an advisory vote, the frequency of future advisory votes to approve the compensation of the Company’s named executive officers (i.e., “Say-On-Frequency”);
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”);2024; 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 16, 2024 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting.
Most shareholders have a choice of voting on the Internet, by phone 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 or vote on any of the proposals in person at the Annual Meeting.
Sincerely,
Inga A. Fyodorova
Corporate Secretary
May 22, 2020April 25, 2024
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ONJUNE10, 2020. 5, 2024. The proxy statementProxy Statement and our Annual Report on Form10-K for fiscal year 20192023 (the “2019“2023 Annual Report”) are available at the website appearing on your proxy card. The proxy statement,Proxy Statement, proxy card and the 20192023 Annual Report will be provided to shareholders beginningmailed on or about May 22, 2020.April 25, 2024.
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OneSpaWorld Holdings Limited
20202024 Annual Meeting of Shareholders
to be Held on June 10, 20205, 2024
This proxy statementProxy 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 statementProxy Statement addresses the items of business for the 20202024 Annual Meeting of Shareholders of OneSpaWorld (the “Annual Meeting”) to be held in the Library Room, located at The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, on Wednesday, June 10, 2020,5, 2024 at 11:00 a.m., Eastern Daylight Time, or any postponement or adjournment thereof. We will holdPrior to the Annual Meeting, online at 12:30 p.m., Eastern Daylight Time, at https://www.cstproxy.com/onespaworld/2020. 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, shareholdersyou will be able to attend, vote at www.proxyvote.com for the purpose of considering and submit questions, as further described below.voting upon the items of business for the Annual Meeting.
The Notice of Annual Meeting of Shareholders, this proxy statement,Proxy Statement, our Annual Report on Form10-K for the fiscal year ended December 31, 20192023 (the “2019“2023 Annual Report”), the proxy card and any accompanying proxy materials are being made available to shareholders on or about May 22, 2020.April 25, 2024.
For purposes of this proxy statement,Proxy Statement, “OSW Predecessor” is comprised of the net assets and operations of (i) the following wholly ownedcertain wholly-owned, majority-owned and indirect subsidiaries of Steiner Leisure, Limited (“Steiner Leisure”): OneSpaWorld LLC, Steiner Spa Asia Limited, Steiner Spa Limited, and Steiner Marks Limited, (ii) the following respective indirect subsidiariesformer parent company of Steiner Leisure: Mandara PSLV, LLC, 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), 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 statementProxy 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 “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” 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, including projected financial information (which is not audited or reviewed by the Company’s auditors), 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 the COVID-19 pandemic on the Company’s business and its results of operation and liquidity for the foreseeable future; the demand for the Company’s services 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 market for the Company’s services; changes in applicable laws or regulations; the availability or 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 customer 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, which was filed with the SEC on March 30, 2020.. 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.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 16, 2024 (the “Record Date”), you are considered a shareholder entitled to vote at the Annual Meeting. Accordingly, we are providing you with ourThe Annual Meeting will be held in the Library Room, located at The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, on Wednesday, June 5, 2024 at 11:00 a.m., Eastern Daylight Time.
The proxy materials, in orderincluding the Proxy Statement, proxy card, and the 2023 Annual Report will be mailed to solicit your vote at the Annual Meeting.our shareholders of record on or about April 25, 2024.
2. | What is included in the proxy materials? |
The proxy materials include:
Our Notice of Annual Meeting of Shareholders;
Our proxy statementProxy Statement for the Annual Meeting;
Our proxy or voting instruction card; and
Our 20192023 Annual Report.
3. | 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 22, 2024, 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 1-800-690-6903 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
4. Who |
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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.
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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.
5. | 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, Walter F. McLallen and Leonard FluxmanJeffrey E. Stiefler to serve as Class AB directors and to hold office for a three-year term expiring at the 2023 annual meeting of shareholders;2027 Annual Meeting;
Proposal 2. The approval, by an advisory vote, of the compensation of the Company’s named executive officers (i.e., “Say-on-Pay”);
Proposal 3. The approval, by an advisory vote, of the frequency of future advisory votes to approve the compensation of the Company’s named executive officers (i.e., “Say-on-Frequency”); and
Proposal 4. 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.2024.
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.
6. | 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 our non-binding advisory vote on named executive officer compensation. Abstentions will have the effect of a vote against this proposal. Broker non-votes will have no effect on the vote for this proposal.
Proposal 3. You may vote for “1 YEAR,” 2 YEARS, 3 YEARS or “ABSTAIN” on our non-binding advisory vote on the frequency of future advisory votes to approve the compensation of the Company’s named executive officers. The frequency that receives the highest number of votes cast will be deemed to be the frequency selected by shareholders. Abstention and broker non-votes will not count in the determination of which alternative receives the highest number of votes cast.
Proposal 4. 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
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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.
7. | 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;
“FOR” the approval, by an advisory vote, of the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement;
“EVERY YEAR” for the frequency of future advisory votes to approve named executive officer compensation; 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.2024.
8. | 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, ifIf you submit a properly executed proxy card, even if you abstain from voting, you will be considered part of the quorum. Similarly,Additionally, 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.Say-On-Pay | Majority of the Votes present in person or represented by proxy at the meeting and entitled to vote on the subject matter | |
3. Say-On-Frequency | The highest number of votes cast will determine the frequency selected by shareholders. | |
4. 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 non-binding advisory vote on Say-On-Pay 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. Broker non-votes will have no effect on the outcome of this proposal. Although the results will not be binding on the Board, the Board will consider the results of the shareholder vote when making future decisions regarding executive compensation.
For the non-binding advisory vote on Say-On-Frequency, the frequency that receives the highest number of votes cast will be deemed to be the frequency selected by shareholders. Abstention and broker non-votes will not count
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in the determination of which alternative receives the highest number of votes cast. Although the results will not be binding on the Board, the Board will consider the results of the shareholder vote when making future decisions regarding the frequency with which it will submit for shareholder approval the compensation of the Company’s named executive officers.
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.
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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.
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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.Annual 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.
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.
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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 received in the mail.card.
Voting VirtuallyOnline Prior to the Annual Meeting
Shareholders of record may vote virtually at the Annual Meeting with aby proxy card by visiting www.proxyvote.com and following the instructions at https://www.cstproxy.com/onespaworld/2020.to create an electronic voting instruction form. The availability of online voting may depend on the voting procedures of the organization that holds your shares.
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, 2020.4, 2024.
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.
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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 2421 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 |
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.Meeting. The Annual Meeting live webcast will begin promptly at 12:30 p.m.11:00 a.m., Eastern Daylight Time, on Wednesday, June 10, 2020. You will not be able to attend the meeting in person. Shareholders participating5, 2024 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 and you wish to attend the virtual Annual Meeting, go to https://www.cstproxy.com/onespaworld/2020, enter the control number you received on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” linkLibrary Room, located 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.The Island House, Mahogany Hill, Western Road, Nassau, Bahamas.
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 2012 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 onlinein the Library Room, located at The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, on Wednesday, June 10, 20205, 2024 at 12:30 p.m.11:00 a.m., Eastern Daylight Time, at https://www.cstproxy.com/onespaworld/2020.Time.
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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, 2021December 30, 2024 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, 2021December 30, 2024 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.
To comply with the requirements set forth in Rule 14a-19 of the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must also provide written notice to the Secretary at the Company’s principal executive officers that sets forth all the information required by Rule 14a-19(b) of the Exchange Act.
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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)24).
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 20212025 annual meeting of shareholders is currently set to begin on February 10, 20215, 2025 and end on March 27, 2021.22, 2025. 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 24.21.
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 24.21. 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.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
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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.
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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 DateApril 25, 2024 (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 61,218,151104,713,619 shares of voting common shares issued and outstanding as of the Record Date.April 25, 2024.
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 | % | ||||||
Directors & Named Executive Officers: | ||||||||
Leonard Fluxman(2) | 2,428,780 | 3.96 | % | |||||
Steven J. Heyer(3) | 1,721,234 | 2.81 | % | |||||
Glenn J. Fusfield(4) | 941,521 | 1.53 | % | |||||
Marc Magliacano | — | — | ||||||
Andrew R. Heyer(5) | 1,309,679 | 2.13 | % | |||||
Walter F. McLallen(6) | 271,487 | * | ||||||
Jeffrey E. Stiefler(7) | 84,033 | * | ||||||
Michael J. Dolan | — | — | ||||||
Stephen W. Powell | 2,500 | * | ||||||
Maryam Banikarim | — | — | ||||||
Stephen B. Lazarus(8) | 1,155,599 | 1.88 | % | |||||
All current directors and officers as a group (11 persons) | 7,410,412 | 12.10 | % | |||||
5% Shareholders: | ||||||||
Steiner Leisure Limited(9) | 10,034,650 | �� | 16.39 | % | ||||
Franklin Resources Inc(10) | 7,005,797 | 11.44 | % | |||||
BlackRock, Inc.(11) | 3,411,493 | 5.57 | % |
Name of Beneficial Owner(1) | Number of Shares | % | ||||||
Directors & Named Executive Officers: | ||||||||
Leonard Fluxman(2) | 2,074,627 | 2.0 | % | |||||
Glenn J. Fusfield(3) | 233,163 | * | ||||||
Marc Magliacano | 34,035 | * | ||||||
Andrew R. Heyer(4) | 1,181,450 | 1.1 | % | |||||
Walter F. McLallen(5) | 217,153 | * | ||||||
Jeffrey E. Stiefler(6) | 169,411 | * | ||||||
Adam Hasiba | 29,833 | * | ||||||
Stephen W. Powell | 104,183 | * | ||||||
Maryam Banikarim | 75,765 | * | ||||||
Stephen B. Lazarus | 755,978 | * | ||||||
Susan Bonner | 320,854 | * | ||||||
Lisa Myers | 8,404 | * | ||||||
All current directors and officers as a group (12 persons) | 5,204,856 | 5.0 | % | |||||
5% Shareholders: | ||||||||
Franklin Resources Inc.(7) | 5,298,544 | 5.1 | % | |||||
Ariel Investments, LLC(8) | 13,409,080 | 12.8 | % | |||||
Select Equity Group, L.P.(9) | 8,448,600 | 8.1 | % | |||||
Blackrock, Inc.(10) | 6,866,714 | 6.6 | % |
* | Indicates percentage of less than one percent. |
(1) | Unless otherwise noted, the business addresses of each of the |
(2) |
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(3) | Represents (a) |
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(4) | Represents (a) 608,305 common shares held directly by Andrew R. Heyer; |
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Represents |
Includes |
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Represents common shares beneficially owned by |
(9) | Represents common shares beneficially owned by Select Equity Group L.P. (“Select LP”), SEG Partners II, L.P. (“SEG Partners II”) and George S. Loenig. Select LP and George S. Loenig claim shared voting and dispositive power of 8,448,600 common shares. SEG Partners II claims shared voting and dispositive power of 4,824,624 common shares. This information is based solely on a Schedule 13G filed with the SEC on February |
(10) | Represents common shares beneficially owned by Blackrock Inc., of which it has sole voting power of 6,756,873 common shares and sole dispositive power of 6,866,714 common shares. This information is based solely on a Schedule 13G filed with the SEC on February 2, 2024. The address of Blackrock Inc. is 50 Hudson Yards, New York, NY 10001. |
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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, Walter F. McLallen and Leonard FluxmanJeffrey E. Stiefler forre-election as Class AB Directors for three-year terms expiring at the 20232027 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, thereThere 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 related to Steiner Leisure’s board and committee designation rights under the Investment Agreement and the Governance Agreement, which take effect upon the consummation of the Private Placement and supersede the Director Designation Agreement, please refer to “Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635—Background and Overview—Investment Agreement” and “—Governance Agreement.”
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:
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Our Class AB Director Nominees
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION
OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
Director since: March | Mr.
We believe Mr. |
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Walter F. McLallen Age: 58 Title: Director Director since: March | Mr. McLallen is a finance professional with over 35 years of investment banking, corporate finance advisory, capital markets and financial 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 The LoveSac Company (NASDAQ: LOVE), a direct to consumer specialty furniture brand supporting an e-commerce model, since June 2019; as well as a director 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 is also a founder and Co-Chairman of Tomahawk Strategic Solutions, a law enforcement and corporate training and risk management company, since 2014. From 2006 to 2015, Mr. McLallen was the 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 |
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Jeffrey E. Stiefler Age: 77 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. |
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT
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Our Class A Directors (serving until our 2026 annual meeting of shareholders)
Andrew R. Heyer
Director since: March 2019 | Mr. Heyer is a finance professional with over
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. |
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Leonard Fluxman
Director since: March | Mr. Fluxman is our Executive Chairman and Chief Executive Officer since March 2021 and our President since June 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.
