How will proxies be voted on other items or matters that properly come before the meeting?
If any other items or matters properly come before the meeting, the proxies received will be voted on those items or matters in accordance with the discretion of the proxy holders.
Is the Company aware of any other item of business that will be presented at the meeting?
The Board does not intend to present, and does not have any reason to believe that others will present, any item of business at the Annual Meeting other than those specifically set forth in the Notice of Annual Meeting of Stockholders. However, if other matters are properly brought before the Annual Meeting, the persons named on the enclosed proxy will have discretionary authority to vote all proxies in accordance with their best judgment.
We intend to report the voting results in a Current Report on Form 8-K, which we expect to file with the Securities and Exchange CommissionSEC within four business days after the Annual Meeting.
No dissenters’ rights are available to any stockholder who dissents from any of the proposals set forth in the Proxy Statement under the Nevada Revised Statutes or under our current Articles of Incorporation or Bylaws.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINEES FOR NEXT ANNUAL MEETING
Stockholders may present proposals for action at a future meeting if they comply with SEC rules, state law and our Bylaws.
Pursuant to Rule 14a-8 under the Exchange Act, some stockholder proposals, including stockholder nominations to the Board of Directors, may be eligible for inclusion in the proxy statement for our 2022 annual meeting of stockholders. These stockholder proposals, along with proof of ownership of our stock in accordance with Rule 14a-8(b)(2), must be received by us not later than December 31, 2021 which is 120 calendar days prior to the anniversary date of the mailing of this Proxy Statement. Stockholders are also advised to review our Bylaws which contain additional advance notice requirements, including requirements with respect to advance notice of stockholder proposals (other than non-binding proposals presented under Rule 14a-8) and director nominations.
Our Bylaws provide that, except in the case of proposals made in accordance with Rule 14a-8, for stockholder nominations to the Board of Directors or other proposals to be considered at an annual meeting of stockholders, the stockholder must have given timely notice thereof in writing to us not less than 60 nor more than 90 calendar days prior to the anniversary date of the preceding year’s annual meeting. Therefore, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following public notice of the meeting date.
Stockholder proposals should be mailed by certified mail, return receipt requested, and must comply in all respects with applicable rules and regulations of the SEC, the laws of the State of Nevada and our Bylaws. Stockholder proposals may be mailed to the Corporate Secretary, 321 South 1250 West, Suite 1, Lindon, Utah 84042.
INFORMATION TO BE FURNISHED TO SECURITY HOLDERS
Our Annual Report on Form 10-K for the year ended December 31, 2020, as well as our other SEC filings, are available without charge.If you would like to request copies of any documents, requests should be sent in writing to Profire Energy, Inc., ATTN Corporate Secretary, 321 South 1250 West, Suite 1, Lindon, Utah 84042.
OTHER MATTERS
We know of no other matters that are to be presented for action at the Annual Meeting other than those set forth above.If any other matters properly come before the Annual Meeting, the persons named in the enclosed proxy will vote the shares represented by proxies in accordance with their best judgment on such matters.
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares you hold.Therefore, you are urged to execute and return the accompanying proxy in the enclosed envelope at your earliest convenience.
By order of the Board of Directors,
April 30,2021/s/ Ryan W. Oviatt/s/ Cameron M. Tidball
Ryan W. Oviatt Cameron M. Tidball Co-Chief Executive Officer Co-Chief Executive Officer
PROPOSAL ONE
ELECTION OF DIRECTORS
Our Board of Directors currently has five members. The size of the Board will remain at five members following the Annual Meeting. Our Bylaws provide that the Board will consist of such number of directors to be fixed from time-to-time by resolution of the Board.
The Nominating and Governance Committee (the “Nominating Committee”) is charged with identifying potential Board members and recommending qualified individuals to the Board for its consideration. The Nominating Committee is authorized to employ third-party search firms to identify potential candidates. In evaluating candidates, the Nominating Committee considers, among other things:
•Education, background, skills, and experience that provide knowledge of business, financial, governmental, or legal matters relevant to our business or to our status as a public company;
•A high level of personal and professional ethics, integrity, and values;
•A reputation for exercising good business judgment;
•Commitment to representing the long-term interests of our stockholders;
•The fit of the individual's skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to our needs; and
•Sufficient available time to fulfill the responsibilities of a member of the Board.
The Nominating Committee also considers whether individuals satisfy the independence criteria set forth in the Nasdaq listing standards, as well as any special criteria applicable to service on various standing committees of the Board. Our Board and the Nominating Committee believe it is desirable that Board members represent diversity of gender, race and national origin, as well as diversity of viewpoints, background, experience and demographics.
The Nominating Committee generally identifies nominees by first assessing whether the current members of the Board continue to provide the appropriate mix of knowledge, skills, judgment, experience, differing viewpoints and other qualities necessary to the Board's ability to oversee and guide the business and affairs of the organization. The Board generally nominates for re-election current members of the Board who are willing to continue in service, collectively satisfy the criteria listed above and are available to devote enough time and attention to the affairs of the organization. When the Nominating Committee seeks new candidates for director roles, it seeks individuals with qualifications that will complement the experience, skills and perspectives of the other members of the Board. The full Board (1) considers candidates that the Nominating Committee recommends; (2) considers the optimum
size of the Board; (3) determines how to address any vacancies on the Board; and (4) determines the composition of all Board committees.
Upon the recommendation of our Nominating and Corporate Governance Committee, the Board has identified and nominated five individuals to serve as directors for a one-year term expiring on the date of our next Annual Meeting, or until their successors are duly elected and qualified.Brenton W. Hatch, Harold Albert, Arlen B. Crouch,Colleen Larkin Bell, Ryan W. Oviatt, Daren J. Shaw, and Ronald R. Spoehel have been nominated by the Nominating and Corporate Governance Committee to stand for election as directors.Messrs. Hatch, Albert, Crouch,Oviatt, Shaw and Spoehel and Ms. Bell currently serve as directors of the Company.
We intend that the proxies solicited by us will be voted for the election of the nominees named above.Each of the nominees has agreed to serve as a director if elected, and we believe each nominee will be available to serve.However, the proxy holders have discretionary authority to cast votes for the election of a substitute should any nominee not be available to serve as a director.
Board Nominees for Election of Directors
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Positions Held | | Director Since | | Officer Since | |
| | | | | | | | | |
| Brenton W. Hatch | | 6770 | | Chief Executive Officer, PresidentChairman and Director | | November 2008 | | October 2008 | |
Harold Albert(1)
Ryan W. Oviatt | | 5547 | | Co-Chief Executive Officer, Co-President, and Chief Financial Officer and Director | | October 2018 | | September 2015 | |
| Colleen Larkin Bell | | 61 | | Director | | November 2008August 2020 | | N/A | |
| Daren J. Shaw | | 6164 | | Director | | August 2013 | | N/A | |
| Ronald R. Spoehel | | 6063 | | Director | | October 2013 | | N/A |
Arlen B. Crouch | | 84 | | Director | | November 2013 | | N/A |
| |
(1) | Mr. Albert retired as Chief Technology Officer of the Company on March 1, 2017. He continues to serve as a director. |
A brief description of the background and business experience of each nominee follows:
Brenton W. Hatch. Mr. Hatch became thetransitioned from his prior role as Chief Executive Officer and President of the Company in October 2008 andto serve as Executive Chairman through June 30, 2021. Mr. Hatch has served as the Chairman of the Board since November 2008.Mr. Hatch has beenformerly served as Chief Executive Officer of the Company and was responsible for overseeing the day-to-day operations of the Company sincefrom October 2008. 2008 to July 2020.Mr. Hatch co-founded the Company’s wholly owned subsidiary, Profire Combustion, Inc. in 2002. Since that time he has served as the Chief Executive Officer and General Manager of Profire Combustion and has been responsible for the day-to-day operations of Profire Combustion since its inception. Prior to founding Profire Combustion, between 2001 and 2002, Mr. Hatch was a Management Consultant and General Manager of Titan Technologies, Inc., an oilfield service and distribution company in Edmonton, Alberta, Canada.In this position, Mr. Hatch performed an in-depth analysis of the operations and management of all divisions of Titan Technologies.Based on
his analysis, Mr. Hatch implemented company-wide operational changes to improve company performance.From 1989 to 2000, Mr. Hatch served as President and Chief Executive Officer of Keaton International, Inc., an
educational services company based in Edmonton, Alberta, Canada.Mr. Hatch managed all executive functions of the company and particularly focused on the development and management of the company’s educational services.During his time at Keaton International, Mr. Hatch led corporate networking and marketing campaigns world-wide.Mr. Hatch earned a Bachelor’s Degreebachelor’s degree in Educationeducation from the University of Alberta in 1974.Mr. Hatch is not currently, nor has he in the past five years been, a nominee or director of any other SEC registrant or registered investment company.We considered Mr. Hatch’s experience as a founder and as the principal executive officer of Profire Combustion, as well as his previous management and operational oversight experience in concluding that he should serve as a director of the Company.
Harold Albert
Ryan W. Oviatt. . Mr. AlbertOviatt is the Co-Chief Executive Officer & Chief Financial Officer, and Treasurer of the Company, with responsibility over all finance, accounting, operations, human resources, information technology, health, safety, and environment, quality control, and compliance functions of the Company. Mr. Oviatt has served as Co-Chief Executive Officer of the Company’sCompany since July 2020, as Chief TechnologyFinancial Officer (“CTO”) from June 2016 through March 2017. Additionally, Mr. Albertof the Company since September 2015 and has served as a Director since October 2018. Previously, Mr. Oviatt was a Senior Manager at Rio Tinto, a publicly-traded, international mining and metals company.During his time with Rio Tinto he held significant responsibility for Sarbanes-Oxley compliance, financial reporting analysis, and other special projects from 2005-2015. He also managed value-tracking and reporting within the company, leading to enhanced cash flow and reduced costs. Additionally, Mr. Oviatt served on technical committees relating to international tax, finance, and development of a significant international Rio Tinto mining operation. He also helped mentor and develop personnel and management. Prior to Rio Tinto, Mr. Oviatt was an Audit Manager at Ernst & Young, LLP from 2000-2005, where he audited both public and private clients, including oil and gas companies. Mr. Oviatt received his bachelor’s degree in accounting from Westminster College, and master’s degree in accountancy from Brigham Young University. He is a certified public accountant in Utah. We considered Mr. Oviatt’s extensive management experience as well as his experience and leadership in other senior financial roles in public companies in determining that he should serve as an officer and director of the Company since NovemberCompany.