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Our Class B Directors (serving until our 2021 annual meeting of shareholders)
Director since: June |
Until establishing Clerisy, Ms. Myers was a partner at L Catterton, the largest consumer-focused private equity firm in the world with over In 2021, Ms. Myers served as the president of Aspirational Consumer Lifestyle Corp., a SPAC, which completed a NYSE listing of Wheels UP, one of the leading companies in Ms. Myers holds Board positions on several private companies and Passionate about helping and mentoring women, Ms. Myers formerly served on the Board of Women’s World Banking, a global organization which provides micro-finance to women in emerging markets and serves on the Board of Wharton
We believe
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Our Class C Directors (serving until our 20222025 annual meeting of shareholders)
Glenn J. Fusfield
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 | |
Stephen W. Powell
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
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. |
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Maryam Banikarim
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 working in an advisory capacity with the
We believe Ms. Banikarim is qualified to serve as a director due to her extensive experience and leadership in marketing. | |
Adam Hasiba Age: 40 Title: Director Director since: June | Mr. Hasiba serves on our Board. Mr. Hasiba joined the Board in June 2020. Mr. Hasiba is currently a Managing Director at L Catterton, where he also worked from 2014 to 2022. At L Catterton, Mr. Hasiba invests in consumer-focused brands and provides those investments with operational, financial, and strategic support. Prior to rejoining L Catterton, Mr. Hasiba was the Chief Financial Officer at Ideal Image, the #1 Aesthetics Brand in North America. Prior to his initial employment at 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 several years at McKinsey where he was a member 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 graduated 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. |
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We are asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in the “Compensation Discussion and Analysis” section of this Proxy Statement and the related compensation tables and narrative. This item is being presented pursuant to Section 14A of the Exchange Act. Although this advisory vote is not binding, the Compensation Committee will consider the voting results when evaluating our executive compensation program.
Our executive compensation program is designed to support our long-term success and reflect our pay-for-performance culture. We have a strong belief in promoting a pay-for-performance culture, and, accordingly, as described in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee has structured an executive compensation program that is competitive, rewards achievement of our business objectives, and aligns the interests of our executive officers, including our Named Executive Officers, with those of our shareholders. Our executive compensation program is designed to recruit and retain as executive officers individuals with the highest capabilities and capacities to develop, grow, and manage our business, and to align their compensation with our Company’s short-term and long-term goals.
You are being asked to approve the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the description of our compensation program, compensation tables and narrative discussion, is hereby APPROVED.
THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL, ON AN ADVISORY BASIS, OF
THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS
DESCRIBED IN THIS PROXY STATEMENT.
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Pursuant to Section 14A of the Exchange Act, we are asking shareholders to cast an advisory vote on the frequency of future advisory votes on executive compensation. Shareholders may specify whether they prefer such votes to occur every year, every two years, or every three years, or they may abstain. The Board recommends that this vote occur every year.
Although we recognize the potential benefits of having less frequent advisory votes on named executive officer compensation (including allowing the Company additional time to conduct a more detailed review of its compensation practices in response to the outcome of shareholder advisory votes), we recognize that the widely adopted standard is to hold “Say-On-Pay” votes annually. We also acknowledge current shareholder expectations regarding having the opportunity to express their views on the Company’s compensation of its named executive officers on an annual basis. In light of investor expectations and prevailing market practice, the Board recommends that the advisory vote on named executive officer compensation occur every year.
Although the shareholders’ vote on this proposal is not binding, the Compensation Committee and the Board will consider the voting results in determining the frequency of future advisory votes. Notwithstanding the Board’s recommendation and the outcome of the shareholders vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
THE BOARD RECOMMENDS SHAREHOLDERS VOTE, ON AN ADVISORY BASIS, TO CONDUCT FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION “EVERY YEAR.”
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Proposal 4: 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, 20202024 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, 20192023 and 2018.2022.
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 2023 and the fees incurred by the Company and paid by Nemo Investor Aggregator, Limited (the parent company of OSW Predecessor) in fiscal year 2018.2022.
Year Ended December 31, | Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2023 | 2022 | |||||||||||||
Audit Fees(1) | $ | 2,275,000 | $ | 2,499,102 | $ | 2,327,913 | $ | 1,482,861 | ||||||||
Audit-Related Fees(2) | — | — | 170,000 | — | ||||||||||||
Tax Fees(3) | 47,900 | 4,500 | 1,758 | 14,654 | ||||||||||||
All Other Fees(4) | — | — | — | — | ||||||||||||
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Total Fees | $ | 2,322,900 | $ | 2,503,602 | $ | 2,499,671 | $ | 1,497,515 | ||||||||
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(1) | Audit Fees. Audit fees consist of fees billed for professional services rendered for the audits of our financial statements (including the Sarbanes-Oxley 404 attestation for fiscal year 2023), 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”“FOR” PROPOSAL 2.4.
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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 fourfive 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, 20192023 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, 2019.2023.
Walter F. McLallen, Chair
Stephen W. PowellGlenn Fusfield
Michael J. DolanAdam Hasiba
Andrew R. Heyer
Background to Proposals 3 and 4
You are being asked to approve two proposals in connection with the Private Placement: (i) the approval of the Private Placement for purposes of Nasdaq Listing Rule 5635 (Proposal 3); and (ii) the approval and adoption of 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 on 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.
Our Board of Directors is soliciting your vote on these proposals in order 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, our Board of Directors believes that the consummation of the Private Placement will provide the Company with both near- and long-termnon-financial 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.
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:
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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.24
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:
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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
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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:
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Source: S&P Capital IQ, SEC Filings, Annual and Interim Reports
The selected public companies analysis resulted in a range of enterprise values for the Company, based on LTM EBITDA as of February 29, 2020 of $55.9 million, of $502.9 million to $558.7 million. Duff & Phelps adjusted the enterprise value range for net debt, othernon-operating assets of the Company and the impact of outstanding options and other equity securities of the Company to arrive at the aggregate equity value of the Company, which implied a range of per share equity value of $3.89 per share to $4.62 per share.
Other Matters
Duff & Phelps 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 engaged in the valuation of businesses and securities in the preparation of fairness opinions in connection with mergers, acquisitions and other strategic transactions.
Duff & Phelps was retained by the Company to provide an opinion to the Special Committee of the Board of the Company (solely in their capacity 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 opinion 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 inquiry with respect to such a transaction. In addition, the Company agreed to certain covenants in support of the transaction, 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. 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 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 amount of not less than $75 million (less transaction fees, costs and expenses of
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) 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 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) issue to Steiner Leisure an aggregate of (x) approximately 15.0 millionNon-Voting Common Shares and (y) warrants to purchase approximately 4.0 millionNon-Voting Common Shares at an exercise price of $5.75 per share, and (ii) issue to theCo-Investors an aggregate of (x) approximately 3.7 million shares 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.
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 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 $50 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 closing 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’
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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.
Steiner Leisure Director Designation Right
Under the terms of the Investment Agreement, Steiner Leisure will have 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 will not be subjectto re-designation by 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) may not transfer the purchased Common 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 Rights
Contingent upon shareholder approval of Proposals 3 and 4, in connection with the closing of the Private Placement, the Company, Steiner Leisure and, solely for the purpose of Section 18 thereof, HYAC will enter into the Governance Agreement, pursuant to which Steiner Leisure 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 closing of the Private Placement, the Governance Agreement will supersede 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 will have the right to designate and appoint (a) two directors after the closing of the Private Placement (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 after the closing 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 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 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 information regarding Mr. Magliacano, see “Proposal 1: Election of Directors—Our Class B Directors.”
Class C Initial Steiner Designee:Adam Hasiba will be the initial Class C director designee by Steiner Leisure and will serve as a member of the Nominating and Governance Committee. Mr. Hasiba joined the board of Steiner Leisure, the former parent of company of OneSpaWorld, in 2019. Mr. Hasiba is currently serving as a Vice President atL 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 joiningL 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.
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 expiration of his term following the closing of the Private Placement.
We expect Michael Dolan will step down from the Board of Directors and all committees on which he serves, effective as of the closing of the Private Placement for purposes of facilitating the designation and appointment rights of Steiner Leisure and its affiliates.
Consent Rights
Under the terms of the Governance Agreement, amajority-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
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 entitled to make up to three demands per 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 before and 90 days after the pricing of any underwritten offering of the Company, and will enter into acustomary lock-up agreement to such effect.
Amendments to Credit Agreements
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, entered into Amendment No. 1 to First Lien Credit Agreement (the “First Lien Amendment”). 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 amount of not less than $75 million (less transaction fees, costs and expenses of 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) 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 in 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 Association (the “Amended Articles”) in the form attached hereto asAppendix B, in order to, 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 17.2 millionNon-Voting Common Shares and approximately 2.8 million Voting Common Shares (each amount includes the applicable portion of the Additional 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) issue tothe 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. As of May 5, 2020, these Common Shares would represent approximately 28% of our Common Shares outstanding immediately following 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 value of the Company. The sale or any resale of the Common Shares, or Common Shares issued upon exercise of the warrants, could also cause the market price of our Voting Common Shares 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 Association 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 changes to the Company’s existing Articles described more fully below, 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.
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 are required to consummate the Private Placement, unless the closing condition in the Investment Agreement related to shareholder approval of the Amended Articles is waived.
Before voting on this proposal, shareholders should carefully read 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 Board
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, whowhich 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 companyCompany 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.
The following table sets forth the director class, name, age as of April 25, 2024, and other information for each member of our Board:
Board of Directors (as of the date hereof)
Director/Nominee | Age | Class | Audit | Compensation | Nominating and | ||||||||||||||||
Leonard Fluxman* | 66 | A | |||||||||||||||||||
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Andrew R. Heyer | 66 | A | ✓ | ||||||||||||||||||
Lisa Myers | 56 | A | ✓ | ||||||||||||||||||
Marc Magliacano | 49 | B | ✓ | ||||||||||||||||||
Walter F. McLallen† | 58 | B | ✓* | ✓ | |||||||||||||||||
Jeffrey E. Stiefler | 77 | B | ✓ | ✓* | |||||||||||||||||
| 40 | C | ✓ | ||||||||||||||||||
Stephen W. Powell | 65 | C | ✓ | ✓* | |||||||||||||||||
Maryam Banikarim | 55 | C | ✓ | ||||||||||||||||||
Glenn J. Fusfield | 61 | C | ✓ |
* | Indicates chairperson. |
† | Indicates audit committee financial expert. |
Leadership Structure
Our Board of Directors is responsible for establishing and maintaining 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 April 25, 2024, Leonard Fluxman currently serves as theExecutive Chairman, of the Board.Chief Executive Officer, President and Director. Together, Mr. Fluxman, Stephen B. Lazarus (our Chief Financial Officer),Officer and Glenn FusfieldChief Operating Officer) and Susan Bonner (our Chief ExecutiveCommercial Officer), lead an internally developeda senior management team with over 150 years of combined industry experience. Steven J. HeyerStephen W. Powell is our designated lead independent director.Lead Independent Director.
The Board believes that having Mr. Fluxman serve as both Chairman and Chief Executive Officer is the most effective leadership structure for the Company at this time. Mr. Fluxman has over 30 years of leadership and operations experience, including over 25 years of experience in the consumer and consumer-related products and services industry. Mr. Fluxman served as Chief Executive Officer of Steiner Leisure and OSW Predecessor from January 2001 to March 2019, Executive Chairman of the Company from March 2019 to March 2021, and Chairman and Chief Executive Officer of the Company since March 2021. Based on Mr. Fluxman’s direct and highly relevant experience, the Company’s performance under his leadership and the Board’s engagement with Mr. Fluxman since March 2019, the Board performsbelieves that Mr. Fluxman is uniquely well positioned to serve as both Chairman and Chief Executive Officer of the Company and lead our business, operations and strategy in such dutiescapacity at this time.
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The combination of the Chief Executive Officer and possess such powers as are assigned to him byChairman 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 Articles, including to act as chairmanbusiness strategies. The combination of the Chief Executive Officer and Chairman roles is balanced by our Lead Independent Director position, by the independence of all specialof our other directors, each of whom has significant experience in leadership roles at public companies and annual shareholder meetingsother large, complex organizations, and by the three principal committees of the Company. At any meetingBoard, each of our shareholders,which consists solely of independent directors.
Although the chairman ofBoard does not have a specific diversity policy, 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 structurediversity along multiple dimensions, including gender, race, ethnicity, sexual orientation, and professional expertise and experience, 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 andan important factor in board composition. The below sets forth the independent membersself-identified diversity characteristics of our Board as of Directors. Our BoardApril 25, 2024. Each of Directors will continue to review its leadership structurethe categories listed in the table below has the meaning as we continue to grow as a company.
Board Diversity Matrix (as of April 25, 2024) |
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Total Number of Directors | 10 | |||||||||||||||
Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||||
Part I: Gender Identity |
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Directors | 2 | 8 | ||||||||||||||
Part II: Demographic Background |
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White | 2 | 8 |
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.investor-relations. Paper copies may be obtained upon request by writing to us: 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.
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 consummation of the Private Placement and supersede the Director Designation Agreement, please refer to “Proposal 3: Approval of the Private Placement for purposes of Nasdaq Listing Rule 5635—Background and Overview—Investment Agreement” and “—Governance Agreement.”
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.
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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.investor-relations.
Our Audit Committee consists of Mr. McLallen (chairperson), Mr. Powell,Fusfield, Mr. DolanHasiba, Mr. Heyer and Mr. A. Heyer.Powell. 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, 2019.2023.
If the Private Placement is consummated, we expect Mr. Dolan to resign from the Board and our Audit Committee.
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.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-PaySay-On-Pay Votes,votes, taking into account the results of the most recent shareholder advisory vote on frequency ofSay-on-PaySay-On-Frequency Votesvotes required by Section 14A of the Exchange Act, and review and approve the proposals regarding theSay-on-PaySay-On-Pay Votevote and the frequency of theSay-on-PaySay-On-Frequency Votevote to be included in the Company’s proxy statement;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 statementProxy Statement for the annual meeting of shareholders, in accordance with applicable rules and regulations of the SEC.SEC;
Make recommendations to our Board of Directors regarding the establishment and terms of the Company’s incentive compensation plans and administer such plans;
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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, oranalysis and 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 HeyerPowell (chairperson), Mr. Powell, Mr. Magliacano and Mr. Stiefler. All members of ourthe 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 five meetings during the fiscal year ended December 31, 2019.2023.
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.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. StieflerMcLallen and Mr. S. Heyer.Ms. Myers. 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 twosix meetings during the fiscal year ended December 31, 2019.2023.
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.
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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 statementProxy 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 and Workforce 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
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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 Mses. Banikarim and Myers and Messrs. Dolan,Fusfield, Hasiba, Heyer, Magliacano, McLallen, Magliacano, Stiefler and Powell and Ms. BanikarimStiefler 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.
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During the fiscal year ended December 31, 2019,2023, our Board of Directors held fournine regular meetings, executive sessions with respect to each such regular meeting 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. 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 2023 annual meeting of shareholders as a public company.shareholders.
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, including diversity, sustainability and social responsibility. 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 enterprise 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, cybersecurity risks and cybersecurityother identified enterprise 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.
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 corporate website at onespaworld.com/www.onespaworld.com/investor-relations. The information contained on, ouror that can be accessed through, the websites referenced throughout this Proxy Statement are not incorporated into this Proxy Statement. Further, references to website is not part ofaddresses throughout this proxy statement.Proxy Statement are intended to be inactive textual references only. 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 livesA primary responsibility of our guests,Board of Directors and our leadership team involves overseeing our corporate strategy with respect to establishing, implementing and monitoring our ESG policies, practices and procedures embedded across our operations in order to mitigate risks, identify opportunities and maximize the long-term performance and value of the Company. Our Board of Directors fulfills this duty through their oversight functions, with operational management delegated to our executive officers and management team.
The Company has formalized a plan to review, establish, manage, assess and communicate our ESG policies, practices and procedures (the “ESG Plan”). Our ESG Plan was informed by components of industry-leading frameworks, including the Sustainability Accounting Standards Board (“SASB”) (now as part of IFRS Foundation), and the United Nations Sustainable Development Goals, pertinent to the Company’s operations and goals. Pursuant to the ESG Plan and in consultation with external advisors, we created an internal ESG working group, led by our Chief Financial Officer and Chief Operating Officer, Senior Vice President of Taxation, and Vice President and General Counsel. This group reports to our Executive Chairman and the Nominating and Governance Committee of our Board on an ongoing basis, with formal presentations made at least quarterly. We have conducted interviews with internal stakeholders to identify and assess ESG-related risks and opportunities relevant to our business. Among other initial ESG Plan deliverables, we have developed our Sustainability and Social Responsibility website, at www.onespaworld.com/our-world/corporate-social-awareness, which outlines our ESG policies, practices and procedures. The information contained on or accessible through our website is not incorporated by reference into this Proxy Statement or any of our other filings with the SEC or considered to be part of this document.
We believe the accountability of our leadership to our employees and our shareholders, how we manage our impact on the inhabitants of the destinations we visitenvironment and the locationscommunities where we operate, and call home. Sustainability is atour relationships with all constituencies across our business are all important to the coresuccess of our commitmentbusiness. Our strategic priorities include programs designed to the world,incorporate sustainable business practices into our operations, foster a respectful and throughequitable workplace with broad employee diversity and inclusive opportunity, enhance employee support and personal and career development, strengthen data privacy and cybersecurity, and invest in our advocacy andcommunities by continuing to support of a diverse range of charitablelocal organizations and activities, we striveprograms that align with our values of wellness, diversity, and sustainability.
A Commitment to inspire othersEnvironmental Stewardship
We seek to makeminimize our impact on 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 directiveswe believe that our sustainability policies, practices and procedures mitigate risk and create meaningful long-term value for our shareholders and stakeholders. We work to promote practices that are efficient and effective relative to resource conservation and preservation in collaboration with our partners. We have implemented sustainable practices across our organization, including workplace recycling, paper usage and plastic water bottle reduction, and light sensor installations to reduce
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electricity consumption. We have collaborated with our third-party product suppliers to introduce improved packaging and product solutions to reduce environmental impacts. Initiatives include among others, removing more than 500,000changes to our packaging materials from polystyrene to recyclable pillow packs, removal of paper leaflets from our shipments, and elimination of plastic spatulas from certain of our supplier products. Our primary supplier is a certified B Corporation® that prioritizes strong standards of social and environmental performance, accountability, and transparency, including ingredient traceability and utilization of biodegradable rinse-off formulas.
A Focus on People
As the pre-eminentglobal production, saving approximately 450 kilogramsoperator of plastic wastehealth and wellness services onboard cruise ships and in destination resorts, our people are essential to landfillthe performance of our operations, the long-term success of our Company, and removing 1.2 million cardboard linersthe value we deliver to our shareholders. Our employees are responsible for upholding our purpose, integrity, and accountability, and representing OneSpaWorld’s mission and values as a global health and wellness company. To attract, retain, motivate, and advance the best talent, we focus on building a culture where possible, saving approximately 9,070 kilogramsemployees can safely thrive in waste each year, reducing paper wastean environment supportive of their unique personalities, boundaries, talents, passions, strengths, responsibilities, and protectingpersonal and career goals.
We prioritize the health and safety of our forests.employees and work alongside our cruise line and destination resort partners to mitigate risks and maintain safe environments for our employees and customers. Our comprehensive safety manual, “Guidelines for Protection and Sanitization,” along with our protocols and trainings, reinforce workplace safety. We also invest in our communities with donations to local organizations and programs and provide educational scholarships and support to our team members facing adversity.
The Human Capital section of our 2023 Annual Report on Form 10-K addresses the programs and practices pertaining to our people, culture and ethics, diversity and inclusion, talent attraction, talent retention, training and development, health and safety, and succession plan.
As evidenced by our ESG priorities and initiatives in support of our people, communities, and planet, we continue to imagine, develop and undertake strategies, policies and procedures across our Company designed to mitigate risks, identify opportunities and maximize the long-term performance and value of the Company.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation arrangements with our named executive officers and directors are described elsewhere in this proxy statement.Proxy Statement.
RegistrationPrior Governance Rights Agreementof Steiner Leisure
Pursuant to an Investment Agreement, dated April 30, 2020, and a Governance Agreement, dated June 12, 2020, between the Company, Steiner Leisure and Haymaker Sponsor, LLC (“Haymaker Sponsor”) are entitled to certain customary registration rights pursuant to the Registration Rights Agreement, dated as of March 19, 2019 (the “Registration Rights Agreement”). We have filed a shelf prospectus registering Steiner Leisure’s and Haymaker Sponsor’s common shares. At any time, and from time to time,other investors party thereto, Steiner Leisure will be entitledwas previously granted certain governance rights, including: (a) the right to make up to three demands (and Haymaker Sponsor will be entitled to make up to three demands per year) that a resale of our common shares reasonably expected to exceed $10,000,000 in gross offering price pursuant to such shelf prospectus 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 agreed not to transfer any 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, and Steiner Leisure and Haymaker Sponsor will enter into acustomary lock-up agreement 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 ordesignate two 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 inown at least 15% of the aggregate, beneficiallyCompany’s issued and outstanding common shares or one director to the Board so long as Steiner Leisure and its affiliates own at least 5% or more of ourthe Company’s issued and outstanding common shares; and (b) certain consent rights as long as Steiner Leisure and its affiliates own at least 15% of the Company’s issued and outstanding common shares. Pursuant toSteiner Leisure and its affiliates’ ownership of the Director Designation Agreement, Marc Magliacano shall serveCompany’s issued and outstanding common shares fell below 5% on November 30, 2023, as a Class B director until the 2021 annual meeting.
Executive Services Agreement
OSW Predecessor entered into an Executive Services Agreement, concurrent with the closingresult of which Steiner Leisure’s governance rights terminated. As of March 13, 2024, Steiner Leisure and its affiliates no longer own any of the Business Combination, with Nemo Investor Aggregator, Limited,Company’s common shares.
Registration Rights Agreement
On June 12, 2020, the parent company of Steiner Leisure, which became effective at the time of the closing. The agreement provides that after the closing of the Business Combination, Leonard Fluxman and Stephen Lazarus are to be made available to provide certain transition services to Nemo until December 31, 2020 in exchange for $850,000.
Agreements Related to the Private Placement
For information related to the agreements withCompany, Steiner Leisure and certain other investors, including members of our management and Board of Directors and certain existing shareholders of the Company, entered into a Second Amended and Restated Registration Rights Agreement (the “A&R RRA”). The A&R RRA provided for customary registration rights, including demand registration rights previously held by Steiner Leisure and piggyback rights that are currently held by certain of the Company’s managementdirectors.
Exchange Agreements
On March 14, 2023, the Company entered into exchange agreements with certain directors and board of directors, please refer to “Proposal 3: Approvalother affiliated holders of the Company with respect to 3,055,906 private warrants exercisable for $11.50 per share (the “Private Warrants”), which were exchanged at a fixed exchange ratio of 0.175 common shares per Private PlacementWarrant. Such ratio reflected a price per warrant of $1.62 and a price of $10.74 per common share. Affiliated holders of Private Warrants also agreed not to transfer common shares issuable upon such exchange for purposesa period of Nasdaq Listing Rule 5635—Background and Overview.”60 days commencing on March 14, 2023.
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
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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 | 66 | Executive Chairman, | ||||
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Stephen B. Lazarus | 60 | Chief Financial Officer and Chief Operating Officer | ||||
Susan Bonner | 59 | Chief Commercial Officer |
Leonard FluxmanSee “Proposal 1: Election of Directors—Our Class A Directors 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, in which role 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.
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COMPENSATION OF EXECUTIVE OFFICERSDISCUSSION AND DIRECTORSANALYSIS
At our core, we are a global services company. We are the market leader in the outsourced maritime health and wellness market with a consistent market share exceeding 90%, driven by strong competitive positioning and dedication to extraordinary customer service. Over more than 50 years, we have built our leading market position on our highly complex global personnel sourcing, education and training and operations management platform, and operating protocols that produce our unrivaled depth and consistency of staff expertise to deliver outstanding guest experiences; broad and innovative service and product offerings; expansive global logistics platform; and decades-long partnerships with our cruise line and destination resort partners. Throughout our Company’s history, our mission has been simple: helping our guests look and feel their best during and after their stay. We serve a critical role for our cruise line and destination resort partners, operating a complex and increasingly essential aspect of their guests’ overall experience.
In 2023, OneSpaWorld achieved several key accomplishments, highlighting our strong performance and growth in the global health and wellness services industry:
1. | Strong Market Position: We hold a preeminent position in the global health and wellness services industry. |
2. | Collaborative Partnerships: We have long-term agreements with the largest and most reputable cruise lines, operating on all global routes and ship classes, and a strong history of contract renewals and additions. We have built strong, decades-long relationships with our cruise line partners, ensuring continued collaboration and revenue growth. |
3. | Unmatched Service and Product Breadth: We offer a comprehensive range of services, including spa and beauty services, medi-spa treatments, fitness programs, health and nutrition services, mind-body and spiritual wellness, and more, together with the offering and sale of curated assortment of complementary products from our market leading global brand partners. |
4. | Exceptional Financial Growth: In 2023, we reported a 45% increase in total revenues to a record $794.0 million, a 258% increase in income from operations to a record $54.2 million, and a 77% increase in adjusted EBITDA to a record $89.2 million. |
5. | Outstanding Market Performance: Fiscal year 2023 saw remarkable market performance, displaying a 51% increase in stock price. Our compensation programs demonstrated high alignment with shareholder returns, as evidenced by the disclosed pay versus performance analysis. |
6. | Strong Free Cash Flow Conversion: We have a robust financial performance model, with approximately 89% after-tax free cash flow to adjusted EBITDA conversion. Our asset-light operating model, combined with disciplined execution, has enabled us to deliver strong and increasing free cash flow. |
7. | Enhanced Capital Structure: Fiscal 2023 also marked meaningful progress in enhancing our financial flexibility, strengthening our already durable balance sheet and generating robust free cash flow. The year saw us fully repay our second lien term loan and significantly reduce the outstanding balance on our first lien term loan. We simplified our capital structure through the completion of a warrant exchange and utilized our positive cash flow to repurchase our common stock. In total, we invested $65.1 million in 2023 for debt repayment and share repurchase, while ending the year with total liquidity of $48.9 million and no material debt maturities until 2028. |
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Our commitment to innovation and continuous improvement remains a key driver of our success. We will continue to invest in innovative service offerings and stay at the forefront of industry trends.
Our focus on sustainability and responsible business practices will also play a crucial role in attracting environmentally conscious travelers and aligning with evolving stakeholder expectations.
New Disclosures
As a result of our consistent growth, we ceased to be an emerging“emerging growth company, we have opted to comply with thecompany” as of December 31, 2023. Therefore, this year’s Proxy Statement includes additional detail regarding executive compensation that was previously not required to be disclosed, including, without limitation, (1) this Compensation Discussion and Analysis; (2) additional compensation tables that provide disclosure rules applicableon “Grants of Plan-Based Awards,” “Options Exercised and Stock Vested”, and “Potential Payments Upon Termination or a Change in Control”; (3) disclosure with respect to “smaller reporting companies”the Company’s risk management and pay versus performance; (4) an advisory shareholder vote on the preferred frequency of advisory shareholder votes to approve the compensation of our named executive officers, which is included as such termthe “Say-on-Frequency” Proposal in this Proxy Statement; and (5) an advisory shareholder vote to approve the compensation of our named executive officers, which is definedincluded as the “Say-on-Pay” Proposal in the rules promulgated under the Securities Act. Thisthis Proxy Statement.