Colleen Larkin Bell. Ms. Bell served as Vice President and General Manager of 2008.Dominion Energy Western Distribution, Gas Infrastructure Group. She was responsible for all company functions related to the delivery of natural gas to over 1,000,000 homes and businesses in the western United States. She carries an extensive background of over 30 years in both law and the natural gas and energy industries. Prior to his appointment as CTO, Mr. Albertthe merger with Dominion Energy in 2016, she served as Vice President and General Counsel for Questar Corporation, holding primary responsibility over Questar Corporation’s legal and insurance departments. She reported directly to the Company’s Chief Operating Officer beginningcompany’s chief executive officer and was the chief legal advisor to Questar’s board of directors. Ms. Bell has received a myriad of prestigious awards and accolades over the course of her tenure and is active in October 2008. From October 2008 until March 2017, Mr. Albert has been responsiblea number of charitable and other organizations, including serving on the Utah Energy Infrastructure Authority Board of Directors from 2016 to present, serving as the Chair for research and development of new products and servicesWomen United, as well as overseeing Company operationsserving on the United Way of Salt Lake Board of Directors from 2016 to 2019. She received her bachelor’s degree in Canada. Mr. Albert co-founded Profire Combustion, Inc.English, with a minor in 2002. Prior to founding Profire Combustion, Mr. Albert workedpolitical science from the University of Utah and her law degree from the S.J. Quinney College of Law, University of Utah. We considered Ms. Bell’s extensive management experience, awarded legal expertise, and years
of active management in the oil services industry for Titan Technologies, Inc. from 1996 to 2002. During that period, Mr. Albert served as an Associate Manager overseeing the company’s burner division. From 1993 to 1996, Mr. Albert was employed with Natco Canada doing start-up and commissioning of oil and gas facilitiesindustry in both Canada and Russia. Mr. Albert is not, nor has he in the past five years been, a nominee or director of any other SEC registrant or registered investment company. We considered Mr. Albert’s experience as a founder and principal officer of the Company, combined with his previous management and operational experience in concludingdetermining that heshe should serve as a director of the Company.
Arlen B. Crouch
. From 1989 to 1997, Mr. Crouch served as President and Chief Executive Officer of Franklin Quest Co., now Franklin Covey Co. (NYSE:FC), where he played a key role in the company’s initial public offering and listing on the New York Stock Exchange (“NYSE”). Prior to his appointment as President and Chief Executive Officer, he served in a variety of senior management roles including Chief Operating Officer and Executive Vice President. At the time Mr. Crouch stepped down in 1997 to serve a three-year assignment in Washington, D.C. for the Church of Jesus Christ of Latter Day Saints, the company had a market capitalization in excess of $500 million. Previously, from 1955 to 1989, he was employed at Merrill Lynch where he served as a First Vice President and Regional Director with responsibilities for retail operations in the Southern California region. In 1995, Mr. Crouch also served as Chair of the Salt Lake Chamber of Commerce. We considered Mr. Crouch’s extensive management experiences as well as his experience and leadership in the financial services industry in determining that he should serve as a director of the Company.
Daren J. Shaw. Mr. Shaw has served for more than 30 years in leadership capacities with several financial services firms. Mr. Shaw currently servesretired as a Managing Director of Investment Banking at D.A. Davidson & Co., a middle-market full-service investment banking and brokerage firm.firm in early 2019. During his term as Managing Director at D.A. Davidson & Co., Mr. Shaw has served on the Senior Management Committee and board of directors and as the lead investment banker in a wide variety of transactions including public stock offerings, private placements, and mergers and acquisitions. Prior to joining D.A. Davidson & Co. in 1997, Mr. Shaw served for 12 years with Pacific Crest Securities in various roles, including Managing Director. Since 2012, Mr. Shaw has
served as a member of the board of directors of The Ensign Group, Inc. (NASDAQ: ENSG), a provider of skilled nursing, assisted living, and rehabilitative care services with more than 230approximately 232 facilities located in 1513 states. He currently serves as Chairman of The Ensign Group’s audit committee and also serves on The Ensign Group’s compensation and specialnominating/governance committees. We considered Mr. Shaw’s extensive experience and leadership in the financial services industry and on the boards of directors of public and private companies in determining that he should serve as a director of the Company.
Ronald R. Spoehel. The Honorable Ronald R.Mr. Spoehel is a private investor with has over 35 years of board, executive management, investment banking, and private bankinginvestment experience, from Fortune 500 to technology startups. From 2007 to 2009, he served as the Presidentially-appointed, Senate-confirmed Chief Financial Officer of the National Aeronautics and Space Administration (“NASA”)(NASA). Prior to NASA, Mr. Spoehel servedpresently serves as an executive officer inManaging Partner of Windrock Capital LLC. He also serves on other U.S. and international private company and advisory boards and has held various board, financial and general management positions and on the Boards of Directors ofwith globally operating public and private operating companies in the U.S., Canada, Latin America, and Europe. AmongPreviously, he was a partner in various investment companies with worldwide operations, heand served as Executive Vice President and Chief Financial Officer and on the Boards of both ManTech International (NASDAQ:MANT) and ICx Technologies, Inc.; as Vice President-Corporate Development of Harris Corporation (NYSE:HRS); and, as Chief Executive Officer and on the board of directors of Optinel Systems, Inc. Mr. Spoehel began his career as an investment banker for ten years in investment banking at Lehman Brothers and Bank of America, primarily focused on energy and technology sectors.Mr. Spoehel is a member of the Economic Club of Washington, D.C.Mr. Spoehel is an honors graduate of the University of Pennsylvania, where he received his Bachelor of Science degree in economics and MBAMaster in Business Administration from the Wharton School, and his Master of Science degree in engineering from the Moore School of Electrical Engineering. In addition to currently serving as Chairman of Millennial ESports Corp. (TSXV:GAME), Mr. Spoehel also serves on the boards of directors of U.S. and international private companies. We considered Mr. Spoehel’s extensive experience and leadership in the energy and technology sectors and on the boards of directors of public and private companies in determining that he should serve as a director of the Company.
Family Relationships
There are no family relations among any of our executive officers, directors or key employees.
Involvement in Certain Legal Proceedings
To our knowledge, none of our officers, directors or affiliates or any owner of record of 5% or more of our common stock, or any associate of any of the foregoing, is a party adverse to the Company or any of our subsidiaries or has a material interest adverse to the Company or any of our subsidiaries. To our knowledge, none of our officers, directors or affiliates or any owner of record of 5% or more of our common stock, or any associate of any of the foregoing, is a party adverse to the Company or any of our subsidiaries or has a material interest adverse to the Company or any of our subsidiaries.
Related Party Transactions
Our Audit Committee Charter requires that the Audit Committee review, approve or oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations on an ongoing basis, and to develop policies and procedures for the Audit Committee’s approval of transactions with related persons. Prior to
establishing our Audit Committee, our Board monitored and reviewed issues involving potential conflicts of interests and related party transactions in accordance with our written policies and procedures.
During the year ended December 31, 2017, the Audit Committee approved and2020, the Company entered into a Stock Redemption Agreement, dated May 25, 2017, with the Hatch Family Holdings Company, LLC, which is wholly owned by Brenton W. Hatch, the Company's Chairmandid not engage in any related party transactions, and Chief Executive Officer. Pursuant to the Agreement, the Company repurchased 1,300,000 shares of its Common Stock for an aggregate cash purchase price of $1,703,000.
there are currently no proposed related party transactions.
On February 23, 2017 (the "Effective Date") the Company and Mr. Albert entered into a Retirement and Release Agreement ("Retirement Agreement"). Pursuant to the Retirement Agreement, Mr. Albert received severance of $375,000 (the "Severance"), less applicable tax-related deductions and withholdings, paid in four equal quarterly installments over the next four financial quarters. The Retirement Agreement also contemplated that Mr. Albert would provide up to ten hours of consulting services per month to the Company upon the Company's request at no charge until the Severance has been paid in full and thereafter at a rate of $175 per hour. Mr. Albert was not to receive any additional compensation for his service as a director until the Severance was paid in full. The final installment of the Severance was paid in the final quarter of 2017. Going forward, pursuant to the Retirement Agreement, Mr. Albert will receive annual compensation of $80,000 paid in equal monthly installments for his service as a non-executive director.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors and executive officers, and any persons who own more than 10% of the common stock of the Company to file with the CommissionSEC reports of beneficial ownership and changes in beneficial ownership of common stock. Officers and directors are required by SEC regulationregulations to furnish us with copies of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to us or written representations that no other reports were required, we believe that during the Transition Period all filing requirements applicable to our officers, directors, greater than 10% stockholders or any other person subject to Section 16 of the Exchange Act were met. with respect to the year ended December 31, 2020.
Director Independence
The Board has determined that of the current directors or nominees, Messrs. Crouch,Ms. Bell, Mr. Shaw and Mr. Spoehel qualify as independent directors as that term is defined in the listing standards of Thethe Nasdaq Stock Market.Such independence definition includes a series of objective tests, including that the director is not an employee of the Company and has not engaged in various types of business dealings with the Company.As Mr.Messrs. Hatch is alsoand Oviatt are employed by the Company, and Mr. Albert recently retired as an employee and officer, the Board has determined that neither of them areis currently independent.
Board Committees
Audit Committee.The Audit Committee of the Board is responsible for the selection, review and oversight of the Company’s independent registered public accounting firm; approval of all audit, review and attest services provided by the independent registered public accounting firm; and the integrity
of our reporting practices and evaluation of internal controls and accounting procedures. The Audit Committee is responsible for the pre-approval of all non-audit services provided by its independent registered public accounting firm. Non-audit services are only provided by our independent registered public accounting firm to the extent permitted by law. Further, all related party transactions are reviewed and approved by the Audit Committee.
The Audit Committee is chaired by Daren J. Shaw and consists of Messrs. Crouch,Ms. Bell, Mr. Shaw, and Mr. Spoehel, all of whom qualify as independent directors. The Board believes that Daren J.Mr. Shaw qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. The Board has adopted a written charter to govern the activities of the Audit Committee, which is available on our website at www.profireenergy.com. The Audit Committee held four meetings during the fiscal year ended December 31, 2017.2020.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee (the “Nominating Committee”) of the Board is responsible for identifying and recommending director candidates for nomination by the Board.The Nominating Committee is chaired by Arlen B. CrouchColleen Larkin Bell and consists of Messrs. Crouch,Ms. Bell, Mr. Shaw, and Mr. Spoehel, all of whom qualify as independent directors.In general, when the Board determines that expansion of the boardBoard or replacement of a director is necessary or appropriate, the Nominating Committee will identify candidates through candidate interviews with members of management, consultation with the candidate’s associates and other means to determine qualifications to serve on our Board.
Each candidate to serve on the Board must possess the highest personal and professional ethics, integrity and values, and be committed to serving the long-term interests of our stockholders.Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating Committee may consider such other factors as it may deem appropriate, which may include, without limitation, professional experience, diversity of backgrounds, skills and experience at policy-making levels in business, government, financial, and in other areas relevant to our global operations, experience and history with our company, and stock ownership.
We do not have a formal policy with regard to the consideration of diversity in identifying Board nominees, but the Nominating Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee our business.
The Nominating Committee will consider director candidates recommended by the Company’s stockholders pursuant to the procedures described in this proxy statementProxy Statement or validly made in accordance with applicable laws, rules and regulations and the provisions of our Bylaws. Stockholders wishing to
recommend candidates should do so in writing to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Profire Energy, Inc., 321 South 1250 West, Suite 1, Lindon, UT 84042. Please refer to the section below entitled “Stockholder Proposals and Director Nominees for Next Annual Meeting” for further information. The Nominating Committee may also consider candidates proposed by current directors, management, employees and others. All such candidates who, after evaluation, are then recommended by the Nominating Committee and approved by the Board will be included in our recommended slate of director nominees in our proxy statement.