The purpose of this Compensation Discussion and Analysis section discussesis to provide information regarding the material componentselements of the executive compensation program forthat are paid to, awarded to, or earned by, our Chief Executive Officer, Chief Financial Officer, and our two other most highly compensated officers,executive officer, who we refer to collectively as our “Named Executive Officers”. As of theOfficers.” For fiscal year ended December 31, 2019,2023, our Named Executive Officers and their respective job titles 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.
Summary Compensation Tableas follows:
| Job Title | |||||||||||||||||||||||||||
Leonard Fluxman
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President & Executive Chairman | ||||||||||||||||||||||||||||
Stephen B. Lazarus | Chief | |||||||||||||||||||||||||||
Susan Bonner | Chief Commercial Officer |
(1) | Because we only have three “executive officers” as such term is defined in Rule 3b-7 of the Exchange Act, we only have three Named Executive Officers for the fiscal year ended December 31, 2023. |
Compensation Philosophy and Objectives
Our compensation philosophy is centered around attracting and retaining high-performing talent aligned with our corporate culture, motivating performance, and aligning the interests of our executives with those of our shareholders and stakeholders. We believe that a well-designed and competitive compensation program is essential to drive the consistent long-term success of our Company.
Our compensation objectives are as follows:
1. |
|
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2. | Performance-Based Compensation: We employ a pay-for-performance philosophy, linking a significant portion of executive compensation to the achievement of specific financial and operational goals. Our compensation programs are designed to reward executives for their individual and team contributions to both short-term and long-term Company performance. |
3. | Alignment with Shareholders: We believe in aligning the interests of our executives with those of our shareholders. Our compensation programs include equity-based awards that tie executive compensation to the Company’s financial performance, driven by achieving our long-term strategic objectives. By providing executives with a stake in the Company’s success, we aim to foster a sense of ownership and accountability. |
4. | Fairness and Internal Equity: We strive to ensure fairness among our executive management team by recognizing the contributions each executive makes to our Company’s success. Our compensation programs are designed to provide equitable compensation based on individual performance, experience, responsibilities and team development and success. |
5. | Responsiveness to Shareholder Feedback: We value the input and feedback of our shareholders. We aim to maintain transparency and open communication with our shareholders regarding our compensation practices. We will engage with investors as appropriate to respond to vote results from our Say-on-Pay proposal. |
By employing these compensation objectives, we aim to create a compensation program that supports the long-term growth and success of our Company while rewarding our executives for their contributions to shareholder value. We seek to provide competitive compensation that is commensurate with individual, team and Company-wide performance. We generally target compensation based on the median of the market and calibrate both annual and long-term incentive opportunities to result in less-than-median total pay levels when goals are not fully achieved and the potential for greater-than-median awards when performance goals are exceeded. With our unique business operating in a complex industry, we retain the ability to target compensation for certain leadership roles at higher market levels as necessary to maintain our ability to recruit and retain the most high-performing specialized talent.
We seek to promote a long-term commitment to the Company by our executives and we believe that there is great value to the Company in having a team of long-tenured, seasoned managers. Our team-focused culture and management processes are designed to foster this commitment.
Compensation Committee Procedures
The Compensation Committee of our Board meets outside the presence of all our executive officers, including our Named Executive Officers, to consider appropriate compensation for our Chief Executive Officer. For all other Named Executive Officers, the Compensation Committee meets outside the presence of all executive officers except our Chief Executive Officer.
To assist in the decision-making process, our Chief Executive Officer reviews the performance of each Named Executive Officer annually and provides recommendations to the Compensation Committee regarding their base salary, cash performance awards, and grants of long-term equity incentive awards. The Chief Executive Officer’s recommendations are based on a thorough assessment of each Named Executive Officer’s performance and are aligned with our compensation objectives and principles.
The Compensation Committee, taking into consideration the recommendations of our Chief Executive Officer and the objectives outlined above, recommends to the Board for its approval the annual compensation packages for our Chief Financial Officer and Chief Operating Officer and our Chief Commercial Officer. The Compensation Committee also evaluates the performance of the Chief Executive Officer and determines his base salary, cash performance awards, and grants of long-term equity incentive awards. The Compensation Committee assesses our Chief Executive Officer’s performance with analysis and advice from our executive compensation
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consultant reflecting its assessment of current industry best practices and comparative market data on compensation practices and programs across the market as a whole and for specific competitors and comparable companies.
The Compensation Committee retains the authority to modify or terminate its relationship with its compensation consultant or engage other outside advisors as needed to fulfill its responsibilities effectively. The Compensation Committee’s compensation consultant did not provide any services to the Company other than the services provided at the direction of the Compensation Committee during 2023. In addition, the Compensation Committee has assessed and determined that the analysis and advice of its compensation consultant is not subject to and does not create any conflict of interest.
By following the procedures described above and leveraging the expertise of our compensation consultant and our legal advisers, our Compensation Committee strives to ensure that our executive officers, including our Named Executive Officers, are fairly compensated and that their incentives are aligned with our Company’s performance and long-term goals.
Risk Assessment
The Compensation Committee has assessed the potential risks associated with our compensation programs and policies and has determined that any risks which may arise are not probable to cause a material adverse effect on the Company. Our compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are correlated to the value delivered to shareholders. The combination of performance measures for annual bonuses and the equity compensation programs, share ownership and retention guidelines for Named Executive Officers, as well as the multiyear vesting schedules for equity awards, encourage employees to create both short and long-term value for our Company and our shareholders.
Peer Group
For fiscal year 2023, the Compensation Committee, at the recommendation of our compensation consultant, established a peer group to be used for guiding our executive compensation practices by using the following primary criteria: companies in the Diversified Consumer Services, Hotels, Restaurants and Leisure, or related industries, companies identified by proxy advisory firms as a peer company, and financial size (based on revenue or current market cap). As a result of this review, our Committee approved the peer group of companies listed below. While this peer group was not used for benchmarking purposes, it informed our Committee’s decisions regarding our executive pay program for fiscal year 2023.
Choice Hotels International, Inc. | | Planet Fitness, Inc. |
e.l.f. Beauty, Inc. | Playa Hotels & Resorts N.V. | |
European Wax Center, Inc. | Target Hospitality Corp. | |
Inter Parfums, Inc. | The Beauty Health Company | |
Lindblad Expeditions Holdings, Inc. | USANA Health Sciences, Inc. | |
Medifast, Inc. | WW International, Inc. | |
National Vision Holdings, Inc. | Wyndham Hotels & Resorts, Inc. | |
Nature’s Sunshine Products, Inc. | Xponential Fitness, Inc. |
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Elements of Compensation
Our executive compensation program, overseen by our Compensation Committee, encompasses several key components designed to attract and retain top talent, motivate performance, and align the interests of our executive officers and senior personnel with those of our shareholders. The following elements form the foundation of our compensation packages:
Compensation Element | Description | ||||
| Base Salary | We provide competitive base salaries to our executive officers, reflecting their experience, responsibilities, and market benchmarks. Base salaries serve as a fixed component of compensation designed to deliver predictable, consistent, and stable compensation, while recognizing the ongoing contributions and expertise of our executives. | |||
| Annual Performance Incentives | To drive performance and reward the achievement of financial, operational, and strategic objectives, we offer annual cash incentive awards. These incentives are directly funded based on our overall financial performance, evidencing an ability-to-pay philosophy, and are designed to motivate our executives to deliver exceptional results. | |||
| Long-Term Equity-Based Compensation | We believe in aligning the long-term interests of our executives with those of our shareholders. To achieve this, we grant long-term equity-based compensation, including restricted stock units (“RSUs”) and performance stock units (“PSUs”). RSUs promote ownership and leadership stability by tying pay to continued service, while PSUs reward financial results aligned with performance and stock price appreciation. These grants provide our executives with a stake in our success and encourage a focus on sustainable, long-term value creation. | |||
| Executive Benefits and Perquisites | In addition to base salary and performance incentives, we provide our executives with a comprehensive package of benefits and perquisites. These include market competitive health and wellness benefits, retirement savings plans, life insurance, and other valuable perquisites that enhance their overall compensation packages. | |||
| Employment Agreements |
| To ensure stability and provide clarity, we have entered into employment agreements with our executives. These agreements outline the terms and conditions of employment, including employment severance and change of control benefits. They provide a level of security, protection, and predictability for both the executive and the Company. |
By combining the above compensation elements, we’ve created compensation programs that are competitive, performance-driven, and aligned with the interests of our shareholders. Our goal is to continue to attract and retain top talent, motivate exceptional performance, and drive long-term value for our Company and its shareholders.
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Pay Mix
We believe in utilizing a balanced pay mix that incorporates multiple elements of compensation to achieve a comprehensive approach to executive compensation. Our pay mix is designed to provide for a combination of secure compensation, retention, and incentive-based at-risk compensation through both short- and long-term performance incentives and rewards. This approach seeks to assure that our executives maintain a level of security in their minimum expected compensation, while also motivating them to drive realization of key business metrics that result in strong Company performance and long-term wealth creation for themselves, our shareholders and our stakeholders. The specific weightings and proportions of each element of compensation are determined based on our compensation philosophy and market practices.
For key executives, our pay mix is weighted toward incentive-based at-risk compensation, which includes annual incentives and long-term incentives. Our Chief Executive Officer has 80.4% of his compensation at-risk, while our other Named Executive Officers have on average 71.4% of their respective compensation at-risk. Our emphasis on at-risk compensation aligns with our pay-for-performance orientation and ensures that our compensation programs align individual and Company performance.
Base Salary
The base salary for each of our executive officers reflects their respective responsibilities, experience, prior performance, market demand, succession and other factors deemed relevant by our Compensation Committee. The purpose of the base salary is to provide our executive officers with a competitive component of compensation throughout the fiscal year that aligns with industry standards, a foundation of financial stability and recognition of their core contributions and value.
When determining market-level compensation for base salaries, our Compensation Committee assesses and considers each executive’s comparative value and market demand by, among other considerations, referencing the base salaries of similarly situated executives in companies deemed comparable for compensation assessment purposes by the Compensation Committee, on advice of its compensation consultant, including competitors, companies operating similar business models and companies with similar market capitalization, among other factors.
Please refer to the table below for the base salaries of our Named Executive Officers for the year 2023:
Named Executive Officer | 2023 Base Salary | |||
Leonard Fluxman | $ | 910,252 | ||
Stephen B. Lazarus | $ | 579,251 | ||
Susan Bonner | $ | 500,500 |
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Annual Incentive Program
Our Compensation Committee recognizes the importance of incentivizing and rewarding the achievement of Company and individual performance objectives. As such, we have established an annual cash incentive bonus program (the “AIP”) for our Named Executive Officers that is designed to align the interests of our Named Executive Officers with the overall success of our Company and the interests of our shareholders. The primary performance metric used to determine the amount of our annual bonuses is Adjusted EBITDA, which is set at the beginning of each fiscal year. This metric reflects our financial performance and serves as a key indicator of our ability to generate sustainable growth and profitability. It is also the metric most often used by financial analysts and investors to assess our performance and value. The table below reflects the threshold, target and maximum Adjusted EBITDA goals for the 2023 annual cash bonus program for our Named Executive Officers.
Please refer to the table below for our AIP payout percentages at threshold, target and maximum performance levels for fiscal year 2023:
AIP Payout Level | Payout (% of target) | Adjusted EBITDA ($ in millions) | ||||||
Maximum | 200 | 83.6 | ||||||
Target | 100 | 66.9 | ||||||
Threshold | 50 | 60.2 |
To ensure transparency and clarity, we provide each of our Named Executive Officers with an individual annual bonus target, which is structured as a percentage of their annual base salary. The target bonus amount represents the level of performance that, if achieved, would result in the full payout of the annual bonus. Depending on the attainment of Company and individual performance objectives, Named Executive Officers can earn between 0% (if threshold results are not achieved) and 200% (if maximum results are achieved) of their target bonus amount.
Please refer to the table below for the bonus amounts as percentage of base salary for each Named Executive Officer:
Named Executive Officer | Below Threshold | Threshold | Target | Maximum | ||||||||||||
Leonard Fluxman | 0 | % | 62.5 | % | 125 | % | 250 | % | ||||||||
Stephen B. Lazarus | 0 | % | 45 | % | 90 | % | 180 | % | ||||||||
Susan Bonner | 0 | % | 37.5 | % | 75 | % | 150 | % |
2023 Annual Bonus (AIP) Actual Performance
Our Compensation Committee evaluates the attainment of our Adjusted EBITDA when determining the annual cash bonus for each Named Executive Officer. In making annual bonus determinations, the Compensation Committee reserves the discretion to make adjustments to the plan objectives and/or actual financial results based on the occurrence of extraordinary or nonrecurring events that may have influenced such results. For fiscal year 2023, no extraordinary or nonrecurring events impacted the annual bonus program.
Please refer to the table below for the results for fiscal year 2023 and the applicable payout for each Named Executive Officer based on such results.
Results | ||||
FY2023 Actual | $ | 89.2 | ||
Payout as % of Target | 200 | % |
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Named Executive Officer | 2023 Base Salary | 2023 Target AIP Bonus % | 2023 Actual Performance | 2023 Actual AIP Bonus Amount | ||||||||||||||||||||||||
Leonard Fluxman | $ | 910,252 | x | 125 | % | x | 200 | % | = | $ | 2,275,631 | |||||||||||||||||
Stephen B. Lazarus | $ | 579,251 | x | 90 | % | x | 200 | % | = | $ | 1,042,653 | |||||||||||||||||
Susan Bonner | $ | 500,500 | x | 75 | % | x | 200 | % | = | $ | 750,750 |
We believe that our AIP plays a vital role in attracting and retaining highly skilled executives who have a positive impact on our Company results. By providing these bonus opportunities, we foster a culture of performance excellence and ensure that our executives are rewarded for their contributions to our success.