To date, we have not paid any fee to any third partythird-party to identify or evaluate, or to assist in identifying or evaluating, potential director candidates, but we may consider doing so in the future
if the nominating committeeNominating Committee determines that engaging a consultant is in the best interests of the Company. The Board has adopted a written charter to govern the activities of the Nominating Committee, which is available on our website at www.profireenergy.com. During the fiscal year ended December 31, 2017,2020, the Nominating Committee did not hold any separate Nominating Committee meetings but, rather, covered various Nominating Committee business at general Board meetings and during Board calls.held two meetings.
Compensation Committee. The Compensation Committee of the Board reviews and advises the Board on executive compensation.The Compensation Committee is chaired by Ronald R. Spoehel and consists of Messrs. Crouch,Ms. Bell, Mr. Shaw and Mr. Spoehel, all of whom qualify as independent directors.
The Compensation Committee oversees all aspects of our executive compensation program and incentive compensation. It reviews and advises the Board on the corporate goals and objectives applicable to the compensation of our ChiefCo-Chief Executive Officer,Officers, recommends to the full Board for approval compensation amounts for the Chief Co-ChiefExecutive OfficerOfficers and all other executive officers, reviews and makes recommendations to our Board relating to incentive compensation and equity-based plans, and reviews and makes recommendations to the full Board regarding employment agreements and severance agreements or plans for the ChiefCo-Chief Executive OfficerOfficers and other executive officers.
Beginning June 2016,In September 2020, the Compensation Committee engaged a third partythird-party consultant, Compensation & Leadership Solutions, LLC,Advisory Partners (“CAP”), to support the Compensation Committee in its efforts to review and advise upon executive compensation. CAP was engaged to assist the Compensation Committee in the following three main areas:
–Provide a collaborative review and approval of a compensation peer group and establish a group of companies that will be used to report market compensation levels and practices for both executive & director compensation;
–Review and advise on executive compensation, including base salary, bonus targets/opportunity, actual bonus payouts, long-term incentive award values, and total direct compensation; and,
–Complete a comprehensive review of director compensation levels and structure. As part of the review CAP was engaged to provide a summary of, among other things, peer company/market pay mix, board structure, details on number of meetings and paid and unpaid directors.
Pursuant to its charter, the Compensation Committee may delegate its authority to a subcommittee or subcommittees. The Board has adopted a written charter to govern the activities of the Compensation Committee, which is available on our website at www.profireenergy.com. The Compensation Committee held one meetingthree meetings during the fiscal year ended December 31, 2017.2020.
Board Leadership Structure and Role in Risk Oversight
Currently, our Chief Executive Officer alsoChairman serves as the Chairman of our Board and we do not have an independent lead director.Given our current size, resources and access to potential qualified director candidates, the Board believes the most effective leadership structure for the Company at this time and with our current Chief Executive OfficerChairman is to have a combined Chairman of the Board and Chief Executive Officer. Chairman.Our current combined structure promotes unified leadership, a cohesive vision and strategy for the Company and clear and direct communication to the board.Board.
We do not have a policy regarding the separation or combination of the roles of Chairman of the ChairmanBoard and Chief Executive OfficerChairman and believe that the separation or combination of these offices is a matter for discussion and determination by the Board.The Board believes that it should be able to select the Chairman of the Board based on the criteria that the Board deems to be in the best interests of the Company and its stockholders.
Board-level risk oversight is performed by our full Board.Our risk oversight process includes an ongoing dialogue between management and the Board, intended to identify and analyze risks that the Company faces.Through these discussions with management and their own business experience and knowledge, our directors are able to identify material risks for which a full analysis
and risk mitigation planning are necessary. The Board monitors risk mitigation action plans developed by management in order to ensure such plans are implemented and are effective in reducing the targeted risks.
Report of Audit Committee Regarding 20172020 Audited Financial Statements
The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm (i) the consolidated financial statements as of December 31, 2017,2020, and (ii) management’s assessment of the effectiveness of the Company’s internal controlcontrols over financial reporting as of December 31, 2017.2020. Management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board ("PCAB"(“PCAOB”) in Rule 3200T.
The Audit Committee has received the written disclosures and letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm's communications with the Audit Committee concerning
independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm's independence.
Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in our Annual Report on Form 10-K for the year ended December 31, 2017.2020.
Daren J. Shaw
Colleen Larkin Bell
Ronald R. Spoehel
Arlen B. Crouch
Board Meetings and Attendance at Annual Meetings
The Board held fivesix meetings during our fiscal year ended December 31, 2017.2020. In addition,2020, each memberdirector attended more than 75% of the aggregate total number of meetings of the Board attended at least 75%held during the period and the total number of meetings held by all committees of the Board meetings and committee meetings for committees on which they served.
Although it is not mandatory for directors to attend annual meetings of stockholders, each director is encouraged to attend meetings of stockholders. The Company held its last annual meeting of stockholders on June 15, 2017,17, 2020, and allfive out of the five directors then serving were in attendance.
Communications with Directors
Stockholders and other parties interested in communicating with the Board may do so by writing to the Chairman of the Board of Directors, Profire Energy, Inc., 321 South 1250 West, Suite 1,, Lindon, Utah 84042.84042. The Chairman of the Board will review and forward to the appropriate members of the boardBoard copies of all such correspondence that, in the opinion of the Chairman, deals with the functions of the boardBoard or that he otherwise determines requires their attention.
Employee, Officer and Director Hedging
The Company has adopted a policy regarding insider trading both to satisfy the Company’s obligation to prevent insider trading and to help Company personnel avoid the severe consequences associated with violations of insider trading laws. The Company considers it improper and inappropriate for any director, officer, or other employee of the Company to engage in short-term or speculative transactions in the Company’s securities. It therefore is the Company’s policy that directors, officers and other employees may not engage in short sales, publicly-traded options, margins accounts and pledges, and hedging transactions. An exception to the prohibition of pledges exists where a person wishes to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resorting to the pledged securities.
Compensation of Directors and Executive Officers
The following table sets forth information regarding our principal executive officerPrincipal Executive Officers and our chief financial officer and one additional individualChief Financial Officer who served as an executive officer during 207.2020. These individuals are referred to herein as “named executive officers” or “NEOs”. The Company had no other executive officers during 2017. Please refer to the section above entitled “Board Nominees for Election of Directors” for Mr. Hatch’s and Mr. Albert’sOviatt’s biographical information.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Positions Held | | Director Since | | Named Executive Officer Since |
| | | | | | | | |
Name | | Age | | Positions Held | | Director Since | | Officer Since |
| | | | | | | | |
| Brenton W. Hatch | | 6770 | | Chief Executive Officer, President and DirectorChairman | | November 2008 | | October 2008 |
Harold Albert(1)
| | 55 | | Chief Technology Officer and Director | | November 2008 | | October 2008-March 2017 |
| Ryan W. Oviatt | | 4447 | | Chief Financial OfficerCo-CEO, Co-President, CFO | | N/AOctober 2018 | | September 2015 |
| Cameron M. Tidball | | 44 | | Co-CEO, Co-President | | N/A | | March 2018 |
(1)Jay G. Fugal | Mr. Albert retired as Chief Technology Officer | 37 | | VP of the Company on Operations | | N/A | | March 1, 2017. He continues to serve as a director.2018 |
| Patrick D. Fisher | | 43 | | VP of Product Development | | N/A | | April 2019 |
Ryan W. Oviatt.
Cameron M. Tidball. Ryan Oviatt isMr. Tidball commenced serving as the Chief FinancialCompany’s Co-Chief Executive Officer Secretary, and Treasurer, with responsibility over all finance, accounting, information technology, quality control, and compliance functionsCo-President of the Company. Previously,Company in July 2020. Mr. OviattTidball is responsible for the strategic direction and day-to-day operations of the Company and management of sales and marketing efforts, development of products and technologies, and expansion of markets and industries. Mr. Tidball previously served as the Company’s Chief Business Development Officer from March 2008 to July 2020 and was responsible for all sales and marketing initiatives, business and product development, and service delivery. Mr. Tidball joined the Company in 2010 as a Regional Sales Manager and in 2012 he became the Vice President of Sales and Marketing. Prior to joining the Company, Cameron worked for Direct Energy from 2008 through 2010, where he held a Senior ManagerManagement position managing customer care operations for the provinces of Alberta and British Columbia. Before his time at Rio Tinto,Direct Energy, he was employed from 2003 through 2008 at TELUS, a publicly-traded, international mining and metalsCanadian telecommunications company, where he managed significant company functions, having responsibility over Sarbanes-Oxley compliance, Financial Reporting Analysis,customer experience strategies and Special Projects during his 10-years thereinitiatives for a network of global call centers. Mr. Tidball earned a Bachelor of Commerce degree in Marketing & Management Science from 2005-2015.the University of Alberta. He also managed value-trackingreceived a technical diploma in Engineering Design from the Northern Alberta Institute of Technology.
Jay G. Fugal.Mr. Fugal commenced serving as the Company’s Vice President of Operations in March 2018. Mr. Fugal has been with the Company since 2012 when expansion in the US needed greater focus and reporting withinsupport to bring highly innovated products to market. Mr. Fugal has been a key leader in the company, leading to enhanced cash flowexpansion efforts since 2012 and reduced costs. Additionally,oversees the Human Resource and Operations departments. Mr. Oviatt served on technical committees relating to international tax, finance,Fugal is highly trained in Six Sigma and developmentLean Management and is just as passionate about the success of a significant Rio Tinto mining operation. He also helped mentor and develop personnel and management.the Company’s employees as he is the customers of Profire. Prior to Rio Tinto,joining the Company, Mr. OviattFugal was an Audit Managerthe Director of Human Resources at Ernst & Young, LLPNiels Fugal Sons Company, a well-known leader in the telecommunications and natural gas industry. It was here that Mr. Fugal developed his passion for people and the operations of business. Mr. Fugal holds a Bachelor of Science degree in Business Management from 2000-2005,Utah Valley University, where he audited both publicheld several leadership roles in student government.
Patrick Fisher. Mr. Fisher commenced serving as the Company’s Vice President of Product Development in April of 2019. Mr. Fisher is responsible for overseeing the direction and private clients,focus of product development for the company. Mr. Fisher joined the Company in 2009 and working on product research
and development. He oversees many aspects of new product development and existing product maintenance, from determining the customer's needs, through development and production ramp-up, to launching the product into the market and long-term support. Mr. Fisher started at the Company as the sole member of the R&D team and, together, one external contractor developed the PF2100 BMS, which has been Profire's flagship product for a decade. Mr. Fisher built the R&D team from the ground up. Prior to working at the Company, Mr. Fisher worked as a product developer at Eleven Engineering. During his time there, he gained experience in electronics hardware development and learned much about engineering culture and collaboration. He was involved in various aspects of the development cycle, including oil and gas companies.a stint in China ramping up production. Mr. Oviatt received his Bachelor Degree in Accounting from WestminsterFisher studied Engineering at Red Deer College and Master Degreecompleted his education at NAIT in Accountancy from Brigham Young University. HeElectronics Engineering Technology.