Long-Term Equity-Based Incentive Compensation
We believe in fostering a culture of long-term value creation and aligning the interests of our executives with the success of our Company and its shareholders. Our long-term equity-based incentive compensation (“LTI”) program serves as a powerful tool to incent and reward our executives for their contributions to our growth and shareholder value. By offering a combination of RSUs and PSUs, we aim to create a balanced and performance-driven compensation structure that drives sustainable results. This compensation program not only rewards executives for their ongoing commitment but also ensures their compensation is directly tied to the achievement of key performance metrics, financial results and the creation of long-term shareholder value.
To align the interests of our executives with the performance of our Company toward creating shareholder value, we allocate 50% of the total equity grants to RSUs and 50% to PSUs. This structure incents executives to strive for strong performance and aligns their interests with the Company’s financial goals. The RSUs vest ratably over a three-year period during which the executive is continuously employed by the Company. The PSUs are subject to both performance-based and time-based conditions. The performance-based condition is satisfied based on achievement against specified EBITDA targets measured on the first anniversary of the award’s grant date. The PSUs earned under the performance-vesting conditions time-vest ratably over a three-year period ending on the third anniversary of the award’s grant date.
We have used a 1-year performance period for our PSUs because of the difficulty in setting longer-term financial objectives given the volatility of the overall economic environment and the sensitivity of our business to consumer economic trends and extraneous events (such as COVID-19), which strongly impacted, and may in the future strongly impact, our industry. We selected Adjusted EBITDA as the performance measure for our long-term and short-term compensation programs as the highest correlating metric applied to assess the performance and value of our Company, reflecting our ability to convert revenue into operating profits toward achieving our short-term and long-term value objectives.
By linking a significant portion of compensation to performance, we create a strong incentive for our executives to focus on achieving key objectives that are critical to our long-term success. We aim to create a compensation structure that not only rewards our executives for their ongoing commitment but also ensures that their interests are closely aligned with the creation of long-term shareholder value. By tying their compensation to performance-based metrics, we foster a culture of accountability and drive sustainable results that benefit both our executives and our shareholders.
2023 Target LTI Awards
In fiscal year 2023, the Compensation Committee established target LTI awards for our Named Executive Officers that reflect our commitment to aligning executive compensation with our long-term success. These target awards are designed to motivate and reward our executives for their contributions to the Company’s growth and the enhancement of shareholder value. These target awards are determined based on a comprehensive evaluation of various factors, including individual performance, market competitiveness, and the achievement of key strategic objectives.
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Please refer to the table below, which reflects the grant date value of the equity grants made to the Named Executive Officers in fiscal year 2023, calculated based on the closing price of the Company’s stock on the date of grant.
Named Executive Officer | Time-Based Awards (RSUs) | Performance-Based Awards (PSUs) | Total LTI | |||||||||
Leonard Fluxman | $ | 1,303,364 | $ | 1,303,364 | $ | 2,606,729 | ||||||
Stephen B. Lazarus | $ | 524,800 | $ | 524,800 | $ | 1,049,600 | ||||||
Susan Bonner | $ | 375,000 | $ | 375,000 | $ | 750,000 |
2023 Performance-Based Awards Achievement
For 2023, the PSUs granted in 2022 were achieved with a payout of 167% based on performance results measured against targets set at the end of the 2022 fiscal year as shown in the table below:
PSU Payout Level | Payout (% of target) | Adjusted EBITDA ($ in millions) | ||||||
Maximum | 200 | 100.3 | ||||||
Target | 100 | 66.9 | ||||||
Threshold | 50 | 60.2 | ||||||
Results | ||||||||
FY2023 Actual |
| $89.2 | ||||||
Payout % |
| 167 | % |
These achieved PSUs vested one third at the end of the one-year performance period based on achievement of the EBITDA goals set by the Compensation Committee and will continue to vest ratably on the second and third anniversaries from grant.
Other Executive Benefits and Perquisites
We provide the following benefits to our executive officers on the same basis as certain other eligible employees:
health insurance;
vacation, personal holidays and sick days;
annual automobile allowance;
private office;
life insurance and supplemental life insurance;
short-term and long-term disability; and
a 401(k) plan with Company matching contributions.
We believe these benefits are generally consistent with those offered by other comparable companies and specifically with those companies with which we compete for employees.
Agreements with Named Executive Officers
We believe that a strong, experienced management team is in the best interests of the Company and our shareholders. We have executed employment agreements with each of our Named Executive Officers that provide for, among other terms and conditions, specified base salary, incentive compensation, benefits, severance
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protection and grants of Company equity awards. These benefits are payable if the Name Executive Officer is terminated by the Company under certain circumstances. In addition, the employment agreements with each of our Named Executive Officers in each case include provisions to incent our Named Executive Officers with respect to consummating a significant transaction deemed in the best interest of our shareholders as detailed in the “Employment Agreements” and “Potential Payments Upon Termination or a Change in Control” sections below.
Clawback Policy
In 2023, the Compensation Committee adopted a clawback policy that complies with Nasdaq’s clawback rules promulgated under Section 10D of the Exchange Act and the rules promulgated thereunder. In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any such financial reporting requirement, the clawback policy requires that covered executives must reimburse the Company, or forfeit, any excess incentive-based compensation received by such covered executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare the restatement. Executives covered by the clawback policy are current and former executive officers, as determined by the Compensation Committee in accordance with Section 10D of the Exchange Act and the Nasdaq listing rules. Incentive-based compensation subject to the clawback policy includes any cash or equity compensation that is granted, earned or vested based wholly or in part on the attainment of a financial reporting measure. The amount subject to recovery is the excess of the incentive-based compensation received based on the erroneous data over the incentive- based compensation that would have been received had it been based on the restated results. The clawback policy will only apply to incentive-based compensation received on or after October 2, 2023.
Section 280G of the Internal Revenue Code
Section 280G of the Internal Revenue Code (the “Code”) disallows a tax deduction with respect to “excess parachute payments” to certain executive officers of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% excise tax penalty on the individual receiving the “excess parachute payment.” Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans or programs and other equity-based compensation. “Excess parachute payments” are parachute payments that excess a threshold determined under Section 280G of the Code based on an executive officer’s prior compensation.
In the event that any payment or benefit to be made to the Named Executive Officers under their respective 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. We do not provide for excise tax gross-ups to our executive officers and do not expect to do so in the future.
Section 162(m) Compliance
Section 162(m) of the Code places a limit of $1,000,000 on the amount that can be deducted in any one year for compensation paid to certain executive officers. While our Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible for tax purposes.
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Section 409A Considerations
Section 409A of the Code affects the manner by which deferred compensation opportunities are offered to our employees requiring, among other requirements, that “non-qualified deferred compensation” be structured in a manner that limits employees’ abilities to accelerate or further defer certain deferred compensation. We intend to apply our existing compensation arrangements that are covered by Section 409A in accordance with the applicable rules thereunder, and we will continue to review and amend our compensation arrangements where necessary to comply with Section 409A. To the extent applicable, our compensation arrangements are structured and interpreted to comply with, or be exempt from, Section 409A and the regulations and other interpretive guidance that may be issued under Section 409A.
Accounting for Stock-Based Compensation
We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our equity-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their equity-based awards using a variety of assumptions. ASC 718 also requires companies to recognize the compensation cost of their equity-based awards in their income statements over the period that an associate is required to render service in exchange for the award. Future grants of stock options, restricted stock, RSUs and other equity-based awards under our equity incentive award plans will be accounted for under ASC 718. The Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Shareholder Say-on-Frequency and Say-on-Pay Advisory Vote
Pursuant to the “Say-on-Frequency” Proposal included in this Proxy Statement, our shareholders will be voting for the first time on the frequency of advisory shareholder votes to approve the compensation of our Named Executive Officers. We are recommending that Say-on-Pay advisory votes be held annually.
Pursuant to the “Say-on-Pay Proposal” included in this Proxy Statement, our shareholders will also be voting for the first time to approve the compensation of our Named Executive Officers. We will consider the outcome of the Say-On-Pay and Say-On-Frequency advisory votes when making compensation decisions regarding our Named Executive Officers.
Compensation Committee Report:
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Members of the Compensation Committee during fiscal year 2023 consisted of:
Mr. S. Heyer (chairperson until his retirement in June 2023)
Mr. Powell (chairperson commencing in June 2023)
Mr. Magliacano
Mr. Stiefler
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2023 Summary Compensation Table
The following table sets forth certain information with respect to compensation for the fiscal year ended December 31, 2023 earned by, awarded to or paid to our Named Executive Officers.
Name and Principal | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | |||||||||||||||||||||
Leonard Fluxman(6) | 2023 | 910,252 | — | 2,606,729 | 2,275,631 | 92,193 | 5,884,805 | |||||||||||||||||||||
President, Executive Chairman and Chief Executive Officer | 2022 | 910,252 | — | 3,668,933 | (3) | 1,873,019 | 90,539 | 6,542,743 | ||||||||||||||||||||
2021 | 875,243 | 531,094 | 2,648,410 | 1,062,188 | 86,553 | 5,203,488 | ||||||||||||||||||||||
Stephen B. Lazarus | 2023 | 579,251 | — | 1,049,600 | 1,042,653 | 73,945 | 2,745,449 | |||||||||||||||||||||
Chief Financial Officer and | 2022 | 579,251 | — | 1,536,261 | (3) | 858,183 | 72,895 | 3,046,590 | ||||||||||||||||||||
2021 | 556,973 | 243,338 | 1,066,365 | 486,675 | 67,322 | 2,420,673 | ||||||||||||||||||||||
Susan Bonner | 2023 | 500,500 | — | 749,996 | 750,750 | 33,118 | 2,034,364 | |||||||||||||||||||||
Chief Commercial Officer | 2022 | 500,500 | 89,894 | 890,314 | (3) | 617,925 | 33,311 | 2,131,944 | ||||||||||||||||||||
2021 | 481,250 | 50,000 | 611,176 | 288,750 | 32,302 | 1,463,478 |
(1) | Amounts reflect the |
(2) | Amounts reflect the grant date fair value of |
(3) | The Summary Compensation Table included in our Annual Proxy Statement filed with the SEC on April 28, 2023 inadvertently reported the grant date fair value of the RSUs and PSUs granted to our Named Executive Officers during 2022 incorrectly as the following values: Mr. Fluxman: $2,365,556; Ms. Bonner: $509,374 and Mr. Lazarus: $876,367. The amounts reflected in the Stock Awards column for 2022 have been adjusted to reflect the correct grant date fair value of the RSUs and PSUs granted to our Named Executive Officers during 2022, calculated in accordance with ASC 718. |
(4) | Amounts for 2023 reflect AIP bonuses earned by each of our Named Executive Officers, which were paid in cash. See “Compensation Discussion and Analysis – Annual Incentive Program” above for further information regarding the 2023 AIP bonus opportunities. |
(5) | Amounts for 2023 reflect: (i) 401(k) Plan employer matching contributions of $13,200 for each Named Executive Officer; (ii) an annual automobile allowance equal to $25,000 for Mr. Fluxman, $15,000 for Mr. Lazarus, and $10,000 for Ms. Bonner; (iii) an amount equal to $40,357 for Mr. Fluxman, 36,260 for Mr. Lazarus, and $9,918 for Ms. Bonner, in each case, for fringe payments received in 2023 for medical, dental, vision and long-term disability, and (iv) reimbursement of life insurance premiums in an amount equal to $13,636 for Mr. Fluxman and $9,485 for Mr. Lazarus. |
(6) | Mr. Fluxman serves on our Board but did not receive any additional compensation for such Board service. |
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2023 Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2023 with respect to our Named Executive Officers.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units(3) (#) | Awards(4) ($) | |||||||||||||||||||||||||||
Leonard Fluxman | 568,908 | 1,137,815 | 2,275,630 | — | — | — | — | — | ||||||||||||||||||||||||||||
12/6/2023 | — | — | — | 52,260 | 104,520 | 209,040 | 1,303,364 | |||||||||||||||||||||||||||||
12/6/2023 | — | — | — | — | — | — | 104,520 | 1,303,364 | ||||||||||||||||||||||||||||
Stephen B. Lazarus | 260,663 | 521,326 | 1,042,652 | — | — | — | — | — | ||||||||||||||||||||||||||||
12/6/2023 | — | — | — | 21,043 | 42,085 | 84,170 | — | 524,800 | ||||||||||||||||||||||||||||
12/6/2023 | — | — | — | — | — | — | 42,085 | 524,800 | ||||||||||||||||||||||||||||
Susan Bonner | 187,688 | 375,375 | 750,750 | — | — | — | — | — | ||||||||||||||||||||||||||||
12/6/2023 | — | — | — | 15,036 | 30,072 | 60,144 | — | 374,998 | ||||||||||||||||||||||||||||
12/6/2023 | — | — | — | — | — | — | 30,072 | 374,998 |
(1) | Amounts represent the threshold, target and maximum AIP amounts for fiscal year 2023. The threshold amount of each Named Executive Officer is 50% of the target amount, and is the minimum amount payable if threshold performance is achieved. If threshold performance is not achieved, the payment would be $0. The maximum amount for each Named Executive Officer is 200% of the target amount, and is the maximum amount payable if maximum performance is achieved. The pre-established AIP performance metric for fiscal year 2023 was Adjusted EBITDA. The actual amounts paid to our Named Executive Officers under our 2023 AIP are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. See “Compensation Discussion and Analysis – Annual Incentive Program” above for additional details. |
(2) | Amounts represent the threshold, target and maximum PSU amounts for fiscal year 2023. The threshold amount of each Named Executive Officer is 50% of the target amount, and is the minimum amount payable if threshold performance is achieved. If threshold performance is not achieved, no PSUs would vest and the PSUs would be forfeited. The maximum amount for each Named Executive Officer is 200% of the target amount, and is the maximum amount of PSUs that may vest if maximum performance is achieved. The pre-established PSU performance metric for fiscal year 2023 was Adjusted EBITDA. See “Compensation Discussion and Analysis – Long-Term Equity-Based Incentive Compensation” above for additional details. |
(3) | Amounts represent RSUs granted to our Named Executive Officers in 2023. The RSUs vest one-third on each of the first, second and third anniversaries of the grant date. See “Compensation Discussion and Analysis – Long-Term Equity-Based Incentive Compensation” above for additional details. |
(4) | Amounts represent the grant date fair value of RSUs and PSUs, as applicable, granted to our Named Executive Officers during 2023, as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value of the |
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Narrative Description to the Summary Compensation Table and the Grants of Plan-Based Awards Table for the 2023 Fiscal Year
Executive Employment Agreements
Executive Employment Agreements. Certain of the compensation paid to the Named Executive OfficersMs. Bonner and Messrs. Fluxman and Lazarus reflected in the Summary Compensation Table above was provided pursuant to employment agreements with OneSpaWorld (collectively,the Company (each an “Employment Agreement,” and, collectively, the “Employment Agreements”). EachThe Employment Agreement providesAgreements for
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Messrs. Fluxman and Lazarus each provide 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 Agreement for Ms. Bonner provides an initial term ending on December 31, 2021, subject to automatic one-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.equity awards. 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 respective terminations of employment for Messrs. Fluxman and Lazarus and one year following termination of employment for Ms. Bonner, as well as perpetual mutualnon-disparagement and confidentiality obligations.