Executive Compensation Highlights: Principles and Objectives
Our executive compensation program is a Certified Public Accountant in Utah. We considered Mr. Oviatt’s extensive management experiences as well as his experience and leadership in other senior financial roles in public companies in determining that he should serve as an officer of the Company.designed to:
•Link pay to performance;
•Attract and retain talented executive officers and key employees;
•Emphasize performance-based compensation to motivate executives and key employees;
•Reward individual performance; and
•Encourage long-term commitment to the Company and align the interests of executives with stockholders.
We meet these objectives through the appropriate mix of compensation, including:
•Annual base salary;
•Short-term incentives; and
•Long-term incentives, consisting of equity awards tied to performance and restricted stock units (“RSU’s”).
The following table summarizes the total compensation paid to our NEOs.
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) (2) | Stock Awards ($) | Option Awards ($)(1) | Nonequity incentive plan compensation ($) | All Other Compensation ($) | Total ($) |
| Brenton W. Hatch | 2020 | $374,292 | $154 | $ - | $ - | $ - | $ - | $374,446 |
| Executive Chairman | 2019 | $409,692 | $264 | $256,186(3) | $ - | $ 256,186(3) | $ - | $922,328 |
| | | | | | | | | |
| Ryan Oviatt | 2020 | $258,942 | $154 | $10,668(4) | $84,390 | $ - | $ - | $354,154 |
| Co-CEO, Co-President, CFO | 2019 | $256,058 | $264 | $89,538 (3,4) | $ - | $ 56,041(3) | $ - | $401,900 |
| | | | | | | | | |
| | | | | | | | | |
| Cameron Tidball | 2020 | $249,934 | $120 | $8,320(4) | $84,390 | $ - | $ - | $342,764 |
| Co-CEO, Co-President | 2019 | $244,592 | $280 | $69,690(3,4) | $ - | $ 52,454(3) | $ - | $367,016 |
| | | | | | | | | |
Jay Fugal(8) | 2020 | $160,744 | $154 | $8,992(4,6) | $51,810 | $ - | $ - | $221,700 |
| VP of Operations | | | | | | | | |
| | | | | | | | | |
Patrick Fisher(7,8) | 2020 | $120,998 | $120 | $12,480(4,6) | $51,810 | $ - | $ - | $185,408 |
| VP of Product Development | | | | | | | | |
1.The amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC 718, of the awards, excluding the effect of estimated forfeitures. The fair value of each equity award is estimated on the date of grant using the Black-Scholes option pricing model. Additional information about the assumptions used in the calculation of these amounts is included in Note 12
to our audited financial statements for the Fiscal Year ended December 31, 2020 included in the Annual Report on Form 10-K.
2.In December 2019 Messrs. Hatch, Oviatt, and Tidball received a Christmas bonus that is calculated and awarded to have all employees take home $200 after taxes. In December 2020 Messrs. Hatch, Oviatt, Tidball, Fugal, and Fisher received a Christmas bonus that was calculated and awarded to have all employees take home $100 after taxes.
3.In April 2019 the Company entered into an executive incentive plan with Messrs. Hatch, Oviatt, and Tidball with respect to fiscal 2019 performance (the “2019 Executive Incentive Plan”), and pursuant to that plan the Board approved a bonus to Mr. Hatch of $512,371, a bonus to Mr. Oviatt of $112,081, and a bonus to Mr. Tidball of $104,908. Pursuant to the 2019 Executive Incentive Plan, the bonus payment was paid approximately 50% in cash and 50% in stock. The stock portion of the bonus payment was paid by granting shares of restricted stock under the Company’s 2014 Equity Incentive Plan, which were fully vested on the date of grant. The number of shares awarded was 212,512 to Mr. Hatch, 46,487 to Mr. Oviatt, and 43,511 to Mr. Tidball. These bonuses were paid to the executives in March 2020.
4.This number includes the stock bonus described in footnote 3 as well as restricted stock units awarded on April 22, 2019 pursuant to a Long-Term Incentive Plan approved by the Board.
|
| | | | | | | |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) |
| Brenton W. Hatch | 2017 | 315,673 | -0- | -0- | -0- | 31,412 | 347,085 |
| Chief Executive Officer and Director | 2016-T(4) | 207,692 | 75,000 | -0- | 125,750 | 43,648 | 452,090 |
| | | | | | | | |
| Ryan Oviatt | 2017 | 203,823 | -0- | 95,131(3) | -0- | 21,000 | 319,954 |
| CFO | 2016-T | 136,653 | -0- | -0- | 100,600 | 48,073 | 285,326 |
| | | | | | | | |
| | | | | | | | |
| Harold Albert | 2017 | 41,538 | -0- | -0- | -0- | 382,000(2) | 423,538 |
CTO and Director (1) | 2016-T | 207,692 | -0- | -0- | 34,725 | 24,610 | 267,027 |
| | | | | | | | |
5.This number includes a $15,000 CAD bonus awarded to Mr. Fisher prior to his appointment as an executive officer.
6.Prior to being named executive officers the Board approved restricted stock unit awards to Messrs. Fugal and Fisher in March 2018. Pursuant to the award Mr. Fugal is entitled to receive up to 10,000 shares and Mr. Fisher is entitled to receive up to 7,500 shares. The shares vest in five equal installments annually on the anniversary of the date of grant which was March 6, 2018. Additionally in 2019 the Board approved a restricted stock unit award to Mr. Fisher. The 2019 award entitled Mr. Fisher to receive up to 12,000 shares. The shares vest in four equal installments annually on the anniversary of the date of grant which was March 14, 2019.
7.Mr. Fisher’s salary is paid in CAD. The table above reflects the US Dollar equivalent of his salary on an exchange rate of $0.80033 CAD to $1 USD (the exchange rate as of December 31, 2020).
8.There is no compensation information for Messrs. Fugal and Fisher for the year 2019 because they were not NEO’s prior to 2020.
| |
(1) | Harold Albert retired as the Company’s Chief Technology Officer and entered into a Retirement and Release Agreement with the Company dated February 23, 2017 (the “Retirement Agreement”). |
| |
(2) | Pursuant to the Retirement Agreement Mr. Albert was paid a retirement amount of $375,000 payable in equal installments in each of the four fiscal quarters in 2017. |
| |
(3) | The maximum value of this award is $126,840, assuming all performance metrics reach the "outstanding" threshold and the full 66,758 shares are issued. The expected value of this award as of March 31, 2018 is $95,131, assuming 50,069 shares will be issued based on revenue growth rate hitting the "outstanding" threshold, operating income as a percentage of revenue hitting the "target" threshold, and ROIC hitting the "above target" threshold. |
| |
(4) | In December 2016 the Board adopted a resolution to change the Company's fiscal year end from March 31 to December 31. This resulted in a nine-month transitional fiscal year from April 1, 2016 to December 31, 2016. |
Salary
Salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers.The salary for each named executive officer is typically set at the time the individual is hired based on the factors discussed in the preceding sentence and the negotiation process between the Company and the named executive officer.Thereafter, changes to annual salary, if any, are determined based on several factors, including evaluation of performance, anticipated financial performance, economic condition and local market, and labor conditions. As discussed in more detail below under the heading “Employment Agreements”, in June 2013, the Company executed employment agreements with Messrs. Hatch and Albert, retroactively effective as of May 1, 2013. These employment agreements provided that Mr. Hatch would receive an annual salary of $270,000 per year and provided that, prior to his retirement as Chief Technology Officer effective March 1, 2017, Mr. Albert would receive an annual salary of $270,000 per year. Mr. Oviatt’s employment agreement became effective on the date of his hire, September 14, 2015, and provided that Mr. Oviatt would receive an annual salary of $190,000.
As further discussed below theThe Company entered into amended and restated employment agreements with Messrs. Hatch and Oviatt in August 2017, retroactive to July 1, 2017. These agreements superseded the employmentsemployment agreements that were previously in place. Mr. Hatch's new agreement provided that the Company would pay Mr. Hatch an annual base salary of $365,000 for the remainder of calendar year 2017, effective as of July 1, 2017, and provided for an increase in Mr. Hatch’s annual base salary to $400,000 on January 1, 2018 as a result of the Company meeting its budgeted projections for Revenuerevenue and EBITDA for 2017. Mr. Hatch’s annual base salary is otherwise subject to annual review by the compensation committee of the board of directors annually.Board. Mr. Oviatt's new agreement established an annual annual base salary of $243,000 for the remainder of calendar year 2017, effective as of July 1, 2017, and provided for an increase in Mr. Oviatt's annual base salary to $250,000 on January 1, 2018 as a result of the Company meeting its budgeted projections for Revenuerevenue and EBITDA for 2017. Mr. Tidball entered into an employment agreement dated March 1, 2018 which set an annual base salary of $234,000. Mr. Fugal entered into an employment agreement dated March 1, 2018 which set an annual base salary of $160,000.
On February 28, 2019 the Compensation Committee approved a 3% increase in annual base salary for Messrs. Hatch, Oviatt, Tidball and Fugal. Pursuant to the 3% increase, Mr. Hatch’s annual base salary was $412,000, Mr. Oviatt’s annual base salary iswas $257,500 and Mr. Tidball’s annual base salary was $241,020, in each case until July 2, 2020 when new employment agreements were signed as described below. Pursuant to the 3% increase, Mr. Fugal’s annual base salary was $164,800.
Mr. Fisher entered into an employment agreement dated April 30, 2019 which set an annual base salary of $155,000 CAD.
On July 2, 2020, the Board of Directors approved certain changes to the executive management team of the Company. Pursuant to these changes, Brenton W. Hatch transitioned from Chief Executive Officer and President of the Company to Executive Chairman. Ryan W. Oviatt was promoted to Co-Chief Executive Officer, Co-President, and Chief Financial Officer of the Company. Cameron M. Tidball was also promoted to Co-Chief Executive Officer and Co-President of the Company. In connection with these appointments, the Company entered into amended employment agreements with Mr. Hatch, Mr. Oviatt and Mr. Tidball, as more fully described below.
On July 2, 2020, the Company and Mr. Hatch entered into a Second Amended and Restated Employment Agreement (“Hatch Agreement”). Pursuant to the Hatch Agreement, Mr. Hatch transitioned from his prior role as Chief Executive Officer and President of the Company to serve as Executive Chairman through June 30, 2021. As the Company’s Executive Chairman, in addition to other executive-level duties determined by the Board, Mr. Hatch will continue to serve as Chairman of the Board. Also pursuant to the Hatch Agreement, beginning July 1, 2021, Mr. Hatch will transition from the role of Executive Chairman to Special Advisor for the executive officers of the Company. Mr. Hatch will serve as a Special Advisor through June 30, 2022 (“Special Advisor Term”). During this Special Advisor Term, Mr. Hatch will continue to serve as Chairman of the Board and will advise the Company executives on items including, but not limited to, major projects, investor relations, and management succession planning. Pursuant to the Hatch Agreement Mr. Hatch will be paid an annual base salary of $350,000 for the period from July 2, 2020 through December 31, 2020.