Non-Equity Incentive CompensationEquity Awards. For 2019,
2023 RSUs
On December 6, 2023, we granted RSUs to our Named Executive Officers were eligiblethat vest one-third on each of the first, second and third anniversaries of the grant date. Upon a termination by the Company without “cause” or due to earn annual performance-based cash incentive bonuses pursuant to their respective Employment Agreements. Bonus opportunities for 2019 were based on a formula and performance criteria approveddeath or “disability” or by our Compensation Committee in its sole discretion. The potential bonus eachthe Named Executive Officer was eligiblefor “good reason” (as each such term is defined in the award agreements), the RSUs will accelerate and vest. The RSUs will also accelerate and vest upon a “change in control” (as defined in the OneSpaWorld Holdings Limited 2019 Equity Incentive Plan (the “2019 Plan”)), subject to earn for 2019 ranged from 75% to 150% of base salary (with a target bonus equal to 75% of base salary) for Messrs. Lazarus and Fusfield, and 100% to 200% of base salary (with a target bonus equal to 100% of base salary) for Mr. Fluxman (each applicable target bonus, the Named Executive Officer’s “Target Annual Bonus”), subject to continued employment through the endconsummation of such change in control. If the Named Executive Officer terminates employment and such Named Executive Officer has at least ten years of full-time employment with the Company, is at least 65 years old, and the Compensation Committee approves the equity treatment (an “Eligible Retirement”), the Named Executive Officer will remain eligible to continue to vest in the RSUs following the termination of employment, subject to compliance with such Named Executive Officer’s 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).
2023 PSUs
On December 6, 2023, we granted PSUs to our Named Executive Officers that performance vest up to a maximum of 200% of the performance period. Achievement falling below the minimum performance targets would result in no payout of thetarget award unless our Compensation Committee determined otherwise. The performance goals used to determine 2019 annual bonuses wereamount based on achievement of budgetedspecified EBITDA levels. These 2019 performance goals were not achievedduring the one-year period following the grant date (the “Earned 2023 PSUs”), as determined by the Compensation Committee no later than March 15th following such performance period (such determination date, the “Determination Date”). Any Earned 2023 PSUs will fully vest one-third on each of the Determination Date and asthe second and third anniversaries of the grant date.
Upon a result,termination by the Company did not pay outwithout “cause” or due to death or “disability” or by the Named Executive Officer for “good reason” (as each such annual performance-based cash incentive bonusesterm is defined in the applicable award agreement), 100% of the PSUs will accelerate and vest as of the date of such termination based on (i) target performance, if such termination of employment occurs before the Determination Date or (ii) actual performance, if such termination of employment occurs after the Determination Date. If the Named Executive Officer terminates employment following the performance period and the Determination Date due to an Eligible Retirement, such Named Executive Officer will remain eligible to continue to vest in any Earned 2023 PSUs following termination, subject to compliance with the Named Executive Officer’s 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 (a) 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 (b) following the Determination Date, any outstanding Earned 2023 PSUs will vest upon such change in control, subject, in each case, 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 participateOfficer’s continued employment through the consummation of such change in the Company’s standard employee benefit plans, including medical, life, and disability benefits.
Retirement 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, andcontrol. Upon 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.termination event, any unvested PSUs (including all Earned 2023 PSUs) will be forfeited.
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Outstanding Equity Awards At 2019at 2023 Fiscal Year End
The following table summarizes the outstanding equity awards held as of December 31, 20192023 by each of the Named Executive Officers. The market value of RSUs and PSUs reflected below were calculated based on the closing price of the Company’s common shares on December 29, 2023, the last business day of fiscal year 2023, of $14.10.
Option Awards | ||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Number of Securities Underlying Unexercised Unearned Options | Option Price ($) | Option Expiration Date | Grant Date | Number of 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 | 12/6/2023 | 104,520 | (1) | 1,473,732 | 209,040 | (2) | 2,947,464 | ||||||||||||||||||||||||||||
Glenn J. Fusfield | — | — | 941,512 | 12.99 | 3/26/2025 | |||||||||||||||||||||||||||||||||||
12/6/2022 | 84,361 | (3) | 1,189,490 | 253,082 | (4) | 3,568,456 | ||||||||||||||||||||||||||||||||||
12/7/2021 | 102,256 | (5) | 1,441,805 | — | — | |||||||||||||||||||||||||||||||||||
Stephen B. Lazarus | — | — | 1,080,599 | 12.99 | 3/26/2025 | 12/6/2023 | 42,085 | (1) | 593,399 | 84,170 | (2) | 1,186,797 | ||||||||||||||||||||||||||||
12/6/2022 | 33,967 | (3) | 478,935 | 101,902 | (4) | 1,436,818 | ||||||||||||||||||||||||||||||||||
12/7/2021 | 41,172 | (5) | 580,530 | — | — | |||||||||||||||||||||||||||||||||||
Susan Bonner | 12/6/2023 | 30,072 | (1) | 424,015 | 60,144 | (2) | 848,030 | |||||||||||||||||||||||||||||||||
12/6/2022 | 19,468 | (3) | 274,499 | 58,404 | (4) | 823,496 | ||||||||||||||||||||||||||||||||||
12/7/2021 | 23,597 | (5) | 332,718 | — | — |
(1) |
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(2) | Reflects PSUs granted on December 6, 2023 at maximum performance, which 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 2023 PSUs”), as determined by the Compensation Committee no later than March 15th following such performance period (such determination date, the “2023 PSU Determination Date”), and such Earned 2023 PSUs will fully vest one-third on each of the 2023 PSU Determination Date and the second and third anniversaries of the grant date. |
(3) | Reflects RSUs granted on December 6, 2022, which time vest one-third on each of the first, second and third anniversaries of the grant date. |
(4) | Reflects PSUs granted on December 6, 2022 at maximum performance, which 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 2022 PSUs”), as determined by the Compensation Committee on February 13, 2024 (such determination date, the “2022 PSU Determination Date”), and such Earned 2022 PSUs vested one-third on the 2022 PSU Determination Date and will continue to vest one-third on each of the second and third anniversaries of the grant date. |
(5) | Reflects RSUs granted on December 7, 2021, which time vest one-third on each of the first, second and third anniversaries of the grant date, and PSUs granted on December 7, 2021, which have satisfied the applicable performance conditions and will fully time vest on the third anniversary of the date of grant. |
Severance,Option Exercises and Stock Vested in the 2023 Fiscal Year
The following table sets forth certain information with respect to the vesting of stock awards during the fiscal year ended December 31, 2023 with respect to our Named Executive Officers.
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Leonard Fluxman | 772,602 | 9,650,937 | ||||||
Stephen B. Lazarus | 326,576 | 4,075,202 | ||||||
Susan Bonner | 123,633 | 1,472,756 |
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Potential Payments Upon Termination or a Change in Control
Employment Agreements
Each of Messrs. Fluxman and Equity Arrangements
Severance Benefits. Each Named Executive Officer’sLazarus’ 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’sCompany’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)their respective Employment Agreements), in addition to receiving (i) any accrued but unpaid annual bonus, (ii) apro-rata Target Annual Bonustarget 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 Officereach of Messrs. Fluxman and Lazarus will be entitled to receive, subject to the Named Executive Officer’sin each case to his 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.Mr. Lazarus and Fusfield (3X3X for Mr. Fluxman)Fluxman of the sum of the Named Executive Officer’shis base salary and Target Annual Bonus,target annual bonus, and (y) the annual bonus for the year of the Named Executive Officer’shis termination of employment, determined based on actual achievement of the applicable performance criteria during the performance period ofapplicable to such annual bonus.
Ms. Bonner’s Employment Agreement provides that, in the event that her employment is terminated either by the Company without “cause” (which includes the Company’s delivery of a notice of nonrenewal of the employment term), or by Ms. Bonner for “good reason” (in each case as such terms are defined in her Employment Agreement), in addition to receiving (i) any accrued but unpaid annual bonus, (ii) a pro-rata target annual bonus for the year of her termination, and (iii) a lump sum payment equal to the premiums that would be paid by Ms. Bonner for 18 months’ of COBRA continuation coverage, Ms. Bonner will be entitled to receive, subject to her execution and non-revocation of a release of claims in favor of the Company and its affiliates, continued payment of her then-current base salary for 12 months following the date of her termination of employment.
In the event that any payment or benefit to be made to the Named Executive OfficersMessrs. Fluxman or Lazarus or Ms. Bonner 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.
The Employment Agreements also provide that in the event of the Named Executive Officer’s death during the Named Executive Officer’s employment by the Company or the Named Executive Officer’s termination due to the Named Executive Officer’s disability, the Named Executive Officer (or their estate, as applicable) will be entitled to: (i) any unpaid accrued base salary, and any unpaid accrued incentive bonus, (ii) any amount due to the Named Executive Officer as reimbursement of expenses, (iii) any unpaid accrued vacation payment; (iv) a pro-rated target annual bonus for the year of termination and (v) a lump sum amount equal to the maximum monthly premium the Named Executive Officer (if the Named Executive Officer is terminated due to disability), the Named Executive Officer’s spouse and other eligible family members would be required to pay pursuant to COBRA, multiplied by 24 for Messrs. Fluxman and Lazarus and 18 for Ms. Bonner.
Outstanding Equity Awards. The purpose
Under the terms of the 2019 Plan, is to make available incentives that will assist the Company to attract, retain, and motivate employees, including officers, consultants and directors. 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 to 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
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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. Pursuant to the Compensation Committee’s discretion, the RSU and PSU award agreements governing RSUs and PSUs outstanding as of December 31, 2023 provide that (i) RSUs will accelerate and vest upon a change in control and (ii) if the change in control occurs (a) 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 (b) following 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.
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”),Additionally, upon a parent companytermination 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 ofa Named Executive Officer by 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 heldwithout “cause” or due to death or “disability” or by Mr. Fluxman and Mr. Lazarussuch Named Executive Officer for “good reason” (as each such term 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 specifieddefined in the applicable award agreements). Messrs.agreement), any outstanding RSUs and PSUs will accelerate and vest.
Mr. Fluxman meets the age and service requirements for an Eligible Retirement under the terms of our RSU and PSU award agreements. See “Narrative Description to the Summary Compensation Table and the Grants of Plan-Based Awards Table for the 2023 Fiscal Year – Equity Awards” above for more information. In order to receive Eligible Retirement treatment of his equity awards upon his termination of employment from the Company as of December 31, 2023, such treatment would have required the Compensation Committee’s approval. Neither Mr. Lazarus each still hold their Nemo Shares, which have fully time vested, but remain subjectnor Ms. Bonner are eligible for retirement treatment under the terms of our equity awards.
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Benefits and Payments Upon Termination
The following table provides information regarding potential payments to performance vesting conditions.our Named Executive Officers as of December 31, 2023 in connection with certain termination or change in control events.