Also, on July 2, 2020, the Company entered into a Second Amended and Restated Employment Agreement with Ryan W. Oviatt (the “Oviatt Agreement”) and an Amended and Restated Employment Agreement with Cameron M. Tidball (the “Tidball Agreement” and, together with the Oviatt Agreement, the “CEO Agreements”).
The CEO Agreements provide that each Mr. Oviatt and Mr. Tidball will receive a salary based on an annualized base salary of $275,000 USD for the period of July 2, 2020 through December 31, 2020.
The annual salaries of Messrs. Hatch, Oviatt, Tidball, Fugal and Fisher are otherwise subject to review by the compensation committeeCompensation Committee annually.
Due to the impact of the boardCOVID-19 pandemic the Company’s executive management team elected to temporarily reduce wages for all employees (“Furlough”). As part of directors annually.the Furlough management elected not to participate in any incentive and bonus plans in fiscal year 2020. The Furlough reduced the salary owed to the NEOs by 8% effective in August 2020 throughout the remainder of fiscal year 2020. A Third Amended and Restated Employment Agreement reflecting this reduction with the NEO’s was signed in April 2021.
Bonuses
The Board may make cash awards to our NEOs and employees that are not part of any pre-established, performance-based criteria. Awards of this type are completely discretionary and subjectively determined by our Board of Directors at the time they are awarded.In the event this type of cash award is made, it is reflected in the “Summary Compensation Table” under a separate column entitled “Bonus.” No bonuses
On April 22, 2019, the Board approved the 2019 Executive Incentive Plan for Brenton W. Hatch, then the Company’s President and Chief Executive Officer, Ryan W. Oviatt, the Company’s Chief Financial Officer, Cameron M. Tidball, then the Company’s Chief Business Development Officer, Jay Fugal, the Company’s Vice President of Operations, and Patrick Fisher, the Company’s Vice President of Product Development for the Company’s 2019 fiscal performance. Under that plan, each participating executive officer was assigned a target bonus amount for fiscal 2019. The target bonus amount for Mr. Hatch was $412,000, the target bonus amount for Mr. Oviatt was $90,125, and the target bonus amount for Mr. Tidball was $84,357.The performance goals in the 2019 plan were based on the Company’s total revenue, net income, free cash flow, and non-financial product development milestones for fiscal 2019. Each of these performance goals is weighted 25% in calculating bonus amounts.
The bonus amounts earned under the 2019 Executive Incentive Plan were paid 50% in 2017.cash and 50% in shares of restricted stock under the plan. In no event could the total award exceed 200% of the target bonus amount for each participant, or exceed any limitations otherwise set forth in the plan. The actual bonus amounts were determined by the Compensation Committee upon the completion of fiscal year 2019 and paid by March 15, 2020, subject to all applicable tax withholding. The bonuses paid under the plan were $512,371 to Mr. Hatch, $112,081 to Mr. Oviatt, and $104,098 to Mr. Tidball.
Equity Awards
Under the 2014 Equity Incentive Plan, the Compensation Committee, together with the Board, may elect to grant equity awards to the Company’s NEOs in the form of stock purchase options, restricted stock or restricted stock units. The Compensation Committee and the Board determine whether and how much to award based on numerous factors including, but not limited to, Company performance, individual performance, competitive compensation practices, orand incentive alignment. If the equity awards are granted, the Compensation Committee and the Board will determine the terms of the grant, including vesting, forfeiture, and dividend or voting rights, if any. In the event this type of equity award is made, it is reflected in the “Summary Compensation Table” under a separate column entitled “Stock Awards.”
The Company Entered into a Long-Term Incentive Plan with Messrs. Oviatt , Tidball, Fugal, and Fisher in April 2019. The 2019 Long-Term Incentive Plan consists of total awards of 66,213 restricted stock units to Mr. Oviatt, 51,646 units to Mr. Tidball, 35,313 restricted stock units to Mr. Fugal, and 24,862 restricted stock units to Mr. Fisher pursuant to two separate Restricted Stock Unit Award Agreements entered between the Company and each participant. One such agreement covers the 33% of each participant’s units that are subject to time-based vesting, and the other such agreement covers the remaining 67% of such participant’s units that may vest based on performance metrics. Upon vesting, the award agreements entitle the award recipients to receive one share of the Company’s common stock for each vested unit. The vesting period of the 2019 Long-Term Incentive Plan began on January 1, 2019 and terminates on December 31, 2021.
The units awarded pursuant to the 2019 Long-Term Incentive Plan that are subject to time-based vesting, vest in three equal annual installments beginning December 31, 2019, and ending on December 31, 2021, if the participant's employment continues with the Company through such dates.
The units awarded pursuant to the 2019 Long-Term Incentive Plan that are performance-based restricted stock units vest based upon the following Company performance metrics:
| | | | | | | | | | | | | | |
| Performance Metric | Weight | Target | Above Target | Outstanding |
| Three Year Average Revenue Growth Rate | 1/3% | 7.5% | 10% | 12.5% |
Operating Income as a Percentage of Revenue (Three Year Target) | 1/3% | 8% | 10% | 12% |
| Return on Invested Capital (Three Year Target) | 1/3% | 12% | 17% | 21% |
One-third of such performance-vesting units may vest for each of the three performance metrics identified in the table above. The number of units that will vest for each performance metric shall be determined as follows: (i) if the “Target” level for such performance metric is not achieved, none of the
units relating to such performance metric will vest; (ii) if the “Target” level (but no higher level) for such performance metric is achieved, 50% of the units relating to such performance metric will vest; (iii) if the “Above Target” level (but no higher level) for such performance metric is achieved, 75% of the units relating to such performance metric will vest; and (iv) if the “Outstanding” level for such performance metric is achieved, 100% of the units relating to such performance metric will vest.
On July 2, 2020 the Board approved nonqualified stock option awards to each of Messrs. Oviatt and Tidball. Each of Mr. Oviatt and Mr. Tidball were granted options to purchase 100,000 shares. One-third of the options vest annually on the anniversary of the date of grant. The options expire on July 2, 2024.
On August 21, 2020 the Board approved nonqualified stock option awards to each of Messers. Fugal and Fisher. Each of Mr. Fugal and Mr. Fisher were granted options to purchase 66,000 shares. One-third of the options vest annually on the anniversary of the date of grant. The options expire on August 21, 2024.
Employer Benefit Plans
Beginning May 1, 2015, theThe Company institutedhas a 401(k) plan for all U.S. Company employees, and a Registered Retirement SavingSavings Plan for all Canadian Company employees, in which the executive officers may choose to participate. The plans provide a Company paid match, which is capped at a maximum of 4% of the employee’s annual base salary or annualized hourly pay. In the future, the Board of Directors may adopt other plans as it deems reasonable under the circumstances.
Say-on-Pay
At our annual stockholder meeting held on September 15, 2016,June 17, 2020, we solicited an advisory vote of our stockholders to approve the compensation packages proposed to be paid to our named executive officers.Of the 46,995,21642,438,972 shares represented at the meeting by valid proxies and ballots, 35,265,86641,762,582 voted to approve the compensation proposals.As determined by our stockholders at our annual stockholder meeting held in June 2019, we intend to hold a nonbinding advisory vote on our executive compensation every two
years.
years, and we are conducting an advisory vote on executive compensation at the annual meeting as described in Proposal 2.
Employment Agreements
On June 28, 2013, we executed employment agreements with Messrs. Hatch and Albert, which were retroactively effective to May 1, 2013. On February 23, 2017, Mr. Albert and the Company entered into the Retirement Agreement pursuant to which Mr. Albert retired effective on March 1, 2017 from his position as Chief Technology Officer of the Company. Pursuant to the Retirement Agreement, Mr. Albert received severance of $375,000 (the “Severance”), less applicable tax-related deductions and withholdings, paid in four equal quarterly installments beginning March 1, 2017. The Retirement Agreement also contemplated that Mr. Albert would provide up to ten hours of consulting services per month to the Company upon the Company’s request at no charge until the Severance was paid in full and thereafter at the rate of $175 per hour. Mr. Albert did not receive any additional compensation for his anticipated continued service as a non-employee director until the Severance was paid in full. The final installment of the Severance was paid in the first quarter of 2018. Going forward, pursuant to the Retirement Agreement, Mr. Albert will receive annual compensation of $80,000 paid in equal monthly installments for his service as a non-employee director. Outstanding stock options held by Mr. Albert continued to vest according to their terms until the Severance was paid in full, at which time any outstanding options vested notwithstanding the vesting provisions that would have otherwise been applicable to the outstanding stock options.
On August 3, 2017, to be effective as of July 1, 2017, we executed Amended and Restated Employment Agreements (the "Amended Agreements") with Messrs. Hatch and Oviatt to better align with the compensation of comparable executive officers of public companies.
In addition to the salary described above, each of the Amended Agreement of Mr.employment agreements with Messrs. Oviatt, Hatch, Tidball, Fugal, and Fisher provides that hethe executive each will devote, on a full-time basis, his best ability and talents to the business of the Company. The agreement prohibits himagreements prohibit each executive from providing consulting services or accepting employment with any other party unless pre-approved by the Company. The agreement providesagreements provide that Mr. Hatch isthe executives are entitled to:
•An Annualannual bonus determined by the Compensation Committee in accordance with the terms and eligibility requirements of the Company’s then-current Executive Incentive Plan;
•Participate in the Company's then current Long TermLong-Term Incentive Plan;
•Fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company;
•Participate in employee benefit plans;
•Paid time off in accordance with the Company'sCompany’s policies; and
•Reimbursement for all reasonable and necessary out-of-pocket business, entertainment, and travel expenses incurred by Executivethe executive in connection with the
performance of Executive’sthe executive’s duties hereunder in accordance with the Company’s expense reimbursement policies and procedures.
In addition to the salary described above, the Amended Agreement of Mr. Oviatt provides that he will devote, on a full-time basis, his best ability and talents to the business of the Company. The agreement prohibits him from providing consulting services or accepting employment with any other party unless pre-approved by the Company. The agreement provides that Mr. Oviatt is entitled to:
An Annual bonus determined by the Compensation Committee in accordance with the terms and eligibility requirements of the Company’s then-current Executive Incentive Plan;
Participate in the Company's then current Long Term Incentive Plan;
Fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company;
Participate in employee benefit plans;
Paid time off in accordance with the Company's policies; and
Reimbursement for all reasonable and necessary out-of-pocket business, entertainment, and travel expenses incurred by Executive in connection with the performance of Executive’s duties hereunder in accordance with the Company’s expense reimbursement policies and procedures.
Termination and Change in Control
The Amended Agreementsemployment agreements contain provisions for payment in the event of termination of employment. Under their employment agreements, Messrs. Hatch, Oviatt, and OviattTidball are entitled to the following payments in the event of termination of employment:
•Without causeCause. . The employee may be terminated without cause at any time, but with 90 daysdays’ prior written notice.If terminated without cause, or for Good Reason, the Company shall pay the employee, as a severance allowance, his continued Base Salarybase salary for 188 months for Mr. OviattFugal, 8 months for Mr. Fisher, and two yearsfor the remaining employment term for Mr. Hatch. If terminated without cause, the Company shall pay Messrs. Tidball and Oviatt an amount equal to 1.5 times their then applicable base salary payable over 12 months following their termination. Additionally, Messrs. Hatch, Oviatt, Tidball, Fugal, and OviattFisher will be entitled toa payment equal to the product of: (i) the Annual Bonus,annual bonus, if any, that Executivethe employee would have earned for the calendar year in which the termination date occurs based on achievement of the applicable performance goals for such year; and (ii) a fraction, the numerator of which is the number of days Executivethe employee was employed by the Company during the year of termination and the denominator of which is the number of days in such year (the “Pro-Rata Bonus”).year.
•For causeCause.If terminated for cause the individual shall be entitled to receive any accrued but unpaid Base Salarybase salary and accrued but unused vacation which shall be paid on the Company’s next pay date immediately following the termination date and reimbursement
for unreimbursed business expenses properly incurred by Executive,the employee, which shall be subject to and paid in accordance with the Company’s expense reimbursement policy.
•By resignation withResignation With Good Reason. If the employee resigns with good reason, he shall be entitled to receive the same compensation as being terminated without cause.
•By resignationResignation without Good Reason. If the employee resigns without good reason, he shall be entitled to receive the same compensation as being terminated for cause.
•For disabilityDisability or deathDeath.The Company shall have the option to terminate the employment agreement should the employee no longer be able to perform his essential functions.In the event of termination for death or disability the employee shall be entitled to the same compensation and benefits as if the agreement had been terminated without cause except Mr. Oviatt'sFugal’s severance period will be reduced to 126 months, of his base salary.and Mr. Fisher’s severance period will be reduced to 8 months.
We do not have agreements, plans or arrangements, written or unwritten, with any of our named executive officers that would provide for payments or other benefits to any of our named executive officers in the event of a change in control of the Company or a change in the responsibilities of any named executive officer following a change in control of the Company.
Outstanding Equity Awards at End of Fiscal Year 20172020
| | | | | | | | | | | | | | | | | | | | |
| Name | Option awards | Stock Awards |
| Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (2) |
| (a) | (b) | (c) | (e) | (f) | (i) | (j) |
| Brenton W. Hatch | -- | -- | -- | -- | -- | -- |
| Ryan W. Oviatt | -- | 100,000(1) | $0.8439 | 7/2/2024 | 51,499(3,4) | $43,929(2) |
| Cameron M. Tidball | -- | 100,000(1) | $0.8439 | 7/2/2024 | 40,170(3,4) | $34,265(2) |
| Jay G. Fugal |
| 66,000(7) | $0.785 | 8/21/2024 | 31,465(3,4,5) | $ 26,840 |
| Patrick D. Fisher |
| 66,000(7) | $0.785 | 8/21/2024 | 28,338(3,4,6) | $ 24,172 |
|
| | | | | | | | | | | |
| Name | Option awards | Stock Awards |
Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (3) |
| (a) | (b) | (c) | (e) | (f) | (i) | (j) |
| Brenton W. Hatch | 125,000(1) | 125,000 |
| $ | 1.17 |
| 11/2/2019 | | |
| Ryan W. Oviatt | 100,000(1) | 100,000 |
| $ | 1.17 |
| 11/2/2019 | 66,758(4) | $ | 128,175 |
|
| Harold Albert | 75,000(2) | | $ | 1.17 |
| 11/2/2019 | | |
(1) The stock options will become exercisable in two equal annual installments beginning November 2, 2017.
(2) Mr. Albert entered into a Retirement Agreement in February 2017. Pursuant to that agreement any outstanding stock options held by Mr. Albert continued to vest according to their terms until the Severance was paid in full. at which time any outstanding options vested notwithstanding the vesting provisions that would have otherwise been applicable to the outstanding stock options. Severance was paid in full in December 2017, thus all outstanding options are now vested.
(3) 2.Calculated based on the closing stock price reported on the NASDAQ Stock Market on December 29, 201731, 2020 at $1.92$0.8530 per share.
(4) The restrictions on these3.Includes performance-based restrictsrestricted stock unit grants lapse annually for three yearsunits awarded in 2019 that vest over a three-year performance period based on attainment of specific criteria set by the Compensation Committee as outlinedset forth in Mr. Oviatt's Long Termthe executive’s applicable Long-Term Incentive Plan.Plans.
In October 20174.Includes restricted stock units that vest in three annual installments starting on December 31, 2019 pursuant the Company entered into a Long Termexecutive’s 2019 Long-Term Incentive Plan ("LTIP") with Mr. Oviatt. Pursuantas discussed above.
5.Includes restricted stock units that vest in five annual installments starting on March 6, 2019, pursuant to the LTIP and under the Company's 2014 Equity Incentive Plan, the Compensation Committee of the Board of Directors of the Company approved the grant ofa restricted stock award granted on March 6, 2018.
6.Includes restricted stock units that vest in five annual installments starting on March 6, 2019, pursuant to a restricted stock unit award to Mr. Oviattgranted on March 6, 2018. Also includes restricted stock units that vest in four annual installments starting on March 14, 2020, pursuant to a Restricted Stock Unit Award Agreement (the “Award Agreement”). The Award Agreement provides for an award (the “Award”) of restricted stock units covering up to 66,758 shares of Common Stock (“Units”), which will vest upon achieving the following performance metrics described below.(each a “Performance Metric”) during the performance period beginning January 1, 2017 and terminatingunit award granted on December 31, 2019 (the “Performance Period”):March 14, 2019.
|
| | | | |
| Performance Metric | Weight | Target | Above Target | Outstanding |
| Three Year Average Revenue Growth Rate | 33% | 25% | 30% | 35% |
| Operating Income as a Percentage of Revenue (Three Year Target) | 33% | 15% | 20% | 25% |
| Return on Invested Capital (Three Year Target) | 33% | 14% | 22% | 30% |
Each Performance Metric7.Vesting shall determine the vesting for 22,253 Units and the number of Units that will vest for each Performance Metric shall be determined as follows: (i) if the “Target” level for such Performance Metric is not achieved, none of the Units relating to such Performance Metric will vest; (ii) if the “Target” level for such Performance Metric is achieved, 50% of the Units relating to such Performance Metric will vest; (iii) if the “Above Target” level for such Performance Metric is achieved, 75% of the Units relating to such Performance Metric will vest; and (iv) if the “Outstanding” level for such Performance Metric is achieved, 100% of the Units relating to such Performance Metric will vest. The Compensation Committee shall determine at the end of the Performance Period whether the Performance Metrics have been achieved and the number of Units that will vest.
In March of 2018 the Company entered into an Executive Incentive plan with Messrs. Hatch and Oviatt. Under that plan, each participating executive officer has been assigned a target bonus amount for fiscal 2018. The target bonus amount for Mr. Hatch is $400,000, and the target bonus amount for Mr. Oviatt is $87,500. Under no circumstance can the participants receive more than two times the assigned target bonus. Participants will be eligible to receive bonuses based upon reaching or exceeding performance goals established by the Committee for fiscal 2018. The performance goals in the plan are basedoccur on the Company’s total revenue, net income and free cash flow for fiscal 2018. Eachanniversary date of these performance goals will be weighted 33% in calculating bonus amounts.
The bonus amounts earned under the Executive Incentive Plan, if any, will be paid 50% in cash and 50% in shares of Restricted Stock under the Plan. In no event shall the total award exceed 200% of the target bonus amount for each participant, or exceed any limitations otherwise set forth in the Plan. The actual bonus amounts, if any, will be determined by the Committee upon the completion of fiscal 2018 and paid by March 15, 2019, subject to all applicable tax withholding. Additionally, on March 6, 2018, the Board, upon recommendation of the Compensation Committee, approved a one-time bonus for Mr. Hatch and Mr. Oviatt. The Board approved this Bonus Payment due to the Company’s performance in its fiscal year 2017. The Board approved a bonus to Mr. Hatch of $511,000 and a bonus to Mr. Oviatt of $121,500. The Bonus payment will be paid approximately 50% in cash and 50% in stock. The stock portion of the Bonus Payment shall be paid by granting awards of shares of Restricted Stock under the Plan, which will be fully vested on the date of grant. The number of shares awardedgrant which was 119,953 to Mr. Hatch and 28,521 to Mr. Oviatt."
In addition to the Executive Incentive Plan, the Company entered into Long Term Incentive Plan ("LTIP")August 21, 2020, with Mr. Oviatt in March of 2018. As the 2018 LTIP for Mr. Oviatt, the Compensation Committee approved the award of up to 70,234 restricted stock units (“Units”) under the Plan as represented by a Restricted Stock Unit Award Agreement. Subject to performance vesting requirements, each Unit entitles Mr. Oviatt to receive one shareone-third of the Company’s common stock. The performance periodtotal shares vesting on the first three anniversaries of the LTIP begins on January 1, 2018 and terminates on December 31, 2020 (the “Vesting Date”) and provides for the issuancedate of Units in accordance with the Plan. Vesting of the Units is based upon the following performance metrics:grant.
|
| | | | |
| Performance Metric | Weight | Target | Above Target | Outstanding |
| Three Year Average Revenue Growth Rate | 33% | 25% | 30% | 35% |
| Operating Income as a Percentage of Revenue (Three Year Target) | 33% | 15% | 20% | 25% |
| Return on Invested Capital (Three Year Target) | 33% | 20% | 30% | 42% |
One-third of the award, or 23,474 Units, will be subject to vesting based upon each of the three performance metrics. The number of Units that will vest based on each Performance Metric on the Vesting Date shall be determined as follows: (i) if the “Target” level for such Performance Metric is not achieved, none of the Units relating to such Performance Metric will vest; (ii) if the “Target” level for such Performance Metric is achieved, 50% of the Units relating to such Performance Metric will vest; (iii) if the “Above Target” level for such Performance Metric is achieved, 75% of the Units relating to such Performance Metric will vest; and (iv) if the “Outstanding” level for such Performance Metric is achieved, 100% of the Units relating to such Performance Metric will vest.
Director Compensation
Mr. Hatch served as an employee of the Company during the 2017 fiscal year. Mr. Albert served as an employee during part of the 2017 fiscal year and received severance during the remainder of the 2017 fiscal year, as described above. Neither Mr. Hatch nor Mr. AlbertOviatt received compensation for serving on our Board during the 20172019 fiscal year or the nine-month Transition Period ended December 31, 2016.2020 Fiscal year. For details regarding the compensation received by each of these directors, please see Summary Compensation Table on page 1425 of this Proxy Statement.