Prior Bonus Arrangements. In 2016, Mr. Fusfield entered into two bonus agreements with OneSpaWorld (Bahamas) Limited,
Named Executive | Base Salary(1) ($) | Target Incentive Bonus(2) ($) | Accrued 2023 Incentive Bonus(3) ($) | Termination Incentive(4) Bonus ($) | Pro-Rata Bonus(5) ($) | Continued Health Benefits(6) ($) | Disability Insurance Proceeds(7) ($) | Life Insurance Policy(8) ($) | Acceleration of RSUs(9) ($) | Acceleration of PSUs(10) ($) | Total ($) | |||||||||||||||||||||||||||||||||
Leonard Fluxman | ||||||||||||||||||||||||||||||||||||||||||||
Termination without Cause or for Good Reason | 2,730,756 | 3,413,445 | 2,275,631 | 2,275,631 | 1,137,815 | 43,221 | — | — | 3,271,383 | 4,087,802 | 19,235,684 | |||||||||||||||||||||||||||||||||
Termination for Cause or without Good Reason | — | — | 2,275,631 | — | — | — | — | — | — | — | 2,275,631 | |||||||||||||||||||||||||||||||||
Termination Due to Death | — | — | 2,275,631 | — | 1,137,815 | 43,221 | — | 5,689,075 | 3,271,383 | 4,087,802 | 16,504,927 | |||||||||||||||||||||||||||||||||
Termination Due to Disability | — | — | 2,275,631 | — | 1,137,815 | 43,221 | 519,952 | — | 3,271,383 | 4,087,802 | 11,335,804 | |||||||||||||||||||||||||||||||||
Change in Control | — | — | — | — | — | — | — | — | 3,271,383 | 4,383,225 | 7,654,608 | |||||||||||||||||||||||||||||||||
Eligible Retirement(11) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Stephen B. Lazarus | ||||||||||||||||||||||||||||||||||||||||||||
Termination without Cause or for Good Reason | 1,448,128 | 1,303,315 | 1,042,653 | 1,042,653 | 521,326 | 43,221 | — | — | 1,318,745 | 1,645,921 | 8,365,961 | |||||||||||||||||||||||||||||||||
Termination for Cause or without Good Reason | — | — | 1,042,653 | — | — | — | — | — | — | — | 1,042,653 | |||||||||||||||||||||||||||||||||
Termination Due to Death | — | — | 1,042,653 | — | 521,326 | 43,221 | — | 3,417,581 | 1,318,745 | 1,645,921 | 7,989,447 | |||||||||||||||||||||||||||||||||
Termination Due to Disability | — | — | 1,042,653 | — | 521,326 | 43,221 | 783,000 | — | 1,318,745 | 1,645,921 | 5,354,866 | |||||||||||||||||||||||||||||||||
Change in Control | — | — | — | — | — | — | — | — | 1,318,745 | 1,764,866 | 3,083,610 | |||||||||||||||||||||||||||||||||
Eligible Retirement | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Susan Bonner | ||||||||||||||||||||||||||||||||||||||||||||
Termination without Cause or for Good Reason | 500,500 | — | — | — | 375,375 | 6,044 | — | — | 839,740 | 1,027,256 | 2,748,914 | |||||||||||||||||||||||||||||||||
Termination for Cause or without Good Reason | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Termination Due to Death | — | — | — | — | 375,375 | 6,044 | — | 1,876,875 | 839,740 | 1,027,256 | 4,125,289 | |||||||||||||||||||||||||||||||||
Termination Due to Disability | — | — | — | — | 375,375 | 6,044 | 6,800 | — | 839,740 | 1,027,256 | 2,255,214 | |||||||||||||||||||||||||||||||||
Change in Control | — | — | — | — | — | — | — | — | 839,740 | 1,095,427 | 1,935,166 | |||||||||||||||||||||||||||||||||
Eligible Retirement | — | — | — | — | — | — | — | — | — | — | — |
(1) | Represents base salary severance payments based on each Named Executive Officer’s respective base salary in effect as of December 31, 2023, multiplied by the following severance multiples, as specified in each Named Executive Officer’s employment agreement: Mr. Fluxman: 3x, Mr. Lazarus: 2.5x and Ms. Bonner: 1x. |
(2) | Represents the Target Incentive Bonus (as defined in each applicable Named Executive Officer’s employment agreement) amounts for each of Messrs. Fluxman and Lazarus, multiplied by the following severance multiples, as specified in their respective employment agreements: Mr. Fluxman: 3x and Mr. Lazarus: 2.5x. |
(3) | Represents the accrued but unpaid 2023 Incentive Bonus (as defined in each applicable Named Executive Officer’s employment agreement) amounts for Messrs. Fluxman and Lazarus, based on actual performance. Upon a termination for Cause (as defined in each applicable Named Executive Officer’s employment agreement), Messrs. Fluxman and Lazarus would only be entitled to such amount upon a termination due to such Named Executive Officer’s (i) failure to substantially performance duties, (ii) violation of any lawful written policy or directive which is materially and demonstrably injurious to the Company or an affiliate, (iii) excessive alcoholism or drug abuse that substantially impairs the Named Executive Officer’s ability to perform duties under the Employment Agreement, (vi) commission of an act involving moral turpitude that results in material and demonstrable damage to the Company or an affiliate or (v) material breach or material violation of any non-competition, non-solicitation, non-disclosure or confidentiality provision contained in the Employment Agreement. |
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(4) | Represents Termination Incentive Bonus payments as specified in each of Messrs. Fluxman and Lazarus’s employment agreements. |
(5) | Represents the pro-rata Target Incentive Bonus payments, which are based on each Named Executive Officer’s Target Incentive Bonus, pro-rated for the portion of the year during which such Named Executive Officer was employed. As this table assumes a termination of employment on December 31, 2023, this column reflects the full Target Incentive Bonus specified in each Named Executive Officer’s employment agreement. |
(6) | Represents the amount of Company-provided continued health benefits for the following time periods, as specified in each Named Executive Officer’s employment agreement: Messrs. Fluxman and Lazarus: 24 months and Ms. Bonner: 18 months. |
(7) | Represents the total of the monthly proceeds payable under a disability insurance policy for which the Company reimburses each of Messrs. Fluxman and Lazarus for premium payments, and an annual amount to be used toward premium payments on a disability insurance policy in the maximum amount obtainable by Ms. Bonner. |
(8) | Represents payments made upon a termination of employment due to death pursuant to a life insurance policy. |
(9) | Represents the value of accelerated vesting of RSUs that would have vested upon the applicable termination event, calculated based on the closing price of the Company’s common shares on December 29, 2023, the last business day of fiscal year 2023, of $14.10. |
(10) | Represents the value of accelerated vesting of PSUs that would have vested upon the applicable termination event, calculated based on the closing price of the Company’s common shares on December 29, 2023, the last business day of fiscal year 2023, of $14.10. Upon a Change in Control that occurs prior to the Determination Date (as defined in the applicable PSU award agreement), the PSUs will be deemed earned at target. Upon a Change in Control that occurs after the Determination Date, the PSUs will be deemed earned at the actual level of performance achieved. As of December 31, 2023, a Determination Date had only occurred with respect to the 2021 PSUs. As such, in the row titled “Change in Control,” the 2021 PSUs are calculated at actual performance (i.e., 135.6%) and the 2022 PSUs and 2023 PSUs are calculated based on target performance. |
(11) | Pursuant to the terms of the RSU and PSU award agreements, if a Named Executive Officer terminates employment due to an Eligible Retirement, such Named Executive Officer will remain eligible to continue to vest in the RSUs and any Earned PSUs following the termination of employment, subject to compliance with such Named Executive Officer’s restrictive covenants. As of December 31, 2023, only Mr. Fluxman was retirement eligible, subject to Compensation Committee approval, and at such time he held 232,283 unvested RSUs and 58,853 Earned PSUs. The value of any RSUs and Earned PSUs that would continue to vest following an Eligible Retirement are not included in this table. |
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Equity Compensation Plan Information
The following table provides certain information with respect to our 2019 Plan as of December 31, 2023, the only equity compensation plan in effect as of December 31, 2023.
Number of Securities to be issued upon exercise of outstanding options, warrants and right(1) (a) | Weighted average exercise price of outstanding options, warrants and rights(2) (b) | Number of Securities remaining available for future issuance under equity compensation plans(3) (c) | ||||||||||
Equity compensation plans approved by security holders | 2,308,741 | $ | — | 911,635 | ||||||||
Equity compensation plans not approved by shareholders | — | $ | — | — | ||||||||
Total | 2,308,741 | $ | — | 911,635 |
(1) | Represents RSUs and PSUs (assuming a maximum level of performance is achieved) that were granted under the 2019 Plan and outstanding as of December 31, 2023. Because the number of shares of common stock to be issued upon settlement of outstanding PSUs is subject to performance conditions, the number of shares of common stock actually issued may be substantially less than the number reflected in this column. |
(2) | Only RSUs and PSUs are reflected in column (a); there is no weighted-average exercise price associated with these awards. |
(3) | Represents the total number of shares of common stock remaining available for issuance under the 2019 Plan as of December 31, 2023, excluding shares subject to outstanding awards as reflected in column (a). |
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PAY VERSUS PERFORMANCE
As required by Section 953(a) of the CompanyDodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the following table reports the compensation of our Principal Executive Officer (“OneSpaWorld Bahamas”PEO”), that granted cash bonuses payable
upon an “exit event” (as definedand the average compensation of our other Named Executive Officers (“Non-PEO NEOs”) as reported in the agreements), subjectSummary Compensation Table for the past three fiscal years, as well as their “compensation actually paid” (“CAP”) as calculated pursuant to the applicable SEC rules and certain conditions, including Mr. Fusfield’s continued employment throughperformance measures required by such rules.
The following table sets forth certain information with respect to the exit event (except as described below). The cash bonus payment under oneCompany’s financial performance and the compensation paid to each of our Named Executive Officers for each of the agreements (the “First Bonus”) was determined with referencefiscal years ended December 31, 2021, 2022 and 2023:
Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO(1)(2) ($) | Summary Compensation Table Total for Former PEO ($) | Compensation Actually Paid to Former PEO(1)(2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2) ($) | Value of Initial Fixed $100 Investment Based on: | Net Income ($) | Adjusted EBITDA(4) ($) | ||||||||||||||||||||||||||||||||
Year | Total Shareholder Return(3) ($) | Peer Group Total Shareholder Return(3) ($) | ||||||||||||||||||||||||||||||||||||||
2023 | 5,884,805 | 11,308,693 | — | — | 2,389,907 | 4,011,726 | 139.05 | 100.01 | (2,974 | ) | 89,192 | |||||||||||||||||||||||||||||
2022 | 6,542,743 | 6,070,680 | — | — | 2,589,267 | 2,423,449 | 92.01 | 88.90 | 53,159 | 50,384 | ||||||||||||||||||||||||||||||
2021 | 5,203,488 | (1,745,320 | ) | 289,990 | (1,874,864 | ) | 1,942,076 | 378,855 | 98.82 | 111.49 | (68,522 | ) | (18,946 | ) |
(1) | Amounts represent CAP to our PEO and the average CAP to our Non-PEO NEOs for the relevant fiscal year, as determined pursuant to the SEC rules (and as described below), which includes the individuals indicated in the table below for each fiscal year: |
Year | Current PEO | Former PEO | Non-PEO NEOs | |||||
2023 | Leonard Fluxman | — | Stephen B. Lazarus, Susan Bonner | |||||
2022 | Leonard Fluxman | — | Stephen B. Lazarus, Susan Bonner | |||||
2021 | Leonard Fluxman | Glenn J. Fusfield | Stephen B. Lazarus, Susan Bonner |
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(2) | In calculating CAP reflected in these columns, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with ASC 718. The valuation assumptions used to calculate such fair values did not materially differ from those disclosed at the time of grant. For each fiscal year, CAP to our Named Executive Officers represents the compensation reported in the “Total” column of the Summary Compensation Table for each applicable fiscal year, adjusted as follows: |
2021 | 2022 | 2023 | ||||||||||||||||||||||||||
Adjustments | Former PEO | Current PEO | Average Non-PEO NEOs | Current PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | |||||||||||||||||||||
Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the covered fiscal year | ($ | 99,801 | ) | ($ | 2,648,410 | ) | ($ | 838,771 | ) | ($ | 3,668,933 | ) | ($ | 1,213,288 | ) | ($ | 2,606,729 | ) | ($ | 899,798 | ) | |||||||
Increase in the fair value as of the end of the covered fiscal year of all awards granted during the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | $ | 102,354 | $ | 2,609,348 | $ | 826,400 | $ | 2,361,255 | $ | 747,827 | $ | 2,947,464 | $ | 1,017,421 | ||||||||||||||
Increase, for awards that are granted and vest in the same year, in the fair value as of the vesting date | $ | 0 | $ | 0 | $ | 0 | $ | 1,096,093 | $ | 400,087 | $ | 0 | $ | 0 | ||||||||||||||
Increase in the amount equal to the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year | ($ | 4,606 | ) | $ | 699,174 | $ | 157,148 | ($ | 123,347 | ) | ($ | 27,628 | ) | $ | 2,085,957 | $ | 660,631 | |||||||||||
Increase in the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | $ | 1,707,917 | $ | 864,688 | $ | 237,081 | ($ | 137,131 | ) | ($ | 72,817 | ) | $ | 2,997,196 | $ | 843,566 | ||||||||||||
Decrease, for any awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered fiscal year, in the amount equal to the fair value at the end of the prior fiscal year | ($ | 3,870,718 | ) | ($ | 8,473,608 | ) | ($ | 1,945,078 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Increase in the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
If at any time during the last completed fiscal year, the company has adjusted or amended the exercise price of options or SARs held by a Named Executive Officer, or otherwise has materially modified such awards, the changes in fair value, taking into account the excess fair value, if any, of any such modified award over the fair value of the original award as of the date of such modification | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Deduction for change in the actuarial present values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table for the covered fiscal year | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Increase for service cost and, if applicable, prior service cost for pension plans | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
TOTAL ADJUSTMENTS | ($ | 2,164,854 | ) | ($ | 6,948,808 | ) | ($ | 1,563,221 | ) | ($ | 472,063 | ) | ($ | 165,818 | ) | $ | 5,423,888 | $ | 1,621,819 |
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(3) | The Company Total Shareholder Return and the Peer Group Total Shareholder Return reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The peer group used to determine the Peer Group Total Shareholder Return for fiscal year 2023 is the compensation peer group that was disclosed in our CD&A, as listed below: |
Current Peer Group (2023) | ||||
Choice Hotels International, Inc. | ||||
e.l.f. Beauty, Inc. | ||||
European Wax Center, Inc. | ||||
Inter Parfums, Inc. | ||||
Lindblad Expeditions Holdings, Inc. | ||||
Medifast, Inc. | ||||
National Vision Holdings, Inc. | ||||
Nature’s Sunshine Products, Inc. | ||||
Planet Fitness, Inc. | ||||
Playa Hotels & Resorts N.V. | ||||
Target Hospitality Corp. | ||||
The Beauty Health Company | ||||
USANA Health Sciences, Inc. | ||||
WW International, Inc. | ||||
Wyndham Hotels & Resorts, Inc. | ||||
Xponential Fitness, Inc. |
For purposes of satisfying regulatory requirements under Item 402(v) of Regulation S-K, in fiscal years 2022 and 2021, we compared our company to the “total enterprise value” (as definedDow Jones U.S. Travel & Leisure Index. If the peer group comparator had not changed for fiscal year 2023, the Peer Group Total Shareholder Return for 2023 would have been $120.98. For fiscal year 2023, we decided to use the peer group disclosed in our CD&A, as we believe that such peer group is more comparable to our business than the U.S. Travel & Leisure Index.