Each of our non-employee directors receives monthly cash remuneration of $3,000 for their service. Each non-employee director is granted an equity award annually, with the amount determined by the Board (of which 50% vests on the date of grant and the remaining 50% vests at the one-year anniversary of the date of grant). Under our 2014 Equity Incentive Plan, the Board may grant our non-employee directors options to purchase common stock or RSUs,restricted stock units; based on determinations of which award would best align the interests of our stockholders and our non-employee directors. InDue to the 2017impact of the COVID-19 pandemic on the Company, the Board elected on June 17, 2020 to temporarily reduce the monthly cash remunerations to non-employee directors to $1,750 for the remainder of fiscal year 2020. Effective August 3, 2020, Mr. Arlen Crouch resigned from the Board granted 32,027 RSUsof Directors. On July 30, 2020, the Board appointed Colleen Larkin Bell to each non-employeeserve as a director other thanto fill the vacancy resulting from Mr. Albert, who retiredCrouch’s resignation, effective August 3, 2020. Ms. Bell was awarded the same compensation as the Chief Technology Officer ofexisting non-employee directors on a pro rata basis for the Company effective March 1, 2017. As contemplated byshortened term from August 2020 until the Retirement Agreement described above, now that the severance amount contemplated by the Retirement Agreement has been paidCompany’s next annual meeting in full, Mr. Albert will receive annual compensation of $80,000 paid in equal monthly installments for his service as a non-employee director. The Company does not expect to grant Mr. Albert any RSUs. June 2021.
The following table describes the components of the compensation for our independent directors during our 20172020 fiscal year:
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Year | Fees Earned or Paid in Cash | Stock Awards ($)1 | Option Awards ($) | Total |
| | | | | |
| Colleen Larkin Bell | 2020 | $8,750 | | $73,184 | | -0- | $81,934 |
| | | | | |
| Daren J. Shaw | 2020 | $26,000 | | $84,000 | | -0- | $110,000 |
| | | | | |
| Ronald R. Spoehel | 2020 | $26,000 | | $84,000 | | -0- | $110,000 |
| | | | | |
| |
| Arlen B. Crouch | 2020 | $17,331 | | $84,000 | | -0- | $101,331 |
1.On June 17, 2020 each non-employee director was awarded 90,322 RSUs, 50% of which vested upon grant and 50% which vest on June 17, 2021. Since Mr. Crouch resigned from the Board
|
| | | | | |
| Name | Year | Fees Earned or Paid in Cash | Stock Awards ($)2 | Option Awards ($)2 | Total |
| | | | | | |
Arlen B. Crouch1 | 2017 | $36,000 | $59,250 | -0- | $95,250 |
| | | | | | |
Daren J. Shaw1 | 2017 | $36,000 | $59,250 | -0- | $95,250 |
| | | | | | |
Ronald R. Spoehel1 | 2017 | $36,000 | $59,250 | -0- | $95,250 |
| |
(1)
| Messrs. Shaw, Spoehel, and Crouch served as non-employee directors of the Company during the fiscal year ended December 31, 2017 and the Transition Period. Under the 2014 Equity Incentive Plan, each non-employee director was awarded 32,027 RSUs, 50% of which vested upon grant and 50% will vest on June 15, 2018. |
| |
(2) | Under the 2014 Equity Incentive Plan, each non-employee director was awarded 32,027 RSUs in fiscal year 2017 that have vested and 16,013 RSUs during the Fiscal Year. 50% of which vested upon grant and 50% will vest on the anniversary of the grant date. The amounts in this column do not reflect compensation actually received by our non-employee directors nor do they reflect the actual value that will be recognized by the non-employee directors. Instead, the amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC 718, of awards of RSUs, made to non-employee directors for the fiscal year ended December 31, 2017 but exclude an estimate for forfeitures. The fair value of each equity award is estimated on the date of grant using the Black-Scholes option pricing model. Additional information about the assumptions used in the calculation of these amounts is included in Note 7 to our audited financial statements for the Fiscal Year ended December 31, 2017 included in the Annual Report on Form 10-K. |
prior to the vesting of the latter 50% he will not receive those RSUs. On August 22, 2020 Ms. Bell was awarded 92,934 RSUs, 50% of which vested upon grant and 50% which vest on June 17, 2021. The amounts in this column do not reflect compensation actually received by our non-employee directors nor do they reflect the actual value that will be recognized by the non-employee directors. Instead, the amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC 718, of awards of RSUs made to non-employee directors for the fiscal year ended December 31, 2020 but exclude an estimate for forfeitures. The fair value of each equity award is estimated on the date of grant using the Black-Scholes option pricing model. Additional information about the assumptions used in the calculation of these amounts is included in Note 11 to our audited financial statements for the Fiscal Year ended December 31, 2020 included in the Annual Report on Form 10-K.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of April 20, 201819, 2021, the name and the number of shares of our common stock, par value of $0.001 per share, held of record or beneficially by each director, officer, nominee or person who held of record, or was known by us to own beneficially, more than 5% of the 48,812,28948,021,696 outstanding shares of our common stock, and the name and shareholdings of each director and officer and of all directors and officers as group.
| | | | | | | | | | | |
| Type of Security | Name and Address | Amount & Nature of Beneficial Ownership | % of Class |
| | | |
| Named Executive Officers and Directors: | | |
| | | |
| Common | Brenton W. Hatch(1) 321 South 1250 West Lindon, UT 84042 | 9,022,033 | 19% |
| | | |
| Common | Ryan W. Oviatt 321South 1250 West, Lindon Utah | 200,569 | *% |
| | | |
| Common | Daren J. Shaw(2) 321 South 1250 West Lindon, UT 8404 | 348,140 | *% |
| | | |
| Common | Ronald R. Spoehel(2) 321 South 1250 West Lindon, UT 8404 | 315,304 | *% |
| | | |
| Common | Colleen Larkin Bell(5) 321 South 1250 West Lindon, UT 8404 | 46,467 | *% |
| | | |
| Common | Cameron M. Tidball(3) 9671 283 Street Acheson, AB T7X 6J5 | 338,917 | *% |
| | | |
| Common | Jay G. Fugal(3) 321 South 1250 West Lindon, UT 8404 | 35,580(5) | *% |
| | | |
|
| | | | | | | | |
| Type of Security | Name and Address | | | Amount & Nature of Beneficial Ownership | % of Class |
| | | | | | |
| Common | Brenton W. Hatch(1) | | | 12,670,962 |
| 26.0 | % |
| | 321 South 1250 West, Suite 1 | | | | |
| | Lindon, Utah 84042 | | | | |
| | | | | | |
| Common | Harold Albert(1) | | | 11,167,425 |
| 22.9 | % |
| | Bay 12, 55 Alberta Ave. | | | | |
| | Spruce Grove, Alberta, Canada T7X 3A6 | | | | |
| | | | | | |
| Common | Ryan W. Oviatt(2) | | | 144,197 |
| *% |
|
| | 321 South 1250 West, Suite 1 | | | | |
| | Lindon, Utah 84042 | | | | |
| | | | | | |
| Common | Daren J. Shaw(2) | | | 205,388 |
| *% |
|
| | 321 South 1250 West, Suite 1 | | | | |
| Lindon, UT 84042 | | |
| | | | | | |
| Common | Ronald R. Spoehel(3) | | | 210,388 |
| *% |
|
| | 321 South 1250 West, Suite 1 | | | | |
| Lindon, UT 84042 | | |
| | | | | | |
| Common | Arlen B. Crouch(3) | | | 185,388 |
| *% |
|
| | 321 South 1250 West, Suite 1 | | | | |
| Lindon, UT 84042 | | |
| | | | | | | |
| Common | Cameron M. Tidball(4) | | | 159,906 |
| *% |
|
| | Bay 12, 55 Alberta Ave. | | | | |
| | Spruce Grove, Alberta, Canada T7X 3A6 | | | | |
| | | | | | | | | | | |
| Common | Patrick Fisher(4) 9671 283 Street Acheson, AB T7X 6J5 | 100,107 | *% |
| | | |
| All executive officers and directors as a group (8 persons) | 10,407,117 | 22% |
| | | |
| Names of Beneficial Owners of 5% or More of Outstanding Stock: | | |
| | | |
| Common | Harold Albert 9671 283 Street Acheson, AB T7X 6J5 | 4,520,500 | 9% |
| | | |
| Common | Askeladden Capital Management, LLC 129 Timberline Drive North Colleyville, TX 76034 | 3,408,39(6) | 7% |
| | | |
| Common | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 2,576,664(7) | 5% |
| TOTAL | 20,912,675 | 44% |
1.Mr. Hatch is a director of the Company, and currently serves as Executive Chairman. Mr. Hatch’s share number consists of 816,473 shares of common stock owned directly by Mr. Hatch; and 8,205,560 shares owned by the Hatch Family Holding Company, LLC, of which Mr. Hatch is the sole member.
2.Messrs. Shaw and Spoehel currently serve as non-employee directors of the Company. Share numbers include 19,953 RSUs granted in fiscal year 2015, currently vested, 80,000 RSUs granted in fiscal year 2016, currently vested, 69,422 RSUs granted in fiscal year 2016-T, currently vested, 32,027 RSU's granted in fiscal year 2017, currently vested, 17,427 RSUs granted in fiscal year 2018, currently vested, 61,314 RSUs granted and vested in fiscal year 2019 and 45,161 RSUs granted and vested in fiscal year 2020.
3.Messrs. Tidball and Fugal were appointed by the Company’s Board of Directors as executive officers on March 6, 2018. Mr. Tidball currently serves as the Company’s Co-CEO and Co-President and Mr. Fugal currently serves as the Company’s Vice President of Operations.
4.Mr. Fisher is the Company’s Vice President of Product Development and was appointed on February 28, 2019.
5.Ms. Bell currently serves as non-employee director of the Company. Share numbers include 46,467 RSUs granted and vested in fiscal year 2020.
6.This amount is based solely on the first amendment to Schedule 13G filed with the SEC on February 16, 2021 by Askelladen Capital Management, LLC.
7.This amount is based solely on Amendment No. 11 to Schedule 13G filed with the SEC on February 8, 2021 by The Vanguard Group. Of these shares, The Vanguard Group has the (i) sole
|
| | | | | | | | |
| | | | | | | |
| Common | Jay G. Fugal(4) | | | 12,750 |
| *% |
|
| | 321 South 1250 West, Suite 1 | | | | |
| | Lindon, UT 84042 | | | | |
| | | | | | |
| All executive officers and directors as a group | | | | | |
| (6 persons) | | | | |
| | | | 24,756,404 |
| 50.7 | % |
| Common | Royce & Associates, LP | | | | |
| 745 Fifth Avenue | | 2,462,824 |
| 5.0 | % |
| New York, NY 10151 | | | |
| | | | | | |
| TOTAL | | | 27,219,228 |
| 55.8% |
| |
(1) | Messrs. Hatch and Albert are directors of the Company, and Mr. Hatch currently serves as Chief Executive Officer of the Company. Mr. Albert served as Chief Technology Officer of the Company until March 1, 2017. Mr. Hatch's share number also includes 125,000 stock options that have not yet been exercised. Mr. Hatch's number also includes 95,962 RSUs granted in fiscal year 2018 which vested and were settled in fiscal year 2018. Mr. Albert's share number includes 75,000 stock options that have not yet been exercised. |
| |
(2) | Mr. Oviatt serves as Chief Financial Officer of the Company. Mr. Oviatt’s share number includes 22,866 RSUs granted in fiscal year 2018 which vested and were settled in fiscal year 2018. This share number also includes 100,000 stock options that have not yet been exercised. |
| |
(3) | Messrs. Shaw, Spoehel and Crouch currently serve as non-employee directors of the Company. Share numbers include 100,000 stock options granted in fiscal year 2014, currently exercisable, 19,953 RSUs granted in fiscal year 2015, currently vested, and 80,000 RSUs granted in fiscal year 2016, currently vested, and 69,422 RSUs granted in fiscal year 2016-T, currently vested and 32,027 RSU's granted in fiscal year 2017 of which 16,013 are vested and 16,014 which vest on June 14, 2018. |
| |
(4) | Messrs. Tidball and Fugal were appointed by the Company's Board of Directors as executive officers on March 6, 2018. Mr. Tidball was appointed as the Company's Chief Business Development Officer and Mr. Fugal was appointed as the Company's Vice President of Operations. |
* Less than 1%.
Change in Control
To the knowledge of the management, there are no present arrangements or pledges of our securities that may result in a change in control of the Company.
Vote Required
A pluralityEach Board nominee shall be elected if the number of votes cast for such nominee’s election exceeds the number of votes cast against the nominee’s election, with eligible votes being shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors will be required to elect Board nominees. The five nominees receiving the highest number of affirmative votes cast at the Annual Meeting will be elected as our directors.
The Board recommends a vote “FOR” each of the nominees under Proposal 1.
PROPOSAL TWO
SAY-ON-PAY-AN ADVISORY VOTE TO APPROVE
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Section 14A of the Securities Exchange Act, which was put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our stockholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with applicable SEC rules. This proposal, commonly known as a “Say-on-Pay” proposal, gives you, as a stockholder, the opportunity to express your views on our named executive officers’ compensation. Your vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to the compensation of our named executive officers described in this proxy statement.
As described in more detail above under “Compensation of Directors and Executive Officers” our executive compensation programs are designed to attract, retain and motivate talented executives, reward performance, and link the interest of the Company’s senior executives to the interests of the Company’s stockholders. The Board oversees our executive compensation, including the compensation of our named executive officers.
We review our compensation plans and programs on an ongoing basis and periodically make adjustments taking into account competitive conditions and other factors. Please read “Compensation of Directors and Executive Officers” beginning on page 15 for additional details about our executive compensation programs, including information about the fiscal year 2018 compensation of our named executive officers.
We are asking our stockholders to support our named executive officer compensation as described in this proxy statement. Accordingly, we ask you to vote “FOR” the following resolution at our Annual Meeting:
“RESOLVED, that the compensation paid to the named executive officers of Profire Energy, Inc., as disclosed in the Profire Energy, Inc. proxy statement for the Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, is hereby APPROVED.”
This vote on the named executive officer compensation is advisory, and therefore will not be binding on the Company and will not affect, limit or augment any existing compensation or awards. However, we value our stockholders’ opinions and the board of directors will take into account the outcome of the vote when considering future compensation arrangements.
Vote Sought
The proposal to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement will be approved if the number of votes cast in favor of the proposal exceed the number of votes cast in opposition of the proposal.
The Board recommends that stockholders vote “FOR” the approval of this proposal.
PROPOSAL THREE
RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selectedappointed Sadler, Gibb & Associates, LLC, Certified Public Accountants (“SGA”) as the Company’s independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 20182021 and recommends that the stockholders vote to ratify such selection. Stockholder ratification of such selection is not required by our Bylaws or other applicable legal requirement. However, our Board is submitting the selection of SGA to stockholders for ratification as a matter of good corporate practice. In the event of a negative vote on such ratification, the Audit Committee will reconsider its selection. Even if the selection is ratified, our Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if our Audit Committee believes that such a change would be in our and our stockholders’ best interests. SGA conducted our most recent audit of our financial statements for the Fiscal Year ended December 31, 2017.2020.
During each of our last two fiscal years we were billed the following fees for professional services rendered by SGA:
| | | | | | | | | | | |
| Fee Category | Fiscal 2020 | | Fiscal 2019 |
| | | |
| Audit Fees | $105,918
$105,917.60 | | $171,541 |
| Tax Fees | $14,119 | | $11,710 |
| All Other Fees | -0- | | -0- |
| Total | $120,037 | | $183,251 |
|
| | | | | | | |
| Fee Category | Fiscal 2017 | | Fiscal 2016-T |
| | | | |
| Audit-Related Fees |
| $91,485 |
| |
| $79,250 |
|
| Audit related | -0- |
| | -0- |
|
| Tax Fees |
| $11,719 |
| |
| $11,125 |
|
| All Other Fees | -0- |
| | -0- |
|
| Total |
| $103,204 |
| |
| $90,375 |
|
Audit Fees.Audit fees were for professional services rendered in connection with the audit of our financial statements included in our annual and transition reports on Form 10-K, and Form 10-KT, review of financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements.
Tax Fees. Tax fees were for professional services rendered in connection with our fiscal 20172020 and 2016 Transition Period2019 tax filings.
Audit Committee Pre-Approval Policies and Procedures. During fiscal year 2014, we established our Audit Committee and subsequent to that time, our Audit Committee has considered and pre-approved such audit and non-audit services to be performed by our independent registered public accounting firm.firm are required to be pre-approved by our Audit Committee. In our Audit Committee’s charter, the Board has delegated authority for pre-approving audit or permissible non-audit services performed by our independent auditors.
The Audit Committee has determined that the services provided by the Company’s independent registered public accounting firms described above are compatible with maintaining independence as our
independent registered public accounting firm. A representative of SGA will
be present at the Annual Meeting. He or she will be given an opportunity to make a statement if he or she desires and will be available to respond to appropriate questions.
Vote Sought
The proposal to ratify the appointment of Sadler, Gibb & Associates, LLC as the Company’s independent registered public accounting firm for the year ending December 31, 20182021 will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast in opposition of the proposal.
The Board recommends a vote “FOR” ratification of the selectionappointment of Sadler, Gibb & Associates, LLC, as our independent registered public accounting firm for the fiscal year ending December 31, 2018. 2021.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINEES FOR NEXT ANNUAL MEETING
Stockholders may present proposals for action at a future meeting if they comply with SEC rules, state law and our Bylaws.
Pursuant to Rule 14a-8 under the Exchange Act, some stockholder proposals, including stockholder nominations to the Board of Directors, may be eligible for inclusion in the proxy statement for our 20192022 Annual Meeting of Stockholders. These stockholder proposals, along with proof of ownership of our stock in accordance with Rule 14a- 8(b)14a-8(b)(2), must be received by us not later than January 5, 2019,December 31, 2021, which is 120 calendar days prior to the anniversary date of the mailing of this proxy statement.Proxy Statement. Stockholders are also advised to review our Bylaws which contain additional advance notice requirements, including requirements with respect to advance notice of stockholder proposals (other than non-binding proposals presented under Rule 14a- 8)14a-8) and director nominations.
Our Bylaws provide that, except in the case of proposals made in accordance with Rule 14a-8, for stockholder nominations to the Board of Directors or other proposals to be considered at an annual meeting of stockholders, the stockholder must have given timely notice thereof in writing to us not less than 60 nor more than 90 calendar days prior to the anniversary date of the preceding year’s annual meeting. Therefore, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which public announcementnotice of the date of such meeting is first made.date.
Stockholder proposals should be mailed by certified mail, return receipt requested, and must comply in all respects with applicable rules and regulations of the Commission,SEC, the laws of the State of Nevada and our Bylaws. Stockholder proposals may be mailed to the Corporate Secretary, 321 South 1250 West, Suite 1, Lindon, Utah 84042.
INFORMATION TO BE FURNISHED TO SECURITY HOLDERS
Our Annual Report on Form 10-K for the year ended December 31, 2017,2020, as well as our other SEC filings, are available without charge.If you would like to request copies of any documents,
requests should be sent in writing to Profire Energy, Inc., ATTN Corporate Secretary, 321 South 1250 West, Suite 1, Lindon, Utah 84042.
OTHER MATTERS
We know of no other matters that are to be presented for action at the Annual Meeting other than those set forth above.If any other matters properly come before the Annual Meeting, the persons named in the enclosed proxy will vote the shares represented by proxies in accordance with their best judgment on such matters.
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares you hold.Therefore, you are urged to execute and return the accompanying proxy in the enclosed envelope at your earliest convenience.
By order of the Board of Directors,
April 30, 20182021 /s/ BrentonRyan W. HatchOviatt/s/ Cameron M. Tidball
BrentonRyan W. Hatch
Oviatt Cameron M. Tidball Co-Chief Executive Officer Co-Chief Executive Officer
Appendix A
Form of Proxy
Proxy – Profire Energy, Inc.
Annual Meeting of Stockholders – June 14, 201816, 2021
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR PROFIRE ENERGY, INC. ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2018:16, 2021:
The Notice of Annual Meeting, the Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 20172020 and the proxy card are available via the Internet at:
www.colonialstock.com/Profire2018.
Profire2021.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brenton W. Hatch and Todd N. Fugal, severally, as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all of the shares of Common Stock of PROFIRE ENERGY, INC., of record in the name of the undersigned at the close of business on April 20, 2018,19, 2021, which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company and at any and all adjournments thereof, with respect to the matters set forth on the reverse side and described in the Notice of Annual Meeting and Proxy Statement dated April 30, 2018, 2021,receipt of which is acknowledged.
This Proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder(s). IF NO INDICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 2 and 3,2 and grants discretionary authority as to any and all other matters that may properly come before the meeting.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
(Please See Reverse Side)
Proxy – Profire Energy, Inc.
Annual Meeting of Stockholders – June 14, 201816, 2021
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[Name and address of stockholder]
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| Mark this box with an X if you have made changes to your name or address details above. |
The Board of Directors recommends a vote “FOR” the election of the nominees specified in Proposal 1 below and that you vote “FOR” the matters described in Proposals 2 and 3 below.matter under Proposal 2.
1.Election of Directors
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1. | | Election of Directors | |
| | For | | WithholdAgainst | | | | For | | WithholdAgainst | |
Brenton W. Hatch | |
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Daren J. Shaw | |
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Harold AlbertRyan W. Oviatt | | | | | | Arlen B. CrouchColleen Larkin Bell | | | | | |
| Ronald R. Spoehel | | | | | | | | | | | |
2.Ratification of Independent Registered Public Accounting Firm
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2. | Approve, on an advisory basis, the Company’s Executive Compensation
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For
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Against
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Abstain
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3. | Ratify the selectionappointment of Sadler, Gibb & Associates, LLC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
| | 2021. | For | | | Against | | | Abstain |
Note: The proxies are authorized to vote at their discretion upon such other business as may properly come before the meeting or any and all adjournments thereof.
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Note: The proxies are authorized to vote at their discretion upon such other business as may properly come before the meeting or any and all adjournments thereof.
Authorized Signatures – Sign Here – This section must be completed for your instructions to be executed.
Please sign exactly as your name appears hereon. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
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| Signature 1 - Please keep signature within the box. | | Signature 2 - Please keep signature within the box | . | Date (mm/dd/yyyy) |
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