(4) | We have selected Adjusted EBITDA as our most important financial measure (that is not otherwise required to be disclosed in the table) used to link CAP to our Named Executive Officers to company performance. Adjusted EBITDA is a non-GAAP measure. We define adjusted EBITDA as net (loss) income plus income tax (benefit) expense, interest income, interest expense, depreciation and amortization, long-lived assets impairment, stock-based compensation, change in fair value of warrant liabilities and business combination costs. |
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Pay versus Performance Comparative Disclosure
The graphs below compare the CAP to our PEO and the average of the CAP to Non-PEO NEOs, with (i) our cumulative Total Shareholder Return against our Peer Group Total Shareholder Return, (ii) our Net Income, and (iii) our Adjusted EBITDA, in each case, for the fiscal years ended December 31, 2021, 2022 and 2023. Total Shareholder Return amounts reported in the agreement)graph assume an initial fixed investment of OneSpaWorld Bahamas$100, and vested in full upon an exit event. Upon a termination of his employment without “cause” (as defined inthat all dividends, if any, were reinvested.
Compensation Actually Paid and Company TSR
Compensation Actually Paid and Net Income
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Compensation Actually Paid and Adjusted EBITDA
Pay Versus Performance Tabular List
We design our executive compensation plans to help attract, motivate, reward, and retain highly qualified executives who can create and sustain value for our shareholders. The following table lists the agreement), Mr. Fusfield remained eligiblemost important and only performance measure that we use to receive all or a portion of the cash bonus for uplink CAP to two years following his termination if an exit event occurred during that period. The other cash bonus payment (the “Second Bonus”) was equalour Named Executive Officers 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 $16,706,300company performance 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.fiscal year ended December 31, 2023.
Most Important Performance Measure |
Adjusted EBITDA |
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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 Independent 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. Members of our Board of Directors were provided with the option to receive their 2023 retainer fees, which would normally be paid in cash, in the form of either RSUs or cash or restricted stock units. that would accrue and be paid at a later date.
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, who receives a cash payment instead) also receives a yearly grant of restricted stock units (“RSUs”)RSUs with a value equal to $100,000 (based on the closing stock price of the Company’s common shares on the date immediately preceding the date of grant). The RSUs fully vest upon theone-year anniversary of the grant date, subject to continuous service. Pursuant to the 2019 Plan, eachnon-employee director may voluntarily elect to defer the delivery of shares upon vesting of the RSUs, generally until the earlier of the 60th day following thenon-employee director’s date of their separation of service or immediately prior to a change in control. We also pay reasonable travel and accommodation expenses of thenon-employee directors in connection with their participation in meetings of our Board of Directors. For the purposes of director compensation, the term “yearly” refers to a “Board Year” in which a director serves, and which begins on the date of the Company’s annual shareholder meeting for such year.
2019Non-Employee2023 Director Compensation Table
The following table presents the total compensation for each person who served as anon-employee director of our Board of Directors during 2019.2023. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards ornon-equity awards to, or pay any other compensation to, any of the othernon-employee directors of our Board of Directors. Messrs.Mr. Fluxman, and Fusfield, our President, Executive
Chairman and President and Chief Executive Officer, respectively,did not receive noany compensation for service as directorsa director and, consequently, areis not included in this table. The compensation received by Messrs.Mr. Fluxman and Fusfield as employeesan employee of the Company is presented in “—Summary Compensation Table”.Table.”
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Option Awards ($) | Total ($) | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3) ($) | Total ($) | |||||||||||||||||||||
Maryam Banikarim | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||||||
Glenn Fusfield | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||||||
Adam Hasiba | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||||||
Steven Heyer(4) | — | — | — | |||||||||||||||||||||||||
Andrew R. Heyer | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||||||
Marc Magliacano | 150,000 | — | — | 150,000 | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||
Michael J. Dolan | 95,000 | 100,012 | — | 195,012 | ||||||||||||||||||||||||
Steven J. Heyer | 100,000 | 100,012 | 766,904 | (4) | 966,916 | (4) | ||||||||||||||||||||||
Walter F. McLallen | 80,000 | 100,008 | 180,008 | |||||||||||||||||||||||||
Lisa Myers | 50,000 | 100,008 | 150,008 | |||||||||||||||||||||||||
Stephen W. Powell | 125,000 | 100,008 | 225,008 | |||||||||||||||||||||||||
Jeffrey E. Stiefler | 50,000 | 100,012 | — | 150,012 | 70,000 | 100,008 | 170,008 | |||||||||||||||||||||
Andrew R. Heyer | 50,000 | 100,012 | — | 150,012 | ||||||||||||||||||||||||
Maryam Banikarim | 50,000 | 100,012 | — | 150,012 | ||||||||||||||||||||||||
Walter F. McLallen | 80,000 | 100,012 | — | 180,012 | ||||||||||||||||||||||||
Stephen W. Powell | 50,000 | 100,012 | — | 150,012 |
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(1) | Reflects the cash retainer earned for eachnon-employee director’s board service. |
(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 |
(3) | As of December 31, |
Name | Shares subject
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Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2019, the 2019 Plan is the only incentive equity plan administered by the Company. The following table provides information as of December 31, 2019 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 | |||||||||
Equity compensation plans approved by security holders | 4,436,794 | (1) | $ | 12.99 | 2,563,206 | |||||||
Equity compensation plans not approved by security holders | 0 | $ | — | 0 |
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Compensation Committee Interlocks and Insider Participation
During fiscal 2019,year 2023, our Compensation Committee consisted of Mr. DolanPowell (chairperson), Mr. Powell and Mr. Magliacano and commencing on July 30, 2019, Mr. Stiefler. None of the members of our Compensation Committee is, nor was during fiscal 2019,year 2023, 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 20192023 served, as a member of a Board of Directors or Compensation Committee of any entity that has, or during fiscal year 20192023 had, one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
Mr. Magliacano was nominated to our Board of Directors by Steiner Leisure pursuant to the terms of the Director Designation Agreement. For more information, see the section entitled “Certain Relationships and Related Transactions.”
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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
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:
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OneSpaWorld Holdings Limited
Page 2 of 4
April 29, 2020
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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:
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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
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REGISTERED OFFICE
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REGISTERED AGENT
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OBJECTS AND POWERS
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CURRENCY
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AUTHORISED CAPITAL
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CLASSES, NUMBER AND PAR VALUE OF SHARES
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SHARE RIGHTS AND LIMITATIONS
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Certain Provisions Regarding theNon-Voting Common Shares:
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VARIATION OF CLASS RIGHTS
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REGISTERED SHARES
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LIABILITY OF SHAREHOLDERS
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AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION
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DEFINITIONS
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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 | |||||
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140-141 | 34 | |||||
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143 | 35 |
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, 2023, all executive officers, directors and greater than 10% stockholders complied with all applicable SEC filing requirements, with the exceptions noted below:
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Due to an administrative error, a late Form 3 report was filed for Lisa Myers on August 9, 2023 to report unvested RSUs that were held by her as of June 7, 2023 when she became a Section 16 reporting officer of the Company.
Due to an administrative error, a late Form 4 report was filed for Leonard Fluxman on January 26, 2023 to report the receipt of 26,325 common shares on January 23, 2023 and the sale of 20,374 common shares on January 24, 2023 to satisfy tax withholding obligations due upon vesting of Performance Stock Units. |
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Due to an administrative error, a late Form 4 report was filed for Stephen B. Lazarus on January 26, 2023 to report the receipt of 9,492 common shares on January 23, 2023 and the sale of 7,348 common shares on January 24, 2023 to satisfy tax withholding obligations due upon vesting of Performance Stock Units.
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“THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECTSCAN TO SIGNIFICANT OWNERSHIP AND TRANSFER RESTRICTIONS PURSUANT TO THE SECOND AMENDED AND RESTATED ARTICLES OF ASSOCIATION OFVIEW MATERIALS & VOTE w VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above 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.”
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SHARES, AUTHORISED CAPITAL AND CAPITAL
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REDUCTION OR INCREASE IN AUTHORISED CAPITAL
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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.
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MEETINGS AND CONSENTS OF SHAREHOLDERS
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have waived notice of the meeting; and for this purpose presence at the meeting shall be deemed to constitute waiver.
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LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION
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RESTRICTIONS ON TRANSFER AND OWNERSHIP
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VOLUNTARY WINDING UP AND DISSOLUTION
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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 transmit your voting instructions and for electronic delivery of OFFICE NUMBER 2, PINEAPPLE BUSINESS PARK, AIRPORT INDUSTRIAL PARK, P.O. BOX N-624 information up until 11:59 p.m. Eastern Time on June 4, 2024. Have your proxy NASSAU, ISLAND OF NEW PROVIDENCE, COMMONWEALTH OF THE BAHAMAS card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your proxy.voting instructions up until 11:59 p.m. Eastern Time on June 4, 2024. Have your proxy card availablein hand when you accesscall and then follow 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.instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope provided. FOLD HERE DO NOT SEPARATE INSERTwe have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN ENVELOPE PROVIDEDBLUE OR BLACK INK AS FOLLOWS: V49064-P07326 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY Please mark your votes X like this THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED IN PROPOSAL 1CARD IS VALID ONLY WHEN SIGNED AND A VOTE “FOR” PROPOSALS 2, 3DATED. DETACH AND 4.RETURN THIS PORTION ONLY ONESPAWORLD HOLDINGS LIMITED The Board of Directors recommends you vote FOR the following proposals: 1. Election of Directors:Class B Directors For Withhold 1a. Marc Magliacano 1b. Walter F. McLallen 1c. Jeffrey E. Stiefler For Against Abstain 2. Approval, by non-binding advisory vote, of the compensation of the Company’s named executive officers. The Board of Directors recommends you vote 1 YEAR the following proposal: 1 Year 2 Years 3 Years Abstain 3. Approval, by non-binding advisory vote, of the Private FOR AGAINST ABSTAIN Placement (as defined infrequency of future advisory votes to approve the FOR AGAINST WITHHOLD proxy statement) for purposes of (1) Steven J. Heyer Nasdaq Listing Rule 5635: (2) Andrew R. Heyer 4. Approvalcompensation of the adoptionCompany’s named executive officers. The Board of ourDirectors recommends you vote FOR AGAINST ABSTAIN (3) Leonard Fluxman Amended Articles (as defined in the proxy statement) to, among 2.following proposal: For Against Abstain 4. 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:2024. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appearappear(s) hereon. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer,other fiduciary, please give full title.title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
16007 OneSpaWorld Proxy Card REV4 Back Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting of Shareholders To view the 2020and Proxy Statement 2019and 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 PROXYare available at www.proxyvote.com. V49065-P07326 ONESPAWORLD HOLDINGS LIMITED THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF OneSpaWorld Holdings Limited For the Annual Meeting of Shareholders to be held on Wednesday, June 10, 2020, at 12:30 p.m., Eastern Daylight Time By signing this proxy, you revoke all prior proxies and appoint Glenn J. Fusfield andSHAREHOLDERS JUNE 5, 2024 The shareholder(s) hereby appoint(s) Stephen B. Lazarus and eachInga A. Fyodorova or either of them, as proxies, each with fullthe power of substitution,to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse hereof,side of this ballot, all of the common shares of Common Shares of OneSpaWorld Holdings Limited held of record by you atthat the close of business on May 5, 2020shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders of OneSpaWorld Holdings Limited to be held at 11:00 a.m., Eastern Daylight Time on Wednesday, June 10, 2020,5, 2024, in the Library Room, located at The Island House, Mahogany Hill, Western Road, Nassau, Bahamas, and at any postponementadjournment or adjournmentpostponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS INDICATED.DIRECTED BY THE SHAREHOLDER(S). IF NO CONTRARY INDICATION ISSUCH DIRECTIONS ARE MADE, THETHIS PROXY WILL BE VOTED IN FAVORFOR THE ELECTION OF ELECTING THE THREE NOMINEES TOLISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS, IN FAVOR OFFOR PROPOSALS 2 3 AND 4, AND IN ACCORDANCE WITH1 YEAR FOR PROPOSAL 3. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREINENCLOSED REPLY ENVELOPE CONTINUED AND TO BE SIGNED ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. (Continued and to be marked, dated and signed, on the other side)REVERSE SIDE